AED Highway Reauthorization Action Center
Every several years, Congress must authorize funding and set policy priorities for the federal highway program. The current highway law, Moving Ahead for Progress in the 21st Century (MAP-21) (Public Law No: 112-141), was enacted July 6, 2012 and will expire on Sept. 30, 2014.
The battle to pass MAP-21 was a long and arduous process that began with the Sept. 30, 2009 expiration of SAFETEA-LU, the previous highway authorization law. Nearly three years and ten temporary extensions later, lawmakers finally agreed to a new law.
Highway reauthorization provides the construction industry with a clearer sense of what resources will be available for future investment, how much each state will have to plan major new projects, and provides firms and contractors with enough certainty to hire new workers and invest in new equipment.
MAP-21 unfortunately did not address revisions to funding mechanisms for infrastructure investments. A recent Congressional Budget Office report shows the HTF's terrible fate - without revenue enhancements, lawmakers would need to cut roughly $50 billion from the HTF in 2015 to maintain the program's solvency – the "Year Zero" scenario. AED projects this dire solution would result in $2.3 billion in lost equipment market opportunity and more than 3,700 lost dealer jobs.
This is simply unacceptable.
A 2013 study by researchers at the College of William & Mary found that failing to change the existing tax structure while maintaining current investment will cause the HTF's account to incur a $365.5 billion deficit by 2035. The construction industry must start educating lawmakers on the need to maintain the solvency of the HTF and present various forms of innovative financing mechanisms. Increases in user fees usually appear in the context of tax debates, and AED urges lawmakers to find new revenues for the HTF while considering comprehensive tax reform. With a concerted effort by the industry, funding for the HTF could be settled before reauthorization talks start up again early in the 113th Congress.
MAP-21 maintains funding at FY 2012 levels, providing the Highway Contract Authority with $40.438 billion in FY 2013 and $40.995 billion in FY 2014. Among other things, the law:
The infrastructure funding provided in MAP-21 is fiscally responsible and a sound investment. An AED-commissioned study conducted by researchers at the College of William and Mary sheds new light on the positive impact infrastructure has on the economy and government tax
receipts. Over two years, one dollar spent on infrastructure construction produces roughly double ($1.92) the initial spending in direct and indirect economic output. Over twenty years, that return is $3.21 per dollar spent. The government sees returns on the investment as well: over twenty years, one dollar in aggregate infrastructure generates $.96 in taxes.
- will create and sustain millions of jobs
- streamlines the project delivery process
- speeds up the environmental review process
- reforms transportation enhancements to provide states greater flexibility to meet individual needs
- Reduces the number of federal transportation programs by 2/3
- Creates roughly $7.2 billion in market opportunity for equipment dealers
The legislation affords equipment dealers an enormous market opportunity. After accounting for mandatory spending allocations and expenses, MAP-21 provides approximately $37 billion to states annually through distribution under the federal funding formual. AED's analysis finds that the $37 billion in annual funding guaranteed to the states under the Federal-aid Highway Program will create roughly $7.2 billion in market activity for equipment distributors (sales, rental, leasing & product support) over the law's duration (including all of FY 2012 and FYs 2013-2014). The money spent at AED member companies will, in turn, generate $23 billion in activity in the broader U.S. economy.
AED's estimates are based on a 2008 AED commissioned report by Professor Stephen Fuller of George Mason University that found each dollar in federal highway spending creates an average of 6.4 cents in equipment market opportunity. Fuller also found that each dollar spent on equipment generates $3.19 in direct and indirect economic activity. (Note that the true impact of MAP-21 on AED members will likely be even more significant because the new analysis focused only on the part of the annual Federal-aid Highway Program guaranteed to states and did not take into account various special programs that can increase the amount a state receives.)
The association played a leading role in the fight for surface transportation reauthorization. In addition to its own efforts to win passage of the measure, AED participated in many coalitions and events urging congressional action.
