Trucking Twice Burned In Recession
The recession first hit the industry earlier than it hit other sectors of the economy, freight volumes falling and costs rising to drive some companies out of business.
OLIVER B. PATTON
WASHINGTON EDITOR
Then, just as indications of recovery are flickering on the horizon, the slowdown is going to strike again -- in the form of lower national spending on highways.
President Bush proposed obligations of $24 billion for highways in 2003 -- a 28% drop of about $9 billion from this year. Since these obligations cover multi-year projects, the decline in actual spending next year will be smaller, on the order of 3%, but for highway users the impact still shows up as rougher road surfaces, more congestion and longer trip times.
The reason is simple: government has less money to spend because it has taken less in. The economic slowdown caused a decline in revenues from federal taxes on fuel and other transportation funding sources -- including the sale of new trucks. Another bite was taken out by a 28% increase in the use of ethanol fuel, which is taxed at a lower rate than gasoline.
Under the highway law, the Transportation Equity Act for the 21st Century, a certain level of funding is guaranteed based on expectations of future income to the Highway Trust Fund. But above that minimum, the funding varies from year to year depending on how much money is actually collected.
The drop in funding was predictable but still comes as a shock to the system. Congress and the states have enjoyed unprecedented highway funding in each of the past several years, thanks to the formerly strong economy, and now they are dismayed.
Republicans and Democrats alike signed up for legislation that would restore almost $4.5 billion to the Bush highway budget. They see the cuts as "devastating," as several members have remarked.
The cuts will create enormous pressure on the states, observed Rep. Thomas Petri (R-Wis.), chairman of the House Surface Transportation Subcommittee. Federal-state matching grants, a significant source of funding for state projects, will be restricted, jobs will be lost and planning will be inhibited, he said.
Rep. Don Young (R-Alaska), the powerful chairman of the House Transportation and Infrastructure Committee, is behind the effort to restore the funds. "Our legislation will save 180,000 family-wage jobs, which is vital in our current economic situation," he said.
Meanwhile, state governors are telling Bush that they want the funds restored, too.
"It makes no sense to make cuts in transportation at a time when the economy is showing signs of recovery," Alabama Gov. Donald Siegelman said during a recent visit to Washington. "This would deal a staggering blow to a very fragile recovery."
With the nation's mayors and the American Highway Users Alliance joining the chorus, the betting among Hill veterans is that Congress will be able to restore at least some of the money.
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