[Senate Hearing 117-19]
[From the U.S. Government Publishing Office]
S. Hrg. 117-19
LONG-TERM SOLVENCY OF THE HIGHWAY TRUST FUND: LESSONS LEARNED FROM THE
SURFACE TRANSPORTATION SYSTEM FUNDING ALTERNATIVES PROGRAM AND OTHER
USER-BASED REVENUE SOLUTIONS, AND HOW FUNDING UNCERTAINTY AFFECTS THE
HIGHWAY PROGRAMS
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HEARING
before the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
APRIL 14, 2021
__________
Printed for the use of the Committee on Environment and Public Works
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
44-757 PDF WASHINGTON : 2021
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
THOMAS R. CARPER, Delaware, Chairman
BENJAMIN L. CARDIN, Maryland SHELLEY MOORE CAPITO, West
BERNARD SANDERS, Vermont Virginia,
SHELDON WHITEHOUSE, Rhode Island Ranking Member
JEFF MERKLEY, Oregon JAMES M. INHOFE, Oklahoma
EDWARD J. MARKEY, Massachusetts KEVIN CRAMER, North Dakota
TAMMY DUCKWORTH, Illinois CYNTHIA M. LUMMIS, Wyoming
DEBBIE STABENOW, Michigan RICHARD SHELBY, Alabama
MARK KELLY, Arizona JOHN BOOZMAN, Arkansas
ALEX PADILLA, California ROGER WICKER, Mississippi
DAN SULLIVAN, Alaska
JONI ERNST, Iowa
LINDSEY O. GRAHAM, South Carolina
Mary Frances Repko, Democratic Staff Director
Adam Tomlinson, Republican Staff Director
C O N T E N T S
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Page
APRIL 14, 2021
OPENING STATEMENTS
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware.. 1
Capito, Hon. Shelley Moore, U.S. Senator from the State of West
Virginia....................................................... 4
Lummis, Hon. Cynthia M., U.S. Senator from the State of Wyoming,
prepared statement............................................. 95
WITNESSES
Kile, Joseph, Ph.D., Director of Microeconomic Analysis,
Congressional Budget Office.................................... 5
Prepared statement........................................... 8
Response to an additional question from Senator Carper....... 23
Basso, Jack, Chair, Mileage-Based User Fee Alliance.............. 24
Prepared statement........................................... 26
Hendren, Patricia G., Ph.D., Executive Director, Eastern
Transportation Coalition....................................... 44
Prepared statement........................................... 46
Poole, Robert, Director of Transportation Policy, Reason
Foundation..................................................... 50
Prepared statement........................................... 53
Shinkle, Douglas, Transportation Program Director, National
Conference of State Legislatures............................... 59
Prepared statement........................................... 62
Response to an additional question from Senator Inhofe....... 74
ADDITIONAL MATERIAL
Letter to:
U.S. Senator Charles Schumer et al. from NATSO et al., April
9, 2021.................................................... 83
U.S. Representative Peter DeFazio et al. from the American
Association of State Highway and Transportation Officials
et al., April 13, 2021..................................... 103
Senators Carper and Capito from the Cato Institute, April 19,
2021....................................................... 106
Senators Carper and Capito from the Bipartisan Policy Center,
April 12, 2021............................................. 110
Senators Carper and Capito from the National Association of
Manufacturers, April 28, 2021.............................. 113
Senators Carper and Capito from the National Stone, Sand &
Gravel Association, April 14, 2021......................... 115
Statement for the Record from the American Association of State
Highway and Transportation Officials, April 14, 2021........... 117
A Practical Analysis of a National VMT Tax System, prepared by
the American Transportation Research Institute, March 2021..... 125
Executive Summary, A Practical Analysis of a National VMT Tax
System, prepared by the American Transportation Research
Institute, March 2021.......................................... 177
Statement of the American Trucking Associations, April 14, 2021.. 178
VMT Talking Points, the American Trucking Associations........... 187
Statement of the American Truck Dealers, April 14, 2021.......... 188
Statement for the Record, the International Bridge, Tunnel and
Turnpike Association, April 14, 2021........................... 189
Statement for the Record, the NAFA Fleet Management Association,
April 14, 2021................................................. 193
Road Usage Charge at the National-Scale: Recommendations for
Building a Solid Foundation, Oregon Department of
Transportation, April 19, 2021................................. 197
Written Statement, the State of Washington Transportation
Commission, April 14, 2021..................................... 201
LONG-TERM SOLVENCY OF THE HIGHWAY TRUST FUND: LESSONS LEARNED FROM THE
SURFACE TRANSPORTATION SYSTEM FUNDING ALTERNATIVES PROGRAM AND OTHER
USER-BASED REVENUE SOLUTIONS, AND HOW FUNDING UNCERTAINTY AFFECTS THE
HIGHWAY PROGRAMS
----------
WEDNESDAY, APRIL 14, 2021
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The Committee, met, pursuant to notice, at 10:08 a.m. in
room 406, Dirksen Senate Office Building, Hon. Thomas R. Carper
(Chairman of the Committee) presiding.
Present: Senators Carper, Capito, Cardin, Whitehouse,
Merkley, Kelly, Padilla, Inhofe, Cramer, Lummis, Sullivan, and
Ernst.
OPENING STATEMENT OF HON. THOMAS R. CARPER,
U.S. SENATOR FROM THE STATE OF DELAWARE
Senator Carper. I was just mentioning the longest title I
have ever seen in a piece of legislation, and frankly, one of
the most timely, and I think, interesting hearings that we are
going to have in some time.
I mentioned that we hope and expect to have our water
legislation out on the floor a week from now, and I think we
are going to have a vote today on another nominee out of our
Committee, the nomination of Brenda Mallory, who came out of
Committee on a bipartisan vote.
She has been nominated to be the Chair of CEQ, and I
understand that somebody told me earlier today that 13 past CEO
and EPA appointees, 13 past Republican CEO and EPA appointees,
including a former CEQ chair and four different Republican EPA
administrators publicly praised and urged her confirmation.
They include Bill Reilly, Christine Todd Whitman, Michael
Leavitt, Steve Johnson, and James Kavanaugh.
She has also been endorsed by, I think, since last we met,
by the U.S. Chamber of Commerce. I would ask that you all keep
that in mind when we vote later today.
When I was new in the Senate, some of us, I knew when I got
here, Jim Inhofe and I served together in the House. A couple
of others had served, too, Chuck Schumer and I, Dick Durbin and
I, a number of us had served together.
One of the people I didn't, and one of the main things I
decided early to do in the Senate is to the folks I would never
met, didn't serve with in the House, didn't serve with as
Governor, I decided to just go have a cup of coffee with them
in their offices. So I would ask one after the other, after the
other, and make my rounds.
One of the last people I asked this was a guy who sat right
behind me on the Senate floor named Ted Kennedy. I told him
what I was doing, getting to know people I didn't know, and he
said, ``Why don't you come to my hideaway? We will have lunch
together.'' I said, ``Really?'' and he said ``Yes.'' Two weeks
later, we were in his hideaway, and we had lunch together.
One of things I asked him then was, I said, ``Why is it
that all these Republicans, why do all these Republicans want
to be your cosponsor on their big bills? Why is that?'' He said
these words. He said, ``I am always willing to compromise on
policy, never willing to compromise on principle.'' Think about
it. Always willing to compromise on policy, never willing to
compromise on principle.
So, I want to start this hearing thinking about, we are
going to have to compromise on surface transportation
legislation as we go along, with our colleagues on the
Committee and the Senate and in the House and with the
Administration. But there are some principles I hope we can
agree on that we won't vary far away from, and one of those is
that roads, highways, and bridges in this country are in bad
shape. Something needs to be done about it, and we are among
the most responsible people for making that happen.
The second principle is that climate change is real. We
need to combat it; we need to adapt to it. We need to build
back better. We need to focus on resilience with all the
extreme weather that we are facing.
The third principle would be that things that are worth
having are worth paying for. Some people describe me as a
recovering Governor. I am also a recovering State treasurer. I
was the treasurer of a State with the worst credit rating in
the country when I was 29 years old, and I have always believed
that things worth having are worth paying for.
The last principle I hope we can adhere to is those who use
our roads and highways and bridges have the responsibility to
help pay for them.
Now, there are, in my State, and I am not sure, but in your
States, in my State, there are a number of major pay fors for
roads, highways, bridges. Gas and diesel tax, vehicle
registration, sales taxes when people buy vehicles, driver's
licenses. The 800 pound gorilla forever has been the gas and
diesel tax for decades. But I would add to that the times are
changing.
I don't think Senator Stabenow is here yet, but about a
dozen or so years ago, she and I were at the Detroit Auto Show.
She was kind enough to introduce me to Mary Barra, who is, I
think, just about to become CEO of GM.
One of the GM products that year was selected, I think, as
a car of the year, it was a Chevrolet Volt. Chevrolet Volt,
interestingly, was a hybrid. It got 38 miles on a charge.
Thirty-eight miles on a charge, and after that, it was a
traditional hybrid, you are on gasoline, but anyway, it was the
car of the year.
That was then, and I went out during recess while we were
on break with my oldest son. We went out to buy a vehicle to
replace my 2001 Chrysler Town and Country minivan, which has
almost 600,000 miles on it. We drove, among other things, a
Chevrolet Volt. It gets 300 miles on a charge.
We also drove a Ford Mustang that gets over 300 miles on a
charge. Ford is about to put out an F-150 pickup truck, all
electric. I thought I would never see the day that we have an
electric F-150 truck, but it is a top selling vehicle in the
country, as you know.
GM says they are not going to be selling, building and
selling any gas or diesel powered vehicles after 2035. They are
going to phase them out. Ford is expected to match or better
that.
Tesla, we drove some Teslas during the break. One of them
is a Y model that gets 350 miles on a charge. There is another
vehicle there that we took a look at that gets over 400 miles
on a charge.
Not everybody's into electric. We have folks at Toyota, a
whole division of their company that is called Mirai, that is
Japanese for future. They are focused on fuel cells, hydrogen
and fuel cells. The waste product that comes out of that
combination is water that you can drink.
GM and Honda are partnering up on fuel cells as well, and
there is a South Korean car company, Hyundai, that apparently
has a whole division of their company that focuses on fuel
cells. They use hydrogen, and they are expected to use a lot of
it in the years to come.
Gas and diesel revenues, our traditional bread and butter
for building roads, highways, bridges, maintain them, are not
going to dry up and go away overnight. We are told that the
average number of years a vehicle has on the road is about 15
years, so we are going to be using gas and diesel for some
time, but by less going forward.
I think it was Stephen Stills, Buffalo Springfield, who
once sang ``something's happening here, just what it is, ain't
exactly clear,'' but I think it is becoming clear what's going
on. We have the opportunity to get ahead of it or to get behind
it. We need to track the transportation bill, surface
transportation bill, that enables us to get in front of what is
happening here.
The question is, will the next generation of vehicles be
built here, will they be designed here, manufactured here, sold
here? Or will they be built other places around the world? Will
they help us in the battle against climate change, or not?
Will we look this adversity in the face, climate change and
all, and instead of just finding despair, find opportunity? My
hope is that we will find opportunity, and that we will seize
the day. Part of that is figuring out how to build the surface
transportation system of the future, and the ways it affects
resilience, climate change, and our needs to move ourselves and
our goods around the country in cost effective, safe, and
climate friendly ways.
With that, I would ask unanimous consent that my written
statement be inserted for the record.
I welcome everybody again. This is, I think, an enormously
important, enormously important hearing and will help us to see
the future more clearly and be ready for it. Thank you.
Senator Capito.
[The prepared statement of Senator Carper was not received
at time of print.]
OPENING STATEMENT OF HON. SHELLEY MOORE CAPITO,
U.S. SENATOR FROM THE STATE OF WEST VIRGINIA
Senator Capito. Thank you, Mr. Chairman, for calling this
hearing today, and for your ongoing commitment to this
bipartisan process for the surface transportation
reauthorization bill.
