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Transportation and Infrastructure
The Senate Finance Committee was expected to markup Sen. Wyden’s (D-OR) Preserving America’s Transit and Highways (PATH) Act today, but the vote was put on hold until after the week-long July 4th recess while the two parties continue to negotiate. The bill attempts to provide a short term funding boost for the long-troubled Highway Trust Fund, which is expected to run out of cash by late July as TheHill.com explains:
The traditional funding source for transportation projects has long been collected from the federal gas tax, which is currently set at 18.4 cents per gallon. Infrastructure expenses have outpaced revenue from the gas tax by about $16 billion annually in recent years, partly due to increases in fuel efficiency and a decline in driving.
The PATH Act purported to provide a $9 billion cash injection to the Trust Fund primarily by eliminating stretch IRAs (essentially raising taxes on investments and nest eggs by $3.5 billion over ten years), increasing taxes on heavy trucks, and a hodge-podge of other tax-loophole gimmicks, such as revoking passports for nonpayment of delinquent taxes. However, a Chairman’s modification to the underlying bill issued only a few hours before the scheduled markup struck the Heavy Vehicle Use Tax hike, which was expected to raise $1.3 billion over ten years, leaving a large gap in revenue and making it even harder for Senators to find agreement on the legislation.
This isn’t the first time the Highway Trust Fund has hit a “roadblock,” so to speak. The fund has been repeatedly bailed out with billions from the General Fund over the past six years. It’s clear another short-term measure is only kicking the can down the road and won’t address the program’s underlying problems. So far, lawmakers on Capitol Hill seem to be focused only on the revenue side of the ledger as one proposal after another has focused on raising taxes or even trying to find savings from the U.S. Postal Service to fund highways, truly a robbing Peter to pay Paul scenario. However there are some commonsense steps lawmakers should take first to restore solvency to the trust fund before turning to taxpayers with hat in hand.
Davis-Bacon is a blatant piece of special-interest, pro-union legislation. It hasn't come cheap for taxpayers. According to research by Suffolk University economists, Davis-Bacon has raised the construction wages on federal projects 22 percent above the market rate.
James Sherk of the Heritage Foundation finds that repealing Davis-Bacon would save taxpayers $11.4 billion in 2010 alone. Simply suspending Davis-Bacon would allow government contractors to hire 160,000 new workers at no additional cost, according to Sherk.
2. Stop raiding the Highway Trust Fund for non-highway projects: The Heritage Foundation’s recent issue brief on the infrastructure funding crisis highlights the way funds are diverted to state and local projects that are outside the intended use of the trust fund:
Transit—including light rail, trolleys, and buses—marks the largest diversion. In 2010 alone, it received 17 percent, or $6 billion, of federal highway user fees, even though it accounted for only about 1 percent of the nation’s surface travel. Despite receiving a portion of federal user fees for decades, transit has failed to reduce traffic congestion or even maintain its share of urban travel. For example, between 1983 and 2010, traffic volumes in the nation’s 51 major metropolitan areas increased by 87 percent, peak travel times in those areas increased by 125 percent, and transit’s share of passenger miles fell by one-fourth.
The transportation alternatives program is another diversion. From FY 2009 to FY 2011, the Federal Highway Administration obligated over $3.1 billion for these activities, which included pedestrian and bicycle paths and facilities, recreation trails, landscaping, environmental mitigation, and transportation museums. The current surface transportation law, Moving Ahead for Progress in the 21st Century (MAP-21), eliminated a handful of previously eligible activities but still required a 2 percent set-aside of total highway funding to fund the remaining ones.
3. Increase privatization and implementation of private-sector innovation: Decreasing the role of big government is the go-to solution for one problem after another, from student loans to health care to energy. Transportation and infrastructure are no different, despite the tendency of some to believe otherwise. The Mercatus Center has a recent working paper that outlines numerous ways increased privatization and adaption of private-sector technologies can address transportation costs and inefficiencies. As the paper explains:
The funding shortfalls result mainly from the lack of basic economic principles to guide the provision of public highway and aviation infrastructure. Prices are not aligned with users’ contributions to congestion and delays, investments are not based on benefit-cost analyses, and regulation inflates operating costs.
