The decadelong stretch with no long-term highway funding authorization has finally ended. After “living in a month-to-month, year-to-year world for a long time,” says David Fialkov, vice president of government affairs for NATSO, Alexandria, Va., the $305 billion Fixing America’s Surface Transportation Act passed in December. And the fact that it did pass “was surprising.”
“It did not appear that the political environment was ripe for a long-term highway bill,” he says. But ripe it was. Constructive negotiations in the last Congress by Rep. Paul Ryan (R-Wis.), who was then chairman of the Budget Committee and now is speaker of the House, with Sen. Patty Murray (D-Wash.) on a budget, helped set the tone of bipartisanship. In the end, the bill will provide billions in funding to repair and expand highways, bridges and transit for the next five years.
“Having a stable set of funding to be able to have a good highway system means more people are going to want to drive, and obviously they’re going to want to fill up their cars with gas and get a great cup of coffee. It’s a win-win for everybody,” says Paige Anderson, director of government relations for NACS, Alexandria, Va.
Funding Fuss
But there are still some concerns related to the bill, and the source of its funding is perhaps the biggest.
That’s because instead of raising the federal excise tax on gasoline, which is a main source of funding for the Highway Trust Fund but has sat at 18.4 cents per gallon since 1993, a tax-averse Congress chose funding sources with little to no relation to transportation.
“It would be more desirable if the funding mechanisms were self-sustaining, by which I mean if transportation policy could be funded by transportation-related funding mechanisms,” says Fialkov. He calls fuel taxes “the most natural choice.”
“Somebody has to have the political courage to say, ‘You can’t have roads for free,’ ” says Tim Columbus, counsel for fuel-marketer association SIGMA, Fairfax, Va. While he says raising the gas tax isn’t the best way to pay for infrastructure, “it’s the best we have ever come across.”
And not raising the federal gas tax could encourage states to raise their own gas taxes, which NATSO finds concerning.
“When you have different states that are looking to make up for a transportation-funding shortfall … you get to a situation where some of our members are operating under different rules and regulations than their competitors are,” Fialkov says. “That leads to a situation where those who operate in high-gas-tax or high-diesel-tax states are going to lose a lot of business to competitors who are in lower-gas-tax states.”
Anderson, however, does not believe 2016 will see an unusually high number of state gas-tax increases; in fact, such activity is likely to be somewhat subdued.
“It’s hard for state legislatures to pass tax increases in an election year,” says Anderson. “On the other hand, with the price of a gallon of gas in such a strong position for the consumer, the question is: Would consumers notice it as much?”
Interstate Love Song?
As far as the bill’s provisions go, NACS, SIGMA and NATSO were all pleased the Interstate System Reconstruction and Rehabilitation Pilot Program was not expanded.
Congress established the program in 1998, authorizing three pilot projects (one in each of three states) to toll an interstate highway, bridge or tunnel.
“Tolling on federal highways is problematic for our folks—that limits access points on and off these highways. Depending on where you put them, it could really put in jeopardy long-standing businesses on those access points,” Anderson says.
Columbus agrees: The interstate highway system “has been an enormous boon to economic development all the way across this country,” and “SIGMA doesn’t want to see [it] tolled.”
Instead, the program was further limited, with “use it or lose it” language that gives the participating states—North Carolina, Virginia and Missouri—three years to implement tolling. Should one of the states not proceed, it would be dropped from the program, opening up a slot for another state.
“We think the pilot program should be repealed entirely,” says Fialkov of NATSO. “[But] the fact that they left it as is is something we viewed as better than a lot of the other alternatives.”
And although it is not a huge provision, Fialkov says the Natural Gas and EV Charging Corridor is one to watch. The new law directs the Department of Transportation to identify and establish corridors to support alternative-fueling stations, including electric, hydrogen, propane and natural-gas fueling infrastructure, at strategic locations along major national highways.
“The idea that the government is looking to try and help move the needle in those areas is something we think we could benefit from and our customers could benefit from,” says Fialkov.
That said, the Department of Transportation’s involvement could lead to government-run alternative-fueling stations, which Fialkov says would compete with private entities already in the alternative-fuel space as well as those trying to enter it.
Regardless of the challenges, the fact that there is a long-term highway bill is groundbreaking.
“It’s important we fund our highway system on a multiyear basis,” says Anderson. “The fact you had such strong bipartisan support, and that the process brought a wide range of stakeholders—including us—together to try to make it work, can be set as an example of how legislation should get done. Hopefully … other issues can follow the same game plan.”
Footing the Bill
Finding more than $300 billion to offset the cost of the long-term highway bill required Congress to get creative. The many “payfors” include:
- Transfer $53 billion from Federal Reserve’s capital account and cut dividend rate paid to large banks: $60.2 billion
- Sell 66 million barrels of oil from Strategic Petroleum Reserve from 2023 to 2025: $6.2 billion
- Increase Customs Services user fees by indexing to inflation: $5.2 billion
- Authorize Internal Revenue Service to hire private tax collectors: $2.4 billion
- Raise caps on motor-vehicle safety penalties: $423 million
- Authorize the IRS to request revocation or denial of passports by the Department of State to those with serious tax debt: $395 million
- End requirement that the Office of Natural Resources must pay interest on overpayments to lessees: $320 million
- Divert money from Leaking Underground Storage Tank Trust Fund: $300 million
Sources: Congressional Budget Office, Steptoe & Johnson LLP
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