A Fund Within a Fund

A Fund Within a Fund

A new concept is taking shape that would protect freight interests within the highway trust fund. On its face, the idea — to create a freight “sub-account” within the trust fund that would be paid for with a new but fair assessment on cargo — has merit. In contrast to the highway fund itself, the “sub-account” could not be raided to pay for mass transit or other non-freight projects.

Federal and state governments would decide how to spend the money through a new intermodal office at the Transportation Department, guaranteeing at least some of the funds would be directed to projects with national implications.

That the idea is gaining currency among freight stakeholders is both an expression of pent-up frustration with the goods movement being all but ignored in recent highway bills and a hope that the attention lavished on the issue in recent years will translate into something tangible.
Whether or not it eventually becomes reality, the very fact a sub-account for freight projects is being seriously discussed is an indication freight stakeholders believe the replacement of the disappointing SAFETEA-LU, which expires in September, represents their best chance in years to make real progress.

“Certainly, compared with the authorization that resulted in SAFETEA-LU, a lot more members of Congress are talking about the importance of supporting our freight infrastructure and making provisions in the next bill to do that,” said Leslie Blakey, executive director of the Coalition for America’s Gateways and Trade Corridors.

The momentum comes from the fact that freight has been all but ignored in recent highway bills, from worsening bottlenecks nationwide, and from growing recognition of surface transportation needs. A National Surface Transportation Infrastructure Financing Commission report in February said highway spending per mile has dropped by half since the 1950s and the fuel tax has lost a third of its spending power, leading to last fall’s $8 billion bailout of the National Highway Trust Fund.

The American Association of State Highway and Transportation Officials, an influential group because it spends the highway money, is calling for a $42 billion sub-account, an amount others say is not far off the mark. The areas requiring the greatest attention, it says, are highway interchanges, rail grade crossings and intermodal connectors — the links between ports and intermodal railheads and the highway system.

Half would be spent by the states and the other half by a new intermodal office within the DOT, an idea strongly supported by Rep. James L. Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee.

Oberstar told The JoC in March that he hopes to bring a new highway bill to the House floor by June 1, though he was less confident the Senate would move as quickly. Considering the

SAFETEA-LU was delivered two years late, others see things dragging out well beyond September, requiring one or more extensions before a replacement bill is finalized.

The idea of a freight sub-account, at least so far, is still on the table.

“We’re looking at it, and are certainly interested in moving freight better because there are so many choke points,” said Jim Berard, communications director for the T&I committee. “The surface transportation authorization bill is still being worked on, and we are not at this point going to make a commitment to adopt a given proposal. Perhaps we will do something like it in the bill, but we are a long way from making that decision.”

While there may be an emerging consensus among freight interests about the idea of a sub-account, where it gets tricky — no surprise — is how to pay for it in a way that’s fair. Not easy. International shippers understandably object to taxes on imports, containers or tapping customs duties, because those solutions would spare domestic freight.

Blakely’s group wants to tax beneficial cargo owners through a user fee, possibly in the form of a waybill tax of 1 percent of the cost of transportation. That may be equitable, but would represent a thorny collection problem because many truck moves are by private fleets, and many waybills themselves are now electronic.

The vehicle mileage tax proposed by the National Surface Transportation Infrastructure Financing Commission would involve monitoring every vehicle and creating more records than held by the IRS, according to the American Trucking Associations.

The best solution may be to start with something simple and then take the time to figure out through technical committees which of the more complex solutions might work in the long term. The simplest solution by far? Raise the 23.4 cents-per-gallon diesel fuel tax and use the increase to fund the sub-account.

Peter Tirschwell is senior adviser of The Journal of Commerce. He can be contacted at 973-848-7158, or at ptirschwell@joc.com.