I would also like to thank our witnesses for joining us
here today. We look forward to hearing from you regarding the
current status of the Highway Trust Fund and recommendations
for funding and financing solutions to address the national
transportation infrastructure needs of our Nation, many of
which our Chairman just spoke about.
Passing a bipartisan surface transportation reauthorization
bill continues to be my top priority as the Ranking Member in
this Committee. Our Committee has a strong record of developing
these bills in a bipartisan manner, and we are in the process
of coming together once again to develop a bill that includes
input from both parties and the stakeholder community.
From my perspective, this bill must enable long-term
investment in our Nation's roads and bridges, but do so in a
fiscally responsible manner, without partisan or lightning rod
pay fors that could sink a bipartisan bill.
We need to give flexibility. I spent the last 2 weeks
traveling my State, as many of us did, talking with our road
and transportation sector. Flexibility is absolutely critical
to our States and communities to address their unique
transportation needs. The flat areas of Oklahoma are nothing
like the mountains of West Virginia, so if you are going to try
to put us both in the same bucket, it could be very
constraining.
We need to keep the Federal interest focused on providing a
connected network of roads and bridges to ensure that all
communities and the economy can thrive, and also, safety is
critical in our bridges.
We need to facilitate efficient delivery of projects so
that we can improve the safety and resiliency of our surface
transportation system, and we need to drive innovation.
Innovation is critical to help pave the way for the systems of
the future.
I am willing to work on all of these with all of my
colleagues to get these goals into our bills. We need to have
that give and take of the bipartisan process to produce
legislation that can make it to the President's desk.
It will take work from all levels of government and the
private sector to meet the Nation's transportation
infrastructure needs, and we will have to take an all hands on
deck approach.
The Highway Trust Fund, which is the source of funding for
Federal surface transportation projects, is once again, as it
has over the last several years, facing a shortfall. This
shortfall must be addressed for us to move forward with the
bill. We have to work together here to find this bipartisan,
long-term solution for the trust fund shortfall. All of us who
use our surface transportation system should contribute to its
upkeep and expansion. Today, that is not the case with all of
the users.
We should consider the unique impacts on certain Americans,
including those in rural areas and lower income individuals,
and we should try to minimize administrative and cost burdens.
We should also try to provide States and other non-Federal
partners with options to use various financing tools.
This is not an easy problem to solve. I am willing to
consider various solutions so that we can discuss how to pay
for our Nation's infrastructure.
Since our Committee last met, President Biden has proposed
a type of pay that I have cautioned against in the past. I am
concerned about the effect that the tax increases proposed by
the Administration will have on our Nation's growth,
particularly coming out of this pandemic.
I look forward to hearing from our witnesses today on an
array of solutions and innovative approaches to raise revenue
for the transportation needs across the Nation that we can
achieve together.
I am committed to working with all of my colleagues both
here in the Committee and in the Senate in general and across
the Capitol, and with the Administration to see that we can get
there, where we need to be.
Thank you, Mr. Chairman, and I yield the balance of my
time.
Senator Carper. Senator Capito, thanks. Thank you very,
very much.
I think now we will have the opportunity to meet and greet
our witnesses. We are blessed with this panel today. I had a
chance to meet in person a couple of them, so thanking those
that are here today in person and those that are joining us
virtually. We very much appreciate your participation.
I want to thank our staffs, both the minority and majority
side for bringing together an excellent team of witnesses.
Let me start by introducing Joe Kile. Mr. Kile is the
Director of Microeconomic Analysis at the Congressional Budget
Office, CBO.
Mr. Kile, I ask of you, go ahead and please proceed with
your statement at this time. Thank you.
STATEMENT OF JOSEPH KILE, PH.D., DIRECTOR OF MICROECONOMIC
ANALYSIS, CONGRESSIONAL BUDGET OFFICE
Mr. Kile. Thank you, and good morning, Chairman Carper,
Ranking Member Capito, and members of the Committee. Thank you
for inviting me to today's hearing.
I will briefly touch on three points. First is the status
of the Highway Trust Fund. Second is some options for spending
on our highways, and third is options for generating revenues
for the trust fund.
For more than a decade, the Government has been spending
more each year from the Highway Trust Fund than the revenues
collected for it. Those revenues come mostly from taxes on
gasoline and diesel fuel, as well as various taxes on heavy
trucks. CBO estimates that the balances in both the Highway
account and the Transit account of the trust fund will be
exhausted in 2022.
The total shortfall over the next 10 years is projected to
be $195 billion in CBO's baseline estimates. If the trust fund
balances were to be exhausted, the Federal Government would not
be able to make payments to States on a timely basis. As a
result, States would face challenges planning for
transportation projects because of uncertainty about the amount
or timing of payments from the treasury.
Turning to spending, the Federal Government spent $47
billion on highways in 2019. Almost all of that was through
grants from the trust fund to State and local governments for
capital projects, that is, for building new roads and
rebuilding existing ones. As you consider options for
reauthorizing surface transportation, you face many choices
about how much to spend. Let me illustrate just two of them.
If you want to maintain the current services and condition
and performance of the highway system, the Government would
need to spend at least $55 billion per year over the next
decade. Alternatively, if you want to fund all projects for
which the benefits exceed the costs, the Government would need
to spend at least $71 billion per year. Of course, the amount
of money spent needed to generate those benefits would depend
on the quality of the projects selected.
Any increase in spending from the trust fund would require
additional income to it. One approach would be to require users
of the highway system to bear more of those costs. When people
drive, they impose costs they do not pay for. Those costs
include wear and tear on roads and bridges, delay from traffic
congestion, and the harmful effects of exhaust emissions. The
combination of taxes on fuel and mileage that makes users pay
for more of those costs would make use of the system more
efficient.
If you want to increase revenues by charging users of a
system, you have various options. One option would be to
increase the existing taxes on gasoline and diesel fuel. Those
taxes have been unchanged since 1993. Increasing them by 15
cents per gallon, as an example, and then indexing them to
inflation would raise $26 billion of revenue for the trust fund
in the first year, and that amount would gradually increase
over time.
Another option would be to impose new taxes on users of the
system. For instance, the Government could impose a tax on
vehicle miles traveled. Some States already have similar VMT
taxes on commercial trucks. CBO recently found that each 1 cent
per mile of Federal tax would raise $2.6 billion per year if it
was levied on all commercial trucks and all roads.
It is important to note that implementing a new tax would
require resolving several practical steps to assess and collect
the tax, and implementing new taxes would probably be more
costly to the Government than increasing existing ones. Some
approaches would also potentially raise privacy concerns,
especially if they were applied to personal vehicles.
New approaches to taxing highways could be assessed through
demonstration projects. Such projects could evaluate different
approaches to key components of a tax. For instance, projects
might apply taxes differently depending on the type of vehicle
or the type of road. They might apply taxes differently
depending on the time of day or the location of the travel, and
they might assess or collect the tax in different ways.
An alternative to imposing the cost of increased spending
on users would be to distribute those costs more broadly. Since
2008, the Federal Government has transferred over $150 billion
from the General Fund to the Treasury to the Highway Trust
Fund. You could adopt that approach again. Compared with other
options, such as increasing the gas tax, funding highways
through broad based taxes would have the advantage of imposing
a smaller burden on low income households relative to their
income.
I will stop there, and I would be happy to answer any
questions you might have.
Thank you.
[The prepared statement of Mr. Kile follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Thank you, Mr. Kile. You have given us a
lot to think about in a very short period of time.
Our next witness is Jack Basso.
Jack, nice to see you up on the screen. Chair of the
Mileage-Based User Fee Alliance, a nonprofit dealing with all
aspects of mileage-based user fees, Mr. Basso. Thanks for all
your work over the years. It is great to have been able to work
with you in many venues.
Thank you for joining us today, and you are recognized to
present your testimony. Thank you, Jack.
STATEMENT OF JACK BASSO,
CHAIR, MILEAGE-BASED USER FEE ALLIANCE
Mr. Basso. Thank you, Mr. Chairman, and members of the
Committee for holding this hearing on the subject of mileage-
based user fees and the Highway Trust Fund alternatives. I am
the Chair of the Board of the Mileage-Based User Fee Alliance.
First, I want to recognize the recent proposal from the
Biden administration giving priority to drastically increased
infrastructure investment. There is a great need for action, we
all agree, I think. In my testimony, I highlight the extent of
the needs and look forward to finding ways to fund those needs
using a variety of creditable sources.
We at the Alliance have been working to provide education,
research, understanding new ways to collect revenue for surface
transportation investment. Since 2008, as has been mentioned,
revenue to the trust fund has dramatically fallen short.
Thirteen years ago, Congress created two commissions to
make recommendations as to alternatives to pay for trust funded
programs. They both concluded that mileage-based user fees
would be one of the most effective ways to do that.
A total of 20 States over the past 5 years, with the
assistance of the Federal STSFA program, have launched major
tests, a variety of pilots, designed to examine the feasibility
of conducting mileage-based user fee tests and support the
needs, were conducted. A great deal has been learned from them.
Let me just highlight a few.
First of all, the largest scale personalized public
outreach effort in the country, 300,000 individuals and
businesses were surveyed in Hawaii, and 50 percent of the
surveyors responded, yielding a wealth of data on public
preferences for road user charges. Washington State allowed a
year long pilot of GPS and non-GPS alternatives and gathered a
great deal of facts for the participants.
Oregon was the first program in the U.S. in 6 years ago to
expand its knowledge in inter-operability of many of the items
for existing programs. California advanced a 5,000 vehicle
pilot that expands the knowledge of rural, tribal, and equity
concerns. Minnesota's pilot funding allows for demonstrate the
use of broad technologies in mobility areas.
I submitted testimony that includes additional information,
but for the sake of time, I pulled these few samples. Dr.
Hendren will talk, I know, about the Eastern Coalition and
their activities.
I know that the U.S. is not alone in moving to a mileage-
based user fee. New Zealand, Germany, and Australia have been
advancing programs and pilots of their own for that purpose.
At this point, the next step to test the approach to a
national pilot. We also strongly believe that additional funds
should be made available to the State pilots, clearly to
preserve the use of pay principle, and the need to make changes
in our system. MBUFA recognizes the urgency to develop and
implement sustainable funding, and we stand by ready to be of
assistance and help with a 50 State system pilot.
The next step is to synthesize what the States learned in
order to identify the most promising alternatives essential to
a national system. As America expands its electric vehicles
fleet, there is a need to be able to collect road user charges,
and the need will become self-evident.
There is a question of equity, and the pilots, all of them,
include analyses of equity issues and what might be done. The
Alliance has provided the Committee with a number of
considerations that we believe will enhance such a national
pilot.
In conclusion, we wish to be supportive of Congress in its
efforts to advance investment in surface transportation
infrastructure.
Thank you.
[The prepared statement of Mr. Basso follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Thank you, Mr. Basso.
I would now like to recognize Dr. Patricia Hendren, the
Executive Director of the Eastern Transportation Council.
Welcome to our Committee, Dr. Hendren, and you are
recognized. Please present your testimony. Thank you.
STATEMENT OF PATRICIA G. HENDREN, PH.D., EXECUTIVE DIRECTOR,
EASTERN TRANSPORTATION COALITION
Ms. Hendren. Chairman Carper, Ranking Member Capito, and
members of the Committee, it is an honor to speak to you today
about how we can bring a sustainable funding model to our
transportation system.
My name is Dr. Patricia Hendren, and I am the Executive
Director of the Eastern Transportation Coalition, a partnership
of 17 States and Washington, DC. For more than 25 years, the
Coalition has brought together transportation agencies to push
innovation and bring solutions to the Eastern Seaboard.
As part of the Surface Transportation System Funding
Alternative Grant Program, we have been investigating the
viability of a mileage-based usage fee, or MBUF. The
cornerstone of the coalition's work is multi-State pilots, real
world data analysis, and connecting directly to the drivers to
figure out the feasibility of replacing the fuel tax with a
distance-based approach.
