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TEA-21 Funding Helps Fuel Economic Growth

At a March hearing of the Transportation and Infrastructure subcommittee on highways, transit and pipelines, economists and academics testified not only about the tremendous transportation needs around the country, but also the very real and measurable benefits to our productivity and economic growth as a result of investing in and improving our transportation system.

Here are just a few points made at that hearing: Research has shown that every dollar of highway capital has a rate of return of 30 cents per year and highway capital investment has been responsible for 25 percent of our nation’s gains in economic productivity. Increases in transportation investment beyond current levels result in significant growth in the gross domestic product, consumer spending, disposable income and equipment investment. In addition, federal and state tax receipts increase due to the overall long-run productivity impacts.

While much attention has been placed on what level of transportation investment we can “afford,” the real question is: How we can afford not to invest?

This is the challenge facing the Congress as we reauthorize the Transportation Equity Act for the 21st Century. America has benefited greatly from having a strong transportation network on which we can move our people and goods, but we are now at a crossroads. Will we make the investment necessary to support a growing economy, or will we allow our transportation infrastructure to deteriorate to the point that it impedes economic growth?

The Department of Transportation has determined that we need to invest $60 billion on highways and $12 billion on transit annually to meet the demands of a growing economy. Unfortunately, the less than $40 billion we now spend is not close to the amount necessary just to maintain our current infrastructure, much less improve it.

Most of us think of congestion in terms of how it impacts us individually during our daily commutes to the workplace. But it also is a very real consideration for businesses across the country. This point was driven home for me during a visit to Texas last year when a well-known corporation indicated that it might be forced to relocate because growing congestion at the current location was affecting the ability to deliver its finished products in an efficient way.

One child out of every 84 born today will die violently in a motor vehicle crash, according to the American Association of Highway and Transportation Officials. That is a chilling statistic. The Federal Highway Administration estimates that bad roads and roadside hazards are factors in more than 13,000 fatalities each year. It’s not just hyperbole to say investing in transportation saves lives — it’s real.

While the long-term economic benefits are clear, we also shouldn’t lose sight of the job-generating capability of transportation spending — especially as we search for ways to stimulate a current struggling economy. Every $1 billion invested by federal and state governments in highways and transit supports roughly 47,500 jobs.

[IMGCAP(1)]Obviously, simply building more roads is not the entire answer to our transportation challenges. We also need to provide other options for travel, utilize technology to efficiently use our current systems, and think creatively about new ways to address capacity issues. Our transportation officials should have a range of tools available as they seek to solve their own particular transportation problems.

TEA-21 was vital in linking transportation revenues to transportation spending. The funding guarantees and firewalls have worked well and must be continued. On that principle I hope we can all agree.

But we are being penny wise and pound foolish if we do not increase our investment in highways and transit. And since transportation investment is overwhelmingly paid for by the users, we can provide the necessary spending without increasing the deficit.

There have been very positive steps forward recently, particularly in the area of ethanol. Even though I support the use of ethanol, it is not right that ethanol is currently taxed at 5.2 cents less than “regular” gasoline. If we determine that there is an overall benefit to our society by encouraging the increased use of ethanol through a tax incentive, it should not come at the expense of the Highway Trust Fund. The recent action by the Senate Finance Committee in approving legislation to replace the ethanol exemption with a volumetric ethanol excise tax credit is a simple, ingenious way to ensure that the Trust Fund is made whole. That legislation would also implement the proposal in the president’s budget to shift the 2.5 cents of the tax on ethanol that now goes into the general fund to the Highway Trust Fund. Together, these actions would result in an additional $2 billion in annual receipts to the Trust Fund.

Indexing has worked well in Wisconsin and the 11 other states where it is used. In our state, we consider it erosion control. It is a simple fact that over time, money loses purchasing power, and we must keep up if we don’t want to fall behind.

So, this is the challenge as we reauthorize our transportation programs. Transportation investment is a legitimate government activity that pays back big dividends. Are we going to take the steps necessary to provide for our economic security, create and sustain jobs, enhance safety, and continue to improve mobility for our citizens? The bipartisan leadership of the Transportation and Infrastructure Committee is committed to producing a bill that meets these goals.

Rep. Tom Petri (R-Wis.) is chairman of the Transportation and Infrastructure subcommittee on highways, transit and pipelines. He also is vice chairman of the Transportation and Infrastructure Committee and the Education and the Workforce Committee.

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