As long as political ideologues continue to use the gasoline tax for purely partisan gain, the ability of federal and state governments to make meaningful transportation investments that improve mobility and strengthen the U.S. economy will be in jeopardy.
That’s the message American Road & Transportation Builders Association (ARTBA) President and CEO Pete Ruane delivered Feb. 9 to the 2006 “Governor’s Conference on Economic Development” in Madison, WI. The event was hosted by the Wisconsin Economic Development Association.
“Transportation is one of a few core services provided by governments that yield numerous tangible benefits for the American motoring public and business community,” said Ruane, who has more than 35 years of diversified experience in the economic development, transportation and construction fields.
“Competing in a 21st century global economy requires a renewed commitment by elected officials at all levels of government to provide the necessary financial resources to build a safe, efficient and reliable transportation system. This debate should be about investment priorities, not about politics.
“Wisconsin has traditionally been one of the most progressive states when it comes to planning and financing transportation improvement projects,” Ruane said. “It was disheartening to see the legislature and governor support a bill driven by political agendas that have nothing to do with transportation investment. The new law will limit Wisconsin’s ability to make the capital investments necessary to meet the demands of a growing population and economy.”
The 2005 Wisconsin Act 85 eliminated the annual increases in Wisconsin’s tax rate after April 1, 2006. Fuel tax indexing was implemented in 1985 to allow the main revenue source of the transportation to offset inflation. The new law will mean $1.8 billion in lost transportation investment revenue for Wisconsin over the next 10 years, ARTBA said.
The ARTBA executive said Wisconsin lawmakers should be considering other means to finance transportation projects, such as sales tax, general fund revenues and tolling, to make up the projected shortfall. Ruane noted the transportation challenges ahead, given recent data showing a 22 percent increase in the cost of materials used for highway and street construction over the past two years.
“Construction costs are going up much faster than highway construction budgets,” he said. “The surface transportation law approved by Congress and the President last year increases federal funding for highways about 4.5 percent per year. This is only a fraction of the recent rise in construction costs. State governments will need additional financial resources to move forward on transportation projects that could improve road safety and reduce traffic congestion.
Ruane emphasized the link between transportation investment and economic development in Wisconsin, pointing out that 92 percent of new and expanding manufacturers in the state during the 1990s located within 5 mi. of a key state highway.
The importance of transportation investment to the economy is not lost on the nation’s largest business group either, Ruane said.
He cited the November 2005 U.S. Chamber of Commerce National Foundation “Future Highway & Public Transportation Finance Study,” which assessed the nation’s transportation needs and outlined possible financing mechanisms to boost investment. At the federal level, it documented an annual $23-billion shortfall between current investment levels and what is needed to maintain road and bridge conditions.
An additional $48 billion annually at the federal level would be necessary to improve conditions, the report found. The Chamber report highlighted the need for a permanent adjustment to the federal motor fuels excise as a user fee, including indexing, and other policy changes to help meet federal obligations for transportation investment over the next 10 years.
Ruane also said there is strong support by voters across the country for boosting transportation investment. In the past two elections, voters have approved 43 ballot initiatives aimed at improving state and local transportation systems.
“It is clear voters are way ahead of elected officials and are looking for relief from worsening traffic congestion that robs them of quality time with their families,” Ruane said. “Despite record high gasoline prices, the American public strongly supports proposals for increasing investment as long as the revenue generated is used exclusively for transportation improvements.”
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