House Transportation and Infrastructure Committee
“Building a 21st Century Infrastructure for America”
February 1, 2017
Key Topics & Takeaways
- Funding Infrastructure: A frequent topic of discussion was the issue of funding infrastructure projects. Ranking Member Peter DeFazio (D-Ore.), as well as numerous members of the committee from both parties, expressed support for user fees and other dedicated revenue streams to pay for certain infrastructure projects. Witnesses also expressed their support for these funding mechanisms.
- Infrastructure Prioritization: Both Republican and Democratic members of the committee, as well as the witnesses, expressed their support for tackling all facets of the country’s infrastructure as part of an infrastructure program. There was support among the witnesses for new infrastructure projects, such as high-speed rail and microgrids. However, witnesses stressed that any infrastructure program should target existing infrastructure such as rail, road, and maritime facilities.
- Municipal Bonds: There was no discussion of the municipal bond tax exemption, municipal bond issuance, or the municipal bond market during the hearing. The only mention of bonds came from Ranking Member DeFazio, who suggested that 30-year federal infrastructure bonds should be considered as a possible funding option for infrastructure projects.
In his opening statement, Chairman Bill Shuster (R-Pa.) discussed the importance of infrastructure to the country and President’s Trump’s promise to revitalize American infrastructure. Shuster noted that “this election raised the profile of infrastructure in the minds of the American people.” Shuster said his goal was to build a “21st Century Infrastructure” to lower transportation costs and improve commerce. Shuster reiterated his support for a modernized Air-Traffic Control system, and touted some of the committee’s previous accomplishments, namely the FAST Act.In his opening statement, Ranking Member Peter DeFazio (D-Ore.) expressed frustration with Congress’ inability to raise user fees to fund infrastructure. DeFazio suggested both raising the gas tax and indexing it to inflation to fund infrastructure development. DeFazio also expressed his support for 30-year infrastructure bonds, which could potentially be funded by dedicated revenue streams, such as the gas tax. DeFazio also criticized the use of port and harbor fees for non-infrastructure uses. DeFazio closed by calling for an increase in the Passenger Facility Charge (PFC) for airport modernization.
Frederick W. Smith, Chairman and Chief Executive Officer of the FedEx Corporation
In his testimony, Fred Smith strongly supported user fees to modernize the United States’ roads and bridges. User fees included the gas tax, mileage fees, and congestion tolls, to pair revenue for roads and bridges to road users. Smith also expressed his support for a stand-alone, corporatized Air-Traffic Control (ATC) system funded by user fees. Smith stressed that an ATC system independent of the Federal Aviation Administration (FAA) will allow for long-term planning and capital investments, which the FAA cannot make as it is subject to appropriations.
David W. MacLennan, Chairman and Chief Executive Officer of Cargill
In his testimony, David MacLennan said that “21st Century Infrastructure” needs to encompass both new infrastructure technologies, like high-speed rail, but also legacy infrastructure, such as roads and waterways. MacLennan stressed that the complexity of supply chains today makes infrastructure critical for business operations, and that weak infrastructure ultimately translates in to higher costs for consumers and businesses.
Ludwig Willisch, President and Chief Executive Officer of BMW of North America
In his testimony, Ludwig Willisch discussed the importance of infrastructure for U.S. exporters. Noting that BMW is the largest exporter of cars by volume in the United States, Willisch said that BMW’s decision to base a major plant in South Carolina was heavily influenced by the Port of Charleston, and the ability of BMW to export through the Port to global markets.
Mary V. Andringa, Chair of the Board of the Vermeer Corporation
In her testimony, Mary Andringa discussed the importance of infrastructure to small and mid-sized businesses. Andringa also discussed the importance of infrastructure to manufacturing supply chains, and how businesses rely on “just-in-time” shipping to avoid holding costly excess inventory. Andringa also expressed her desire that Congress fully utilize the Harbor Maintenance Trust Fund to pay for maritime infrastructure projects.
Richard L. Trumka, President of the AFL-CIO
In his testimony, Richard Trumka stated his belief that Americans “voted for infrastructure” in the most recent election. Trumka also discussed the link between infrastructure and economic growth, and expressed support for linking “Buy American” policies to infrastructure.
Question & Answer
Throughout the hearing, numerous Congressman asked witnesses about various funding mechanisms for infrastructure. DeFazio began with questions about funding infrastructure, and he specifically asked MacLennan if the private sector would support Congress fully utilizing the Harbor Maintenance Trust Fund on infrastructure projects. MacLennan stated his support for this measure.
The use of road user fees dominated much of the committee’s discussion. Fred Smith was asked numerous times about various user fees for roads, and he expressed his support for a gas tax. Smith also expressed support numerous times for a mileage fee, to account for the increasing use of electric vehicles that would not be subject to a gas tax. During questioning, Smith also repeatedly endorsed the idea of a congestion toll, whereby RFID devices in cars communicate with toll stations on highways to automatically tax the users of a road. Smith said that Radio Frequency ID (RFID) technology could be used to increase tolls during periods of high congestion – a “congestion toll” -to encourage users to travel at different times, lightening the burden on highways during rush hours. Smith said that the trucking industry generally supports increasing the gas tax and user fees, and Michael Capuano (D-Mass) noted that the US Chamber of Commerce has endorsed the idea of a gas tax in the past.
Thomas Massie (R-Tenn.) expressed qualified support for DeFazio’s proposal to raise the gas tax and tie it to inflation, to make increases in the tax automatic. Massie argued that this and other user fees, if properly explained to voters, could provide valuable sources of long-term infrastructure funding.
Smith fielded several questions on tax policy during the hearing as well. Mark Sanford (R-S.C.) asked Smith for his opinion on tax reform, and Smith said he supported lowing the top income tax rates for corporations and moving to a territorial tax system. Smith said that the global tax system currently in use by the U.S. is an anomaly in the world and that most developed states have moved to a territorial system. He drew several distinctions between border adjustability and value-added taxes but declined to endorse one tax system over the other.
Trumka also answered a question about lowering corporate tax rates to pay for infrastructure from Dina Titus (D-Nev.). Trumka expressed a willingness to explore border adjustability and other tax mechanisms that would encourage exporting, but stressed that lower tax rates alone will not generate sufficient revenue for an overhaul of the nation’s infrastructure.
Public Private Partnerships
Michael Capuano brought up the idea of public-private partnerships (P3) to fund infrastructure, asking directly if P3 could “fund everything” on the infrastructure agenda. MacLennan said that P3 would not be able to fund everything. Trumka agreed with this stance, and said that much of the necessary infrastructure work has either low or no-revenue generating ability, so private entities financing of projects will have limits.
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