Transportation

U.S. Chamber's Kavinoky discusses Oberstar's gas tax hike, talks impact on businesses

On the heels of the Minneapolis bridge collapse, the House and Senate, this week, are holding oversight hearings into the nation's bridge infrastructure. A controversial proposal by House Transportation & Infrastructure Committee Chairman James Oberstar (D-Minn.) would raise the gas tax in order to pay for infrastructure improvements. How should improvements to our bridges be approached by the Congress? During today's OnPoint, Janet Kavinoky, director of Transportation Infrastructure at the U.S. Chamber of Commerce and executive director of the Americans for Transportation Mobility Coalition explains why she believes significant infrastructure legislation is needed now. Kavinoky discusses some concerns over earmarks associated with infrastructure packages and responds to criticism of Chairman Oberstar's proposal.

Transcript

Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Janet Kavinoky, executive director of the Americans for Transportation Mobility Coalition and the director of Transportation Infrastructure at the U.S. Chamber of Commerce. Janet, thanks for coming on the show.

Janet Kavinoky: You're welcome.

Monica Trauzzi: Janet, on the heels of the Minneapolis bridge collapse, both the House and Senate are taking a look at our nation's infrastructure for bridges. And the House T and I committee is looking at a way to fund bridge repairs by raising the gas tax. Chairman Oberstar's proposal is facing opposition from Republicans and also the White House. What's your take on it?

Janet Kavinoky: Chairman Oberstar has put together actually a very solid proposal to funnel additional money into our nation's bridges specifically on the national highway system and the federal aid system. He has created something I think there is a lot of support for, which is a formula based program, with no earmarks, targeted to the areas of greatest need. But in addition to that one of the most important things in his proposal is that he would take a different look at how we rate and assess bridges today. So, from that policy perspective, we agree that it's very important to move ahead and look at how we actually deal with bridge infrastructure in the United States and make sure that that kind of tragedy, that happened in Minneapolis, doesn't happen again. Now, on the issue of funding for that, I testified a couple of weeks ago in front of the T and I committee, that the U.S. Chamber of Commerce, that the Americans for Transportation Mobility Coalition believe that we need to put more money into all of our infrastructure. At this point we have to have all the options on the table. We haven't seen from the chairman a final legislative proposal, so I'm not sure how we're going to go about putting that additional money into bridges, but there's certainly a lot of options out there.

Monica Trauzzi: But is raising the gas tax really the best option here? We're already seeing exceptionally high prices at the pump, so how do you get businesses and individuals to support something like this when you're telling them you're going to be paying say five cents extra at the pump?

Janet Kavinoky: Well, certainly there is no question, at least in the minds of people who do transportation on a day-to-day basis, that we're under-investing in our infrastructure. Look at SAFETEA-LU that was passed in 2005. SAFETEA-LU passed at a level of $286.4 billion. When the Federal Highway administration said what was actually needed was $375 billion just to maintain the conditions and performance of our current highway and public transportation systems. We know from more recent studies by the National Academy of Sciences that we're falling short at least $50 billion a year as a country in terms of maintaining the systems that we already have. People need to understand and grasp that we've got a huge funding gap that we've got to deal with. Now, in all cases user fees like the gas tax might not be what need to be on the table. There are a lot of sources of funding, not just for highways and for public transportation, but remember we're talking about rails, we're talking about ports and air traffic control systems. So across the board we have to look at a range of options. Talking specifically about the user fees and the highway trust fund on fuel however, those have been the bedrock of funding our nation's highway infrastructure since 1956, since the interstate system. It's a system that's easily understood. But what we know, and probably most importantly, is that the gas tax hasn't been raised since 1993. It's lost a significant amount of its purchasing power. That 18.4 cents that people pay today at the pump is static. So as their gas prices have risen and as the costs of construction have increased up to 33 percent a year, the power of that fuel tax has declined down to about 12 cents. So we're not even covering the cost of inflation now in terms of those user fees.

Monica Trauzzi: But businesses will still see this in their bottom line.

Janet Kavinoky: I think everyone will see it in their bottom line, but remember infrastructure improvements provide productivity increases as well. Time is money for business. Without a transportation system that is fast, reliable, and cost effective they're losing money every day sitting idling in traffic. I'll give you an example. Tomorrow I'm taking delivery of a new Energy Star compliant refrigerator. I am going to get a window of time from the delivery company of about six hours. Well, in that six hours it's going to cost the U.S. Chamber some of my productivity because I'm not sure when it's going to come. I have to put off meetings. I have to sort of clear my schedule for that. In addition, the company that's delivering that refrigerator knows that its workers might have to sit in traffic, engines running, fuel being burned. They're not going to be as productive because they can't deliver as many refrigerators. So what we have to do as a country is realize we've got to make improvements that have a direct benefit.

