AED Washington Insights Newsletter
February 2004
Prepared by Christian A. Klein, AED Vice President of Government Affairs
and the AED Washington team
In this Issue:
Senate passes $318 billion transportation bill
After being stalled in a political traffic jam for months, the highway bill is finally starting to move.
On February 12th, the Senate passed its version of a six-year surface transportation plan by a 76 to 21 vote. The Senate bill proposes $318 billion for federal surface highway and transit programs over the next six years, with $294 billion of that amount guaranteed for construction programs.
With the Senate’s work done for now, attention shifts to the House, where Transportation & Infrastructure (T&I) Committee Chairman Don Young (R-AK) is negotiating with his party’s leaders about how big the highway and transit bill should be and how to pay for it. Young and the bipartisan leadership of his committee have proposed a $375 billion bill that AED and our industry allies strongly supported. Word on the street is that the T&I Committee will mark up its bill next week or the week after and that it will go to the House floor sometime before the end of March. The House earlier this month overwhelmingly passed a bill to extend TEA-21 for another four months past its February 29th expiration date. Senate action on an extension is pending.
Complicating matters on the House side is the hard line the Bush administration is taking. Earlier this month, the administration issued a Statement of Administration Policy threatening to veto any highway bill that violated certain principles. Such violations include, relying on a user fee increase, bonding, or general fund revenues to increase highway funding, or using gimmicks to hide the true cost of the bill from taxpayers. The White House has specifically threatened to veto the legislation.
We think the administration is making a big mistake on the highway issue. With deficits mounting, the president and his advisors are trying to appeal to fiscal conservatives. Unfortunately, they’ve chosen the highway user fee funded transportation bill to make their stand.
In refusing to explore creative solutions to the nation’s transportation crisis, the White House is ignoring the toll that bad roads and congestion are taking on the economy, and the job creation effect that additional highway spending would have. The $256 billion, six-year highway and transit plan offered by the White House would effectively keep infrastructure funding flat through the end of the decade. With 13,000 people dying as a result of bad roads each year, and congestion costing the U.S. economy more than $67 billion annually, that level of funding is unacceptable.
The administration’s rhetoric has spooked House GOP leaders, who are apparently worried about the political consequences of a veto fight between the Republican Congress and the Republican president in an election year. But AED and our allies have taken the position that the $318 billion in funding proposed by the Senate is the absolute minimum that should be authorized for the next six years.
AED members should contact lawmakers in both houses of Congress to urge fast action on a six-year highway and transit bill that provides absolutely no less than $318 billion for transportation programs. Tell lawmakers that it’s crucial to get the legislation done quickly to restore long-term stability to the construction industry. Contact information for Congress can be found at http://www.congress.org.
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Senate highway bill provision would create rental preference for states
Although passage of the Senate’s $318 billion highway bill was good news from the standpoint of efforts to increase funding for the federal highway program, there are problems with certain parts of the legislation. First among these is that it would create a preference for rental equipment used for highway construction and maintenance projects.
The provision, which is being promoted by lobbyists for United Rentals, would require public entities engaged in federal highway work to justify, in writing, a decision to purchase rather than rent most types of equipment. However, states choosing to rent equipment would not be required to justify their decision, even though renting may cost more. The language is contained in Section 1406 of the Senate’s Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2003 (SAFETEA) (S. 1072).
AED has been leading efforts to block the enactment of SAFETEA Section 1406. Pressure from our coalition, which includes contractor and equipment manufacturer representatives, led to Section 1406 being scaled back while SAFETEA was being considered on the Senate floor. In its original form, the rental provision would have applied to contractors as well as to states. However, even as amended, Section 1406 creates unjustifiable and unacceptable preferences for rental in federal law. AED and our construction industry allies are continuing the fight.
AED President calls Section 1406 "bad public policy"
AED’s position is that the decision by a contractor, a state, or municipality to buy, rent, or lease is a market issue and should remain a market issue. Section 1406 threatens to subvert the free market.
But it’s not just the idea of market intrusion that has AED members so concerned. "Fundamentally, Section 1406 is bad public policy," 2004 AED President Dale Vaughn (OCT Equipment in Oklahoma City, Oklahoma) said. "The provision assumes that rental is always better than purchasing or leasing. That’s just not the case. Depending on the type of equipment, the length and size of the project, current equipment fleet assets, and a number of other factors, a state or contractor may decide it is more cost efficient to either buy, lease, or rent equipment."
