Senate Subcommittee Examines Infrastructure Funding Needs

On March 8 the Senate Appropriations Subcommittee on Transportation held a hearing to examine infrastructure funding needs and options. The hearing was largely positive from NATSO's perspective, as all participants recognized the critical need to invest money to repair and improve America's roads and bridges, and also recognized the superiority of direct -- for example, by raising the fuel excise tax -- as opposed to "public private partnerships" which can lead to undesirable revenue-raising mechanisms such as tolling and rest area commercialization.

Although most federal transportation spending is "mandatory," there are some "discretionary" spending accounts that require decisions every year; the Senate Appropriations Committee has authority over these discretionary decisions.

Much of the hearing focused not on these discretionary decisions, however, but on the forthcoming "trillion dollar infrastructure plan," which promises great potential but is thus far lacking in details. Most indications are that the Administration intends to rely on less desirable "public private partnerships" rather than the more politically challenging option of raising fuel taxes and direct federal spending.

Sen. Susan Collins (R-ME), Chair of the Subcommittee and a critical Republican "swing vote" on any Trump infrastructure plan, noted in her opening statement on March 8 that Congress must examine new ways to finance highway transportation projects, specifically mentioning tolling and public private partnerships.

David Bernhardt, Transportation Commissioner in Collins's home state of Maine countered that sentiment somewhat, saying that any major infrastructure package must "focus on direct funding, rather than on Federal financing support. This is because financing tools that leverage existing revenue streams -- such as user fees and taxes -- are typically not viable for most transportation projects in the United States." Bernhardt said that his team in Maine "recognize the inherent limitations of financing for the vast spectrum of publicly-valuable transportation projects that nevertheless cannot generate a sufficient revenue stream through tolls, fares, or availability payments to service debt or provide return on investment to equity holders."

In perhaps the hearing's most positive development from NATSO's perspective, the witness from the American Association of State and Highway Transportation Officials (AASHTO) -- the trade group generally most supportive of tolling and rest area commercialization -- did not focus his testimony on the "virtues" of either policy option. Instead, he focused primarily on the inadequacy of current federal spending levels, and the benefits of more direct federal investment. He spoke in support of the concept of a "vehicle miles traveled" tax, or "VMT," as a forward-looking option in a world of increased vehicle fuel efficiency.

He also noted that states "fully recognize" the inherent limitations of spending options that rely on tolls. AASHTO's testimony included a "matrix" of new potential sources of transportation funding; some of the options include VMT, increasing existing sales and tires taxes, reallocating revenue from the Harbor Maintenance Trust Fund, and imposing a driver's license surcharge. It did not specifically reference tolling or rest area commercialization.