For the second time in as many weeks, a key congressional committee held a hearing to consider funding options for improving the nation's infrastructure. Throughout the hearing, senators emphasized the need to find direct funding opportunities -- such as raising the motor fuel excise tax -- because private financing does not provide a complete solution, especially in rural communities.
President Donald Trump has made infrastructure improvements a top priority for his Administration, calling for an additional $1 trillion in investments. Indications are, however, that the Administration prefers private funding mechanisms, such as tax breaks to private investors to provide toll roads, rather than direct government funding. Although NATSO has long supported enhanced investment in surface transportation infrastructure, direct federal spending -- rather than simply private sector capital -- is necessary to do it effectively. Legislation that relies on private investment and tax credits could lead to undesirable revenue schemes, such as tolling and rest area commercialization, which NATSO opposes.
Sen. John Barasso (R-WY), Chairman of the Senate Environment and Public Works Committee, opened the Feb. 8 hearing by saying that so-called "public-private partnerships" (or PPPs) will not work for rural states such as his home state of Wyoming. "Funding solutions that involve public-private partnerships, as have been discussed by [Trump] Administration officials, may be innovative solutions for crumbling inner cities but do not work for rural areas," Barasso said.
Noting that many federal lawmakers are concerned about the political consequences of raising the federal gas and diesel tax rates, the Committee's top Democrat pointed out that a litany of states have raised fuel taxes in recent years. "Nobody got thrown out of office" after voting to raise fuel taxes, Sen. Tom Carper (D-DE) said. "So you can make tough decisions on funding that people will forgive politicians for if they actually are convinced that it's going to meet a real need that they face every day."
The federal Highway Trust Fund, which funds interstate highway improvement projects, is currently underfunded, and is set to run out of money by 2020.
Testifying before the Committee were various state transportation and public works officials. Shailen Bhatt, Executive Director of the Colorado Department of Transportation, testified that Colorado was open to a mixture of funding options, but said that 70 percent of transportation funding in his state comes from the federal government so it is vital that Congress continues to invest in states such as his.
Sen. Shelly Moore Capito (R-W.Va.) said many projects in her state would not have been completed without public-private partnerships, and asked the Wyoming transportation official to expand on why those don't work for rural states. The Wyoming official explained that traffic counts are low in rural states and will therefore never generate enough revenue. The official said that he does not oppose public-private partnerships, but they simply do not make sense in rural states. Formulaic, direct-funding is a better solution, he said.
Last week, the House Transportation and Infrastructure Committee held a hearing that also examined infrastructure funding options. The House Committee heard mostly from private sector representatives who advocated for increasing motor fuel excise tax rates. The Senate Environment and Public Works Committee is comprised of numerous senators who represent rural states, and is therefore a strong buffer against the potential Trump Administration push to fund infrastructure investments entirely through private investment incentives and public-private partnerships.
Taken together, the House and Senate hearings represent the opening salvo in what is expected to be year-long effort examining the nation's infrastructure needs and methods to fund them. As a practical matter, Congress is unlikely to consider infrastructure policy in earnest for several months, as Republican leaders have prioritized healthcare reform and comprehensive tax reform over infrastructure policy.
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