We are talking about MBUF today because we have lost the
connection between how much a driver uses the road and how much
they pay for it. The concept of a user fee was introduced with
Oregon's State fuel tax in 1919. The premise was simple: The
more you drove, the more fuel you purchased, and the more you
contributed to roads and bridges.
Over the last 100 years, our vehicles have changed
dramatically, with vehicles going farther on less fuel and some
vehicles using no fuel at all. Though this has been great for
our wallets and the environment, the long-term sustainability
of the fuel tax is in jeopardy. Our work, as well as pilots and
programs around the country, have shown that a mileage-based
user fee is a viable alternative.
The Coalition has conducted five demonstration pilots:
Three multi-State passenger pilots, a multi-State truck pilot,
and a national truck pilot. We have taken the study of user
fees from theory to practice to show how MBUF would function in
an actual operating environment and how fuel tax could
transition to MBUF over time.
Our research shows that an MBUF implementation strategy
must address four key elements. First, public education.
By and large, the public does not realize that we are
facing a transportation funding problem. About two-thirds of
people we surveyed thought funding was increasing or staying
the same, while in fact, it is decreasing. To start a
conversation about transportation funding with the public, our
work has shown it is essential to first connect quality of life
benefits, such as safe routes to schools, work, and recreation,
to a strong transportation system.
To move forward with a new, sustainable funding approach,
we are looking for Federal leadership on a national education
campaign to expand knowledge about the importance of
transportation and the need for change.
Second, privacy. In all of our pilots, participants
expressed early concerns about privacy. However, these concerns
fell significantly over the course of the pilot, as people
experienced MBUF firsthand. For example, in our recent
passenger vehicle pilot, participants who ranked privacy as a
high concern dropped from 49 percent down to 15 percent. Our
findings, which are consistent with pilots performed around the
country, highlight the value of continuing State and multi-
State pilots as a means to address the public's very real
privacy concerns.
Third, our Nation is made of urban, suburban, and vast
rural areas. To understand what a shift to MBUF would mean for
different communities, we conducted an in depth analysis using
State data that showed rural drivers will generally pay
slightly less with MBUF than they currently do under the fuel
tax. In other words, rural drivers often fare better with MBUF.
A key aspect of MBUF exploration needs to be the expansion
of this type of analysis to better understand how a change in
how we fund transportation would impact individual households,
as well as different socioeconomic groups.
Finally, the motor carrier industry. As heavy users and
payers, truckers must be included in any transportation funding
exploration. Our national and multi-State truck pilots brought
truckers directly into the MBUF conversation, and showed that
using the same MBUF approach for cars and trucks or even the
same approach for all trucks can end up penalizing fuel
efficient trucks and lead to other unintended consequences. A
viable MBUF system must reflect the complexity of the trucking
industry and understand that trucks are not big cars.
We believe any future transportation funding model must
address all users and build on the work done to date with the
trucking industry.
In conclusion, changing from a 100 year old fuel tax system
to something new will not be easy. At the Coalition, we have
designed our multi-State work to show how MBUF affects actual
drivers across a variety of real world environments and to
bring forth insights about how MBUF would work on a national
scale.
All the work that we have done has been made possible by
the grant program that this Committee had the wisdom to create
as part of the FAST Act. Thank you for your leadership.
Continuing to work together, I am confident that we can
find a permanent solution that sustainably funds our highways
and bridges and keeps our country moving and thriving.
Thank you.
[The prepared statement of Ms. Hendren follows:]
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Senator Carper. Dr. Hendren, thank you very much.
Now, we are going to turn to Robert Poole of the Reason
Foundation.
Mr. Poole, please proceed with your testimony when you are
ready.
Mr. Poole, you are recognized.
STATEMENT OF ROBERT POOLE, DIRECTOR OF TRANSPORTATION POLICY,
REASON FOUNDATION
Mr. Poole. Thank you, Chairman Carper, Ranking Member
Capito. Are you hearing me?
Senator Carper. Loud and clear.
Mr. Poole. Very good, thank you.
And members, thanks very much for inviting me today.
I have been doing transportation policy research for more
than three decades and have served on a number of committees of
the Transportation Research Board. One of the most important of
those was in 2005. It was the first serious national look at
the long-term viability of fuel taxes, and our report,
published in 2006, concluded that they would not be sustainable
for the 21st century.
About 5 years later, Congress, as I think Jack Basso
mentioned, appointed the Infrastructure Financing Commission.
My colleague at Reason, Adrian Moore, served on that. It
clearly, after evaluating about 15 alternatives, concluded that
charging per mile driven rather than per gallon consumed was
the most viable alternative going forward.
In my testimony, I suggest four ideas for dealing with the
sustainability of the trust fund.
First of all, I suggest--the Congressional Research Service
suggested in a very recent bulletin, one short-term fix for the
trust fund would be to restore the original user pays, users
benefit principle that started, as Dr. Hendren mentioned, with
Oregon's first gas tax in 1919, and that is to put all the
money raised from highway users toward the highway program.
That would almost cover the amount that is currently being
spent each year on the highways. That would, of course, mean
shifting the non-highway programs to the general fund, and
doing this openly, rather than through subterfuge, in effect,
of finding general fund money and putting it into the trust
fund and then taking it out again. Avoid the middleman, and do
it straightforwardly, which reflects the large general fund
commitments planned in the Administration's American Jobs Plan.
My second point is that many needed transportation mega-
projects, projects on a billion dollar scale or more, are not
going to be accommodated by a short-term fix for the trust
fund, nor in the Administration's plan. There is just simply
not enough money there to rebuild the interstate highways and
replace many of the major billion dollar scale bridges that
need replacement.
There is an alternate way to bring in private capital,
which could be very, very important for these kinds of projects
specifically. The interstate highway reconstruction that was
called for in the big TRB report that Congress asked for
estimated $1 trillion over the next 20 years. I think that
estimate is low, both in terms of cost and in timeframe. But a
lot of those projects really need to be done, and hedge funds
and other institutional investors would love to invest in long-
term revenue generating infrastructure.
So Congress could open the door, as I suggested in the
recent Wall Street Journal piece, to this kind of private
investment, but making two changes with virtually no budgetary
impact. One would be to expand the current tax exempt private
activity bond program, which has exhausted its $15 billion
original cap, make that much larger.
Second, make sure that the language makes it clear that
these can be financing not only new capacity, which is the
focus of the original program, but to fix existing
infrastructure that needs to be rebuilt and modernized. That is
not at all clear in the current legislative language, and that
needs to be made clear.
The other change would be to expand a small Federal pilot
program that allows only three States to each rebuild one
interstate using toll finance. There are a number of States
that are really studying this, that Congress could expand that
to all 50 States and allow any State that chooses to
participate to rebuild all of their interstates, which would
make much better sense than simply singling out one, which
would be politically very difficult.
Third, I certainly agree with the need. The Reason
Foundation is a charter founding member of the Mileage-Based
Users Fee Alliance. I second the comments that our previous
witnesses have made about the need for more pilot projects,
particularly multi-State pilot projects and more projects
getting involved, long haul truckers, which travel interstate.
There are lots of different issues that need to be addressed.
We have learned a lot from the existing pilots, but most
States have not participated in a pilot. As Dr. Hendren pointed
out, the actual participation of people, including, in many
cases, State legislators, has a powerful educational impact,
which we are not going to get a national per mile system until
we get public support across all 50 States in my view. That is
critically important.
Also, institutions, what institutions are going to be
needed to play key roles? Departments of motor vehicles,
perhaps, the International Fuel Tax Agreement among truckers;
there are things that need to be explored in a lot more detail
than the current pilots have done.
I want to close with one sort of more philosophical point,
and that is there seems to be a growing idea that there is a
conflict between well funded and somewhat expanded highway
system and the need to combat climate change. I want to call
your attention to the long-term nature of both of these
problems.
The transition to electricity is going to proceed at a much
faster pace, it appears, given the commitments of auto
companies, the Federal Government, and many State governments.
At the same time, rebuilding the interstate highway system is
not going to happen overnight. If some corridors, particularly
truck heavy corridors need more lanes, you are talking about a
long-term prospect here of maybe 15 years before the first
major rebuilding can be completed, if the designs were there
today, and probably 30 years until the whole systems are
rebuilt and modernized.
During this time period, we are going to be electrifying
transportation, so the idea that we shouldn't let VMT, vehicle
miles of travel, expand because of climate change, I think is a
very short sighted view. Long-term future is going to require
more capacity for trucks. Autonomous vehicles are likely to
take market share away from short haul flying and onto
highways, so we need to think all of these problems long-term
together.
That concludes my testimony, and I am happy to answer
questions when the time comes.
[The prepared statement of Mr. Poole follows:]
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Senator Carper. Thanks a whole lot, Mr. Poole. You have
given us a lot to think about here.
Our final witness for this morning's panel is Douglas
Shinkle. Mr. Shinkle is the Transportation Program Director
within the Environment, Energy, and Transportation Program, the
National Conference of State Legislatures.
Mr. Shinkle, thank you for joining us this morning. You are
recognized at this time to present your testimony. Please, go
ahead.
STATEMENT OF DOUGLAS SHINKLE, TRANSPORTATION PROGRAM DIRECTOR,
NATIONAL CONFERENCE OF STATE LEGISLATURES
Mr. Shinkle. Chairman Carper, Ranking Member Capito, and
distinguished members of the Senate Environment and Public
Works Committee, my name is Douglas Shinkle, and I am the
Transportation Program Director at the National Conference of
State Legislatures, NCSL.
NCSL is the bipartisan organization representing the 50
State legislatures and the legislatures of our Nation's
commonwealths, territories, possessions, and the District of
Columbia. Our mission is to strengthen the institution of the
legislatures, provide connections between the States, and serve
as the voice of State legislatures in the Federal Government.
Mr. Chairman and Ranking Member, I would like to take this
opportunity to thank you and the Committee for your leadership
on the important issue of transportation funding and financing,
not just with today's hearing, but also on the Committee's work
on surface transportation reauthorization.
As the previous witnesses have mentioned, revenue flowing
into the Highway Trust Fund has proven to be insufficient to
support surface transportation programs. As such, since the
FAST Act, States across the Nation have worked to research,
develop, and deploy new funding mechanisms to meet their own
transportation funding needs.
We very much thank Congress for the Surface Transportation
System Funding Alternative Program, STSFA, which was
established in the FAST Act, and we do urge Congress to build
upon that and support a new user fee, formula-based
transportation funding mechanism to provide the much needed
investment in the Nation's transportation infrastructure.
I am going to spend a little bit of time just going over
some of the most common and notable State transportation
revenue options, with a focus on user-based revenue sources. I
will just briefly touch on gas taxes, since I think we all have
a good sense of how those work and what they look like. I will
note, since 2013, 30 States and the District of Columbia have
enacted legislation to increase gas taxes. Those gas tax
increases have ranged from 2 to 23 cents. Twenty-two States and
the District of Columbia have a variable rate gas tax that
adjusts, to some degree, with inflation or prices without
regular legislative action.
Let me talk about electric vehicle fees a little bit,
because that is something that is certainly on the mind of
State legislatures at the moment. That is one widely adopted
policy approach to address funding shortfalls related to the
declining gas tax revenues is to apply a separate, additional
registration fee for plug in, electric, or hybrid vehicles. In
fact, 28 States have such a fee for electric vehicles, and of
those 14 States also assess that slightly lower fee on plug in
hybrid vehicles. These fees range from $50 to $225 per year,
and the fee revenue is most often directed toward a State
transportation fund. However, at least three States allocate
some fee revenue to support EV charging.
Additionally, at least five States structure the additional
registration fees to grow over time by tying them to the
consumer price index or another inflation related metric. Along
the same lines, States have also been enhancing registration
fees for traditional passenger vehicles.
