AEM: A revenue-neutral solution to rebuild, modernize America’s interstates

The Association of Equipment Manufacturers (AEM) on July 27 released a revenue-neutral solution to rebuild and modernize America’s interstates without raising the gas tax. The proposal, advanced by AEM in an ongoing effort to reinvigorate the stalled debate on infrastructure investment financing, was developed by Jack Schenendorf, former vice chairman of the National Surface Transportation Policy and Revenue Study Commission, of Counsel, Covington & Burling LLP, and Elizabeth Bell, Associate, Covington & Burling LLP.

As the deadline looms to reauthorize U.S. surface transportation policy by September 30, Schenendorf unveiled two alternative solutions to supplement current federal transportation revenues in a policy paper published by The Bureau of National Affairs. Recognizing that the current highway trust fund is an inadequate source of federal funding to rebuild and modernize the nation’s deteriorating roads, bridges and highways, Schenendorf’s solutions will create an alternative funding source for America’s aging and congested interstate highways that are a growing barrier to U.S. economic growth.

“Our manufacturers and farmers are at a competitive disadvantage with other countries because of aging infrastructure that has suffered decades of neglect,” Dennis Slater, president of the Association of Equipment Manufacturers, said in a written statement. “We risk losing manufacturing and agriculture jobs to overseas markets if Congress further reduces highway spending, as has been proposed in the House. With no political will by policy makers to increase the gas tax, we must look for other practical solutions that ensure the nation’s transportation needs are satisfied.”

“Both Congress and the President have recognized the severity of our infrastructure problem and the need to fix it. But neither has been able to come up with a funding solution to pay for the increased investments. This proposal will provide the critically needed funding to modernize our surface transportation system, and allows Congress to increase transportation investment without raising motor fuel or diesel fuel taxes and with no increase to the debt or the deficit,” asserted Schenendorf.

The revenue-neutral transportation funding proposal offers two alternative solutions: a Federal Interstate User Fee (FIUF) and a Federal Motor Carrier User Fee (FMCUF).