"Another reason that Section 1406 is such a terrible idea is that it’s going to impose new red tape on the project delivery process," Vaughn said. "States are going to have to expend additional time and resources to justify an internal decision to federal bureaucrats. This would, of course, be contrary to one of the major goals set by congressional leaders for TEA-21 reauthorization: speeding the project delivery process."
While the limitation of Section 1406 was an important victory for AED and our allies, there’s still more work to be done. It’s crucial that this provision not be included in the House highway bill to give us the maximum opportunity to resolve the issue in conference.
This is an issue that has the potential to affect every AED member, regardless of whether you currently do business with states. The federal government has no business picking winners and losers in the market place. Rental often is an inefficient and more costly way for a state to acquire equipment. And, if this provision is enacted into law, it will set a dangerous precedent for the future.
Immediate grassroots contact needed
AED urges equipment distributors to fax letters to their representatives and senators - particularly those on the Senate Environment & Public Works and House Transportation & Infrastructure Committee – IMMEDIATELY to express opposition to Sec. 1406 and to explain why creating a rental preference in the federal highway program is such a bad idea.
Follow up those letters with phone calls to the transportation legislative assistants and legislative directors in your representatives’ and senators’ offices. You can get contact information for your legislators at http://www.congress.org. For AED’s one-page background paper on Section 1406, click here: http://www.aednet.org/government/pdf/RentalLanguageOnePage.pdf.
Please fax (703.739.9488) or email (aeddc@aednet.org) AED’s Washington office copies of your letters to Congress on the rental preference issue so we can follow up with your representatives and senators.
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Make your voice heard on the Hill: Attend AED’s 2004 Government Affairs Conference
Do you think issues like the reauthorization of TEA-21, efforts to create rental preferences, and tax reform matter to your industry and your company? If you think so, consider joining the equipment industry’s leaders at AED’s Spring 2004 Government Affairs Conference.
On March 24th and 25th AED members will descend on Washington to get personally involved in the policy process. This is a chance for you to get the inside track on what’s happening in the nation’s capital and a chance for you to have a real impact on the legislative process.
Congress is considering myriad bills that could profoundly impact your company. The highly anticipated federal highway program reauthorization bill, permanent death tax repeal, product liability reform, and rental equipment preferences are all on the table.
With all this at stake, your involvement is crucial.
The annual Washington meeting offers AED members an opportunity to learn about the issues directly from prominent lawmakers, to hear from the industries that AED members serve, to learn about the hot congressional races in the 2004 election, and to meet with legislators to promote the equipment industry’s agenda.
Speakers already confirmed for the meeting include:
- House Judiciary Committee Chairman James Sensenbrenner (R-WI);
- Senate Armed Services and Environment & Public Works Committee Member Wayne Allard (R-CO);
- House Workforce Protections Subcommittee Chairman Charlie Norwood (R-GA);
- House Transportation & Infrastructure Committee Member Denny Rehberg (R-MT);
- House T&I Committee Member Lincoln Davis (D-TN);
- Bernadette Budde, vice president of the Business Industry Political Action Committee;
- Diane Steed, president of the American Highway Users Alliance;
- Peter Ruane, president of the American Road and Transportation Builders Association;
- Steve Sandherr, executive vice president of the Associated General Contractors of America; and
- Jennifer Joy Wilson, president & CEO of the National Sand, Stone and Gravel Association.
For those who’ve never been to an AED Washington meeting before, this is a great time to get involved. And veterans of past meetings will notice some exciting changes to our agenda, including the addition of a reception in the Capitol Building on the evening of Thursday, March 25th preceded by an exclusive, behind the scenes Capitol tour.
For more information about the conference and the scheduled events, take a look at the agenda:
http://www.aednet.org/government/spring-govt-affairs-conference/agenda.pdf.
To register for the conference, contact Sandy Brassel at (800) 388-0650 ext. 332 or sbrassel@aednet.org.
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AED-sponsored study offers new ammunition in TEA-21 reauthorization battle
A recent report developed with support from AED’s Washington Education Fund (WEF) has focused new attention on America’s staggering highway infrastructure needs.
On February 19th, the American Highway Users Alliance (AHUA) released its 2004 Bottleneck Study. The report, which received extensive national media coverage, identifies 233 bottlenecks on the nation’s highway system where annual delays exceed 700,000 hours. The findings highlight the need for Congress to act quickly to pass a six-year highway reauthorization that substantially boosts funding for the road program.
