The House Ways and Means Committee on March 6, 2019, held a hearing on "Our Nation's Crumbling Infrastructure and the Need for Immediate Action." The hearing focused on the need for significant investment in US infrastructure and a discussion of options to fund infrastructure investment.

The proceedings were divided into two panels of witnesses. Panel 1 included Representatives Peter DeFazio (D-OR) and Sam Graves (R-MO), Chairman and Ranking Member for the Committee on Transportation and Infrastructure. Panel 2 included: Richard Trumka, President, AFL-CIO; Thomas Donohue, President and CEO, U.S. Chamber of Commerce; Gregory Diloreto, P.E. Managing Director, Government Relations & Infrastructure Initiatives, American Society of Civil Engineers (ASCE); Chris Spear, President and CEO, American Trucking Associations; and, Marc Scribner, Senior Fellow, Competitive Enterprise Institute Office.

In his opening statement, Chairman Richard Neal (D-MA) stated the need for investment in America's infrastructure to stay competitive in the global landscape. "Everyone wins when we make meaningful, sustained investments in the nation's infrastructure. Infrastructure development creates thousands of good-paying jobs for hard-working Americans. [ … ] Infrastructure investment is also a win for American business. [ … ] When we invest in infrastructure, it results in a significant economic multiplier, with each dollar spent, our nation becomes more competitive and, indeed, more prosperous." Chairman Neal reiterated his support for programs such as the Low Income Housing Tax Credit and the New Markets Tax Credit to ensure low-income urban and rural communities do not get left behind.

Ranking Member Kevin Brady (R-TX) noted the nation's current trend of economic growth, low unemployment, and high paycheck growth and the importance of addressing infrastructure needs to sustain these positive trends. "Stronger growth through better infrastructure is a priority that President Trump and lawmakers on both side of the aisle share. We are eager to work together with Democrats on this Committee to send meaningful legislation to the President's desk this year." Brady highlighted the importance of reducing regulations at all levels of the government and looking to innovation and private capital to address infrastructure needs.

In the first panel, Representatives DeFazio and Graves emphasized their committee's need for revenue to put forth the best policy solution to fix the nation's crumbling infrastructure. DeFazio summarized the current state of affairs — a 20% reduction in federal infrastructure funding in real terms, a $16 billion per year deficit in the Highway Trust Fund, and the cost of congestion and poor road conditions in both dollars and economic growth. Proposed revenue sources included increasing the gas tax, taxing vehicle miles traveled (VMT), infrastructure banks, and public-private partnerships. Graves highlighted the advantages and challenges of taxing VMT — although it would be a true user-funded solution with real-time pricing, policymakers and constituents have raised concerns regarding user privacy and fairness among drivers. Both DeFazio and Graves noted the importance of the federal government acting as a reliable partner with local governments and private investors, the role of technology in the future of the nation's infrastructure, and the long-term sustainability of the Highway Trust Fund.

In the second panel, each witness presented a different perspective on the importance of improving the nation's infrastructure. Mr. Trumka highlighted the effect on the labor community in the form of additional good-paying jobs and a pathway out of disadvantaged communities. He noted that investment in infrastructure spurs economic growth and improves overall quality of life for millions of Americans.

Mr. Donohue emphasized the need for bipartisan agreement on a focused, long-term solution in order to remain competitive in the global landscape. Members of the Chamber of Commerce cite crumbling infrastructure as a significant roadblock to sustained profitability.

Mr. Diloreto presented the results of the ASCE's Report Card for America's Infrastructure, which depicts the conditions and performance of 16 categories of infrastructure by assigning letter grades. America received a cumulative grade of D+ in its 2017 report. Diloreto estimates a cost of approximately $200 billion per year to bring all categories up to good repair.

Mr. Spear's organization estimates that the trucking industry has lost $74.5 billion sitting in gridlock. Although trucks only account for 4% of total drivers on the roads today, they pay for almost half of the revenue flowing into the Highway Trust Fund and are willing to pay more through an increase in the gas tax.

Mr. Scribner focused on reassessing the federal government's role in paying for infrastructure and believes state and local governments should increase their contribution, not only for new construction but, more importantly, repairs to existing infrastructure. He believes in aligning with the "user pays" principle and supports an eventual move to taxing VMT and encouraging private investment through bonds. He emphasized a focus on maximizing return on investment and not simply funding a large-scale public works project.

All committee members highlighted the importance of the nation's infrastructure and the need for improvements in their local districts as well as the national system to remain competitive in the global economy. Chairman Neal highlighted the importance of considering other revenue sources in addition to an increase in the gas tax, noting public-private resources — specifically taxable, direct-pay bonds — to attract long-term investment and close the revenue gap. Mr. Donohue agreed that the Chamber of Commerce would support issuing and expanding the taxable, direct-pay bond program to get the resources needed to move forward aggressively.

Ranking member Brady asked Mr. Donohue to opine on the proposal to increase the corporate tax rate to 24% to fund infrastructure improvements. Mr. Donohue agreed that taking money out of the private sector in the form of higher taxes would not be the most efficient way to fund these improvements and noted that a higher economic growth rate would result in more federal revenue and resources for infrastructure investment. Brady also asked Mr. Scribner to expand on the idea of tapping into $200 billion in global capital to support overall investment goals and how best to attract private investment. Mr. Scribner pointed out currently barriers to private investment, including denying institutional programs (e.g. pensions) from investing in programs such as toll roads and the difficulty of enacting a one-size-fits-all approach.

Committee members continued questioning the witnesses on key topics such as the most pressing spending needs, issues with the current permitting process, state and local incentives, the differences in urban and rural needs, universal access to broadband, the role of climate change in increasing costs of repair and disaster resilience, and decreasing carbon emissions by mitigating congestion and focusing on transportation efficiency.

The general consensus of the witnesses and many committee members appeared to be an immediate increase in the gas tax between 5 and 25 cents to continue funding the Highway Trust Fund and other short-term projects with a long-term goal of employing other revenue sources (either user-based or general revenues) as a sustainable solution in the face of increased fuel efficiency and fuel alternatives.

Rep. John Larson (D-CT) asked witnesses to share their opinions on three potential revenue solutions — increasing the gas tax, taxing VMT, and instituting a carbon tax. A majority of the witnesses said they supported increasing the gas tax. Most would also support taxing VMT as a possible long-term solution. Scribner and Spear did not support a carbon tax, Diloreto would consider it as a revenue resource, Trumka said he would need to see more details before committing, and Donohue stated that he believes a gas tax is already a tax on carbon.

During questioning by Rep. Earl Blumenauer (D-OR), Mr. Spear noted that an increase to the gas tax is not as regressive as the cost of bad infrastructure.

Rep. Ron Kind (D-WI) commented that the way to beat China and other competing countries is through investment in infrastructure, research, and access to broadband, not walls, barriers, and tariffs.

Rep. Tom Rice (R-SC) asked the panel to explain why constituents in poor, rural areas should subsidize development projects in rich, urban areas to which Mr. Trumka responded that the price of consumable goods for everyone is inflated due to congestion, repairs and other transportation costs.

Rep. Darin LaHood (R-IL) highlighted the role of the insurance industry in financing infrastructure projects through municipal bonds, which lowers borrowing costs for local governments. Mr. Donohue agreed that this will be part of the solution while Mr. Diloreto noted that insurance companies will expect reliable returns on investment.

Chairman Neal concluded the hearing by again expressing the bipartisan support for finding real, workable solutions to help local communities prosper and ensure the nation's long-term economic security.

Testimony is here.

———————————————