PPPs: How to keep on trucking

A bill recently passed in Arizona provides an example of how investors can help get the haulage industry on board for PPP enabling legislation in the US, writes Cezary Podkul.

The birthing cry of the American Republic was “no taxation without representation!” Today, the trucking industry, well represented by organisations such as the American Trucking Association (ATA), is keeping that tradition alive. It argues that increasing tolls on leased roads is essentially a form of double taxation. And it’s certainly making its voice heard on Capitol Hill.

Two weeks ago, before investors could even digest the content of Senators Bingaman and Grassley’s bills against toll road leases, the ATA issued a press release lauding the bills.

Meanwhile, investors cringed at the thought of legislation that would essentially disincentivise deals such as the Chicago Skyway or the Indiana Toll Road. 

So when Patrick Quinn, co-chairman of trucking firm US Xpress Enterprises and a leading voice for the industry, finished speaking at the New York Infrastructure Summit this week, I asked him what could be done to get trucking companies and investors on the same page on this issue.

Cezary Podkul

Quinn explained that there is indeed a fundamental rift on this issue between truckers and investors. It’s not as if the trucking companies were opposed to paying more for their use of roads. The ATA was in favour of increasing the federal fuel tax, he said during his speech, and it’s rare when an industry actually agrees to raise its own costs. So if they’re already giving on that, they don’t want to pay more in tolls just because a road has been leased.

“It’s double taxation,” Quinn said.

Leonard Gilroy, director of government reform at the think tank Reason Foundation, followed-up with an astute question: can Arizona’s bill 2396 provide a model for getting trucking companies to support public-private partnership (PPP) legislation? This PPP-enabling bill contains a simple, one-paragraph clause that states motorists who use highways that are operated or constructed under a PPP are eligible for a refund from the state for fuel license taxes, use fuel taxes, or motor carrier taxes they incur while driving on the road.

Quinn didn’t excitedly endorse the idea – but didn’t oppose it either. Neither did local trucking concerns in Arizona.

“We are neutral on AB 2396 as long as it moves forward with the amendment that provides for refunds or credits on taxes paid for fuel used to operate on a toll facility,” Karen Rasmussen, president of the Arizona Trucking Association, told InfrastructureInvestor.

All of which hints there may at last be room for compromise on this issue.

“The fuel tax rebate is a key provision for other states to consider with regard to their PPP statutes, as it directly addresses highway user groups' long-voiced concerns about double taxation,’” says Gilroy.

Provided that the cash-strapped states make good on their promise to pay, it may well be the way to go.