AED WEF support was "crucial"
AHUA President Diane Steed noted the important role that AED and the AED WEF played in the development of the study. "AED was the first organization to recognize the significance of this project and to pledge support. The involvement of your association was crucial," Steed said. "I hope that AED''s members will now pick up the ball and use this report in their communications with the Hill as the TEA-21 reauthorization debate proceeds."
The study illustrates the costs of the nation’s under-investment in highway infrastructure. Since the study was last conducted in 1999, the number of bottlenecks has climbed from 167 in 30 states to 233 in 33 states - a 40 percent increase. Bottlenecks are specific, physical locations on highways that routinely experience traffic backups.
The worst bottleneck, on US-101 in Los Angeles, California, suffered from over 27 million hours of delay in 2002. Highways in Houston, Texas, Chicago, Illinois, Phoenix, Arizona, and Atlanta, Georgia, each had bottlenecks that caused over 20 million hours of delay annually. Twenty-four major US bottlenecks annually cause over 10 million hours of delay each. According to the study, bottlenecks contributed to an estimated 50 percent of the nation’s traffic congestion. It has been estimated that traffic congestion around the country costs the U.S. economy more than $67 billion each year.
Study shows investment can solve problems
One important study finding is that investing in infrastructure can make a difference. Because of major construction projects, seven out of the top 18 worst bottlenecks identified in the 1999 study no longer appear on the list at all. That fact alone should help build congressional support for additional road funding.
Investing now means important safety, economic and environmental benefits later
AHUA estimates that fixing the nation’s bottlenecks would prevent 449,500 crashes, 1,750 fatalities and 220,500 injuries that would otherwise occur over the next 20 years. Consumers would conserve 40 billion gallons of fuel, and reduce rush hour delays by an average of more than 30 minutes per day. Relieving pressure at bottlenecks would also have important environmental benefits: carbon monoxide and carbon dioxide pollution at those sites could be reduced by 54 percent and 77 percent respectively.
"A fundamental step towards fixing America’s worst bottlenecks is passage of a new six-year transportation reauthorization bill," Steed said. "For the sake of public safety, an improve environment and a better quality of life, Congress should act quickly and dedicate significant funding to fixing these chokepoints."
By supporting the Bottleneck Study, AED has helped draw national attention to America’s highway investment needs. With the nation and our lawmakers listening, now is the time to take advantage of this momentum. Call your representative and senators and let them know that the results of this study concern you, and that Congress can begin solving this problem by enacting a well funded TEA-21 reauthorization bill.
The complete Bottleneck Study is available at the AHUA website: http://www.highways.org/bottleneck/2004/complete.cfm.
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House Considers Bill to Protect Mobile Machinery Exception
Passage of the Senate’s TEA-21 reauthorization bill has given new life to legislation to protect the mobile machinery exception.
Insights readers will recall that in 2002 the Internal Revenue Service (IRS) launched an initiative to change the regulation that exempts truck chassis that serve as mounts for jobsite equipment from the heavy truck excise tax and other highway user fees.
The proposal set off a firestorm of industry and congressional protest that ultimately led the Treasury Department and IRS to temporarily punt the issue to Congress.
Members of both houses of Congress have responded to the IRS proposal by introducing bills codifying the exception into the tax law, thereby removing it from the IRS’ rulemaking authority.
The recently passed Senate highway reauthorization bill contains just such a provision. In the House, Representative Paul D. Ryan (R-WI) introduced a bill in October 2003 (H.R. 3246), currently under consideration in the House Ways and Means Committee, also designed to protect the exception from IRS tinkering.
AED and others are continuing efforts to convince lawmakers that the IRS proposal to get rid of the mobile machinery exception is misguided. Mobile machinery makes only infrequent use of roads, and new taxes on this type of equipment would depress demand, hurt the economic recovery, and increase the cost of construction projects.
While the Senate has passed legislation to protect the mobile machinery exemption and H.R. 3246 has over 100 co-sponsors, there are still those in the Congress who have not joined in the effort to protect this sensible and fair exception. Among them are several members of the influential House Ways and Means Committee (see sidebar). Currently 16 of the 41 members of the committee have signed on to the bill, while 25 have yet to offer their support as co-sponsors.
If the House fails to pass a bill, the IRS might take that to mean that it’s open season on the mobile machinery exception. For this reason, it’s imperative that H.R. 3246 receives support from the House Ways and Means Committee, including the committee’s chairman, Representative William M. Thomas (R-CA). If the Chairman or another member of the committee represents your district, contact them to let them know that you support H.R. 3246 and the efforts to protect the mobile machinery exception.
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