Obama Admin Declines to Consider New Funding for Transportation

Having entertained legislators’ own ideas about how best to fund future transportation spending, the House Ways and Means committee turned to representatives from the administration and key interest groups today to hear their thoughts on the matter.

The administration’s view could not have been much clearer — this business is all very important, but we’re not ready to commit to anything at this time.

Roy Kienitz, the Department of Transportation’s Undersecretary for Policy, made it quite clear that the administration is not prepared to support any of the new funding mechanisms proposed — not a VMT tax, not indexing the gas tax to inflation, and not taxes on imported oil and refined gasoline.

Kienitz did leave the door open to a tax on trading of oil futures, which he said the administration would have to investigate thoroughly. A key concern is that in a world where oil is traded on global markets, such a measure would simply shift trading off of American soil.

Why the stubborn refusal to engage in the funding debate? Ostensibly, the administration is reluctant to adopt new taxes or fees amid recession.

But this explanation rings hollow. Congress could easily delay the time at which revenue-raising measures take effect until 2011 or later, as is being done with funding mechanisms in the health reform bills under consideration.

The president must know this. A reasonable assumption is that he simply does not want to have a tax debate at this time, not with other key priorities involving new tax burdens also being considered.

With the administration all but out of the discussion, the rest of the hearing seemed somewhat academic, but the committee pressed on. The primary interest groups are, not surprisingly, arguing for their own protection.

C. Wick Moorman, CEO of the regional freight rail operator Norfolk Southern, declared himself supportive of tax incentives for new freight rail investments. Peter Pan Bus Lines President Peter Picknelly asked that the intercity bus line fuel tax exemption be extended in any new transportation bill reauthorization.

And Barbara Windsor, there to represent Hahn Transportation and the American Trucking Association, was quite adamant in expressing the trucking industry’s opposition to new revenue-raising measures.

ATA has endorsed continued reliance on fuel taxes, but it strongly opposes use of a VMT tax, or any tolling of lanes not associated with switching HOV lanes to HOT.

Windsor also had sharp words for the Waxman-Markey energy bill recently passed by the House.

She said she’d been told that it would result in an increase in diesel fuel prices of between 70 cents and 90 cents per gallon for truckers (numbers that are almost certainly incorrect; reports from the Congressional Budget Office and other reputable sources suggest that the carbon prices necessary to generate that increase in fuel prices won’t obtain for decades).

Given that America’s trucking fleet averages about 6.2 miles per gallon, according to Windsor, those higher fuel costs would be quite damaging to the industry.

A more hopeful note was sounded by the American Automobile Association’s Robert Darbelnet, who noted that AAA supported an increase in transportation investment and supported measures to raise revenue to fund that increase.

Darbelnet pointed out that the value of the federal gas tax has declined some 50 percent since it was last increased in 1993, thanks to inflation and increased fuel efficiency.

Given improvements in accountability and a comprehensive national transportation plan, AAA could support an increased gas tax, a VMT tax, or congestion pricing in places with alternatives to travel on priced roads.

All told, it was plenty for the administration and legislators to chew on as they attempt to fill the $200 billion gap between current revenues and planned spending. One important thing to keep in mind — while new taxes might play poorly now, amid recession, recovery will almost certainly result in higher oil prices, which will also make it politically difficult to raise or introduce new taxes.

There’s never a perfect time to try to increase revenue. Hopefully leaders will soon coalesce around a few good ideas, so they can begin the difficult job of selling voters and interest groups on the necessary measures.


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