ISSUE BRIEF: TRANSPORTATION
Nearly 80 percent of NATSO’s truckstop and travel plaza members are located within one-quarter mile of the Interstate Highway System (IHS). An effective, efficient federal highway program is integral to the continued success of the truckstop and travel plaza industry.
NATSO supports a robust federal highway program. At the present time, the best way to achieve this is through raising motor fuels excise taxes. Fuels taxes – 18.4 cents/gallon for gasoline, 24.4 cents/gallon for diesel – represent the most efficient and equitable method to raise dedicated highway funds, and are the ultimate user fee or pay-as-you-go approach to funding infrastructure. Those tax rates have not been raised in decades, however, and are currently too low to raise sufficient revenue to fund much-needed infrastructure projects.
NATSO opposes revenue-raising measures that are inefficient and disrupt travel and freight movement or undercut off-highway businesses. For example, the Trump Administration previously expressed support for commercializing Interstate rest areas and/or tolling existing Interstate highways. Moreover, lawmakers in the House of Representatives are considering introducing legislation that would open up Interstate rest areas to commercial activities. NATSO strongly opposes these policies. They are inefficient mechanisms for raising infrastructure revenue, and would divert highway travelers away from existing off-highway businesses.
NATSO members should emphasize to lawmakers and their staff that (i) our industry is strongly opposed to commercializing rest areas and tolling as a means of raising infrastructure revenue; and (ii) our industry is strongly supportive of efficient and effective means of raising infrastructure revenue, including raising motor fuels excise taxes.
Both chambers of Congress are in the process of drafting legislation designed to enhance investment in and improve efficiencies of infrastructure in the United States. As lawmakers write infrastructure legislation, it is imperative that they understand how various approaches under consideration would impact your business.
For many decades, motor fuels excise taxes have been the primary source of revenue for the Highway Trust Fund (HTF) (which is the primary revenue source for federal transportation projects).
Unfortunately, fuel taxes have not generated sufficient revenue to cover HTF outlays since 2008. Fuel tax revenue has been insufficient for a variety of reasons:
- Fuel taxes are set in terms of cents per gallon rather than as a percentage of the sale price, so their revenues do not increase with inflation;
- The fuel tax rates have not been raised since 1993;
- Fuel efficiency in vehicles has improved;
- Construction costs have increased; and
- Economic growth is sluggish.
For the past decade, HTF shortfalls have been resolved via general fund and other largely non-transportation-related revenue transfers. This is not sustainable. The United States needs sufficient, self-sustaining, transportation-related funding sources rather than transfers from the general treasury fund and other accounting gimmicks. Starting in 2020, when the current highway reauthorization bill expires, HTF receipts will fall nearly $100 billion short of the amount needed to fund highway and public transportation programs over five years (assuming funding remains at current levels).
In a political environment where lawmakers are reluctant to support tax-increases (including fuel taxes), some are exploring alternative revenue-raising mechanisms such as repealing the bans on tolling and commercializing rest areas. Since the advent of the IHS, however, Congress has generally prohibited commercializing Interstate rest areas and tolling existing Interstates. (Certain corridors, mostly in the Northeast, that had been in existence before the IHS was developed were “grandfathered in,” and thus permit tolls and/or commercialized rest areas.)
Repealing or liberalizing the bans on tolling and commercializing rest areas is bad public policy and a dereliction of Congress’s duty to adequately fund infrastructure throughout the United States. NATSO and its members strongly oppose it. Instead, we urge Congress to exercise political courage and make the difficult political decision to raise fuel tax rates and ensure that our country’s infrastructure is well-funded as we head into the middle part of the 21st Century.
NATSO POSITIONS AND ARGUMENTS:
1) Support Modernizing Motor Fuels Excise Taxes to make Transportation Funding Self-Sustaining
Motor fuels excise taxes are a transparent, user-based approach to generating revenue for the U.S. highway system. But the taxes have lost more than 40% of their purchasing power since they were last raised.
