Truck-Only State Tolls Roil Industry That Favors Fuel-Tax Hike

February 20, 2019 by Alan Adler, @AlanAdler

As more states move to charge tolls for big rigs to fund road and bridge repairs, the trucking industry is suing to stop the collections while pushing for an increase in federal fuel taxes to pay for infrastructure construction and repairs.

The American Trucking Associations is helping state trade groups fight the new tolls it says unfairly target truckers. The group also asserts that collecting tolls can cost as much as 35 cents per dollar, eating into funds that should be spent on highway infrastructure.

“It’s absolutely ridiculous,” said Jeff Shefchik, president of Paper Transport Inc. in De Pere, Wis. “Why collect revenue to build roads when there is a cheaper way, which is the fuel tax?”

Fuel-tax proposal

The ATA has proposed increasing federal diesel and gasoline taxes by 20 cents a gallon – 5 cents a year for four years. It would raise $340 billion over 10 years. The current federal tax is 24.4 cents per gallon on diesel fuel and 18.4 cents a gallon on gasoline.

States are taking action on their own.

Two dozen states have raised fuel taxes since 2013, according to the Institute on Taxation and Economic Policy, which encourages states to take the lead in fixing their roads. All but 11 have raised fuel taxes since the last increase in the federal fuel tax in 1993, according to the American Transportation Research Institute, the ATA’s research arm.

In California, voters in November upheld a 40 percent increase in the state gasoline tax, from 18 cents to 30 cents a gallon. Diesel-fuel taxes more than doubled, from 16 cents a gallon to 36 cents a gallon.

The increases had been adopted by the state Legislature and were then challenged in a proposition put to voters, who upheld the increase by a 57 percent-43 percent vote.

California truckers and motorists now pay a national high in combined state and federal diesel taxes of $1.09 a gallon, the American Petroleum Institute said. The U.S. average is 60.3 cents a gallon.

“I know of no industry that’s more taxed than our business,” said David Jackson, chief executive of Knight-Swift Transportation Holdings, the nation’s largest for-hire trucking company.

diesel-fuel tax by state

Aggressive States

Rhode Island and Indiana have moved aggressively to collect truck-only fuel taxes. Connecticut is considering tolling both trucks and cars. Virginia recently backed off on truck tolls on 325 miles of Interstate 81.

The Federal Highway Administration in December approved Rhode Island adding 10 toll booths to two it operates. The ATA sued the state in July 2018, claiming discrimination against interstate commerce and seeking to overturn the state’s plan.

The Owner-Operator Independent Drivers Association sued Indiana in January for wringing 35 percent higher tolls from truckers on a 157-mile stretch of Interstate 80/90 between Ohio and Illinois. The truck-only tolls on the Indiana Tollway went into effect in October 2018 for Class 3 and larger trucks.

“It’s easy to point to heavy trucks as being responsible for more wear and tear on roads,” said Peter Sepp, president of the National Taxpayers Union. “But that should not serve as a license for excessively heavy taxes.”

Crumbling Infrastructure

Whether road and bridge repairs are paid via taxes, tolls or other methods, stakeholders agree that much of the nation’s infrastructure needs major repairs.

In its most recent report card on U.S. infrastructure, the American Society of Civil Engineers graded roads a D.

“The average motorist loses about $600 annually due to higher maintenance and vehicle operating costs just due to rough roads,” said Tonn Ostergard, chief executive of Crete Carrier Corp. “With trucks, it’s a lot more than that.”

Dilapidated roadways also are worsening congestion, according to an ATRI study.

The Transportation Research Board suggested in a December 2018 report that it would take state-level tolls and higher fuel taxes to raise the $45 billion to $70 billion needed annually for the next 20 years just to modernize highway surfaces.

Highway Trust Fund

With Democrats controlling the House of Representatives, the ATA’s proposed fuel-tax increase has “got a fighting chance we haven’t had in 15 or 20 years,” Bill Sullivan, ATA executive vice president, told Trucks.com.

Voters responding to a poll by Quinnipiac University in February 2018 narrowly favored a fuel-tax increase, 46 percent-44 percent. But that represented a decline in support from a Quinnipiac poll that asked the same question in May 2017. At that time, voters favored a gas tax increase by 51 percent-41 percent.

Trucking supports the fuel-tax increase as a way to rebuild the Highway Trust Fund, established with the nation’s interstate system in the 1950s. Fuel taxes and proceeds from a 12 percent federal excise tax on new-truck sales are pooled in the trust and dispersed for highway-improvement projects.

But the trust today is nearly broke. Inflation has risen 65 percent since the last federal fuel-tax increase, the ATA said. As vehicles have become more fuel-efficient, tax revenue has dropped, said Mike Roeth, executive director of the North American Council for Freight Efficiency.

Opposition and Alternatives

The ATA-proposed fuel tax has opposition.

“The case for raising the federal fuel tax has not been made,” Sepp said. “We believe it should be the last resort rather than a first or second resort.”

A mileage-based user fee and unlimited private activity bonds for highway improvements are possible alternatives to higher federal fuel taxes.

“This would allow states to experiment with all-electronic tolling and public-private partnerships in reconstructing and possibly expanding their interstate segments,” said Marc Scribner, senior fellow at the Competitive Enterprise Institute.

Read Next: Transport Group Seeks Fuel Taxes, Tolls to Fix Nation’s Highways

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