Washington Report : Fuel Tax Fairness

by Craig Piercy

With the current transportation bill set to expire at the end of September 2014, the ACPA is gearing up to push Congress for greater tax fairness for concrete pumps at the gas pump. Last month, an ACPA industry leader delegation traveled to Washington and met with senior staff of the House and Senate transportation policy and tax-writing committees to discuss levying highway user fees on concrete pumps based on miles traveled rather than gallons consumed. Participants included Carl Walker, the current president of the ACPA; Brian Hazelton, CEO of Schwing America; and Bruce Young, CEO of Brundage Bone Concrete Pumping. They were joined by former ACPA presidents Mike Cusack and Dennis Andrews, ACPA executive director Christi Collins, and the author.

The results were very positive. The senior policy staff we met with are keenly aware that the Highway Trust Fund is going broke—again—and Congress must not only figure out a shortterm fix to ensure that the 2015 highway construction season doesn’t come to a screeching halt, but also plan for the longterm solvency of the fund at a time when Americans are using less fuel and driving fewer miles.

Recently, the D.C. policy-making community has been paying renewed attention to the idea of gradually replacing federal gasoline and diesel taxes with a mileage-based user fee. A mileage-based funding mechanism has many potential benefits, including the ability to capture hybrid, electric and alternative fueled vehicles. However, there are also notable hurdles to broad limitation, including privacy concerns and a host of technological and administrative implementation questions. Nonetheless, acceptance is growing. More than 15 states have initiated mileage-based demonstration programs, and political support is becoming more bipartisan, with at least one rightward leaning libertarian think tank expressing interest in the concept.

Any plan to transition to a mileage-based user fee will likely start with commercial fleets. However, most trucking trade associations are wary, and some are outright hostile to the idea. That’s what makes the ACPA pitch so intriguing. During each meeting, we made the case that concrete pumps are the perfect test bed for a mileage user fee demonstration program. Owners of concrete pumps pay the 24.4 cent tax on every gallon of diesel fuel they use, even though on average, less than half of it is used on the public highways. Under any reasonable per-mile rate, a fee based on actual road use would save concrete pump owners hundreds of dollars each year per pump. Furthermore, an industry-specific demonstration would address a significant inequity in the U.S. tax law, as all other commercial vehicles in the U.S. with a similar percentage of off-highway fuel use already have some form of exemption from highway excise taxes (i.e., mobile cranes, agricultural vehicles, etc.). Finally, unlike state-specific demonstrations, a national concrete pump demonstration would allow the U.S. Departments of Transportation and Treasury to partner with their state counterparts to test various methods of allocating the proceeds of a mileage-based user fee depending upon where they were generated geographically.

Every sector of the concrete pumping industry would be fully supportive and committed to the success of a demonstration program. Walker described how the owners of the 6,000+ concrete pumps in the U.S. would be universally motivated because of the potential savings involved. In each of our meetings, Young outlined how the hardware and software modifications needed by participating owners would be minimal, since every pump manufactured after 1998 already collects all of the needed data parameters in its engine control module (ECM). Paired with off-the-shelf GPS and wireless communications technology available today, a significant percentage of the existing fleet could be up and running in a short period of time with only a comparatively small investment per unit. Finally, Hazelton explained how concrete pump production in the U.S. is concentrated among a few OEMs who use a common engine chassis combination, thereby allowing fast “bake-in” of the systems needed in new units to participate in a demonstration program.

Overall, our message was simple: a mileage-based pilot program for concrete pumps is a classic “win-win” policy, providing tax fairness for small businesses in the construction industry, while providing a unique ability to demonstrate the administrative efficacy of a mileage-based highway user fee.

The November D.C. visit served as an informal kick-off for a broader congressional advocacy campaign that the ACPA will be spearheading in 2014 to formally establish a concrete pump mileage fee demonstration program. Stay tuned as things heat up. We still have lots of work to do, and we will need your voice!