When the federal fuels excise tax rates are too low, not only are transportation projects underfunded, but states are starved for revenue. This results in individual states increasing their own fuels excise taxes, which creates an un-level playing field for off-highway businesses: Travelers – especially sophisticated, price-conscious truck drivers – are likely to travel straight through “high-tax” states and fill their tanks in neighboring “low-tax” states.
NATSO wants to work with Members of Congress and other interested stakeholders to develop a sensible, responsible, politically feasible method to modernize the federal motor fuels excise tax regime. Whatever approach is taken should be transparent, user-based, and explicitly limited to spending the revenue that is raised on infrastructure-related projects.
NATSO recognizes that recent market and technological innovations pertaining to fuel efficiency, vehicle electrification, ride-sharing, and autonomous vehicles present intriguing opportunities to dramatically alter how we fund and regulate transportation in the United States. It is imperative that lawmakers not allow these forward-looking developments distract from the real, near-term need for investment.
In this respect, the best outcome would be legislation that facilitates a process whereby the U.S. can recalibrate how it pays for infrastructure as it moves into the middle part of the 21st Century, while at the same time providing a mechanism to adequately fund such investment in the near-term as the process plays out.
At the present time, raising motor fuels excise taxes is the most efficient way to generate additional revenue for the U.S. highway system. To capture electric vehicles (EVs) that do not currently pay fuel taxes, NATSO would support increased registration and/or battery fees that target these vehicles.
It is not often that an industry urges Congress to raise taxes on the primary goods that it sells. But the travel center industry recognizes that raising fuel taxes to improve our crumbling infrastructure will benefit their customers and the economy at large. What’s more, it recognizes that the costs of inaction (in terms of increased vehicle maintenance expenses and congestion costs) are too great.
It’s important to recognize that there will likely come a time in the not-too-distant future when a vehicle miles traveled (VMT) tax is the best approach in order to offset fuel efficiency improvements and capture the increasing number of EVs on the road. This approach, however, will require a new bureaucracy at the Internal Revenue Service to collect and enforce the VMT tax. Additionally, it requires the public to overcome privacy concerns that very much exist at the present time. Creating new and expanding existing VMT pilot programs is a necessary step to implementing a nationwide VMT and moving away from fuel taxes as the primary source of revenue for the HTF. Fuel retailers may play an important role in implementing a VMT, and the industry is eager to work with lawmakers toward that end. But these steps should complement, rather than detract from, more immediate efforts to invest in the nation’s roads and bridges.
2) Do Not Commercialize Interstate Rest Areas
When Congress created the IHS in the 1950s, community leaders feared that local businesses, jobs, and tax bases would shrink as truck drivers and motorists bypassed their cities and towns. As a result, Congress prohibited states from offering commercial services, such as food and fuel, at commercial rest areas on Interstates built after Jan. 1, 1960. (NOTE: There is an exception for vending machines operated by businesses owned by legally blind individuals.)
Since then, businesses such as restaurants, fuel stations, and truckstops have clustered at the interchanges along the IHS to provide services to Interstate travelers.
There is a litany of arguments against lifting the ban on commercializing Interstate rest areas. Specifically, commercializing Interstate rest areas would:
- Transfer sales away from the current competitive environment at highway exits to such a degree that many exit-based businesses would not survive. Due solely to their preferential locations, state-owned commercial rest areas would establish virtual monopolies on the sale of services to highway travelers.
- Not increase the quantity of goods bought and sold, but simply transfer the point of sale away from the current competitive environment at highway exits to the non-competitive commercial rest area on the right-of-way.
- Function as a new state tax on localities: Revenue raised from commercial transactions at Interstate rest areas would go to state coffers; the towns and counties that rely on those businesses for local tax revenues will be challenged to make up the lost tax revenues. Local communities will suffer when exit-based businesses and the jobs they support have to cut workers and potentially close.
- Undercut other congressional objectives, such as increasing truck parking capacity and alternative fuel infrastructure options, both of which would be aided by participation from travel plazas and retail fuel stations that are not financially battered by unfair competition from the government.
