Transportation Policy Academy 2015 – DC - Janet Kavinoky, U.S. Chamber of Commerce and Pat Thomas, UPS/American Trucking Associations

Janet Kavinoky is the Executive Director for Transportation and Infrastructure at the U.S. Chamber of Commerce in Washington, DC and Vice President of the Americans for Transportation Mobility Coalition. Pat Thomas is Vice President of Global Public Affairs for UPS and currently serves as First Vice Chairman at the American Trucking Associations. Both were speakers at a transportation policy roundtable May 12 in Washington as part of the 2015 CSG Transportation Policy Academy. In these excerpted portions of their remarks to state legislators attending the academy, they spoke about why both of their organizations support a federal gas tax increase, why Congress hasn’t been able to reach agreement on a plan to meet the nation’s infrastructure investment needs, what it may take to convince them to do so and how predicted changes ahead for freight transportation makes a national focus on the issue imperative.

On why the U.S. Chamber supports a federal gas tax increase … and why it’s not happening…

Kavinoky: “We need transportation that works from the front door of the factory or the retailer to whatever that end product is. We need (transportation) that works for people. We need (transportation) that works for business. And we’ve been very clear that at the federal level we think the simplest, most straightforward way to have a user fee-based approach—and we think that’s good for a number of reasons—is to raise the gas tax. Yesterday (5/11) the chairman of the U.S. Chamber sat with the head of the AFL-CIO at an event at Bloomberg kicking off Infrastructure Week and they both agreed: Congress needs to do something. We get asked all the time ‘well, if the Chamber and the AFL-CIO agree, why doesn’t Congress move?’ Well, you’re all elected officials. It’s not that simple. If you could just get business and labor to agree, you’re still looking at a whole lot of other factors that are out there. I think the challenge comes in many forms and it’s not just about ‘the solution.’ I do think the concept at a national level politically of raising the gas tax is much more difficult than it is at a state or local level because the feds don’t pick projects. We don’t have lists of things that we can go to Congress with and say ‘here’s what the federal government is going to do in your state.’ What we can do is sometimes get states to say to us ‘hey, if we get federal money or if your state gets federal money, here’s where the dollars should go.’ … It’s a federally assisted, state-administered program for highways and transit and that means it’s awfully hard to go make the case to the American people unless there’s the cooperation and participation of all 50 states and metropolitan planning organizations to say ‘if we get X amount of money, here’s where it’s going to go.’ And for numerous reasons it’s been harder.”

On how the lack of a federal purpose for transportation makes things difficult as well…

Kavinoky: “We’ve gone from a situation in the ‘50s … where the federal government did put out a map and they said ‘we’re going to build an interstate highway system and this is roughly how this is all going to work. We’re going to pay for 80 or 90 percent of what’s on that map.’ … So we went from a vision of knowing exactly what we were going to do to ‘where did the money go?’ What did it do? What benefits did it produce? And a lot of questions that have been raised repeatedly over the last 10 to 15 years or so saying ‘what’s the federal purpose?’ We’ve been trying to hone in and talk about that … but ultimately it’s a challenging political problem. What the Chamber is trying to do, what we’ve worked with state and local chambers in many of your states is to talk about what does need to get done, what benefits will it bring and then what needs to happen within federal policy so that it’s easier to use a dollar and it’s not so complicated and things can get done better. But a lot of that is very uneven across the states.”

On why transportation investment is important to UPS and ATA…

Pat Thomas: “I have over the last 13 years managed all of the state government relations for UPS and am currently in line to become the chairman of ATA. So I kind of have a dual role today to talk about my company that I’ve been with for 30 years and then also the industry in general. We have a little bit different perspective on highway bill issues because this is where we do our business. This is not just an inconvenience for our members or my company. This is where our business is conducted and we are really reaching a point now where the cost of congestion not only in time and fuel and all of those things, but in additional repairs because the roads are not in as good a shape as we’d all like to see them are becoming real. … All of those kinds of costs eventually trickle down to the consumer. So they’re not hidden costs within our company or our industry. They all show up in the price of things on the shelves because trucks ultimately deliver just shy of 70 percent of all freight in the country.”

