DOT Hit By ARTBA Road Rage

WASHINGTON - The U.S. Department of Transportation has misled the public and lawmakers by claiming that the highway trust fund has been depleted by declining gas tax revenues, the American Road and Transportation Builders Association charged in a memo to congressional staff and reporters Friday.

The fund has shrunk mostly because retail taxes on truck sales plummeted during the year, the group said after conducting its own analysis of federal data.

"The U.S. DOT misused that data to suggest the federal motor fuels tax can no longer finance federal investments in highway and mass transit improvements," the memo said. "The data in fact suggest that the federal motor fuels taxes can remain a viable source of revenues for highway investments for the foreseeable future. The trust fund's real problem is ... the economic slowdown and the fact the federal motor fuel tax rates have not been changed since 1993."

No one in the transportation community would speculate on why the U.S. DOT misrepresented the data, but the department has opposed increasing the gas tax and has pushed instead for more private investment in highway projects.

The analysis was drafted in response to the Federal Highway Administration's statement on Dec. 12 that Americans drove more than 100 billion fewer miles between November 2007 and October 2008 than the same period a year earlier, "the largest continuous decline in American driving in history."

Decreased traffic volume and more fuel-efficient vehicles have jeopardized the highway trust, DOT said. The fund relies mostly on fuel taxes for revenues, which are then used to make outlays to states for transportation projects. Highway account revenues were $3 billion lower in fiscal year 2008 than in fiscal 2007.

"The way we finance America's transportation network must also change to address this new reality, because banking on the gas tax is no longer a sustainable option," said DOT Secretary Mary E. Peters.

Economists for the group ARTBA found contradictory information. The group claimed in its memo that the FHWA's statement "seriously distorts the facts."

Federal gasoline tax revenues declined only 0.3% in fiscal 2008 over fiscal 2007, accounting for about 2% of the total drop in highway account revenues, the group said. Diesel fuel revenues actually showed a year-over-year increase of about $256 million. Revenues from gas and diesel fuels did slow during the second half of the fiscal year as gasoline prices went up and traffic volume fell. That decline is a serious concern, ARTBA said.

But the drop in the second half of fiscal 2008 was "not enough to completely eclipse the increase in the first part of the year," said Dave Bauer, ARTBA's senior vice president of government relations.

By contrast, heavy truck taxes - mainly a 12% tax on retail sales of trucks and trailers - dropped more than $2.4 billion in fiscal 2008, causing about 80% of total lost highway account revenue. The remaining 20% of lost revenue was caused by a complicated tax revenue transfer to airport and general funds.

ARTBA used year-end revenue data compiled by the Bureau of the Public Debt under the Treasury Department "to get a full understanding as we look at the trust fund's outlook at the year ahead," Bauer said. "Lo and behold, the Treasury data didn't match [the FHWA's] claims."

The Federal Highway Administration responded to the ARTBA data yesterday by insisting that there is a connection between people driving less and the shortfall. Earlier this year, Peters announced the fund was dry and outlays would be rationed. That was prevented by a transfer of funds by Congress into the highway trust.

"The bigger issue is relying on the consumption of fossil fuel to pay for our transportation priorities," said Ian Grossman, FHWA spokesman.

Grossman said Peters has "always talked about moving away from the gas tax in a very strategic, planned way," and that "to raise the gas tax would be wrong."

Bauer agreed that multi-pronged financing should be used in the next transportation bill in order to revitalize and give long-term security to transportation funding.

"I don't think that [the analysis] in any way takes away from the need to look for non-traditional ways to finance improvements, such as public-private partnerships," Bauer said. "What this does more is say that let's not just make claims about the viability of the gas tax based on our assumptions."

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