Monica Trauzzi: You mentioned earmarks before and the president has suggested that Congress take another look at its priorities and redirect money from earmarks. Is that another way that they could get to this point of reworking the infrastructure of the nation?

Janet Kavinoky: Well, certainly we have concerns about some of the earmarks that are in different bills, but these are all priorities in different member's districts. And, in fact, if you look at all of the earmarks that were in SAFETEA-LU, the vast majority of them are for projects that were on state transportation improvement programs already. So you can't say all earmarks are evil. And, in addition, there's really no sense in trying to go back and undo what's been done. Those projects are being planned for. They're important to a lot of communities. What we can do going forward is try and make sense of the priorities as organizations. Whether it's Americans for Transportation Mobility or it's the U.S. Chamber, we want to make sure that funds are being used in a sensible, prioritized way.

Monica Trauzzi: How much of an impact did the Minnesota Bridge collapse have on this overall discussion? Did we know much before? If it didn't happen would we still be having these discussions?

Janet Kavinoky: If that didn't happen we absolutely wouldn't. And it's absolutely abominable that it takes a tragedy of those proportions to get Washington, to get the business community, to get the country talking about infrastructure. But if anything good is going to come of this it's we've got a focus on it and we don't want to lose it.

Monica Trauzzi: Critics of Oberstar's proposal say that since the U.S. is trying to implement alternatives to gasoline it makes no sense to construct a program based around a fuel that's essentially becoming obsolete, or they hope will become obsolete down the line. Is that a stretch or a valid argument? You know, if consumers are using less gasoline than less money would come out of this program.

Janet Kavinoky: Well, it's certainly a valid argument and it's a valid point to say we're trying to fund our infrastructure off of something that runs counter to what we want our energy policy to be. So no one is going to argue that we need to keep propping up a policy that promotes increased fuel use. But we have to be real about this. The reality is the penetration in the market of hybrid vehicles, of alternative fuel vehicles is very low. And several credible studies, including studies by the National Academy of Sciences has shown that it's going to be 20 years before there's an appreciable decline in the use of fuel. What that says is we need now to start planning for 20 years from now and start planning for different collection mechanisms for revenues, different kinds of user fees. But that doesn't mean that fuel taxes are dead.

Monica Trauzzi: How likely is passage of the transportation bill?

Janet Kavinoky: Of Mr. Oberstar's proposal?

Monica Trauzzi: Yes.

Janet Kavinoky: I certainly think that there's a high likelihood we're going to take a look at the way we spend funds on bridges. I think many of the policy aims are excellent. We haven't seen any legislation yet, so I can't speak to how likely I think it would be with the different financing mechanisms. But if it's any time to pass significant infrastructure legislation, whether it's Mr. Oberstar's bill or some other bills that have been passed in the Senate, this is an ideal time.

Monica Trauzzi: Have we gotten to the bottom of this yet? Do we really know what the status is of our nation's infrastructure at this point?

Janet Kavinoky: We don't, but I think that there's hope for that. Now, there have been countless studies, different organizations really trying to assess needs and, in fact, the chamber has just partnered with the Rand Corporation to do an assessment of infrastructure capacity as it relates to the economy. But in terms of transportation I will say this, in late December or early January the National Surface Transportation Policy and Revenue Study Commission, which in sort is called the 1909 Commission, named after the section of SAFETEA-LU in which it was created, will be coming out with its report. This commission is led by the secretary of transportation and has spent the better part of the last two years really assessing what the needs are. Once we have that assessment I think it's going to be up to all of us who work in this area to help educate the public about the needs and start forming some solutions to address them.

Monica Trauzzi: Looking ahead to the 2008 presidential elections, do you anticipate that this will continue to be a major issue or is it sort of in a die down?

Janet Kavinoky: You know, we'd be fooling ourselves if we thought that presidential candidates, on a daily basis, would be talking about infrastructure. I mean certainly issues of health care and the environment, energy, security, and obviously the Iraq war are going to headline a lot more of the presidential debates. But here's why it's important for the presidential candidates all to start thinking about infrastructure, because in the first nine months of their new term they are going to have to reauthorize SAFETEA-LU. I think the general consensus is that we need a new direction in transportation infrastructure in this country. As ranking member Micah has said we need a national strategy on transportation. Well, this next president is going to have the opportunity to create that national strategy and then to implement it. So they better be ready.

Monica Trauzzi: All right. We'll end it right there on that note. Thanks for coming on the show.

Janet Kavinoky: Thank you.

Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.

[End of Audio]

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