Since 2017, at least 12 States have enacted legislation to
enhance registration fees for traditional vehicles. California
and Utah are among States that recently have indexed their
registration fee to CPI, so it will be increasing over time and
doesn't necessarily have to go back and be adjusted constantly
by the legislature.
With the kind of growing ubiquity of transportation network
company services, such as Uber and Lyft, States and local
governments have been looking at how to kind of address the
impact of those services. At least 11 States and Washington,
DC, have enacted laws creating additional fees for
transportation network company rides and fares. Most of these
States use these fees to administer TNC regulatory oversight.
At least four States, Georgia, Maryland, Massachusetts, and New
York, as well as DC, use some of the fees to in part support
transportation projects in their State.
Let's talk a little bit about road user charges, RUC. I am
going to refer to it commonly as that. Dr. Hendren and Jack and
Bob all kind of weighed in on that to a certain extent.
States have been on the forefront of studying road user
charging since the early 2000s, when Oregon first started
looking into it, and many States are currently exploring RUC
systems. Many of these efforts have been supported by the
Federal Government via the STSFA Grant Program, Surface
Transportation System Funding Alternatives. Fourteen States
have been awarded STSFA Grants, although when you kind of
calculate the Eastern Transportation Coalition and then RUC
West, the reach of the number of States involved, in some ways,
is even higher than that.
It is worth noting that there are two operational RUC
programs in the country today. Oregon and Utah both have them.
Oregon's has been around for a few years, I think since 2016,
now. Utah has just started recently. They are both voluntary
and both created at the behest of their State legislatures.
Oregon's program is open to any vehicle over 20 miles per
gallon, while Utah's is currently open only to electric and
hybrid vehicles.
Virginia's RUC program will go live in the summer of 2022.
Oregon, Utah, and soon Virginia will allow drivers of plug in,
hybrid, and electric vehicles to not pay the full enhanced
registration fees if they participated in a State RUC program.
There has been a lot of legislative interest in this in
2019 and 2020. At least 19 States considered 34 pieces of
legislation addressing RUC. Of those, seven States enacted
eight pieces of legislation. Thus far, in 2021, there are 12
States considering RUC related legislation.
I realize I am short on time. I just want to quickly talk
about public-private partnerships. There has been some
discussion about kind of access to capital and using the free
market to kind of help build some of these, especially big
projects. Thirty-eight States, Puerto Rico, and DC statutorily
operate P3s for the transportation sector. State enabling
statutes range from project specific to limited authority based
on project size to broad comprehensive frameworks for P3
agreements.
The most common type of transportation P3 tends to be a
tolled facility, but P3s don't necessarily equal tolls, and
tolls don't necessarily equal P3s. In other words, owners of
the road, a State DOT or a local government, could build a job
the old fashioned way or have a private contractor do the
design build, and then the DOT can charge the tolls themselves.
States have undertaken non-toll P3 projects with their
private partners, such as bundling bridges in Pennsylvania and
transit projects in Maryland. Colorado, Louisiana, and Virginia
are some of the States known for having a robust P3 State
structure and project portfolio.
So, with that, I want to wrap up and just say we applaud
Congress for taking this initial step to examine potential
methods to ensure sufficient and stable long-term Federal
transportation funding and encourage continued outreach to
States to develop and shared long-term vision for funding and
financing surface transportation systems that will enhance the
Nation's prosperity and quality of life for all Americans.
Thank you very much for having me.
[The prepared statement of Mr. Shinkle follows:]
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Senator Carper. Mr. Shinkle, thank you, and thanks to all
of our witnesses. I don't know about the rest of my colleagues
here and joining us virtually, but I think this is fascinating
stuff.
I am sitting here thinking about Dwight Eisenhower and his
leadership, which got us started on the interstate highway
system. Transformational for our country.
We are on the cusp of another transformational change in
the way we not just build our roads, highways, and bridges,
build back batter, also in the face of climate change and do so
at a time when we are trying to figure out how to pay for this
stuff and in ways that make sense and are acceptable
politically and just make good common sense economically, too.
Mary Frances Repko has given me, our staff has just given
me a list of names here in order or recognition, and this may
change a little as people pop up virtually. I am going to lead
off, followed by Senator Capito, Senator Cardin, Senator
Inhofe, and if he returns, Senator Whitehouse, Senator Cramer,
and Senator Lummis.
I will just start off, if I could.
First question is, where do you agree? Where do our
witnesses agree? Pick a major point or two where you think
there is consensus among the witnesses who are here testifying
today, and tell us, where do you agree? Just be very brief.
Take a minute, no more than a minute for each of you.
Mr. Kile, where is there consensus? Where is the common
ground? Go ahead.
Mr. Kile. I think the thing where there is agreement at
this point is that there is a shortfall in the trust fund in
the coming years. Most of the other panelists have spoken of
policy choices. They are all representing particular positions.
CBO does not have a particular position on what the
Congress ought to do, and so I will basically stay silent on
other areas of agreement or disagreement. My testimony mainly
focused on options for you and your colleagues.
Senator Carper. All right, thank you.
Mr. Basso, Jack, where do you see areas of agreement
amongst the five witnesses? Go ahead.
Mr. Basso. Thank you, Mr. Chairman. I see a minimum of
three areas. No. 1, action has to be taken if we are going to
be successful in implementing a major and futuristic
transportation infrastructure investment program.
Second, that the gas tax, and you know better than I do the
political reasons why we can't just raise the gas tax, would
prove that.
The second point is that two commissions and a lot of other
study has suggested that per mile costs and travel as a billing
cycle is a way to accomplish this and take into account the
changing mix of the fleet. Electric vehicles will become far
more prominent in the near future than we would have thought 10
years ago.
I think the last thing is that a national pilot is
definitely necessary if the Federal Government is going to
engage in this activity, and I think we will, and to accomplish
what we can learn and deal with all the attendant issues.
Thank you, Mr. Chairman.
Senator Carper. Thank you, Mr. Basso.
Dr. Hendren, where do you see areas of agreement,
consensus, amongst the five witnesses, please?
Ms. Hendren. Chairman, I am going to go back to your
comments in your opening remarks about not compromising on
principle. I think what we keep hearing is the need to get back
to the user pay principle, and that came up in everyone's
comments.
So I would really focus on that as a big reason why we are
here, and the concept of pay for what you use, it resonates. It
resonates with the public; it resonates within this room, and
outside this room. So that is encouraging, that we can have
this transformational change for the future.
What I see is Federal leadership, again, thanks to this
Committee to have that grant program that has built momentum,
and that momentum has been remarkable in the last 4 years.
But I do think having continued State level work is going
to be important, again, kind of getting that groundswell of
understanding in combination with that Federal leadership and a
national education campaign about the importance of
transportation. That is why we are all here today, and the need
for change. So that is where I see we really are all in
lockstep on this topic.
Senator Carper. Great. Thanks, Dr. Hendren.
Dr. Kile, where is the agreement? Where do you see the
consensus, please?
Mr. Kile. Did you mean to call on me?
Senator Carper. No. I have gotten out of line here.
Mr. Poole, yes, thanks very much.
Mr. Poole.
Mr. Poole. There we go. I am on now?
Senator Carper. Yes, you are. Go right ahead.
Mr. Poole. I think we all are in agreement, apart from CBO,
that we need to replace per gallon fuel taxes with per mile
charges, in some form or another. Second, I think we all agree
that we need to invest more in our transportation system, for
sure, and that the Federal Government has a continued role to
play in research and development on the idea of how do we
implement per mile charges in a way that is going to work and
be affordable and politically acceptable.
I think we all agree that the user pay principle is very
important. I think I am the only one that stressed users pay,
users benefit as the second aspect of that, but I think there
is a remarkable amount of consensus here. Thanks.
Senator Carper. Yes. Thank you very much.
Going to our last witness, Mr. Shinkle, please.
Mr. Shinkle. Yes, it is nice when we can all agree on this.
It is one of the fun things about working on transportation.
I would agree. I mean, I think States certainly are aware
of the pressures associated with increasing fuel efficiency and
more electric vehicles. So they have been already feeling this
and trying to grapple with this.
So if the Highway Trust Fund is in trouble, States realize
that and they are looking for new solutions. It is good that we
all acknowledge that there is an issue.
I do really agree that user fees are something that NCSL
continues to support. As Bob alluded to, they also lead to a
better system and outcomes in terms of, you are linking, you
are using something that can have positive impacts on
congestion, what have you.
And then continue to engage with the States, this is so
appreciated, bringing in NCSL on all these folks that are doing
things out at State and regional, local governments. Continue
to hopefully give States some seed money so States can continue
to innovate and try different things and try to make sure that
we are talking with the public. Because I do really think that
any change is really going to need public buy in, clearly. A
lot of times, having local and State elected officials that are
closer on the ground is a good way to kind of seed those
efforts and grow trust. Yes, there is a lot of areas of
agreement, I think.
Senator Carper. That is great. Mr. Shinkle, thank you.
Thanks to all of you.
I will just say, the National Governors Association is
multi-faceted, but one of the entities within the NGA is
something called Center for Best Practices. It is a
clearinghouse for good ideas.
I think of the States as laboratories of democracy. Many of
us have held State offices as well, and you know this, and we
can learn from the States, what they are doing well, and maybe
not so well.
All right, Senator Capito, please.
Senator Capito. Thank you, Mr. Chairman. I just want to
start out briefly.
We have heard a lot about VMTs and a lot of different
acronyms that are used, but I think we understand what the
concept of that is.
I want to go back to Dr. Kile just quickly for a
clarification question. You mentioned that if the VMT was put
into effect at 1 cent per mile, it would generate $2.6 billion.
But previously you had mentioned that over 10 years, the
shortfall is $195 billion. So, we have a big gap here.
My question is, back to Mr. Shinkle, in some of the States'
pilot studies, is a 1 cent per mile, is that a marker that is
been used for success here? Because it is not going to generate
enough to hit our shortfall at all.
So Mr. Shinkle, I want to ask you that, about the 1 cent
per mile. I also want to ask you, there are concerns on
privacy. We haven't really heard much pushback on that, and
maybe those issues have been sort of laid to rest through some
of these State pilot studies. Mr. Shinkle, could you address
the privacy issue as well?
Mr. Shinkle. Yes, thank you, Ranking Member Capito. With
regard to the mileage charge, let me look real quick. I believe
in Utah, it is 1.5 cents a mile and in Oregon, it is 1.8 cents
a mile, so somewhere in that range. Most of what the States I
have seen talking about it, of course, those are the only two
operational programs that are actually charging, so that gives
you some sense. Most of the range that I have seen is somewhere
in that range, and somewhere in between 1 to 2 cents, so I
would say that is a fairly kind of accurate starting point.
With regard to privacy, I think you are definitely
absolutely correct that that is going to be one of the big
things for the public, kind of perception-wise, to get through
is how to address this. Some of the things States have done, I
think, are really interesting, so maybe a couple examples.
Oregon, when they established their program back in 2013,
they did work with the ACLU while they were developing that
program, and that helps kind of get some buy in there.
A lot of the public feedback that the States that are doing
the RUC programs or pilots has found that the more familiar
with the drivers become with the systems, the more they have
less of an issue with the privacy concerns. I am not saying
that necessarily addresses all of them.
Another piece is offering options. That is something that
California, and I would say Washington and some of these States
are doing a lot of work on, digging and studying and looking at
like, 10 different payment options. Some of those are like, for
example, there are 15 States that do annual or biannual in
person vehicle inspections, essentially. So those 15 States,
you theoretically could just do an odometer reading very easily
within existing State structures and law, and just have an
odometer reading, and you are in and out, and there is no
impact on your privacy.
Now, the flipside or the downside of that is that if you
travel out of State, or you live on a large private ranch,
where you drive a lot of miles on private roads, you are going
to get charged for those miles. So the tradeoff is that having
that location information is always going to be really helpful
to ensure that you are being accurately charged and being
charged as little as possible.
