Infrastructure: key to NH’s competitiveness
So why do we only reinvest 2.5% of the infrastructure’s worth back into the system every year?
It goes without saying that infrastructure is important to the manufacturing and business community in New Hampshire. Without it, the economy would fall apart. But if that’s true, why do we only reinvest 2.5 percent of the infrastructure’s worth back into the system every year?
In recent weeks, many around the state have touted the report released by Conexus — an initiative focused on the advance of manufacturing and logistics — which gave New Hampshire an A and a B in the manufacturing industry and human capital categories, respectively.
Unfortunately, however, New Hampshire received an F in logistics, showing no improvement from last year. While much attention has been paid to New Hampshire’s business tax rates (which received a C- in the report), I would argue that transportation infrastructure is just as important.
In the same year that the state almost cut half of the NH Department of Transportation’s discretionary funds (this year), it appears as though federal transportation funding will be kicked down the road as well. Actions like these are no way to run a 21st century economy and must be stopped.
Looking specifically at federal funding, surface transportation money is allocated from the Highway Trust Fund. Since the 1950s, the trust fund has been supported by gasoline and diesel tax revenues. Over the last 20 years, however, inflation has caused the buying power of these fuel taxes — last raised in 1995 — to decrease by 40 percent. Consequently, revenues into the fund have not been able to match spending since 2008, despite constant spending levels.
In total, this has required $62 billion in bailouts from the general fund of the Treasury.
In July, Congress approved a three-month extension of highway and transit appropriations – the 34th extension since 2009 – as it once again deliberates a six-year highway bill. If the pattern of short-term extensions continues, the highway trust fund will require $100 billion in infusions over the life of the six-year appropriations bill.
This is clearly an unsustainable pattern. Not only does it add to the deficit, but it keeps the NHDOT from planning effectively and delivering the quality services our state’s businesses and manufacturers need to grow.
If Congress is to change course and support transportation for the life of the proposed bill, it has two options: reform international tax law or increase fuel taxes.
Of the two, reforming corporate taxes has the most appeal to lawmakers because it costs the least political capital. In essence, the idea is that reform would allow businesses to repatriate foreign earnings at a discounted rate and thereby increase the incentive for companies to bring back money held offshore, with the increase in revenue going toward transportation.
While that sounds great, overall, this still hurts the United States’ global competitiveness and further complicates the country’s international corporate tax problems. Additionally, the legislation’s complexity leaves many experts wondering whether it is even possible to write, let alone pass or implement.
Fuel taxes are the preferred choice for increasing transportation funding for many in the private sector, including the U.S. Chamber of Commerce, National Association of Manufacturers, the Reason Foundation and the American Trucking Association. They support fuel taxes because they see them as a user fee. If you use the country’s transportation network, they feel, you should have to pay for it.
While many are concerned about fuel efficiency in light of the new corporate average fuel economy (CAFE) standards for 2025 — 54.5 miles per gallon — it is important to remember that fuel economy has been steadily increasing over the last 20 years, yet inflation has still been the largest and only significant driver of the present shortfall.
Should fuel taxes be indexed to inflation, these new standards should not be an issue for years to come. Furthermore, given the alternative of increasing the national debt and hamstringing the NHDOT, there really isn’t a decision to be made.
New Hampshire needs decisive action on transportation. According to the National Association of Manufacturers, every dollar invested in transportation yields three in return. If the state is going to continue to be competitive on a national and global scale, we must be willing to make this investment.
Andrew Wells of Keene, a structural engineering student at the University of Delaware, was recognized in 2014 as one of the “10 New Faces of Civil Engineering: College Edition” by the American Society of Civil Engineers.