Increased privatization would help better align use and cost and would change user behavior based on economic benefits.
Of course, the bottom line is that we shouldn’t be spending money we don’t have. The coming Highway Trust Fund shortfall has been anticipated for a long time and not only have lawmakers waited until the eleventh hour to try to strike a deal, but funds have continued to be dispersed above the rate gas tax revenues have come in. Last-minute deal making rarely bodes well for taxpayers. We should reject tax increases and insist on a long-term solution that addresses our out of control spending problems first.
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Florida’s 19th Special House Election: A Budgetary Guide
In what some are calling a quiet election, there’s still a lot to be said. Though the challenges of taking drug tests have largely been replaced with who can help create the most jobs in the next five months, before the next election for the same office, Florida residents are asking the same questions of candidates as they did in Florida’s other recent special House election: What will you do in Washington, D.C.? Especially in the wake of their last Congressman, Trey Radel, who resigned after being arrested for possession of cocaine.
In just a couple of short months, three front runners have emerged to battle for the 19th District’s seat: businessman Curt Clawson (R), businesswoman and former political activist April Freeman (D), and former health worker Ray Netherwood (L). Each candidate offers different general solutions to America’s fiscal ills but details have yet to come out about how each would actually change the federal budget. However, by using a methodology similar to National Taxpayers Union Foundation’s (NTUF) BillTally project, taxpayers can see where the candidates stand on at least some of the spending issues. For this brief study, we took direct quotes and campaign materials of candidates and matched them with budget and legislative data to see exactly what the differences and similarities are.
Similar to the New Jersey Special Senate and Florida’s 13th Special House elections, details were few and far between. Even with the campaigns releasing economic plans and platform summaries, we’re still left asking what will they do if elected as the House of Representative’s newest member?
Check out the entire line-by-line analysis of all three candidates. As with NTUF’s other BillTally and campaign studies, only changes in current spending are recorded (similar to the Congressional Budget Office). The reports do not include changes in revenues or costs outside the federal government. Below are summaries of each candidates’ proposals.
Curt Clawson (R) has proposed two (out of 12) quantifiable policies that NTUF was able to score. Combined, they would decrease annual spending by $395.8 billion. The largest budget-influencing item that he supports would cap federal expenditures at 19 percent of GDP, which would be implemented using the “Penny Plan,” which would cut spending by one percent each year as long as the budget is not balanced.
April Freeman (D) has two (out of 12) policy items that NTUF could fiscally score. Together, they would increase spending by $20.203 billion each year for the next five years. Her largest quantifiable proposal would overhaul the immigration system.
Ray Netherwood (L) had one proposal that NTUF could identify. It would be to replace the current income-based tax system with a national sales tax, known as the Fair Tax. The measure would cut an average $19 billion in federal outlays for each of the next five years.
Normally, there would be some overlap between the candidates’ platforms. In the other Florida Special Election, the front runners supported increasing current spending by $180 million per year to delay a scheduled rate increase for the National Flood Insurance Program. That was not the case in this House race, although the three candidates were not asked similar questions when interviewed by the same source.
What does this mean for taxpayers and residents of the 19th District? It’s time for the campaigns to give Americans more details. While candidates are asking Floridians for their vote, taxpayers are asking for the roadmap of each candidate’s path to reach a better and expanding economy. As highlighted above and in the full report, the absence of budgetary facts and figures opens the possibility that all of the candidates could have much larger or smaller spending aspirations in mind. Clawson, Freeman, or Netherwood need only clarify their intentions with dollar figures to help complete this report and help educate Americans on important and pressing issues that we’re all facing.
Note: National Taxpayers Union Foundation is a 501(c)3 nonprofit organization. Our research efforts are intended only to educate Americans on how their tax dollars are being or will be spent by those in office, seeking office, or in appointed positions. For more information on NTUF go here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Not a Fan of $1 Million Bus Stop? How about $672K?
