2. Jobs: The overall construction industry is still facing unemployment in the range of 20% or more. Transportation construction plays a vital role in our nation's economy, not only by providing well-paying, permanent employment, but also by supporting business and commerce in the timely shipment of goods to market.
3. Competition: In nations such as Russia, Brazil, India and China, there are large-scale investments being made in highways and other surface transportation infrastructure. It is no coincidence that these nations are emerging not only as economic superpowers, but also formidable political powers, as well.
The short-term gains realized from the ARRA will be lost without a robust highway bill now. It is for this reason the ACPA is urging quick passage of a multi-year highway bill, as well as the required funding mechanism, such as an increase in the federal motor fuels tax.
Prospects for future funding
Q: The much anticipated highway bill remains stalled. How quickly do you see the bill passing? What impact will passage have on the highway industry?
Solsby: Along with other groups/coalition partners, we are working to pass the next bill ASAP.
The greatest impact [of passage] will be to provide certainty. That certainty governs decisions by contractors, suppliers, materials and equipment firms to hire, invest, and expand. You don't make a major investment or expansion decision -- or plan to buy a $10 million piece of equipment -- based on one year's worth of work. You make it based on five to six years of work in the pipeline. That federal certainty will also help the states plan their own work. Right now, we're seeing nearly half of all states -- even with the ARRA -- cut their transportation budgets.
Wathne: The answer to the question of what impact it will have on the concrete pavement industry will depend largely on the scale of the program. Even so, we expect the bill, when signed into law, will help reduce the high unemployment in the construction industry; create good jobs; and allow companies and agencies to plan for both the short-term and long-term needs of the federal-aid highway system.
Sullivan: The administration became sidetracked with the health care bill, and now Congress has an anti-spending mentality. It is unlikely that we will see a highway bill in fiscal 2012 and maybe not until 2013. In the meantime, another extension will be necessary. It's not just economics, it's also politics.
Q: What does the future hold for the Highway Trust Fund (HTF)? Where will additional funds come from knowing that alternative-fueled vehicles are gaining in popularity and the gas tax remains unchanged?
Solsby: The HTF remains the most effective and viable transportation financing program in place. But its effectiveness is undercut because it is not indexed to inflation and its level has not been augmented to reflect current economic values.
The Fund has lost some 30% of its purchasing power in recent years. Imagine if you had no pay raise since 1992! We support raising the gas tax and indexing the tax to inflation going forward, as do many in Congress. To fund the next bill at a level commensurate with goals outlined by key Congressional leaders, we will have to look at putting all revenue options on the table — including raising the gas tax.
Basso: The 18.4 cent federal gas tax was enacted in 1993, and current estimates suggest that the HTF will get us to 2012. In the short run, raising the gas tax and collecting more DMV fees is the course to follow. Long term, a 7 to 8 cent-per-gallon federal gas tax will only allow the industry to tread water, whereas a 13 to 15 cent increase would be more appropriate.
Sullivan: The Highway Trust Fund hasn't benefitted from a gas tax increase in 17 years. When one factors in inflation, the fund continues to lose ground. The gas tax has to increase dramatically.
At this point, I don't believe alternative-fueled vehicles are having a significant impact on the fund. There are somewhere between 275 and 300 million vehicles on the road, and only a very small percentage of them are alternative-fueled vehicles, with an estimated 10 million more of them taking to the roads each year.