On the impact of federal uncertainty and short-term extensions for states…

Thomas: “Our interest (in the federal reauthorization process) is deep and we have some general guidelines that we like to talk about. Number one, it needs to be a long-term highway bill. There needs to be some certainty—as you all know better than I do—for the state, which is where the rubber hits the road. This idea that (Congress is) going to patch this thing for a couple of months or maybe six months or whatever it may be, is just an incredibly bad way to run this program and it ends up costing a significant amount of money. Every day on news feeds that I get, we get news from one state or another about having to delay or cancel or change some project that’s going on somewhere in the country. So it’s got to be a long-term plan that gives the states the ability to plan like businesses do—five and 10 years down the road—about the kinds of investments they’re going to make.”

On why the trucking industry prefers a federal fuel tax increase…

Thomas: “It needs to be, in our view, a bill that has a user pays component and we like the fuel tax because that’s what we’ve got today. It’s incredibly efficient, there isn’t a better option on the table as we see it yet—there may be down the road … and we can make up the differences. If cars are getting better mileage today, then you boost the rate. I think that makes sense to most people. Every dollar that’s been collected today from gas tax has about 40 percent less buying power than it did in 1993. In addition to boosting the gas tax, we think you need to put a component in there that protects it from inflation and indexes it to inflation so we don’t have to deal with this problem in the future. And I know that’s a tough thing to do but a whole bunch of states have reached down and said ‘this isn’t my most favorite vote I’m ever going to take, but by golly we’ve got to do something here so let’s raise the gas tax, assuming it’s protected and doesn’t go to other things.’ … We are not big fans of tolling. That is I don’t think the first time you’ve heard that from the trucking industry. … But we’ve got to have a robust source of revenue. It can’t just be more of the same. We’ve got to do better than fixing the potholes. In our industry in particular over the next decade, there’s going to be about 20 or 25 percent more freight that we’re going to move up and down the highways and we can’t do that on the road system that we have today so there has to be some element within the highway bill to have some additional capacity put in in one form or another. … We have made a change from previous positions in that we have typically been fuel tax or nothing supporters. … We’re kind of “all of the above will work for us” (now). We don’t want to see the fuel tax component go away but additional moneys that we think we need into the program, we’d be more than willing to take a look at (other revenue sources) and see if they make sense to us.”

On the impact of congestion for the trucking industry…

Thomas: “MAP-21 provided for what they call a freight plan, which is a comprehensive look at the bottlenecks around the country and the difficulty here is they’re typically cross-jurisdictional. They go outside city limits. They go outside county limits and they go across state boundaries. But the federal component I think allows us the opportunity to look at these things in a whole transportation plan way versus a state or a local way.”

“We hear lots and lots of numbers about how much congestion costs us. We did a recent study of our industry and we think it’s somewhere in the neighborhood of $9.2 billion a year that we waste sitting in traffic jams around the country. I know for my company alone if every one of our drivers sits in traffic congestion for five minutes every day, that’s $125 million dollars a year that we pay out in additional costs.”

“In addition to that, we’re paying almost two-times as much for our tractors or our equipment now for the engines that the government has told us need to burn cleaner. But when we’re sitting in the middle of an interstate somewhere, all of the gains we’ve made in emissions, we’re giving all those things back.”

On the potential impact of the Panama Canal expansion…

Thomas: “It seems like we’re always at a crisis stage with this highway bill. … The reality is we really ought to think out a little further and say ‘we don’t really need a highway bill; we need a transportation plan.’ UPS of course is an intermodal company and many of the members of ATA are as well so we do everything from planes and trains (to) boats and trucks. Our ability to be interoperable with all of those things and have the right infrastructure in place to be able to take something off a ship and onto a train and from a train to a truck and have all of those connections meet up in the right way in the right places is something we ought to think about for the future. … Overall we have to think of this thing (the transportation system) more holistically. Whoever you talk to, they’ll give you a different number. Some people think (the impact) will be minimal. Other people think it will be quite significant how much freight is diverted from the West Coast over to the East Coast and we’ll have to see how that plays out. But that will make a big difference in the size of the ports, the size of the facilities in the ports in order to get the containers out. Whether they go on rail, whether they go on truck and it will shift all of those things. … I think it’s going to take a few years to see how much of that freight moves but it’s going to be significant for our industry.”

