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- Bonus Quote of the Day
Congress is another week closer to the May deadline for re-authorizing highway and mass transit spending.
What that means: if lawmakers don’t pass an authorization bill before May ends, then the Highway Trust Fund would be paying out money to the states at a much slower pace than normal, which would hinder or halt projects during the spring and summer construction season.
This week most of the Obama administration’s transportation officials will be testifying on Capitol Hill at appropriations hearings.
Tuesday the Senate Commerce, Science and Transportation Subcommittee on Aviation Operations, Safety and Security hears from Melvin Carraway, acting administrator of the Transportation Security Administration about the Obama administration’s Fiscal Year 2016 TSA budget request and issues such as the effectiveness of the TSA’s Pre-Check program for trusted travelers.
The chairwoman of the panel is Sen. Kelly Ayotte, R- N.H., who is up for re-election in 2016.
Meanwhile the Federal Aviation Administration chief Michael Huerta will testify to the House appropriations subcommittee on Commerce, Justice, Science, and Related Agencies.
Also Tuesday, the House Transportation and Infrastructure Committee gets the state and local perspective from North Carolina Gov. Pat McCrory, Salt Lake City Mayor Ralph Becker, and Wyoming Department of Transportation director John Cox.
On Wednesday, Transportation Secretary Anthony Foxx testifies before the Senate Appropriations Subcommittee on Transportation.
Finally on Thursday, the House Appropriations Subcommittee on Transportation hears from Gregory Nadeau, acting head of the Federal Highway Administration, Therese McMillan, acting head of the Federal Transit Administration, National Highway Traffic Safety Administration chief Mark Rosekind, and Maritime Administration chief Paul Jaenichen.
The administration witnesses are sure to make the case for budget certainty and for a long-term infrastructure funding solution. The latter is looking less and less likely in 2015.
This week the 29 West Coast ports began their recovery from a damaging nine-month labor dispute that led to work slowdowns. Container ships lined up off shore as they waited to dock and unload their containers.
We looked at the need for the ports to regain the trust – and patronage—of shippers, some of whom have diverted ships to East Coast, Mexican, and Canadian ports.
The theme of protectionism ran through a couple of stories this week, with our look at the Buy America requirement for infrastructure projects – even for components as small of four-inch steel valves on a the Kosciuszko Bridge project in New York City.
(Kosciuszko, by the way, was a Polish military officer and engineer who designed fortifications along the Hudson River and helped the colonies win their independence.)
Jim Whitty is the evangelist for Oregon’s pioneering road user fee pilot program which begins on July 1.
Other states are watching how Whitty and Oregon conduct a 5,000-vehicle pilot program in which volunteers will pay a road usage charge of 1.5 cents per mile for the number of miles they drive, instead of the fuel tax. Drivers will get a credit on their bill to offset the fuel tax they pay.
Whitty, manager of the Office of Innovative Partnerships & Alternative Funding for Oregon’s Department of Transportation, is a wry, self-deprecating salesman for the program.
The shift from the gasoline tax to mileage-based user fees which Oregon is launching this year, which California will be testing in 2017, and which other states may follow isn’t just a way for states to pay for transportation infrastructure, it’s a business opportunity for vendors such as Verizon Telematics and Sanef.
Telematics, data collection, and information technology companies envision a world in which, if drivers agree to turn over their driving data to the vendor, they get the benefits of:
Oregon’s pilot program involves only 5,000 vehicles and has three vendors running it. The state now is subsidizing those vendors.
Here’s one recent and relatively small illustration of how far-reaching are the Buy America rules that have governed transportation infrastructure projects since 1978.
The state of New York is about to replace the Kosciuszko Bridge, built in 1940, which spans the Newtown Creek between the New York City boroughs of Brooklyn and Queens.
The bridge carries more than 160,000 vehicles a day and is a chokepoint on the Brooklyn-Queens Expressway, part of Interstate 278.
Here are more excerpts from our interview with Harvard Business School finance professor Mihir Desai on the movement toward using revenues from taxing overseas profits to fun infrastructure.
It sounds like you would agree with part of what Rep. Delaney is proposing. Tax past earnings, but not future earnings?
