With roads and bridges continuing to deteriorate across the state and nation and potentially affecting business and industry, many are seeking ways to pay for upgrades and repairs.
And the U.S. Chamber of Commerce is one major player behind a call to increase the federal gas and diesel tax by 25 cents per gallon to raise $375 billion for infrastructure improvements during the next decade.
The chamber’s proposal also includes a push for private investment in public infrastructure projects, a streamlined permitting process and increased capacity of federal loan programs.
While Congress has yet to act, a federal tax increase on gas is getting an uncertain to disapproving reaction in Pennsylvania and the Greater Lehigh Valley.
“I think it’s a terrible proposal,” said Matthew Telesca, president and CEO of MGN Logistics Inc. in Easton. “I think it’s going to be a lopsided impact on small [trucking] businesses.”
All transportation companies will feel the impact of a 25-cent increase in the federal gas tax, but it will be exacerbated for small companies because they dominate the market, he said.
Ninety percent of all truckload companies in the nation have fewer than 10 trucks, and these mom-and-pop trucking companies are hauling about 90 percent of the domestic freight in the country, he said.
And this comes on top of Pennsylvania’s Act 89, signed into law in 2013, that raised the state’s wholesale gas and diesel tax, increased fees for driver licenses, vehicle registrations and fines for motor vehicle violations to pay for all types of transportation improvements.
Pennsylvania has hiked its wholesale gas tax every year since 2013, and that cost trickles down to the pump for all motorists.
COST OF GOODS TO RISE
Truckload companies are those that transport materials and products across long distances. Since last year, the truckload industry has been at an all-time high rate for the cost of shipments. That’s primarily caused by extremely tight capacity and the truck driver shortage, Telesca said.
The trucking market is fluctuating between four and five truckloads available for every one truck.
“Right now, we are seeing the tightest market we’ve seen historically, so the idea of adding an additional 25 cents on any gas/diesel tax would really accelerate the pricing we are seeing now,” he said.
“It could set up a bad economic situation two years out. That’s going to directly impact those small carriers, and ultimately that’s going to find its way into consumer costs.”
Telesca said it could escalate inflation and cause the Federal Reserve to raise interest rates to cool it down.
So far, local chamber organizations have yet to announce a position on the issue.
“We have not come out with a specific position,” said Michelle Griffin Young, executive vice president of government and external affairs for the Greater Lehigh Valley Chamber of Commerce.
In general, though, the Greater Lehigh Chamber is OK with an increase specifically for infrastructure because business needs infrastructure to succeed, she said.
Locally, Northampton County officials have created a public-private transportation partnership called a P3 to pay for the repair or replacement of 33 bridges by using a state law that allows transfer of ownership of the county’s bridges to a municipal authority.
“We are very interested in what P3 partnerships there are,” Griffin Young said.
By the end of March, the Greater Lehigh Valley Chamber should be prepared to reveal its position on the issue of raising the gas tax to fund infrastructure projects, she said.
SUSTAINABILITY IN QUESTION
The Greater Reading Chamber Alliance will follow a similar path.
The chamber’s transportation committee will evaluate the U.S. Chamber’s proposal at a March 22 meeting, said Gail Landis, senior vice president, government and community relations for the Greater Reading Chamber Alliance, which has 1,200 members.
Though the alliance does not yet have an official position, Landis questioned the viability of a 25-cent increase in the federal gas tax.
“It’s not a really great long-term solution, when you think about it,” Landis said. “Is that going to be a sustainable source of revenue?”
SEEKING REASON, CONSISTENCY
When the state passed Act 89, the Greater Reading Chamber Alliance supported it as part of a plan to fund infrastructure, Landis said.
“We are looking at major infrastructure, and how do you implement something that’s going to be reasonable and consistent?” she asked.
The major infrastructure that needs funding includes bridges, rail and commuter services, Landis said.
NO POSITION YET BY PA. CHAMBER
The Pennsylvania Chamber of Business & Industry has not taken a position on raising the federal gas tax to pay for infrastructure projects, said Kevin Sunday, director of government affairs for the organization.
“We have pushed broadly that Congress needs to find a solution,” he said. “The investment deficit has existed for many years.”
Aside from roads and bridges, many of the state’s water lines and airports need upgrading, Sunday added.