Supply Chain News / Risk & Compliance / Ground

No New Taxes; No New Funding

July 2, 2012
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At the SMC3 Jump Start event in Chicago, executives from leading U.S. motor carriers, shippers, and other transportation companies listened as Washington insiders cautiously predicted the passage of a two-year highway bill.

Bill Bronrott, Federal Motor Carrier Safety Administration (FMCSA), focused his discussions on safety issues, including a status report on CSA safety rules. But, Deputy Administrator Bronrott noted the highway bill the conference committee brought to the floor contained most of what was included in the Senate version with regard to safety. The bill included a mandate for electronic onboard recorders (EOBR). “It also includes FMCSA’s enforcement authorities,” he said.

The bill, which amounts to a 27-month extension, runs through September 30, 2014.

Tim Lynch, Morgan Lewis & Brockius LLP, began his comments by saying that he had spent the better part of the previous day trying to read through the 900 pages of the bill to see what it contained. With that as backdrop, he noted that the Republican-controlled U.S.

House of Representatives includes a number of representatives who are conservative and “truly believe that less government is better.” He continued, “They don’t differentiate between some programs that are OK and others that are not under the rubric of big government.”

Two or three years ago then-chairman Jim Oberstar wanted to double funding for the highway program, Lynch pointed out. Even if you can explain how you are going to fund it and how valuable the need to invest in infrastructure, those conservative representatives didn’t look favorably on a $500 billion program.

Another factor which played heavily on the ability to move the highway bill forward was the addition of the Keystone Pipeline funding provision, an amendment related to coal ash, and environmental streamlining. In reconciling the House and Senate versions, there is no Keystone Pipeline provision and no coal ash provision.

Funding is essentially a flat-line funding, said Lynch. House Republicans made it very clear they would not consider nor accept any increase in any fuel taxes, Lynch pointed out.

“Interestingly, I think the business community came out virtually in unanimity on that position – the American Trucking Associations, U.S. Chamber of Commerce, National Association of Manufacturers, on down the list, all not only supported but encouraged an increase in the fuel tax in order to pay for a more robust program.”

The bill continues existing funding with no increase in taxes, and fuel tax and excise taxes will remain where they are, said Lynch. He pointed out that in the 95-page summary, nearly 60 pages were devoted to “pay fors” which are non-highway related taxes that could raise almost $27 billion in non-highway, non-transportation revenues to offset some of the cost of the highway program.

We’ve already shifted about $35 billion out of the general fund to pay for the highway program, Lynch pointed out. “That’s important because the existing tax structure of the highway program cannot sustain the spending – even at a flatline spending rate.”

Fuel tax revenues are not keeping up with the spending, for a number of reasons, including reduced driving, alternative fuel use, and more, he said.

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