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November/December 2008
Paving the Way for a Better Bill
AGC is leading a national effort to ensure timely reauthorization of a healthy transportation bill
By Angelle Bergeron
he Associated General Contractors of America is going to make certain that when Congress and the new administration decide on the September 2009 transportation reauthorization, they and everyone else in the country will have full knowledge of the nation’s transportation needs and what it will take to fund them.
“This will be the most important piece of legislation to impact the highway construction industry for the next six years,” says Brian Deery, senior director of AGC’s Highway and Transportation Division. “We are hoping for a reauthorization of $500 billion.”
That amount represents a significant increase over the current $286-billion Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, signed by President George W. Bush on Aug. 10, 2005.
Were it not for an $8-billion infusion for the Highway Trust Fund, a fix recommended by Senate Finance Committee Chairman Max Baucus (D-Mont.) and signed by the President on Sept. 15, contractors would have had to stop transportation work in mid-September. Before the bailout, SAFETEA-LU was predicted to enter 2009 with an estimated $3.3-billion deficit for the fiscal year.
Although the bailout saved contractors for the short term, it is not a sufficient cure. “All it did was show that Congress was able to act in a crisis situation,” Deery says. “This is just a short-term fix to get us through next year, instead of operating in a deficit. We still have quite a fight on our hands to get new funding.”
Deery says the nation will be facing the same problem next year if Congress doesn’t push for raising taxes for transportation. “Congress wants the gain without the pain,” he adds.
AGC has been working with a number of groups, including the Transportation Construction Coalition, Americans for Transportation Mobility, American Association of State Highway and Transportation Officials and others to develop a concerted strategy to ensure a robust transportation reauthorization. Consequently, AGC is supporting a bonding proposal that would allow the federal government to borrow money for capital projects.
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| AGC CEO Stephen E. Sandherr spoke in support of a provision by U.S. Senators Max Baucus (D-Mont.), left, and Chuck Grassley (R-Iowa), right, to restore $5 billion to the Highway Trust Fund during a news conference on Capitol Hill led by Baucus and Grassley last summer. |
“Public-private partnerships and tolling are certainly going to continue to be part of the mix as well,” Deery says. “We think Congress should make it easier to place tolling on Interstates.”
AGC also is recommending a 10-cent increase in the federal gas tax. “Frankly, that’s a minimal amount,” Deery says.
The failure to increase the federal gas tax since 1993, as well as inaccurate predictions about gas usage, caused the current trust-fund problems in the first place, Deery says. To head off the problem in the future, AGC also is recommending the federal gas tax be indexed to stay current with inflation.
“We’ve suggested establishing a highway user-rate commission that would annually look at where we are and recommend to Congress what needs to be raised,” Deery adds. “It would be like the postal commission. Unless Congress vetoed it [the gas tax increase], it would automatically go into place.”
Politicians have historically been reluctant to increase the federal gas tax, even before the current sluggish economy and last summer’s $4-per-gallon gas. Winning a gas-tax increase of any kind will take a persistent, concentrated effort to educate the public about “transportation needs and gas tax, as well as the link between driving and user fees,” Deery says.
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| Brian Deery, AGC of America’s senior director of the Highway & Transportation Division (left), and Robert Lanham, vice president of Williams Brothers Construction Co. Inc., Houston, and the immediate past chairman of the Highway & Transportation Division, confer about highway funding options. |
Educating the Public
AGC has been working with individual state chapters to build a strategic grassroots campaign for public education about transportation investment and its link to increased efficiency and economic growth. Deery says AGC has found in its polling that people generally realize there are transportation needs and approve of increasing investment.
Although they oppose raising the gas tax, people support a user fee solely dedicated to transportation needs, Deery says. “Politicians will do what their constituents want,” he adds. “We need that groundswell of support to get the politicians to have the stomach to vote for taxes.”
After Hurricane Katrina exposed flood-control flaws in New Orleans and throughout the Gulf Coast, last year’s Interstate 35 bridge collapse in Minnesota and this year’s Midwest flooding, infrastructure became important to most people, says Casey Dinges, senior managing director of strategic and public affairs for the American Society of Civil Engineers. However, it apparently takes more than disasters to get things moving, he adds.
“A bridge collapse is one of the most unsafe things the public can see, but Congress still hasn’t passed a bridge rehab bill,” Dinges says. He adds that although infrastructure/transportation is on the national conscience more than ever before, it isn’t as high a national priority as the war in Iraq, the economy or health care.
AGC Chapters Find Regional Funding Solutions
AGC’s work with state chapters to build grassroots campaigns for increased transportation investment has paid off
WEST VIRGINIA
The Contractors Association of West Virginia created a task force that resulted in “Fund Our Roads/West Virginians for Better Transportation.” The group created “Keep West Virginia Moving,” an education campaign about transportation needs and funding, which eventually resulted in the legislature passing bills for an additional $994 million in revenue for the State Road Fund over a seven-year period.