What’s really important to me is that we get the corporate tax on a good footing, and it’s in a very bad place… We have the highest statutory rate… we’re not raising much money, and our international provisions are extremely complex and raise very little money.
And our system is very distinct from the rest of the world which makes [the United States] an inhospitable place for our companies to be incorporated, as we’ve seen via the inversion wave.
My primary concern is not about the stock of previous earnings. My primary concern is: how do we use this as an opportunity to get the corporate tax on a good footing?
Last year President Obama said in his budget proposal that he wanted to use revenue raised from overhauling taxes on corporations to pay for infrastructure.
This year’s budget proposal will fill in the details of how Obama proposes to do that.
Essentially, according to administration officials, he seeks to impose a tax on foreign earnings that U.S. companies have earnings stashed overseas, ending the deferral that they now use to postpone paying taxes on that money.
We won’t know for months what, if anything, of this proposal will emerge from Congress. But momentum does seem to be growing to use overseas profits to help pay for highways and other infrastructure.
In his Fiscal Year 2015 budget last March, President Obama said he wanted to use “one-time transition revenue resulting from business tax reform” to pay for highways, roads and transit systems.
Now Rep. John Delaney, D- Md., has introduced a bill that fills in details of a concept about which Obama, House Speaker John Boehner, and several others have been thinking aloud: pay for infrastructure with tax revenue from repatriated profits of U.S. corporations.
But Delaney said his bill is “much more comprehensive” than what Obama sketched out last March.
Delaney’s measure would impose an 8.75 percent tax on overseas profits and would, he said, raise $170 billion, more than enough to both fill the shortfall in the Highway Trust Fund for six years and to create a new $50 billion infrastructure funding entity.
It would also give Congress what he called “a nice long runway” for lawmakers to devise ways to cope with the anticipated decline in revenues from taxes on gasoline and diesel fuel.
Two sharply contrasting views of transportation policy were on display in Washington Tuesday.
Sen. Bernard Sanders, I- Vt., announced his Rebuild America Act, a $1 trillion, five-year plan to repair and build transit systems, bridges, highways, railroads, ports, the national electric power grid, and national parks.
He did not include financing proposals in the bill.
“What I wanted to do was focus on the need to build the infrastructure and not start the debate right away on how we fund it. There are many ways to fund it and honest people can have honest differences of opinion,” Sanders told reporters.
Sanders serves on the Environment and Public Works Committee which will be working on a highway reauthorization bill this year. He was skeptical about proposals to use repatriated profits of U.S. corporations now held overseas to pay for infrastructure.
He also said Sen. Barbara Mikulski, D- Md., the ranking member of the Appropriations Committee, is a co-sponsor of his bill.
Meanwhile, the limited-government, free-enterprise think tank, the Competitive Enterprise Institute, issued its 2015 legislative agenda.
In its annual budget and economic forecast Monday the Congressional Budget Office reminded members of Congress of some of the basics that set the bounds of the infrastructure debate:
What was not made clear in President Obama’s State of the Union speech Tuesday night was whether he’d be willing to sign a stand-alone bill to use profits of U.S. corporations now held overseas to pay for infrastructure.
Would he instead insist on a bill that included some of the tax increases that the White House sketched out over the weekend such as higher tax rates on dividends and capital gains?
Obama said Tuesday night that Congress must “close loopholes so we stop rewarding companies that keep profits abroad, and reward those that invest in America.”
The idea of using an overhaul of corporate taxes to come up with revenue for infrastructure was an element of his $302 billion Grow America Act unveiled last April.
But it’s an open question whether the president would sign a bill along the lines of the Partnership to Build America Act sponsored by Rep. John Delaney, D-Md. and Rep. Mike Fitzpatrick, R- Pa.
Sen. Roy Blunt, R-Mo., and Rep. Michael Bennet, D- Colo. have introduced a companion bill in the Senate.
The measure would let U.S. companies repatriate some of their overseas profits tax free if they invested them in infrastructure bonds.
