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Steer Clear of Major Tax Increases

Transportation Policy Briefing

What issues are likely to take center stage during the upcoming debate over highway reauthorization?

How will the government pay for all the transportation projects it needs to fund?

How will environmental priorities mesh with the nation's infrastructure and economic needs as Congress debates highway reauthorization?

What issues are likely to come to the fore during debate over FAA reauthorization?

What does having a Democratic president and greater Democratic majorities in Congress mean for bicyclists?

As the new ranking member of the House Appropriations Subcommittee on Transportation and Housing and Urban Development, I am fully aware of the long list of national and local transportation priorities that await the consideration of Congress over the next several months following the commotion from the recent spending spree — and various other bailout measures.

Many people share my serious concerns about the state of the highway, aviation and mass-transit trust funds. It is no secret that they are all near bankruptcy, or headed in that direction.

The 2008 spike in fuel prices, coupled with the economic slowdown, triggered a large reduction in driving and, in turn, a reduction in the use of fuel. The decrease in driving directly reduced fuel tax receipts. Given that fuel taxes are the primary source of

funding the trust funds that cover highway and other transit priorities, Congress will have to figure out some method of addressing the shortfalls in a sustainable way — possibly in a transitional fashion from one source to another as we do not yet know the point at which fuel purchases will substantially increase.

Two trust fund proposals, which surface from time to time, have again been brought to the forefront: One that is certain to be pushed by some is to simply increase the federal gas tax, which has not been adjusted in more than a decade; a second revenue approach likely to be advocated is the idea of implementing road and highway tolls.

It is worth raising a caution flag to those who would blindly steer us down the path of either a regressive gas tax increase or the establishment of tolls to make up the revenue shortfalls. We must be very mindful in our pursuit of solutions to the trust fund problem, as we do not want to add additional stress on our economy or hardworking families around the country.

Fuel taxes and road tolls often hit low-income Americans the hardest. This is particularly true in rural states, where lower-income citizens tend to commute farther distances to their places of employment. Given that they are also likely to be operating older, less fuel-efficient vehicles, it is logical to conclude that regressive toll or tax increases could be devastating to rural and low-income Americans.

As an Iowan, I will try to contribute to the upcoming debate an added perspective on the ways in which reduced revenues to the Highway Trust Fund affect the flexibility of funding rural transportation concerns. Iowans and other rural residents know all too well that the stability of the rural transportation infrastructure is the lifeline for fast and efficient transportation of agricultural products within and beyond state borders.

An important debate that will take place during the highway bill reauthorization process is the way in which we can best address national versus state and local priorities. In light of the Urban Partnership grants created by former Transportation Secretary Mary Peters and the National Surface Grant program that the Senate added to the economic stimulus measure, I believe that we may see a greater emphasis on fixing “national” issues with federal transportation funds. Even with an expected focus on those projects that are deemed national priorities, it is important to be mindful of the ways in which the direction of moneys to different areas will affect the ability to prioritize and provide needed funds for state and local projects.

Turning to an issue that Congress failed to address in a timely manner last year, the reauthorization of the Federal Aviation Administration, I believe that it is important that Congress make substantive progress on next- generation aviation planning and funding. Within any new policy, we should include some accommodation for smaller airports in the less-populated areas of the country, as these airports represent an important component in the economic strength and vitality for these and surrounding communities. One of my interests in this debate is whether there are new and different ways to help smaller, but still viable airports, in dealing with their facility and equipment issues. At a minimum, smaller airports must be able to access adequate federal assistance, particularly for airport safety projects.

Finally, I believe that, in any aviation debate, we must include a discussion about the future of our nation’s air traffic control systems. I hope that we can begin to lay the groundwork to ensure the safest and most efficient control system in the world in the not-too-distant future.

Rep. Tom Latham (R-Iowa) is ranking member of the House Appropriations Subcommittee on Transportation and Housing and Urban Development.

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