Some of the other things that States can do is that,
certainly, I know Oregon and California and Utah have all done
things around kind of disaggregating the location information.
I know in Oregon they are only allowed to keep that location
data for 30 days, and law enforcement has to have a warrant to
access it. So there are a lot of things that need to be done.
I think States have taken good steps. I also do think this
needs leadership at the local, State, and Federal level to
continue to talk about this and to try and talk about the
challenge that we don't have enough transportation funding.
So those are kind of some of my thoughts. Thank you for the
question.
Senator Capito. Thank you. Thank you for your insight
there.
Mr. Poole, in your statement, you mentioned that if all of
the money that was generated from the gas tax was put toward
the surface transportation bill, that it would be much closer
to meeting the shortfall. Are you referring to the fact that
funds from that gas tax are moved over to transit? Is that what
you were alluding to?
Mr. Poole.
Mr. Poole. Yes, I understand the question. What I was
referring to is, if you look at the total amount of revenue
from the highway user taxes going into the trust fund, versus
the amount spent, there is only a $2 billion a year gap right
now, according to CRS, between the spending on highways and the
revenue from highway users.
Almost all the shortfall is all the non-highway programs.
So closing that $2 billion gap would take a very slow increase
in a user tax, which might be more acceptable to highway users
if they knew that all the money that they put in was going to
be spent to better highways. The rest could be simply paid for
out of the general fund, all the non-highway portions.
That would be my suggestion for a short-term fix. It is not
going to solve the long-term problem, but it would make the
Highway Trust Fund itself solvent.
Senator Capito. OK. Thank you.
Senator Carper. All right.
Senator Cardin. Senator Cardin, to our witnesses, Senator
Cardin serves as the Chair of the Transportation Infrastructure
Subcommittee of this Committee and does a great job, and his
wing person, wingman, on that is someone who has chaired this
Committee before, Jim Inhofe. They are a good team.
Senator Cardin.
Senator Cardin. Mr. Chairman, first of all, thank you, and
I want to thank all of our witnesses. This panel has been
extremely informative.
I sort of share the Chairman and Ranking Member's view that
we are looking for revenues that can get bipartisan support and
we can move forward as a Congress. We all recognize we have a
shortfall, so I find this panel to be very helpful.
Senator Capito, as I understand it, the 1 cent per mile
estimate is based upon commercial traffic, which is where the
pilots are all headed right now. But as our witnesses have
pointed out, if you are looking at replacing the existing
gasoline tax, which gives us a lot greater need for revenues,
we would be looking at a broader mileage user fee. It would
create additional issues that would have to be resolved before
we could get to that point.
So in one respect, we are looking at the mileage-based user
fees to get us out of the current hole. If we are looking at
the long-term impact, then we really do need to have other
questions answered before we can do that.
One is federalism. How do you impose a national user fee
based upon mileage and work with our States, because they use
the gasoline as a revenue source? And how do we sort of bring
this together under federalism and the interstate use of our
transportation system?
I want to sort of challenge on two parts as we move
forward, and maybe I will start with Dr. Hendren on this first,
and that is, how do you answer the question, if we move toward
a mileage-based user fee at the national level, low and middle
income families being overly burdened? How do you deal with the
fuel efficiency issues, which is one of our major objectives in
all of our policies, is to increase the efficiencies of our
transportation system?
Ms. Hendren. Senator, thank you for the question.
I think starting with the first one about the impact that
this potential shift from the fuel tax to a distance-based
approach could have on different geographic areas as well as
socioeconomic groups is work that still needs to be done. I
think a really important place that we need to start that
conversation is where we are today with the fuel tax is a
regressive tax.
What we found, for example, in looking at rural communities
versus urban and suburban, is that a lot of rural communities
are paying more today under a fuel tax approach. With a shift
to a distance-based approach, they would pay slightly less.
Senator Cardin. I understand that more work needs to be
done. I really do understand that.
Ms. Hendren. OK.
Senator Cardin. We are impatient right now, because we have
got to act. So if we are going to act in this Congress to do a
transformational improvement on our infrastructure, and we need
to have revenues, but we don't want to adversely impact on
middle and low income, what do we do?
Ms. Hendren. I think the benefit of a distance-based
approach versus a fuel tax is you have more policy levers. So,
the way you set your rate, I think, is the answer to the
question. You can have one rate that is the same for everyone.
You can also look at rates that would vary based on where you
live, income level, type of vehicle; there are a lot of
options.
Again, that is a benefit of this kind of more
transformational way of funding transportation. So I think that
is the way to move forward there.
Senator Cardin. How about on the energy efficiency issues?
One of the points that was raised was that those who use
electric vehicles, yes, they are very much impacting on our
transportation system, but they are also a benefit in regards
to the impact on our environment, so how do we weigh that
issue?
Ms. Hendren. I think what we have seen so far is EV owners
are actually very willing to be part of a distance-based
approach. If you look at the Oregon program, a volunteer
program, almost a third of those volunteers are EV owners, so
that shows you the choice to be an EV owner is about the
environment. They do also want to have roads to drive on, so
those issues are not at odds with EV owners.
Senator Cardin. I guess I don't understand a voluntary
program. They voluntarily agree to pay money?
Ms. Hendren. You can either pay a registration fee or a cap
amount, or you can do the voluntary program. So if you are an
EV owner, you are not going to be paying fuel tax today, so if
you opt into the program, you will be paying more.
Senator Cardin. But wouldn't you make the judgment based
upon what you think you are paying less money to the
government? Wouldn't that be the decision?
Ms. Hendren. Exactly.
Senator Cardin. That doesn't necessarily reward energy
efficiency.
Ms. Hendren. It doesn't. But I think the reason I am
bringing that up is, there is a concern that moving forward,
the distance-based approach will hurt the sale of EV, hurt that
transformation of our fleet. So what we are seeing out there in
these demonstration pilots is that is not true in the programs.
Senator Cardin. If I wanted to transfer to an electric
vehicle, and I do lots of driving, but I am prepared to do
that, I am prepared to charge where I need, the charging
stations, pay for the battery support that I need, how does
this system benefit that decision I am making to help the
environment?
Ms. Hendren. The way we have it now, is you would be paying
a majority of your operating costs for an EV is that charging.
They are not paying for fuel tax, which is what we have been
using to fund our roads and bridges.
So if the question is, what is the motivation for the EV
owner, it is to support the roads and bridges on which they
drive, so you are correct. If they are like, that is not cost
effective for me, they could choose not to.
But what we are finding is a very openness to be part of
the solution to have those roads and bridges to drive on. But I
think your point about fuel efficiency, that is where our real
challenge is right now, as far as the revenue loss from these
much more fuel efficient vehicles.
So I look at Virginia's program as a real example of how to
address that revenue loss from fuel efficiency. We have kind of
two issues, and they kind of get merged, so I think looking at
fuel efficient vehicles and looking at EVs, and this approach
can address both of those types.
Senator Cardin. You are absolutely right. The revenue loss
is the environmental gain. You have to weigh it.
Thank you, Mr. Chairman.
Senator Carper. Really good questions. One of the issues
that Senator Cardin raised was actually addressed in part at a
hearing yesterday. He and I sit next to each other on the
Finance Committee, as well. He finds it hard to get rid of me.
Our witness yesterday was Commissioner Rettig, the
Commissioner of the IRS. One of the issues that I raised with
him is for the concern on raising a gas tax, user tax, user
fees, our concern is how do we help make sure that lower income
families, at risk families, don't end up bearing an inordinate
amount of burden?
And I asked him too, this question, for the record, I said
why don't you see if there is some way that we can provide
through the tax system a rebate of some kind to go to families
whose income is maybe below the median average in the country
to help make them whole with some assumptions on how much gas
and diesel they use? So, we will see.
OK, Senator Inhofe, you are up, please.
Senator Inhofe. Thank you, Mr. Chairman. Last hearing, I
entered into the record an effort to protect the ban on
Government controlled interstate rest areas. I know that some
of our witnesses, I understand that Mr. Poole probably
disagrees with this position, but it is one that we felt pretty
strongly about.
I want to enter into the record this time, it is a similar
letter. It is signed by stakeholders that we all know, such as
the National League of Cities, the National Restaurant
Association, Energy Marketers of America, and a lot of others,
which talks about the value of the private sector investment
across the Nation's highway network. I think the rest stops
would give the Government, if they were Government controlled,
an unfair monopoly. So this letter is one that covers that, and
I want to have that as a part of the record.
Senator Carper. Without objection.
[The referenced information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Inhofe. It is kind of interesting. Ben Cardin and I
were both elected in the same year, 1986, and we have been
dealing with this all these highway bills ever since that time.
So we have a lot of seniority on these issues.
One of the interesting things I always like to point out to
my friends and witnesses at such hearings is this: Most of them
are too young to remember this, but I remember one of the
biggest problems we had in the Highway Trust Fund is we had too
much surplus, and so everyone's trying to rob the surplus.
One of the worst offenders of that was Bill Clinton. He
actually took--I can't remember how many billion dollars was
out of that. It took me about 2 years to get it all back in,
anticipating that we would have the problems that we are having
today.
One of the unique things about this is, this is a program
that everyone agrees with. I can remember a lot of the
Republicans who were running for President a few years ago were
trying to each one be the most conservative, more conservative.
One of our people who went back actually was one of the
candidates from, I shouldn't say this, but from Kentucky. He
got up there, and all the transportation people jumped all over
him. You are running for President, and we don't want--and he
said, oh, I wasn't talking about transportation.
See, we have that benefit that people all fall into
agreement that we want to have that system. So anyway, I was
glad, this is the first time that I have heard that all of our
witnesses came in agreement knowing that there should be a user
pay concept.
I have been saying this when it was very unpopular to say
this, and now I think it is more popular than it was at that
time, so I think we are making some headway in this area. I
would like to make sure that there is no one here--what we all
agree is, we do need a long-term highway bill to give the
States the certainty and predictability. I would assume, if
there are any of our five witnesses who don't agree with that,
say so now. Because I believe that is a concept that we all
agree on.
I think also the fact that we are now looking at something
on the electric vehicles on paying their fair share, and I just
rejoice in the fact that people are talking about that now, and
it is popular, and it is very fair.
Now, Mr. Shinkle, I understand that nearly 30 States have
passed electric vehicle fees to help pay for the road. I would
like to have you elaborate a little bit on, have these revenues
been used to invest in roads and bridges? Has it been
successful? We are looking at this right now in our State of
Oklahoma, and so I would like to have you explore that a little
bit on what has been workable in the past.
Mr. Shinkle. Yes, thank you for that question, Senator
Inhofe. Twenty-eight States have enacted fees on electric
vehicles and 14 on hybrid vehicles. That money is, except for
three States, that money is pretty much going into
transportation projects.
Sometimes transportation projects are a little more broadly
defined to include a little bit of electric charging stations
and things like that. Generally, for the most part, that money
is going into the State fund that pays for transportation
there. Given that no State, I don't believe, has more than 2
percent or I think even at the most of their personal vehicle
fleets that are electric vehicles, the amount of money thus far
isn't really substantial.
Now, that is going to start to change, and it is going to
become more important. I think every year it is going to become
more important, frankly, especially within 5 to 10 years as
that kind of bridge until we do figure out if we are moving to
a RUC or what are we going to do.
But the short answer is there is not necessarily a lot of
money there, it is really more of an equity kind of concern at
this point. If there is a group of vehicle owners, in many
cases, which tend to be but not always are higher income that
weren't paying to be part of the system at a time when the
system needs more money in.
So that was a lot of the rationale behind that. I am happy
to provide more information on how the States have exactly been
spending that money in the follow up testimony, but it is
mostly for State transportation projects, maintenance, and
operation, what have you.
Senator Inhofe. For the record, any elaboration on that you
can get, that would be very helpful to us. I think this hearing
has been very helpful.