Executive Director Michael Clowser says that thanks to “Keep West Virginia Moving,” the association won reissuance of a wholesale gas tax ($63 million), reauthorization of an initial gas tax ($55 million), reallocation of trust-fund diversions ($15.5 million) and the restoration of a department of highways sales tax exemption for construction materials ($13.5 million).
“Those four items add up to $142 million on an annual basis,” Clowser says. “Every state is trying to find a magic bullet, but I don’t think there is one. I think instead of finding one single source, there will be several.”
Currently, the West Virginia association is looking at alternatives to generate an additional $150 million to $300 million in revenue to maintain the state’s existing system and move forward with new construction projects.
IOWA
Iowa managed to skirt around the whole gas-tax issue by creating funding streams about which the public would not object and by dedicating existing monies to transportation. About six years ago, AGC of Iowa, along with the Iowa Dept. of Transportation and other industry organizations, proposed the TIME 21 plan, which resulted in $138 million in new revenue from registration fees. More importantly, it provided constitutional protection to the more than $250 million raised annually in user taxes that previously were not protected and were exposed to diversions, says Scott Newhard, vice president of public affairs with AGC of Iowa.
Initially, TIME 21 was targeted to generate $200 million and would have included a gas-tax increase, but that wouldn’t have been supported by the governor, Newhard says. “We had a target date of July 1, 2011, to start generating at least $200 million a year, but we only hit 70% of our target amount,” he adds. “We are going back for the gas tax next year, regardless if gas is $10 a gallon.”
Newhard says he is hopeful that this year’s widespread flooding in Iowa will make the public more supportive of infrastructure funding and a gas-tax increase.
Interstate 80, with average daily traffic of about 30,000 vehicles, 40% of which is truck traffic, was closed for three days because of the spring floods. That probably did increase public awareness, says Stuart Anderson, director of systems planning at the Iowa Dept. of Transportation. “Whether that is sustained is another question,” he says.
Anderson’s office has been charged with determining additional sources for funding to meet the $200-million mark. The technical verbiage is “basically code for encouraging us to look at the fuel tax,” Anderson says. Fuel taxes represent a good measure of system usage and require low administrative costs to collect, but there is still “extreme sensitivity to raising the fuel tax.”
NEW HAMPSHIRE
When AGC of New Hampshire in 2004 joined forces with other organizations to establish the “A Safer Road to Tomorrow” awareness campaign, the group expected it would be a long-term plan for change, says Gary Abbott, the chapter’s executive vice president.
“We are reaching out to communities to make sure they are aware of the sinking revenue funds available to them,” Abbott says. “We are letting them know that failure to do something means our roads and bridges will be increasingly closed.”
Since 2004, “A Safer Road to Tomorrow” has distributed calendars featuring deficient roads, bridges and statistics, a quarterly newsletter and annual booklet and, recently, a DVD to legislators, municipal and state officials and community organizations to increase their awareness about transportation needs and funding shortages.
ARKANSAS
In Arkansas, education may not reap immediate results, but it is fairly inexpensive, says Don Weaver, president of Weaver Bailey Contractors Inc. and vice chair of AGC’s highway and transportation division in the state.
An estimated $200,000 investment may translate into $100 million to $150 million of new revenue for Arkansas’ highway department over the next three years, Weaver says. Two years ago, Arkansas Good Roads established a public education campaign that consisted of billboards, radio ads and press releases to local media.
Transportation moved up from No. 8 to No. 2 on the state’s Top 10 priorities list, Weaver says. That recognition influenced Gov. Mike Beebe, who entered a special session to dedicate severance taxes from Arkansas’ Fayetteville Shale. “We were lucky we had that new revenue stream and that he happened to turn his views to highways,” Weaver says. Currently, Arkansas AGC is trying to generate a pot of money for another education campaign about the federal SAFETEA-LU transportation bill’s reauthorization.
MISSOURI
Trust is a component of education and, ultimately, funding, says Pete Rahn, director of the Missouri Dept. of Transportation and current president of the American Association of State Highway and Transportation Officials. “You have to establish credibility with the public first and demonstrate that if you get more resources, you’ll use it quickly and wisely,” he says.
In Missouri, where all tax increases are approved by voters, not the legislature, the DOT is working on the tail end of $2 billion of bonded revenue created in 2004 when a voter initiative moved half the state’s vehicle sales tax to the state road fund.
With a $1-billion deficit and polls that indicate Missourians don’t want tolling or a gas tax, the transportation department, like other states and the federal government, is looking for creative new solutions.
“If we are going to invest in transportation at the level that will make our country economically competitive, we’ve got to have a new approach,” Rahn says. “We’re going to have to demonstrate that there is an accountability that hasn’t been there in the past.” |
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