ARLnow.com, a local news site for Arlington, Virginia, updated residents on the costs of new bus stops proposed along Columbia Pike, a major artery running right up to the Pentagon. As opposed to the $1 million prototype bus stop that I wrote about last year, Arlington County officials released an updated design with a new cost per stop: between $362,000 and $672,000. The three newly termed “transit centers” look similar to the “Super Stop” design but are shorter in height, have wider canopies, and have side windscreens. Each stop will have a different cost, according to its size:
The county provided a breakdown in costs for construction and site design and project management, with the latter representing approximately 23 percent of the total cost for the small- and medium-sized stations.
This all might be an improvement but taxpayers who answered a poll on the site say it’s still too high a cost:
Area residents questioned why existing bus stop designs (the classic three-sided, glass enclosures) are being replaced for a more expensive, unproven design (especially since the new design still does not protect those waiting from the elements. Others voiced concerns over the still-high costs. One commenter wrote that a standard stop costs $30,000 and some can cost as much as $58,000 across the border in Maryland. The question I ask Arlington Board members is, are the artsy designs of the stops worth spending millions of local taxpayer dollars instead of putting those funds towards other concerns or taxpayer relief?
On a county-level, the cost of the overall effort went from $20.9 million to $12.4 million, a 40 percent decrease. Yet, those savings may be swept away as the Washington Post just reported that the Columbia Pike streetcar – a major reason the county cites for updating the bus stops -- will cost $358 million, or $100 million more than the county’s previous projection. On top of all of this, taxpayers across the country need to keep any eye on this issue because 48 percent ($140.5 million) of Arlington County’s share of the expenses are expected to come from the federal government. The issue comes down to whether Arlington officials are doing what’s best for residents or just building pretty things that will ultimately go underused.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
Fisker fail: The Department of Energy announced that it will auction off its remaining loan to the now closed electric vehicle manufacturer Fisker Automotive. The outstanding loan totals $168 million. This is the second DOE backed company to go bust. Read more in the Detroit News.
Metro malaise: The Washington DC metro system, which is already subsidized by the taxpayers, is in the process of building another line which will likely increase the per-trip cost for riders significantly, while “leaving riders and taxpayers around the region to pay the bill.” Read more in the Washington City Paper.
Food stamp fraud: A federal indictment was handed down against 10 Baltimore area business owners after they allegedly used food stamp debit cards to defraud the taxpayers. The fraud totaled nearly $7 million. Read more details in The Baltimore Sun.0 Comments | Post a Comment | Sign up for NTU Action Alerts
All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.
Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.
Now for the not-so-good:
All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?
And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.
Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?
Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”
Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.
Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.2 Comments | Post a Comment | Sign up for NTU Action Alerts
I live in Arlington, Virginia, a tiny county that happens to be right next to our nation’s capitol. One of the many reasons I live there is that the state of Virginia seems to have a much better handle on spending and the size of government, especially when compared to neighboring Maryland and Washington DC. So much so that the state had a $220 million surplus back in July. There are other great benefits to living in Arlington including amazing food trucks, access to the Metro system, and Arlington Cemetery. BUT the county seems to want people to be impressed with a piece of nondescript concrete a mere 6 blocks from where I live. It’s a bus stop. It cost $1 million and I’m not the only one who paid for it. You did too.According to Arlington Now, the county just completed the “Super Stop,” which is the first of 24 such advanced bus pickup points with a shelter for “some 15 passengers, lighting, an electronic display that shows when the next buses are coming, and a number of unbranded newspaper boxes.” It took a year and a half to construct. An Arlington County spokeswoman reported that $575,000 was spent for construction and $440,000 went towards management and inspections. First point: I am not read up on the intricacies of Arlington and Virginia building codes but if just a forth of the latter amount ($110,000) was spent on inspections then this is a serious case of overregulation.