The question that we get, one of the differences between
witnesses and people sitting at this table is, you guys don't
have to run for election. The first thing when we hear a VMT
system or one of these other systems, the first thing that
comes to me is the questions that people are always asked when
we talk about this publicly, the only question they have is,
how much is it going to cost me?
Anyone have a good idea on a good answer for that question?
No, I didn't think so.
All right, thank you very much, Mr. Chairman.
Senator Carper. I would just say to my colleague, as you
know, I have talked to a lot of Governors and a lot of State
legislators, and I know you have too, but those who have in the
last decade, not in the last 5 or 6 years, who supported
increases in traditional user fees in their States have
actually been more electable rather than less. It is pretty
amazing.
I think next is Sheldon.
Senator Whitehouse, please.
Senator Whitehouse. Thank you, Chairman.
Thank you to all the witnesses.
I want to pick up on the same topic that we have been
talking about, which is how we get electric vehicles to pay a
fair share of the use of the road. But I come at it from a
slightly different perspective, because I have this Consumer
Reports information here that shows the number of States in
which what is charged electric vehicles is higher than what is
charged internal combustion engine vehicles.
In some cases, it is not a huge difference. It is 40
percent more, 20 percent more, 36 percent more. But in some
cases, it is nearly triple. The expectation of Consumer Reports
is that these are going to continue to trend upwards with
electric vehicles being charged as much as four times what an
internal combustion engine vehicle is charged.
So I think that as we address this issue, and we address it
from an equity point of view, it is going to be important,
looking at whatever kind of a highway funding program we put in
to make sure that this is not being used as a mechanism to
suppress to development of electric vehicles. It is hard for me
to see a reason why it should be more.
I don't know if any witness can identify a manner in which
an electric vehicle is harder on the highways and bridges than
an internal combustion engine powered vehicle. If these were
great big trucks that had extra weight--my Governor, who is now
Secretary of Commerce, Governor Raimondo, put an extra toll for
trucks coming through Rhode Island. It worked out; I mean, the
truckers didn't love it, but it worked out pretty well in terms
of convenience because of EZ Pass, which makes tolling so easy.
I understood that they do put a lot more wear and tear on
the roads than a regular passenger vehicle. But an electric
vehicle, I think, is pretty equivalent to an internal
combustion engine vehicle in terms of the wear and tear it puts
on the roads.
So it doesn't make sense to me why these States, many of
which have significant fossil fuel investment in them and
fossil fuel activity in the legislature would be charging a
higher fee against electric vehicles than they do internal
combustion engines, unless they were actually trying to
suppress electric vehicles so that we could continue to burn
more gasoline and continue to pump carbon dioxide into our
atmosphere and continue to pollute, and obviously none of that
is a very good thing.
So, I hope as we try to solve this, Mr. Chairman, we will
keep in mind that it really would not be appropriate for States
to use this predicament that we have right now to pick winners
and losers as between electric and internal combustion engine
vehicles. There is no statement of what the purpose is in any
of this, so we will look into it further.
But my surmise would be based on the location of the States
and the lack of any apparent justification for charging
electric vehicles more that this has something to do with
trying to suppress the growth of electric vehicles. I don't
think that is a winners and losers contest that we should be
in, and it is not a contest that I think we should allow the
States to get into because of all the other collateral costs of
suppressing the growth of electric vehicles.
So, that is what I wanted to mention today. We have done
highway work in really strong bipartisan fashion before, and I
think it really is important that we take care of our roads and
bridges and the traditional infrastructure for automobile
transport.
But I will be extremely concerned about any proposal that
we adopt that allows for this kind of selective choosing of
winners and losers and deliberate suppression of consumer
choice toward electric vehicles, particularly if we discover
that the fossil fuel industry has had its hand in the politics
of any of these places and getting those fees to be jacked up
to where it costs more to own an electric vehicle than it does
to own an internal combustion engine vehicle.
With that, I am happy to yield back the rest of my time,
and I look forward to working with everybody to get a good
bipartisan bill going on this and continue to develop our
infrastructure.
Senator Carper. I think we all share that view; that is
good.
One of the things that I mentioned earlier, as Senator
Whitehouse said, during the break, one of my sons came home
from California, and we just went out and drove all kinds of
vehicles. I will say this: Those electric vehicles are a lot of
fun. They are just a hoot. They have got a lot of torque. He
and I both felt like kids at the end; he still is.
All right. I think next is Senator Cramer, please.
Senator Cramer. Thank you, Mr. Chairman.
Thanks to all the witnesses, and I agree with a lot of what
has been said, largely over the fact that we are unified in the
goal. The details will kill us, eventually, probably.
In the meantime, I do think there is a lot of common
ground.
Certainly, Mr. Chairman, to your opening statement, I
remain committed to principle while having an open mind to the
policies that will get us where we need to get, and I think we
are off to a good start right here.
I would like to say, Senator Whitehouse raised an important
point, and it is hard to know what any individual or group of
States might be doing. Maybe we can get an answer to that in a
little bit. But I think a lot of those fees are registration
fees. When you break it down to the use fee, it is probably
less, not more.
The other thing I would mention, in some of the studies I
have seen, at least to this point, the California, UC Davis
study showed that 30 percent of the people who drive an
electric vehicle make over $150,000 a year, and the next
50,000, from $100,000 to a $150,000 a year make up another 20
percent. Earlier, we were talking about some of the
socializing, what I call social engineering here, with regard
to it not hurting people at the lower income level.
Well, electric vehicles so far seem to be driven by people
at the higher income level. I don't know that that is relevant,
but I think as we are discussing all these things, it is worth
noting.
Also, I appreciated, Doctor, your reference earlier in
answer, I think it was to Senator Cardin. There is nothing, no
tax hardly more regressive than the gas tax itself. So the idea
that a user fee for electric vehicles is going to be worse for
lower income people than the gas taxes would be hard, I would
be hard pressed to see that. We could design it that way, I
would hope we would avoid that.
So there is a lot of opportunity here to bring equity to
all of the structures, and that would be, hopefully, the goal.
Also, with regard to that, and I want to get to some of the
things that Senator Cardin was talking about when he talked
about gas fueled vehicles. Obviously gas fueled vehicles emit
greenhouse gases, CO2. But nothing in the fuel tax,
to this point, is designed to address any of that. It is not a
punitive tax. It may look punitive sometimes, but there is not
a carbon tax added on to it.
So when we start talking about, I think, Ben's parting
comment was the loss of the gas tax is the environment's gain;
well, that is true. That is a true statement. We are building
roads and bridges and maintaining them; we can't do it with
less money. We are trying to find a way to get more money in an
equitable fashion.
So I just want to make sure we keep the main thing the main
thing when we are talking about transportation infrastructure,
and some of the other things, being important, don't get us off
the rails here.
I do want to ask Mr. Shinkle a question, because obviously,
the focus of this hearing is on the revenue side. But it also
addresses, in the description of course, a reference to funding
consistency, or sustainability, or funding uncertainty.
In the White House's rollout last week, they talked about
changing the formula, the Press Secretary referenced a
different formula, a grant formula, rather than the traditional
formula.
Mr. Shinkle, I would like to know what States might feel
about a different type of program. Just as an example, the
INFRA Grant Program has existed for over 5 years. In my State,
we have never received one. In the big, wide open west, I don't
feel like setting aside 400 miles of gravel to hook up our
interstates. I don't think that would serve very well.
So just a question, Mr. Shinkle, about the commitment to
funding certainty by trading the traditional formula for a
competitive bidding process, as per the Press Secretary in the
White House.
Mr. Shinkle. I will probably have to be a little bit
careful about what I say. I think that I would have to know
more about that exact proposal.
But I would say that States are pretty comfortable with
existing formulas that are in place to transfer money from the
Highway Trust Fund to the States. Anything that would deviate
from that and reduce the flexibility for States to be kind of
nimble in their States to respond to infrastructure challenges
out there is something they might be skeptical of. Otherwise I
am afraid I can't answer in any more depth than that, but I
could look into that some more with my team, and we can get
back to you with a more detailed answer.
Senator Cramer. Thank you.
As my time has run out, Mr. Chairman, just again, thank you
for a very good hearing, a very good start to this discussion,
really the second one. I am keeping my mind open, because I
think there is a lot of opportunity.
By the way, I think we ought to go big. I really do. I want
to aim high. This is a moment, and this is an opportunity, and
I think there is an opportunity to do exactly that with these
people.
Senator Carper. Aim high, there is more room up there. That
is good.
I said to Adam, who's staff director for the minority, and
to Mary Frances, and Rebecca Higgins, I am very pleased with
this hearing. I think it is an extraordinary hearing with
extraordinary opportunity.
I think next up is Senator Kelly, who has somehow slipped
in here, and we are going to yield to him next, and then
Senator Lummis, you are next.
Senator Kelly. Thank you, Mr. Chairman.
Dr. Hendren, in your testimony, you discussed the
importance of taking into account drivers in different
geographies when considering options to address the Highway
Trust Fund shortfall. In particular, you discussed rural
communities where driving far distances is often needed for
basic necessities like going to work or visiting grocery stores
or accessing health care.
As a result, Arizonans, the State that I represent, living
in rural communities often pay for gasoline more often, making
them more impacted by a gas tax increase. As Congress considers
solutions to fund the Highway Trust Fund, are there any
proposals out there which are less costly for residents of
rural areas than the gas tax?
Ms. Hendren. Senator, I think you hit the key point
directly on target, which is currently, rural communities are
paying more in fuel tax, given the distances they need to drive
to get their daily life activities done, as well as the
vehicles in which they are driving.
So I think that is the place we need to start, is exactly
your comments. If we look forward at a transformational way to
have a sustainable funding source, the analysis that we have
done so far using State data shows the shift to a distance-
based fee will result in slightly less payment for rural
communities. So that is a start.
I think how we look and design the rates of that future
user-based system need to take into account the different ways
people use our roads. So I think that is an opportunity that we
have at this new way going forward.
Senator Kelly. What kind of research has been done on user-
based fees to date?
Ms. Hendren. Sure. So, what we recently did in several
States on the eastern seaboard, is we basically took States and
we divided them into different communities and how people move.
You have rural communities, you have mixed communities that
look rural but are going into the cities, and then you look at
what type of vehicles they have, look at how many miles they
drive. Then we looked today in fuel tax versus tomorrow in a
distance-based fee.
So, doing that data specific, data driven analysis has
enabled me to go to rural legislatures in North Carolina who
are very concerned about this idea for their constituents and
say, this is what the data is showing us. I am a data person,
so that is where I like to start, because it starts the
conversation. When you put the numbers in front of people, it
makes them say, OK, maybe the way I thought today was isn't
exactly as I thought, so let's talk about tomorrow together.
That is the work we have started to do.
Senator Kelly. I appreciate you looking and going to the
data. That is near and dear to my heart. Thank you.
Mr. Kile, I have got a couple more minutes here. I want to
ask you about how the coronavirus pandemic has affected fuel
consumption and gas tax revenues. The Arizona Department of
Transportation recently reported that year over year, State
fuel tax revenues were down 13 percent in 2020 compared to
2019, which in turn, has affected funding for many surface
transportation projects in Arizona.
Some of this decline was likely due to the initial stay at
home orders last spring, but long-term telework and virtual
schooling have kept drivers off the roads. I am concerned that
if these trends continue, the stress placed on the Highway
Trust Fund could be more significant than expected.
Mr. Kile, in your testimony, you indicated that it would
require about $195 billion, I believe, in general fund revenue
to cover the Highway Trust Fund shortfall over the next 10
years. Did those calculations take into account these long-term
trends that seem to be out there, which were accelerated by the
pandemic, more telework, fewer in person activities, which in
turn results in fewer Americans on the roadways?
Mr. Kile. I think the long run effects of the pandemic and
perhaps changes in lifestyle that might occur are still being
sorted out. There was obviously a reduction in driving over the
course of the last year, relative to recent history.
