LaHood Rejects Fuel Tax Hike After Urging Funding Creativity

This story appears in the March 2 print edition of Transport Topics.

WASHINGTON — Transportation Secretary Ray LaHood said federal officials should explore all options to finance infrastructure, but he later strongly rejected a fuel tax increase, at least while the economy is in recession.

Speaking to American Trucking Associations leaders here Feb. 24, LaHood said government leaders should “think outside the box” for highway funding and to be sure “all options were on the table.”

Later that day, speaking to the American Association of State Highway and Transportation Officials, however, LaHood said the Obama administration was opposed to raising the fuel tax.

“In a recession, when people are out of work, when people don’t have jobs, the last thing anyone, any politician, is going to talk about is raising taxes,” LaHood said. “I’m not for it, the administration is not for it and we’re going to think creatively about how we do the things we want to do.”

LaHood made his comments a few days after he was publicly rebuked by White House Press Secretary Robert Gibbs for floating the idea of instituting a federal tax on vehicle miles traveled (click here for Premium Content story).

Despite rejecting higher fuel taxes, LaHood told ATA leaders that “something has to be done” to shore up the Highway Trust Fund and noted the emergency infusion of $8 billion Congress provided last year to keep the fund solvent.

“The Highway Trust Fund is deteriorating,” he said. “I believe we have to be creative, we have to consider all ideas, we have to think outside the box and all options are on the table.”

LaHood said the trust fund, with its fuel taxes, “frankly is a 20th century mechanism for funding roads.”

“If we look at all the needs we have in America for roads and bridges . . . there simply is not enough money,” he added. “The big dilemma . . . is how do we pay for it? How do we pay for all these things?”

Questioned later, LaHood did not elaborate on how he or the Obama administration planned to answer those questions.

“We have to think outside the box,” he said. “That’s the name of the game, and that’s what we’re going to be doing and we’re going to be working with Congress on that.”

In his remarks to AASHTO, LaHood said the $27.5 billion for transportation spending in the economic stimulus package would provide “an enormous boost” for the country’s infrastructure needs but that more was needed.

“It’s very clear that there is simply not enough money in the Highway Trust Fund to do all the things that need to be done in America, following up the recovery plan,” he said. “We all need to be thinking about . . . how we’re going to continue the progress the recovery plan allowed us to do.”

Asked about public-private partnerships, LaHood said such arrangements are “one of the things we need to think about.”

However, he was quick to say that interest in thinking about them was “not an endorsement” of private road deals. Rather, he said, the department was just “thinking about” their possible role in funding highway infrastructure.

LaHood told ATA that the stimulus legislation would have “a direct impact” on trucking since the industry would be called on to haul much of the material used for road and other construction funded by the $778 billion spending plan.

“The trucking industry is critical to the health of our economy,” which the stimulus plan is designed to “jump-start,” he said.

LaHood said he was “troubled” at how hard the recession has hit trucking, noting that the industry lost nearly 75,000 jobs in 2008. In January alone, the Labor Department reported that trucking shed 24,900 jobs (click here for previous Premium Content story).

LaHood said to AASHTO that economists told the Obama administration that “the best way [to create jobs] is to build infrastructure and rebuild our infrastructure” and that DOT was “very encouraged by the reports that state DOTs are moving quickly to get projects in the pipeline.”

DOT, he said, would also soon begin distributing funds from a $1.5 billion discretionary program created by the stimulus plan and that the department was “trying to establish some criteria” for awarding the funds.