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Infrastructure

BABs, Gas Taxes, More Tolls on the Table

Transportation and business leaders on Wednesday discussed controversial solutions for funding American infrastructure, including Build America Bonds, gasoline tax increases, and the wider use of tolling.

Tom Donohue, president and chief executive officer at the U.S. Chamber of Commerce, opened up the chamber's First Annual Transportation Infrastructure Summit by pushing for an increase in the 18.4 cents per gallon federal gas tax. House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., preferred a more local approach.

"Raising the gas tax is really tough," Shuster said, when pressed about the prospects of a gas tax increase in this Congress.

Shuster said no revenue increase would be easy to get at the federal level, but one major step that could help would be giving states more flexibility to toll interstate highways. Such proposals have been highly controversial each time they are introduced, and there has been significant backlash against plans to toll I-95 in North Carolina and Virginia.

"We ought to be looking at giving the states more flexibility," Shuster said. "I don't rule anything in, I don't rule anything out. Everything needs to be on the table."

Donohue argued that a gradual, phased-in gas tax increase could help keep the highway trust fund, a key source of backing for some bonds, stay solvent beyond its current projected insolvency in 2015 and give lawmakers a chance to come up with a new way to fund transportation. Businesses recognize the importance of infrastructure and are ready to pay higher fees, he said.

"Money is not going to magically start pouring into the trust fund," the chamber leader told a large gathering of business leaders. "We can help bridge the gap."

Both men then headed to Capitol Hill for Shuster's first hearing as committee chairman, where former Pennsylvania Gov. Ed Rendell made a push for BABs and Donohue drew a rebuke from the committee's previous chairman.

Citing the tremendous popularity of the now-defunct BAB program, Rendell said the benefits of job creation and economic development outweigh the cost of BABs. He tried to head off a negative response from Republicans, who have not been supportive of a revival of the program, by pointing out that the federal government would bear a relatively small cost from subsidizing the debt.

"The states still pay the majority of the cost of borrowing," Rendell said.

Rendell also expressed support for a national infrastructure bank, saying that it has worked for the European Union and that a $5 billion investment would generate $50 billion of borrowing capacity for the states.

Former committee chair John Mica, R-Fla., blasted Donohue for his "myopic" gas tax pitch.

"Rather than focus on innovation and investment from the private sector, cutting wasteful programs and red tape, he championed tax increases," Mica said in a statement issued shortly after Donohue's testimony. "Unfortunately, Mr. Donohue has lost touch with the business people he represents, and it would be my hope that he can seek other opportunities for employment as soon as possible."

The debate sets the stage for a conversation about how to fund the nation's transportation infrastructure after the current surface transportation funding law expires Sept. 30, 2014. Shuster said he is talking with Senate Environment and Public Works Committee Chair Barbara Boxer, D-Calif., and there will be a series of exploratory hearings this year before real work begins in 2014.

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