I know for the trust fund itself, they are still working
out exactly the implications of the last year for revenues to
that fund, and we would have to get back to you with specifics.
We would be happy to do that. But I believe that that is
actually not entirely sorted out by IRS.
In terms of longer run trends, it really does depend on
what happens to mileage in the future and the number of vehicle
miles in the future, and then also the fuel efficiency or the
fuel economy of the vehicles driving those miles.
Senator Kelly. Well, thank you, Dr. Kile, and thank you,
Mr. Chairman.
Senator Carper. Thank you, Senator Kelly.
And now the moment we have all been waiting for, Senator
Lummis.
Senator Lummis. Well, thank you, Mr. Chairman. It is a
great hearing. Thank you for doing it.
Mr. Kile, we know that not all vehicle miles traveled have
the same wear and tear on the roads. We haven't had a cost
allocation study since 1997. Can you talk about the type of
information that Congress needs to get from a more recent
study?
Mr. Kile. The cost allocation study is, in fact, quite old,
as you noted. I think the basic points about the cost from past
cost allocation studies have been that the cost of passenger
vehicles is mostly felt through congestion in larger urban
areas, and then through the environmental externalities from
gasoline consumption. For heavy trucks, it is mostly based on
pavement damage from those trucks. I think it would be
enormously helpful for the policy community if there were a
more recent cost allocation study.
Senator Lummis. Thank you.
Should there be, Ms. Hendren, should there be some sort of
a congestion pricing or some other mechanism that could reflect
those differences?
Mr. Kile. Well, whether there should or should not is a
decision obviously for you and your colleagues. Under the
current system, though, consumers don't basically see the costs
of their contributions to congestion. We all sit in congested
highways, but the users don't bear those costs that they impose
on other people.
Senator Lummis. Ms. Hendren, have you seen any formula that
reflects congestion pricing?
Ms. Hendren. The work that we are doing in our
demonstration pilots, we are exploring if this technology of a
user-based fee could also be used as a congestion mitigation
approach. The view that we have is our cars are changing, as
Senator Carper said, the times are a-changing, our cars are
changing, our drivers are changing. So as we change the way
that we potentially fund transportation, what other concerns do
we have?
So, what we have seen so far, we did a proof of concept
looking at cordon pricing around a city to say, could the
technology of a distance-based fee handle bringing in different
variable prices on time of day or location? And it looks like
the technology can, so we need to do more work there. Again,
the idea is how can we simplify how people pay for
transportation? How can we look at collecting that revenue in a
cost efficient manner?
So, we are using the grants, again, that this Committee put
in place to really kick the tires on this concept. We have some
preliminary finding. I am happy to submit more of our findings
when we are finished with them to this Committee, but we have a
little more exploration to do there.
Senator Lummis. Thank you. We would love to see that when
it is available.
Mr. Poole, I was really pleased to see you advocated for
removing the mass transit account from the Highway Trust Fund
in your testimony. Is there a user fee model out there that we
could apply to mass transportation so highway users are not
subsidizing mass transportation, and thereby removing adequate
funding from highways and bridges?
Mr. Poole. Thank you, Senator. The problem is that the
costs of operating and building and operating and maintaining
our transportation system are vastly higher than the amount of
revenue that gets generated from passenger fees. In the
research community, one idea that is looked at a lot is
something called value capture, real estate value capture.
For example, in a major city like New York or in
Washington, DC, where you have subway stations, you can
actually measure that there is significant increases in the
land value of being located within proximity to those stations.
But yet that value is captured by the real estate owners, not
by the transit system.
By contrast, the systems developed and operated in Hong
Kong and Tokyo and other major cities in Japan have built in
value capture as part of the funding and financing mechanism.
So the problem is since we haven't done that, and most of these
facilities are already built, it is difficult politically to
all of a sudden say, well, you guys have benefited from real
estate value increases. Now we are going to take some of it.
But that is a mechanism that actually would generate revenue if
we could figure out a way to do it. It is fairly, pretty
substantial revenue on an ongoing basis.
Senator Lummis. Thank you for that.
For any of you, has anyone ever looked at a user fee tax on
tires? I know that there is some tax on tires for commercial
vehicles, but what about passenger vehicles? A user fee on
tires, it could be assessed either at the point of sale or
earlier in the manufacturing process. That would capture
electric vehicles as well as gas vehicles.
Does anyone have any information on that kind of a concept?
Has anybody studied that?
Senator Carper. Dr. Kile, do you have any thoughts on that?
I am pretty sure there is a Federal tax excised on what trucks,
large trucks pay on tires, I think. Dr. Kile, is that true?
Mr. Kile. Yes, there is a tax, a Federal truck tire tax for
commercial vehicles. We have not looked at that for passenger
vehicles.
Senator Lummis. Thank you, Mr. Chairman. I yield back.
[The prepared statement of Senator Lummis follows:]
Statement of Hon. Cynthia M. Lummis,
U.S. Senator from the State of Wyoming
I appreciate the opportunity to weigh in on the important
topic of infrastructure funding.
Finding a long-term, reliable funding source for the
Highway Trust Fund must be the top priority as we work on an
infrastructure bill. Right now, it is a trust fund that we
can't actually trust. Congress just passed a $2 trillion relief
bill that will be paid for by future generations. I do not want
to further burden them with paying for the infrastructure we
are using today.
I am also concerned about suggestions that Congress could
use corporate taxes or even a carbon tax to fund
infrastructure. These proposals take us further and further
away from a user fee model.
User fees have different qualities than general taxes,
primarily that the user is able to see the direct benefits of
those fees. The idea that the people and entities using our
roads should be the ones paying for them should not be a
controversial idea.
We must simply find a way to pay for our roads and bridges
rather than relying on General Fund transfers; that is what we
have done since 2008. We have to make the tough decisions now
so that our children and grandchildren don't pay the
consequences.
Senator Carper. All right. Senator Lummis, thanks for those
questions.
Senator Capito.
Senator Capito. Thank you, and thank all of you for being
here and just--I have a couple comments, and then a quick
question.
I think it has been really interesting to see how
innovative States have been through pilot projects with the
road user fees or the mileage-based user fees. I think that
this is something that it seems like we have bipartisan very
large interest in this, and it is something that we ought to
really consider as we are moving forward. I am encouraged by
that.
I would like to, and I am a little puzzled, because I think
the Secretary of Transportation in his public statements has
not only removed the gas tax increase from a possible revenue
source, but also the vehicle miles traveled idea and concept
as, they kind of took that off the table rather rapidly, which
I was sort of surprised about. So we will have to circle back
with that.
One of the things that I think we don't talk enough about,
and I am not really sure, obviously, what we are looking here
for is enough revenues to meet our needs and to meet not just
the needs now, but the needs of the future.
Mr. Shinkle, you talked about public-private partnerships,
and that some of that was tolling. We know tolling is very
unpopular in a lot of areas of all of our States and is
difficult for State leaders to move forward.
What other ideas, how else can we bring the private sector
into this? Obviously, they are the beneficiary, whether you are
a car manufacturer, tire manufacturer, refinery, all kinds of
different electrical and technical parts of an automobile or a
truck. How else can we bring the private sector dollars into
this to help us match our public dollar investment? Do you have
any other ideas on that? It is a big question.
Mr. Shinkle.
Mr. Shinkle. Yes, Senator Capito, thanks for that. I do,
and I think, along the lines of P3s and I think it is pretty
fair to characterize that public-private partnerships, P3s, are
perhaps underutilized in the United States, certainly compared
to our comparative Canada, United Kingdom, Europe, et cetera,
even Latin American countries. Some of that is kind of a lack
of statutory and certainty and having the correct process set
up.
Now, having said that, a lot of States have done a lot of
great things with regard to P3s, and they have been successful
with a lot of projects and delivering projects that have been
on time and for less money, and with all of the kind of
efficiencies in intellectual and physical capital that the free
market and companies have that a State DOT or a State doesn't
necessarily have. So I do really think there is a role there
for private companies to play in some way.
I think that probably asking someone from industry is the
way to get the best answer. But they need some more regulatory,
statutory certainty. They need some idea that if we submit a
bid, and it goes through, and it is accepted, then this project
is going to go forward.
But as you alluded to, especially when it comes to tolling,
that starts getting really difficult. You have to make sure
that you have the public buy in, or else you are going to have
this conflation of tolls constantly with P3s, and that makes it
difficult.
Now, having said that, there are examples of where you can
do P3s, you can have a large project. I think a good example is
in Pennsylvania. They are doing 500-plus bridges, smaller
bridges. They bundled them together. You bundle a bunch of
similar-ish projects together, and by doing that, you achieve a
scale.
That doesn't involve any tolls, it is just that, you know,
it is easier for a private company, perhaps, to replace, repair
those 500-some bridges than to have the State DOT do it. They
can do it quicker and more efficiently, and you have them bid.
I believe in Pennsylvania, they are using money from their
bonding to pay for that. So that is an example of a P3 without
a toll.
There are other examples out there. There are transit P3s,
and a lot of these are just based on availability payments,
which essentially means that you did the job correctly, that
the asset is working correctly, and you are meeting these
certain metrics. So I think there is a lot there.
I think, along the lines of what Mr. Poole said, too,
about, and this isn't necessarily about private, but having
just access to capital, too, and things like TIFIA, and having
access to capital is important to States, especially for some
of these trickier projects. So those are kind of some of my
thoughts.
Senator Capito. Thank you. Yes, I think one of the things
that you are alluding to here, which is a little off topic for
what we are doing here, but regulatory certainty and efficiency
in the regulatory process has got to be a part of this bill. I
think that we reached some consensus on that in our last bill 2
years ago that we passed unanimously out of this Committee. But
that would certainly help us as we move forward.
I would say anecdotally, the State of West Virginia uses
something called GARVEE Bonds, and don't ask me what they stand
for, but what they are are basically using future revenues,
guarantees of future revenues to pay for the construction of
the highway of today. That is where we have to give this long-
term certainty to our Governors and to our road builders and to
our users that, in 5 years, you are going to have this amount
of money. So you can then sort of pre-fund as you move forward
in anticipation of funds coming in later.
So thank you all very much.
Thank you, Mr. Chair.
Senator Carper. Senator Padilla is trying to do double
duty. He is at two hearings he is in line to ask questions in
both of them at the same time, so he is asking questions at
another hearing, and when he wraps up there, he is going to
join us virtually.
In the meantime, I would like to ask a question of Dr.
Kile. I want to give you an opportunity to discuss the estimate
of revenues that a 1 cent VMT fee would raise compared to the
annual shortfall in the Highway Trust Fund in response to the
question that was raised, I think earlier, by Senator Capito.
Dr. Kile.
Mr. Kile. So, one of the options that you have is to assess
a vehicle miles traveled tax. I think that was just, looking at
the State setting for the moment, the shortfall in the trust
fund over the next 10 years is $195 billion. That is a 10 year
number.
The illustrative number on vehicle miles traveled taxes is
$1.6 billion a year, and that is for a VMT tax that would be
imposed on commercial trucks on all roads, all commercial
trucks. That is strictly an example both in terms of the base
of the tax, the number of vehicles that would be taxed, as well
as the amount. All of those are choice variables for the
Congress if you go down that road.
Maybe the only other thing I would say about VMT taxes is
that implementing them would take a fair bit of work relative
to what we currently have. There are a lot of implementation
details that would need to be worked out.
Senator Carper. OK, thanks.
A couple of comments I might make while we are waiting for
Senator Padilla to join us. I oftentimes, my colleagues and I
oftentimes come to work on the train. A guy named Biden, he and
I used to train-pool together, and even every now and then he
still takes the train.
I used to be on the Amtrak Board when I was Governor. I
served on the Amtrak Board for 4 years, and we never seemed to
be able to raise at the fare box, for Amtrak, money to pay both
for operating costs and capital costs in the northeast
corridor. I might be mistaken on this, but I don't think I am.
