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AGC: User Fees are Path to Infrastructure Repair

July 24, 2018

The Associated General Contractors of America are supportive of long-term legislation proposed by the chairman of the House Transportation and Infrastructure Committee to address the nation’s aging infrastructure problem. The draft proposal includes a user-fee approach to fund infrastructure repair. AGC CEO Stephen Sandherr said the association is prepared to work with the chairman, leadership of Congress and the administration to ensure “this draft serves as the catalyst for enacting new, long-term legislation.”

A pilot program is proposed to demonstrate how a national per-mile user fee can be used to restore and maintain the long-term solvency of the Highway Trust Fund and reduce the backlog for surface transportation repair. A Highway Trust Fund Commission would be formed to study the nation’s highway system and prepare comments for submission by Jan. 15, 2021.

The plan calls for implementing a 15-cent-per-gallon tax on gasoline and a 20-cent-per-gallon tax on diesel that would be phased in over a three-year period. At the end of the period, fees would be indexed to inflation until they are eliminated in September 2028. In order to fairly portion the fee across roadway users, a wholesale tax of 10 percent is proposed on tires for adult size bicycles. Alternative fuels, like natural gas, would be taxed, as well as batteries for electric vehicles.

Other methods of raising funds for infrastructure repairs include grants of no less than $25 million each for specific projects, such as upgrades to ports, airports, rail and highways.

“This discussion draft does not represent a complete and final infrastructure bill. It is meant to reignite discussions amongst my colleagues, and I urge all members to be open-minded and willing to work together in considering real solutions that will give America the modern day infrastructure it needs,” Shuster said.

Said Sandherr in a statement released in reaction to the draft proposal: “Chairman Shuster has demonstrated wisdom and courage by outlining a series of infrastructure recommendations that will support meaningful improvements to the nation’s surface transportation systems for the next decade. In what is becoming all-too rare, the chairman has made a serious, substantive effort to identify fiscally responsible ways to pay for improvements to aging and over-burdened transportation, waterways and public buildings across the country.

“While we have concerns that his call to replace the current funding system with a new approach in 10 years could be politically difficult, he is right to assume that we need a user-fee approach that is better suited to the way people use our infrastructure.

“His concept will lead to marked improvements in the quality, efficiency and safety of the nation’s surface transportation systems and other public infrastructure. It will make American employers more competitive and successful by reducing the costs of coping with the chronic congestion, detours and delays that effectively serve as a tax on business. And it will help prepare our transportation system to accommodate the kind of technological improvements – including self-driving vehicles – that are likely to radically transform personal and commercial transportation for the years to come.”