Despite later in the speech lamenting the use of “gotcha” moments in politics, Obama took an opportunity to ding the proponents of the Keystone XL oil pipeline by saying “let’s set our sights higher than a single oil pipeline; let’s pass a bipartisan infrastructure plan that could create more than 30 times as many jobs per year” as the Keystone XL project.
Absent from Obama’s speech was any mention of the simplest, but politically unpalatable, expedient of raising the gasoline tax to pay for a new infrastructure bill. Obama did not join the chorus of those saying, ‘why not raise gasoline taxes since the price at the pump is now so low?’
As infrastructure advocates wait for the repatriation-for-infrastructure details to be worked out, their goals haven’t changed.
As American Road & Transportation Builders Association president Pete Ruane said Tuesday night, what they seek is “a long-term revenue stream to ensure state governments have the reliable federal partner they need to make overdue improvements to America’s roads, bridges and transit systems.”
And Patrick Jones, CEO of the International Bridge, Tunnel and Turnpike Association, said Obama and Congress ought to give states “greater flexibility to meet their individual transportation funding needs—including the right to use tolling on their existing Interstate highways for the purpose of reconstruction.”
“We won’t pass a gas tax increase,” House Ways and Means Committee chairman Rep. Paul Ryan told reporters Thursday at the Republican retreat in Hershey, Pa.
That was almost immediately after he said, “We would like to have a long-term highway bill, but we’ve got to see how we can for pay it.”
Ryan left the door open to a corporate tax overhaul that might raise revenue for infrastructure, an idea which last year he said has merit.
So, for the major players on the Republican side, here’s an updated scorecard on their recent comments on infrastructure financing:
This week we asked Matthew Click, vice president and director of priced managed lanes for HNTB, an infrastructure design and construction management company, what he thinks will be the most interesting place in country in 2015 to watch for development of toll lanes and congestion pricing.
Click’s choice: the San Francisco Bay area.
Here are the points he made: Full story
The week’s marquee event in Washington is the 94th annual meeting of the Transportation Research Board, a five-day extravaganza of panel discussions, research presentations, and speeches by government officials, corporate leaders, and academic and think tank experts.
On the are nearly 750 workshops and sessions, on topics ranging from “Self-heating Electrically Conducting Concrete for Pavement De-Icing” to “Understanding the Gender Gap in Urban Biking.”
At the TRB meeting, Transportation Secretary Anthony Foxx will forecast the year ahead for transportation and also discuss opportunities and challenges facing America’s transportation network over the next thirty years.
Also on Monday’s TRB agenda is a presentation from Timothy Butters, acting head the Pipeline and Hazardous Materials Safety Administration, Scott Darling, acting head of the Federal Motor Carrier Safety Administration, and other transportation officials who will explain how they go about the federal rule-making process for various modes of transportation.
At the TRB annual meeting, National Transportation Safety Board Acting Chairman Christopher Hart and his colleagues unveil the NTSB’s Most Wanted List of transportation safety improvements for 2015.
Last year’s NTSB list included banning the use of cell phones and other portable electronic devices by anyone while driving a car or a truck, or while piloting a plane, a ship, or a train.
Tuesday’s TRB meeting features a session with state transportation department chiefs on steps they are taking to fund major capital projects in light of the continued uncertainty of federal funding. Featured speakers include Anthony Tata of North Carolina, Charles Zelle of Minnesota, and Joan McDonald of New York.
Thursday and Friday
As the TRB meeting continues, the World Bank is staging its own transportation event, Transforming Transportation: Smart Cities for Shared Prosperity. It features policy makers and experts from several countries including a panel discussion on The Role of Technology in Fostering Sustainable Mobility and Inclusive Growth, with Robin Chase, Founder of Zipcar, and others.
Capping a week in which some Republicans, most notably Senate Finance Committee Chairman Sen. Orrin G. Hatch, indicated an openness to a possible increase in the gasoline tax, Rep. Tom Cole, R-Okla., said Friday that raising the gasoline tax isn’t what Congress should do to raise revenue for infrastructure.
Asked on C-Span’s Washington Journal whether low gasoline prices – at their lowest levels in four years – make it easier now to pass a gasoline tax increase, Cole replied, “Most of my constituents would say, ‘Don’t take away the benefits of lower prices.’”