March, a year ago, just before we fell into the pandemic,
that February or March, may have been the first month since
Amtrak was created back in the 1970s where, at the fare box,
they were able to pay for, because of ridership growth, they
were able to pay for the operating costs in the northeast
corridor, and I believe, the capital costs, as well. Ridership
was about a quarter of a million people per week, and that was
an all time record.
The idea of saying that we are not going to use any money,
and we don't use moneys, as I recall, we don't use money out of
the Highway Trust Fund to help underwrite the costs of
interstate passenger rail service. We do use about 20 percent
of the moneys for transit.
Folks who ride transit around our country, whether it is
Delaware, West Virginia, California, Des Moines, those are
folks who are not going to be using the roads, highways,
bridges. As someone once shared with me, folks were not riding
the train if they weren't taking transit. If they were driving
the cars in the northeast corridor, we would have to build a
bunch of extra lanes of I-95. So there is an argument for both
sides, and I will just leave that where it is.
I want to ask our witnesses, any final quick points that
you want to make?
Dr. Kile, any last closing word? Maybe a question you were
not asked that you want to answer, Dr. Kile, real quickly.
Thank you.
Mr. Kile. I would be happy to answer anything that you
have, but I think I covered the main points that I intended to
cover in my oral statement.
Senator Carper. All right, thanks a lot.
Jack Basso. Jack, thanks so much for joining us, Mr. Basso,
whom I called Jack, for years.
Mr. Basso. Thank you, Senator. I think just one point that
we really do need to address, getting both State and national
pilots going, and we are going to need additional funding,
which I know you have in the EPW bill, so that is my only
additive comment. We really need to move. Thank you.
Senator Carper. All right. Thank you, sir.
Next, Dr. Hendren, please. Maybe one last point you would
like to make, or remake.
Ms. Hendren. Thank you. So, I think the topic that hasn't
come up as much today relates to motor carriers. I think again,
as heavy users and payers of our transportation system, we
really need to look at our trucking industry separately from
our passenger vehicles as we go forward on a sustainable
transportation funding approach.
You all are very aware how diverse and complex and heavily
regulated the trucking industry is. I think at the Coalition,
we have done a very good job of bringing them to the table, to
the conversation. But I am concerned if we move forward with a
user-based approach, it does need to address all users, versus
singling out one of our users on the road. So that comment, I
just wanted to make sure I had made it clearly.
Senator Carper. I appreciate your making that point. The
conversations we have had with the trucking industry, there is
great willingness to pay their fair share. They are some of the
strongest supporters for making sure that the users pay.
Let's see, Mr. Poole, Robert Poole.
Mr. Poole. Thank you, Senator. I would like to second the
comment from Dr. Hendren, and caution very seriously against
singling out the trucking industry to be the place to start. It
is really, as their findings have found, it is more complex in
a lot of ways than passenger cars.
The trucking industry, while participating commendably in
some of these new pilot programs, has also just published a big
report making the most pessimistic possible assumptions about a
truck mileage-based user--well, mileage-based user fees in
general.
So there is a lot of persuading still needed and experience
needed with the trucking industry. The worst thing that policy
could do it to single them out and start saying, we are going
to make the trucking industry go first, because that would
create a backlash that I think would be very, very damaging.
Senator Carper. Thank you, sir.
Mr. Shinkle. Then I am going to recognize Senator Padilla
on Webex.
Mr. Shinkle, please.
Mr. Shinkle. Thank you, Chairman Carper.
Two things I would just reiterate that States do appreciate
having formulas for funding certainty. So that is one thing to
mention. And then I think just continue to partner and ask for
the States to participate.
This conversation is great. There are a lot of incredible
insights that are coming from the Surface Transportation System
Funding Alternatives Grant Program, a lot of different things
in States. I think it does work to the advantage of us as a
country at this point, that States are kind of experimenting
with slightly different ways of doing things, working with the
public, looking at different payment options, and just playing
around with what a RUC might look like, as well as
collaborating with their neighboring States to figure out about
travel going across States.
So just continuing to partner with States, and even more
robust funding for STSFA would be nice. I think that is all I
would say.
Senator Carper. All right, thanks, Mr. Shinkle.
Now, let me recognize Senator Padilla.
Senator Padilla, thanks for hanging in there and joining
us. You might be the last Senator to ask a question. Go ahead,
Senator.
Senator Padilla. Thank you, Mr. Chair. I will try to be
brief. I know it has been a long, very substantive hearing. I
just appreciate the opportunity to raise a couple of points.
The first, for Mr. Kile. Mr. Kile, in your written
testimony, you heeded how a road charge system could create a
greater burden relative to income for lower income households.
What are some ways that Congress could address concerns of
equity in exploring these alternative funding mechanisms and
formulas? And we welcome Dr. Hendren's thoughts on the same
matter.
Mr. Kile. Sir, you are correct to note that a road use
charge that was uniform would impose larger costs relative to
income on lower income households. In that way, the
characteristics of that, I think, are probably similar to the
characteristics of the gasoline tax.
As for options, that is really something that I would need
to leave to you and your colleagues for ways to ameliorate the
effects of that on low income households.
Ms. Hendren. To add on to my colleague's statements there,
I think the key part is today, the fuel tax approach is a
regressive tax, as you are aware. So as we move forward, we do
have the opportunity of the user-based fee to change how we
fund transportation and to be smarter about that.
So I think it is an incredible opportunity that is kind of
at our feet that we can grab hold of, and we can make sure that
we go forward in a way that doesn't put a higher percentage of
household costs on our lower income households for
transportation. Transportation to me is how we create
opportunity in our country, so how can we make sure how we pay
for it continues to open up those doors of opportunity.
Senator Padilla. Thank you both. A lot of work to do to
address that.
The next and final question is for Mr. Shinkle. In your
written testimony, you noted how the Surface Transportation
System Funding Alternatives Program has helped 14 States to
explore road usage charge systems. Additionally, 12 States have
introduced legislation related to road usage charge so far this
year.
In addition to funding, how else can the Federal Government
best support States as they continue their critical work to
study and pilot road usage charge programs and similar
concepts?
Mr. Shinkle. That is a great question. I think, first of
all, having a hearing, and thank you very much, Senator
Padilla, for the question. I think, first of all, just holding
hearings like this and including the voices of stakeholders
from the States.
I think it would be great to hear from, obviously, Dr.
Hendren is here representing the Eastern Transportation
Coalition, but perhaps hearing from Oregon and Utah, the States
that have the actual operational RUC programs. Your home State
of California is doing a lot of really incredible and
interesting research, and has been really piloting and looking
at a lot of different payment options, which I think will be
important to consider.
Washington is doing a lot of interesting stuff; Hawaii was
alluded to before. So maybe hearing from some of those States
would be another advantageous thing to hear a little bit more
about exactly what they are doing, because they can really get
into the weeds of exactly what they are doing and what kind of
RUC systems they are trying to potentially build.
Senator Padilla. Thank you, and thank you for the response.
We have got a lot more work to do, a lot more data to gather.
Thank you, Mr. Chairman.
Senator Carper. Thanks, Senator Padilla.
Well, I think while you were trying to do double duty with
the other hearing you are participating in, I mentioned that
the States are laboratories of democracy, and they give us the
opportunity to find out what works and do more of that, and
frankly find out what doesn't work and do maybe less of that.
Anybody else, any of our other colleagues out there on
Webex or virtually somewhere would like to participate?
OK. I want to again, thank our witnesses. We had both
sides, both minority and majority sides of our staffs were
responsible for putting together our witnesses today. I just
want to say, I think you all hit a home run with runners on
base, and we thank each of you for testifying.
Almost every day, every week at least, when I am on the
platform waiting to catch the train to come down here to go to
work, somebody will say to me, I wouldn't want your job for all
the tea in China. They say that, and I say really? They would
say, yes. And I said, actually, yes, I feel lucky to do what I
do. If you think about the opportunities before us here on this
Committee, we have the opportunity to provide leadership for
the Senate, and I think for the Congress, in dealing with some
of our toughest challenges.
One is this pandemic, how to get out of it, how to get our
health better and to get through this. We face the challenge of
an economy; it is the worst economy we have had since the Great
Depression. I think it is getting better, but we still have a
long way to go.
We have a surface transportation system that is in bad
shape, and we can do better than this, and we need to do better
than this.
We can actually sort of address all of those, and climate
change, terrible adverse weather, extreme weather, that is not
getting a whole lot better for us. It is getting a lot worse
over time.
So we have to opportunity to address all of those, all of
those. Not all the responsibility lies in this Committee, but a
good deal. We have the opportunity, again, to provide some of
the leadership that is needed.
Our tradition in this Committee is to work across the aisle
to work together, and we do that pretty well. We will have the
opportunity to demonstrate that next week when our water
infrastructure legislation before the full Senate, reported
unanimously out of this Committee last month, and we hope it
will move along nicely.
We are going to take a fair amount of additional input in
hearings, and just informal conversations over the next month
and a half. Hopefully before Memorial Day, we will report out a
surface transportation bill, and we will do it unanimously, and
in a way that will help make sure that we fund the development
and improvement of our surface transportation system in a
sustainable way and with the kind of resilience that we need,
and provide for beginning to build the kind of infrastructure
that a lot of us are calling for, including the President, to
build corridors of charging stations and fueling stations,
because those vehicles are coming.
I will close with the words of Mary Barra from about a year
ago, the CEO of--not even a year ago, this may be 3 or 4 months
ago, when we were talking about the future of electric
vehicles, and she said, I am all in on electric. She said that
is where the future is. She said, we have done about as much as
we can to improve the internal combustion engine, and we are
not going to be able to take a whole lot more. The future is
with electric.
I would hasten to add it is not just electric with
batteries, but I think the idea of hydrogen, green hydrogen,
and doing that in conjunction with fuel cells and creating
electricity and water as a waste product. There is great future
in that, and a lot of hope and jobs that can be created from
it, not just in building the corridors, but actually building
the vehicles that will use those corridors and reduce the
threat of climate change to our country and to our planet.
I love to quote Albert Einstein, and my favorite Einstein
is ``In adversity lies opportunity.'' Lots of adversity here,
but also plenty of opportunity.
Another, since we are talking a lot about cars, I just
recalled a quote from Henry Ford, who was the father of the
Model T. Henry Ford used to say, ``If you think you can, or you
think you can't, you are right.'' If you think you can, or you
think you can't, you are right. I think we can, and I am really
encouraged by the input we have received from our witnesses
today.
I very much appreciate the work of our staff in bringing
this together today, for all of our colleagues who have
participated today. This is, for me, encouraging, and I hope
for others, as well.
I have a couple of unanimous consent requests. Can't leave
here without asking unanimous consent to submit for the record
a report on the economic impact of public transportation
investments from the American Public Transportation
Association. The report describes the way that transit benefits
both transit users as well as road users, who benefit from
reduced traffic congestion and traffic safety benefits.
I have actually alluded to this already, but let's make it
unanimous consent request as well.
Also, I ask unanimous consent to submit a letter signed by
31 transportation stakeholder organizations on the need for a
long-term solution to keep the Highway Trust Fund solvent and
in support of inclusion of a nationwide program to test out
vehicle miles traveled, VMTs, in our next bill. Additionally,
several other associations and States that have led pilot
programs have shared letters of support and findings from their
work. I ask unanimous consent to submit those materials as
well.
[The referenced information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Let me just turn to my right. Adam,
anything else? We are good to go?
Mary Frances Repko, majority staff director? Oh yes, thank
you, Mary. OK.
For some final housekeeping, Senators will be allowed to
submit questions for the record through close of business on
April 28th. We will compile those questions and send them to
our witnesses. We would ask for you to respond to them by May
12th, if at all possible.
Anything else?
All right, I think we are good to go.
Thanks, everyone; it was a great hearing.
It is time to vote.
Thanks.
[Whereupon, at 12:07 p.m., the hearing was adjourned.]