Now to what all of this has to do with you taxpayers across the country. The county paid $200,000 for the glorified street corner and got the remaining $815,000 from the Virginia Department of Transportation, who in turn will get $996.9 million federal funds for road infrastructure projects in FY 2013. Second point: According to Reed Construction Data and their 2008 numbers, it costs an average $1.294 million to construct a basic 12,000 square foot single-story bus terminal using union labor. To clarify, it is conceivable that Arlington County could have built a terminal with the costs of this single bus stop. I estimate that the bus stop is around 180 square feet but, even if it was double that (360 sq ft), they spent $2,828 per square foot.2 Comments | Post a Comment | Sign up for NTU Action Alerts
Will Virginia Gov. McDonnell Veto His Own $6.1B Tax Plan?
"I’m going to be able to find other ways to fund transportation.” –Bob McDonnell, September 2009
Now, when asked about taxpayers’ backlash to his 5-year, $6.1 billion tax hike, Governor Bob McDonnell is all smiles.
“Listen, I’ve been looking all over the state for contractors who will build our roads for free,” McDonnell joked in a recent interview. “Haven’t found any of them yet!”
As a Virginia taxpayer, I’m not amused. McDonnell campaigned against transportation tax hikes. Now, he’s thrilled that the Virginia General Assembly approved his colossal tax increase.
Friday’s PolitiFact piece shows the full extent of the Governor’s flip-flop. In a 2009 campaign ad, he declared, "My plan: New money for transportation, while protecting education and not raising taxes.”
See for yourself:
McDonnell still hasn’t signed his $6.1 billion tax monster into law, but judging by his eagerness to defend this “historic accomplishment,” Virginia taxpayers should brace themselves.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As the push for more fuel efficient transportation intensifies, U.S. officials are warning of major future deficits for the Highway Trust Fund, established in 1956 to support the construction and maintenance of the Interstate Highway System.
The Highway Trust Fund is financed through transportation-related excise taxes, the most significant of which is the federal gasoline tax. However, as fuel efficiency standards become stricter and Americans head to the pump less often, gas tax collections are expected to decrease over the next decade, and federal transportation funds could face substantial long-term deficits. A May 2012 report from the Congressional Budget Office showed that at 2012 spending and taxation levels, the Highway Trust Fund is looking at a $147 billion shortfall by 2022. After factoring in a 21-percent reduction in gas tax receipts due to increased fuel efficiency standards, that deficit increases to $204 billion.
The CBO determined that the government has 3 options to address the looming problem:
As part of the BillTally project, NTUF analyzed legislation introduced by Rep. Earl Blumenauer (D, OR) in the waning hours of the 112th Congress that opts for the third course of action. H.R. 6662 would authorize $154.5 million to study the impact and feasibility of a mileage-based user fee system. Such a system taxes drivers by the number of miles they travel rather than the gallons of gas they consume. A report conducted by the Government Accountability Office (GAO) in the same month examined some of the costs and benefits of three different types of mileage tax methods: GPS, "pay-at-the-pump," and prepaid systems.
GPS systems use satellite technology and cellular transponders to track the number of miles a registered vehicle travels over a given time, which is then processed at a central location and billed to the driver. Obvious concerns include the cost of implementing such technology in the over 200 million registered passenger vehicles across the country, as well as the perceived invasion of privacy a tracking system of that magnitude is likely to provoke. Germany currently uses a similar system to tax commercial trucking industries.
"Pay-at-the-pump" methods require a wireless transponder be installed in every vehicle, which transmits mileage information to a central database when drivers go to gas stations across the country. Based on that data, fees are automatically adjusted for each driver before billing at the pump. Again, cost and logistical challenges are a major impediment to making this system viable, and some high-efficiency electric vehicles do not require trips to the gas station, making it difficult to enforce the fee collection for some drivers.
Prepaid systems require drivers to purchase "mileage licenses," which allow travel over a certain number of miles before the license must be renewed. Such a system is already in place in New Zealand, where it applies to diesel-fueled vehicles (mostly commercial trucks, but some passenger cars as well). The GAO noted that this system is prone to equity issues, as drivers can tamper with odometers to avoid paying fees.