This increased activism did not go unnoticed.
"It was a long road, with many delays, but Congress completed this much needed transportation reform and jobs bill," House Transportation & Infrastructure Committee Chairman John Mica (R-Fla.) said. "Associated Equipment Distributors and its members did a great job helping keep the process on track and the pressure on."
Similarly Senate Environment & Public Works (EPW) Chair Barbara Boxer (D-Calif.) also noted AED's efforts to educate members of Congress about the bill's importance. In her opening remarks before the highway conference committee on May 8, 2012, Boxer stated, "I learned from the Associated Equipment Distributors that [investment uncertainty] has caused construction businesses to rent equipment that in the past they had the confidence to by. This has depressed their businesses, placing a further drag on the economy."
Throughout the campaign to reauthorize the highway program, AED and its members:
While MAP-21 is a significant victory for AED, it does not offer the kind of robust long-term investments our national transportation networks desperately need. The extension of current funding is great, but without finding a way to pay for our surface transportation infrastructure, lawmakers merely kicked the can down the road, leaving the issue for a future Congress to resolve. If lawmakers fail to change the existing tax structure, the HTF will incur a $365.5 billion deficit by 2035.
- Sent hundreds of messages to Capitol Hill urging for the passage of the highway bill
- Co-hosted the 2011 & 2012 Rally for Roads on the National Mall
- Stormed Capitol Hill for AED's annual Washington Fly-In to educate lawmakers about the need for federal highway program funding
- Funded research showing the economic impact of federal highway program funding
- Organized the Start Us Up USA! Infrastructure Campaign Pledge
- Testified before a congressional panel on the impact the federal highway reauthorization and transportation infrastructure investment has on construction equipment industry small business
- Lead coalitions with other industry allies fighting for surface transportation reauthorization
The new law, therefore, should rather be seen simply as the starting point for a new dialogue on how to best meet the nation's long-term needs. The construction equipment industry should utilize this brief period of funding certainty to steadfastly remind senators and representatives of our nation's critical need and encourage and support innovative options to keep America moving.
AED will remain active in this battle, but the support of the equipment industry will remain critical to achieving this objective. Your support for the association's political program, through learning about AED PAC and congressional outreach through www.AEDAction.org, will help keep up the pressure for new leadership and vision.
Be sure to stay tuned in the coming months for more details on AED's plans for continuing our national infrastructure conversation. As always, be sure to let us know if you have any thoughts or comments at email@example.com.
For more information about the importance of sustained, robust federal investments in transportation infrastructure, please see the information below.
- A 2013 study commissioned by AED, conducted by researchers at William and Mary's Thomas Jefferson Program in Public Policy, found that as automobile fuel economy increases, the federal highway program's fiscal position will become ever more precarious. Left unchained, the HTF deficit will amount to $365.5 billion by 2035. The report illustrates that restoring the gas tax's 1993 spending power by raising it to 25 cents and indexing it for future inflation would raise $167 billion more than current baseline spending requirements over the next two decades. Click here to view a brochure on the study.
- An AED-commissioned study carried out by the College of William & Mary's Thomas Jefferson Program in Public Policy confirmed that investments in infrastructure yield important economic benefits and will essentially pay for themselves in the long run. The study found that each dollar spent on infrastructure investments generated $1.92 in direct and indirect economic output over a two-year period. Over a 20-year period, each dollar spent will generate 96 cents in tax revenue.
- TRIP, a national transportation research group, reports that 32 percent of America's major roads are in poor or mediocre condition, that 24 percent of our bridges are structurally deficient or functionally obsolete, and that 44 percent of our major urban highways are congested. Driving on roads in need of repair costs U.S. motorists $67 billion a year in extra vehicle repairs and operating costs -$324 per motorist.
- The Texas Transportation Institute, one of the nation's leading authorities on congestion issues, found that wasted fuel and lost productivity due to traffic congestion cost the U.S. economy more than $121 billion in 2011. Congestion wastes 2.9 billion gallons of fuel, 38 hours of the average American commuter's time, and costs auto commuters approximately $818 annually.