- With respect to truck parking, truckstops and travel plazas provide more than 90% of truck parking capacity in the United States. Even though it is extremely expensive to build and maintain, truck parking is by and large provided free of charge. The truckstop owner’s “return on investment” for truck parking lots, therefore, is generally via fuel sales and inside sales at restaurants and/or convenience stores. Unfair competition from foodservice establishments located on the right-of-way, therefore, would make it more difficult for the travel plaza industry to make expensive investments in truck parking.
- Devastate the blind community, which currently enjoys a priority for installing and operating vending machines at Interstate rest areas. Many blind entrepreneurs throughout the country rely on this exception to the ban on rest area commercialization to earn a living, support their families, and realize the American dream.
Some lawmakers support a “limited” exception to the ban on commercializing rest areas to allow for EV Charging stations at rest areas. NATSO strongly opposes this. First, this presents unfair, government-sponsored competition with the private sector to sell what many consider to be a fuel (electricity) that will represent an increasing share of the market over the coming decades. What’s more, it would discourage investment in alternative fuels. Many off-highway fuel retailers and other businesses have invested significant resources in alternative fuels such as EV charging and natural gas infrastructure. If such alternative fuels were made available at rest areas on the Interstate right-of-way, it would discourage the private sector from making such investments and ultimately hinder growth in these alternative fuels. This should be the last thing that alternative fuel proponents should want.
Congress has reaffirmed the ban on rest area commercialization numerous times over the years, including as recently as 2012 when the Senate resoundingly rejected an amendment to repeal the ban by a vote of 12-86. Since then, Congress has not expressed an explicit desire to reverse the nearly 60-year prohibition on commercial rest areas.
Some lawmakers, however, have indicated they would consider legislation that rolls back the ban in minor ways, and NATSO takes these threats seriously. Last Congress, Representatives Jim Banks (R-IN) and Joe Courtney (D-CT) introduced legislation that would permit restaurants and convenience stores at Interstate rest areas. Other lawmakers are considering similar legislation presently. Members of Congress should oppose any legislation that would undermine the ban on commercial services at Interstate rest areas.
3) Do Not Toll Existing Interstates
There are many negative consequences of tolls, including:
- Double-Taxation – Tolling an existing Interstate forces motorists to pay two taxes for the same road: a fuel tax and a toll tax. Dedicated fuel tax revenue has been the mechanism for funding Interstate maintenance and construction since the
IHS was established in 1956. New tolls on existing Interstate lanes would be a violation of the public trust.
- Wasted Revenue – Tolling facilities are expensive to build, maintain, operate, and enforce. On major toll roads, toll collection costs can exceed 30% of revenue raised. The latest technologies only lower this cost to 12-20% of revenue raised. By comparison, only approximately 1% of revenue raised via fuels taxes goes to administrative costs; the rest is devoted to transportation investments.
- Traffic Diversion – A toll on existing Interstate lanes diverts traffic to local and secondary roads near toll facilities that were not built to handle Interstate-level traffic volume. This contributes to increased maintenance costs, traffic accidents, and delays for local commuters and first responders who rely on secondary roads every day.
- Negative Economic Impacts – Placing tolls on existing Interstate lanes will increase the cost to move goods throughout the supply chain, hurting the competitiveness of U.S. companies and raising consumer prices. It will also impact communities and businesses that rely on the unhindered flow of people and goods, such as truckstops and restaurants.
- Unfair Treatment for Rural America – Many of the country’s crumbling roads and bridges are located in less-populated areas that may not be traveled frequently enough to generate toll revenue. If we relied on tolling to pay for infrastructure, rural America’s needs would go unfulfilled.
Travel centers, which are often the largest taxpayers and employers in their communities, rely on interstate travelers to survive. The communities along highway interchanges in turn rely on the health of the off-highway businesses that cater to the traveling public. As Congress begins to consider infrastructure legislation, lawmakers should (i) support infrastructure policies that would serve to help these businesses and communities, and (ii) oppose counter-productive “shortcuts” to real infrastructure investment, namely tolling existing interstates and commercializing interstate rest areas.