Any of the three proposed systems would generate additional revenue over the long run, but they pose major logistical and financial challenges (both in implementation and administration), create privacy concerns for many Americans, and would significantly increase transportation costs.
The GAO report modeled the effect of a 0.9 to 2.2 cent per mile tax on a typical American driver, and found that even at those levels, taxpayers could expect to pay $108 to $248 per year in fees. Currently, the average driver pays about $96 in gas taxes each year. That would mean an increase of at least 12.5% in annual transportation expenses for the typical driver if Congress decides to follow through on these proposals.
NTUF does not endorse any candidate or position. For more information on BillTally, please visit http://www.ntu.org/ntuf/.3 Comments | Post a Comment | Sign up for NTU Action Alerts
Why Virginia Gov. McDonnell’s Tax Hike Plan is a Bad Idea
This week, Virginia Governor Bob McDonnell unveiled his transportation funding plan that would eliminate the State’s 17.5 cents-per-gallon gas tax and impose significant hikes on the sales tax and vehicle registration fees.
Under the Governor’s proposal, the Virginia sales tax would jump from 5 to 5.8 percent, car registration fees would spike $15, and Virginians with cars that run on alternative fuels would be hit with a brand new $100 fee. In truth, these new “fees” are actually taxes because they wouldn’t be dedicated to road construction, but instead would fund mass transit projects, such as building passenger rail between Lynchburg and Roanoke and lengthening the Norfolk light rail service into Virginia Beach. An additional $300 million would be set aside for the Metro’s Silver Line, a costly project that began nearly four years ago.
If all goes according to McDonnell’s plan, weary taxpayers (who are already getting pummeled by a lousy fiscal cliff deal and rising health care costs) will be on the hook to help the Governor reach his goal of raising an additional $3.1 billion by 2018. Though, as the Tax Foundation pointed out, the Governor’s math is fuzzy to say the least. True, Virginia’s transportation financing is in desperate need of restructuring, but McDonnell’s plan is a burden-shifting tax hike at its core. Not to mention, it relies on Congressional passage of dangerous online sales tax legislation to reach even deeper into Virginia taxpayers’ wallets to the tune of $1.1 billion. Banking on the so-called Marketplace Equity Act would make Virginia part of a predatory tax collection scheme that will ultimately hurt small Internet-based businesses and, undermine the principles of tax competition that have benefitted the Commonwealth.
Also, can we really expect the Virginia Department of Transportation to be good stewards of billions in new revenue? In 2010, an audit of VDOT uncovered hundreds of millions in unspent funds.
Governor McDonnell’s plan thankfully avoided an income tax boost, but there are other positive approaches that could be taken instead of his burden-shifting sales tax hike. The way in which Virginia’s transportation funding is allocated should be given more attention, and lawmakers should look to strengthen public-private partnerships made possible through the Public Private Transportation Act (PPTA) of 1995. Thanks to the PPTA, the $1 billion I-95 Express Lanes project, which began in July 2012, required only $70 million in state funding. Policymakers should increase the number of these partnerships in the Commonwealth, which have saved the State billions of dollars and years of construction time.
Virginia should also look to states like Missouri for better ways to deliver transportation improvements under budget and on schedule. In 2006, the Missouri Department of Transportation saved taxpayers $91 million through “radical cost controls” such as keeping bids for construction jobs low, asking contractors to propose innovative solutions, and slashing administrative costs. For even more inspiration, VDOT should examine this Texas Department of Transportation report for 49 highway construction and maintenance cost control ideas.
It is likely that Virginia officials have considered some of these proposals, but until they have provided demonstrable evidence that these ideas have been considered and implemented to the maximum amount possible, overburdened taxpayers will continue to oppose schemes such as the one proposed by Governor McDonnell this week.0 Comments | Post a Comment | Sign up for NTU Action Alerts
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NTU's new State Affairs Manager Lee Schalk joins Doug & Manzanita (in Pete's absence) to discuss state taxpayer issues that are still popping up despite the summer heat. Also the 'Fiscal Five' & 'Outrage of the Week!'6 Comments | Post a Comment | Sign up for NTU Action Alerts