- A Federal Highway Administration study concludes that each $1 billion of federal spending on highway construction nationwide generates 30,000 jobs, including 10,300 in the construction sector, 4,675 jobs in industries supporting the construction sector, and approximately 15,000 other jobs induced in non-construction related sectors of the economy.
- Highway investment has a significant impact on the economic health of the equipment industry. Professor Stephen Fuller of George Mason University in Fairfax, Va. estimated that 6.4 cents of every dollar spent on highway construction is spent at equipment dealerships and that the equipment market impact of the $37 billion in 2012 federal highway program funding was $7.2 billion.
- A New Economic Analysis of Infrastructure Investment, a report from the Treasury Department and the Council of Economic Advisers detailing the positive impacts of acting now to increase infrastructure investment
- A report from the Congressional Budget Office to the Senate Finance Committee reviewing the status of the Highway Trust Fund, "The Highway Trust Fund and Paying for Highways"
- The Moment of Truth, a report by the National Commission on Fiscal Responsibility and Reform, which recommends fully funding the transportation trust fund instead of relying on deficit spending.
Important information about MAP-21
The text of MAP-21
The highway conference committees explanatory report on the law's provisions
Click here to see how your senators and congressmen voted
A report from the Congressional Budget Office to the Senate Finance Committee reviewing the status of the Highway Trust Fund, "The Highway Trust Fund and Paying for Highways"
For information, guidance, and more on MAP-21 from the Federal Highway Administration visit:
Making the case for greater infrastructure investment
The Senate Environment & Public Works Committee created a state-by-state chart showing the economic and jobs impact from cuts to federal highway, highway safety, and transit programs if HTF shortfalls are addressed solely by cutting spending in 2015 - the "year zero" scenario. An AED analysis shows how those HTF cuts would impact equipment dealers in each state.
A poll commissioned by the American Road & Transportation Builders Association showing most Americans believe transportation infrastructure should be a core function of the federal government.
The American Society of Civil Engineers 2013 infrastructure report card: http://www.infrastructurereportcard.org/a/#p/home
The Impact of Current Infrastructure Investment on America's Economic Future, a report from the American Society of Civil Engineers detailing the gap between America's infrastructure needs and actual investment levels
Economic research from the San Francisco Federal Reserve Bank showing the significant boost federal highway spending provides to local economic activity
Revenues to the Highway Trust Fund are inadequate to support current and future transportation:
Detailed recommendations for creating and sustaining a pre-eminent surface transportation system in the United States: http://transportationfortomorrow.com/final_report/index.htm
A report laying out the economic challenges posed by our ailing infrastructure:
The 2011 Urban Mobility Report illustrates how a restricted infrastructure system creates greater commuter delays, amounting to traffic congestion with enormous overall economic implications
Inadequate surface transportation negatively impacts public safety, undermining future economic growth and job creation: http://www.aednet.org/government/pdf-2009/AED-TCCSafetyStudy-20090701.pdf
The National Surface Transportation Infrastructure Financing Commission's report explaining the need for a gas tax increase
A report from the Congressional Budget Office detailing alternative approaches to funding highways exploring the consequences and practicality of fuel taxes vs. a vehicle miles traveled (VMT) tax:
A report from the Associated General Contractors: The Case for Infrastructure Reform
The Association of Equipment Manufacturers revenue-neutral proposal for rebuilding and modernizing America's interstates without raising the gas tax: Modernizing U.S. Surface Transportation System: Inaction Must Not Be an Option
A performance index rating how well transportation infrastructure meets national demand and correlates to U.S. economic performance from the U.S. Chamber of Commerce
Read the Bipartisan Policy Center's recommendations for infrastructure investment: Performance Driven: Achieving Wiser Investment in Transportation
The American Society of Civil Engineers report: Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure