Election Impact on Transportation

Election Impact on Transportation

Election Impact on Transportation

Transportation regulatory reform is on the back burner for now. Florida Republican Rep. John Mica will be replacing Oberstar as chairman of the Transportation and Infrastructure Committee. Everyone agrees that the current fuel tax does not support the needs of the transportation sector, but many are against raising the fuel tax to fund necessary changes. Significant delays are expected as new ideas for funding are discussed.

Mica has prioritized long-term reauthorization of the federal highway program, which is long overdue, but Congress is not agreeing on how to get the funds. The program has been extended through December 31st, but with so much to figure out between now and then, nothing is expected to happen. Legislators will need to give the program another extension in order to hash out the inordinate number of details included in the bill.

The reauthorization plan has been stalled out for the past year because the funding for it would mean tax increases that Congress is against. Fuel tax increases would be necessary to support the already suffering Highway Trust Fund. Current fuel taxes have not been raised since 1993 and do not produce enough revenue to support highway needs. The situation is expected to continue to decline as much needed highway repairs are neglected and cars become more fuel efficient.

Mica plans on avoiding raising the fuel tax by changing it. Instead of a flat rate tax on each gallon, he would like to see a percentage tax rate on fuel. At first, the percentage would initially equal current flat rate fuel taxes. This would mean that, as gas prices inevitably increase, fuel taxes go up, and the revenue generated would also increase. That percentage may be figured based on projected highway construction inflation costs. It is estimated that the percentage based fuel tax could generate over $40 billion in six years.

Mica and Transportation Secretary Ray LaHood do agree with many of the proposals included in Oberstar's regulatory reform bill and are hoping for a decision to be made within the next few months. Features of the bill that are likely to pass include a restructure of the Department of Transportation and streamlining the planning and execution of infrastructure projects.

Highway transportation is not the only mode affected by the 2010 election. Oberstar did plant to do away with the antitrust exemption for ocean shipping companies and create a new authority for the Federal Maritime Commission. This would create a more competitive market, but it was heavily opposed by ocean freight lines. That part of the transportation restructure is now not expected to happen. Rail and air transport are also facing challenges that are likely to put a damper on production throughout the transportation industry until a favorable plan can be put into action.

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