The best way to keep the U.S. Highway Trust Fund solvent is to raise the federal user fee that funds it, said Janet Kavinoky, executive director of transportation and infrastructure for the U.S. Chamber of Commerce, in Little Rock on Thursday.
Kavinoky, who also serves as vice president for the group’s Americans for Transportation Mobility (ATM) Coalition, addressed the Arkansas State Chamber’s “Chamber Talks Transportation” luncheon event held at the Little Rock Club.
Kavinoky said the fund is in danger of going under and needs $11 billion to operate through the remainder of 2015 without being bailed out by the federal government. Since 2008, the federal government has borrowed $64.1 million to “patch” the fund instead of finding a reliable, long-term solution, she said.
The user fee of 18.4 cents, which Kavinoky noted is reinterpreted as a gas tax when politicians are aiming for re-election, has not been raised since 1993. Kavinoky said that stasis has resulted in the fee losing almost 40 percent of its purchasing power.
The U.S. Chamber supports a 1-cent hike per month for a year which it believes could raise an extra $15 billion for the fund. Through the coalition, it launched the Faster Better Safer Campaign to promote such a raise.
Coalition literature indicates that a modest hike would lead to better and more efficient roads and could save the average driver $324 a year on vehicle repairs caused by bad road conditions, 5.5 billion hours of being stuck in traffic and almost 3 billion gallons of gas.
Money from the highway fund is collected by the federal government and distributed to states and local jurisdictions, who then decide how to use it. In May, Gov. Asa Hutchinson named members of a highway funding task force, charged with finding new ways to fund Arkansas highways.
Earlier this month, he told the Arkansas Good Roads Foundation that he wanted the group to consider “all options” for future highway funding in the state.
Kavinoky said the national fund has eroded for several reasons: Congress didn’t account for inflationary adjustments; vehicles now are more fuel efficient; roads are in worse shape thanks to an aging infrastructure, and construction costs are rising; and more people, especially millennials, are driving less.
That last point, she said, highlights the need to focus on public transportation, an issue that doesn’t hold a high priority for many lawmakers.
Kavinoky said the federal government looks at five things when considering transportation funding methods:
- Can the government collect it?
- Is it sustainably structured?
- Is it actually related to transportation needs?
- Does it entail ongoing revenue?
- Is it enough?
“The one thing that fits all that is raising the gas tax,” she said.
The government continues to search for “offsets” to prop up the dwindling fund instead of searching for real solutions, she said.
“A lot of times, good policy makes bad politics.”
Opponents of a gas tax hike see it as a proxy for a carbon tax, she said, and many conservative politicians are adamantly opposed to a carbon tax even if they see the benefit of raising the gas tax.
“Behind closed doors, a lot of members will tell us that it’s probably the right thing to do to increase the gas tax,” she said. “But no one wants to take a roll call vote.”
Kavinoky called out political action committees such as Americans for Prosperity, which she said was able to raise $40 million in two weeks to rally its supporters against a gas tax.
The U.S. Chamber endorses the gas tax as a solution to a withering highway fund, she said, but with Congress addressing other high-profile issues and presidential debates just around the corner, her expectations are muted.
“We’re all unified around the gas tax as a solution, but if that doesn’t happen, then what’s the solution?”
Other nuggets from Kavinoky’s address:
- The notion of a vehicle-per-miles traveled tax system is “probably 10 years away.”
- By 2025, the Environmental Protection Agency will require 50 miles-per-gallon on all U.S. vehicles.
- Panama Canal expansion will impact the U.S. because of fewer but larger ships at U.S. ports, Kavinoky said. That will result in an “awful lot of cargo” being unloaded at fewer ports and lead to bottlenecks as that cargo gets moved onto roads and rail. Companies like Wal-Mart will locate distribution centers closer to these big ports (such as Norfolk, Virginia) as a result, she predicted.
- The U.S. Chamber is “strongly supportive” of federal investment in public transportation.
- In response to a question about plans by the Tennessee Department of Transportation to close the old I-55 bridge between Memphis and West Memphis for up to nine months to build a new interchange, Kavinoky said given the nature of highway funding, states sometimes find themselves at odds over such projects. She noted that the I-40 corridor running through east Arkansas accounts for 5 percent of the nation’s economic investment. (An online petition against closing the bridge was started by state Sen. Keith Ingram of West Memphis and is available here.)
Attending the event were officials from Central Arkansas Transit Authority; the Little Rock Regional Chamber of Commerce; the Arkansas Trucking Association; the Arkansas Asphalt Pavement Association; Associated General Contractors of Arkansas; the office of U.S. Rep. French Hill, a Republican representing Arkansas’ Second Congressional District; and the I-49 International Coalition.
Also present were state Reps. Karilyn Brown (R-Sherwood), Prissy Henderson (R-Texarkana), Ron McNair (R-Alpena), James Sorvillo (R-Little Rock) and James Sturch (R-Batesville), all members of the House Committee on Public Transportation.