Attitude Shift on Freight Infrastructure May Change the Way Congress Funds Transportation

Posted April 22, 2015 at 5:04pm

With Congress starting work on reauthorizing highway and transit programs, several lawmakers from both parties want the government to give more attention to the movement of freight on the nation’s highways, rails and waterways because of its importance to the economy. And since there’s no agreement on how to replenish the Highway Trust Fund, which has mostly paid for road and rail projects for decades, these lawmakers want the new investments in freight infrastructure to have their own dedicated revenue stream.

“Our country can no longer afford to avoid investing in our freight infrastructure. That is clear,” Rep. Alan Lowenthal, D-Calif., said at a news conference Tuesday. “There is no painless or magical solution to this problem. It’s going to require a long-term investment.”

Lowenthal has introduced a bill (HR 1308) to establish a freight trust fund that would draw revenue from a 1-percent fee on the cost of transporting goods. He estimated the bill would raise $8 billion a year to spend on freight projects. Lowenthal’s measure has nine co-sponsors, including two Republicans.

Rep. Janice Hahn, D-Calif., has a proposal of her own that’s gained the support of Texas Republicans Ted Poe and Blake Farenthold. That bill (HR 935) also would establish a freight trust fund, but one with more modest revenue goals. The bill would move 5 percent of all import duties collected by Customs and Border Protection at U.S. ports of entry into the trust fund, generating an estimated $2 billion a year.

“The projects that link the last mile in and out of our ports, I don’t want that competing with our Highway Trust Fund,” Hahn said in an interview with CQ Roll Call earlier this year.

There’s also a bill from Rep. Albio Sires, D-N.J., (HR 198) that wouldn’t establish any dedicated funding, but would require states to create immediate and long-range freight plans, as well as establish a competitive grant program for projects that would improve the efficiency of freight movement.

The lawmakers’ efforts come as Congress works to reauthorize surface transportation programs. The current law, known as Moving Ahead for Progress in the 21st Century or MAP-21, expires at the end of May. Members of Congress are deeply divided on where to find the money. The bill covers both highway and transit programs.

Diminishing Resources

The current funding effort, however, comes with two additional problems: The Highway Trust Fund, the vehicle for most federal highway spending, is expected to become technically insolvent this year. And the revenue stream for the Highway Trust Fund — the federal gas tax — is forecast to remain flat for the next decade.

Unless Congress finds a source of money, federal spending on highways and transit will be capped at the revenue provided by a federal gas tax, whose rate hasn’t changed since 1993.

Transportation officials and engineers say the nation’s highways and bridges are already in poor shape and any reduction in the federal contribution would likely worsen that problem. The American Society of Civil Engineers, estimates that 42 percent of urban highways are congested, costing the economy $101 billion a year in wasted time and fuel.

Congress also is expected to reauthorize the Federal Aviation Administration this year. And advocates of improvements to ports and inland waterways are worried that Congress is spending less than the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund have available.

Freight, of course, moves on highways and waterways and through ports and airports. But the lawmakers backing the latest initiatives think the efficiency of the movement of goods can be improved and should be the focus of a program to do so. Multi-modalism, the term that describes moving goods through a succession of different types of transportation, has been widely discussed among transportation experts in recent years.

In essence, multi-modalism considers whether the system can move a container smoothly from a ship to a truck or rail car, or in the opposite direction. The growing importance of trade has heightened the interest in doing so efficiently. The economic importance of that trade became evident several months ago, when a work slowdown at West Coast ports rippled through the economy and led President Barack Obama to appoint a mediator.

Although the cause of that disruption was a work slowdown, it demonstrated how important it is to the economy that goods flow smoothly through the ports.

A Land of Busy Ports

Lowenthal’s proposal to create a Freight Trust Fund has four co-sponsors from California, the state with the country’s two busiest ports.

The American Association of Port Authorities surveyed public port authorities around the country to determine the infrastructure needs related to connecting to the rest of the transportation system, said Aaron Ellis, a spokesman. Eighty of 126 port authorities responded.

Ports officials identified at least $28.9 billion in port-related freight and network projects over the next decade. Nearly a third of the respondents said they needed to invest $100 million over the next decade to move goods off a ship to another mode of transportation.

“Significant investment in America’s port-related freight transportation infrastructure is an urgent national priority,” said Kristin Decas, chairwoman of the AAPA board. “Our nation has a lot of work to do to meet ever-growing demands for trade.”

Lowenthal, who addressed members of the American Association of Port Authorities at their annual Washington summit Tuesday, said his proposed Freight Trust Fund “would complement the Highway Trust Fund.”

His bill would rely on a formula to disburse money from the fund. The formula’s six variables look at a state’s share of national goods movement. It looks at the tonnage and value of freight moved on the main transportation modes and at the number of ports, airports, rail track miles and interstate miles in each state and nationally. States would receive money in proportion to their share of each variable.

The bill would earmark 60 percent of the funding to those states that collaborate with other states or with similar entities in Canada and Mexico. States receiving money would also have to meet conditions to make plans and set priorities for freight spending and to spend the money on the priorities.

Lawmakers aren’t showing much appetite for measures that raise new revenue. And given Congress’ difficulty in agreeing on a highway bill, the proposed freight funds are unlikely to find enough support to pass in the current Congress. But unlike the Highway Trust Fund, which receives money from virtually all drivers, the proposed freight trust funds would draw their revenue solely from businesses. If lawmakers can gain strong support from industries that would pay the money, that could give their proposals a boost — such as was the case for a barge fuel tax increase to help support infrastructure on the nation’s inland waterways.