On how changes in freight transportation will impact passenger travel…

Kavinoky: “I testified last week at the Senate Commerce Committee on some of these challenges … and frankly at the U.S. Chamber we’ve got to figure out how do we bring our members together and say ‘what does this picture of a much more multimodal transportation plan need to look like,’ while still leaving it in the hands of the states and locals to have the flexibility they need. The impact of a lot of this changing freight will also impact passenger travel. If you look at I-95 up in the Northeast Corridor of the United States, think about moving a whole lot more goods in and out of (the Port of) Baltimore and the Port of New York and New Jersey and the parking lot that’s going to create on I-95. That’s a big difference up there. But even let’s say in Mississippi you expand what’s coming into your ports there, that’s going to have an impact on how people move and how your communities move. And so as much as we talk about planning for freight, we also have to incorporate and realize that people and freight are going to have to move together at the same time. I think that’s one of the big challenges. … How do you put the freight people and the passenger people and the state and local and regional, everybody together in a room? I think we’re going to struggle a little bit forging ahead with that but there’s a role hopefully for the Chamber, for American Trucking Associations … but trying to figure out how do we keep working this ‘let’s fix the immediate issue on Capitol Hill’ but start moving past it to what do we really need to do for the future of the country.”

On how policymakers might seek to defuse anti-tax groups in pushing for new revenues…

Thomas: “There are few people in this town that disagree with the need (for infrastructure investment). The question is how do you pay for it and that’s where we get in trouble. There have been those who have suggested that if we raise revenue in the highway bill, then we need to give some (tax) relief somewhere else so that we’re net neutral. Now that takes the pressure off the tax increase group. (But) how (do) you get that other side to balance out? … Everybody loves cutting taxes or reducing revenue except those who get their revenue reduced for their programs. It’s whoever’s ox gets gored. But it is much easier to do these things at the local level because the people can see. They know that road and, as Janet said, you can list the projects that you’re going to do and they see a direct connection between what I’m going to pay and what I’m going to get. And on the federal level, number one, frankly, the further away you get government from the people, the less they trust it.”

On developing coalitions at the national level to push for investment…

Kavinoky: “I lead one of those coalitions. James Corless (at Transportation for America) leads a coalition. We have working groups that work with each other. I will tell you we are all wracking our brains for how do we stop doing and saying the same thing over and over again so that we can get a different result. … We have just put together a new working group that is spanning well beyond our existing coalitions to try and bring together a larger group to do more communications and to bring more to bear here because we keep saying the same things and they’re not getting through.”

On what it will take to convince the public and Congress…

Thomas: “If you ask somebody how much they pay in fuel tax a year for their family, they will give you an astronomical number. In reality, it’s a fraction of what you pay for things like cell phones and cable TV and all those sorts of things. So that’s an argument I think that works fairly well. And trucks pay somewhere in the neighborhood of 40 percent of the money that goes in the highway fund and drive about 17 percent of the miles. And we’re saying ‘tax me. I’ll pay.’ And that sort of falls on deaf ears. It’s frustrating.”

On why there may be hope for movement on Capitol Hill and in the court of public opinion…

Kavinoky: “Some of the weariness you might hear on my part is I feel I’ve been saying the same thing for a long time. What we are realizing is that … the John Thunes of the world actually acknowledge and understand and would like to do something about this problem. Mitch McConnell wants to. Orrin Hatch has said he’s got a top secret way to fix it. He hasn’t told us yet but he’s got a way to fix it. Paul Ryan wants to fix the problem. Even John Boehner, who never votes for transportation bills, has repeatedly said ‘we’ve got to fix this long-term problem.’ And in quite possibly the brightest light, it has finally hit mass media and if you have not seen John Oliver’s bit on his show (HBO’s “Last Week Tonight”) … that was I think quite possibly the highlight of my transportation career—that John Oliver would devote 20 minutes to the subject of infrastructure…”

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Photo by Whitney Crowe

The 2015 CSG Transportation Policy Academy was presented with the support of UPS, the American Society of Civil Engineers and Nissan.