Toll numbers under fire

Truckers suggest increase in diesel tax to help repair bridges

By John Howell
Posted 2/9/16

It’s all about the numbers.

The leadership says tolls are the way to raise the money to support a “surge” in bridge repairs.

Those in the trucking industry say the truck-toll revenues …

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Toll numbers under fire

Truckers suggest increase in diesel tax to help repair bridges

Posted

It’s all about the numbers.

The leadership says tolls are the way to raise the money to support a “surge” in bridge repairs.

Those in the trucking industry say the truck-toll revenues projected in the compromise bill by the governor and House and Senate leadership aren’t realistic, and that if the state moves ahead with the plan not only will the measure be contested in the courts, but there won’t be enough to fix bridges – and, to boot, businesses will be driven out of the state.

Their answer is to increase diesel taxes so all diesel-fueled vehicles share in the cost of bridge repairs, not just the larger Class 8 trucks as the governor proposes with tolls.

Their argument is bolstered by Ocean State Job Lot’s announcement on Saturday that it has put on hold a $50 million distribution center in Quonset because of the proposed Rhode Island truck tolls.

Again, it’s the numbers – but it’s also politics.

Larry Berman, spokesman for House Speaker Nicholas Mattiello, said Friday the truck-toll legislation will be heard by the finance committee today and that a vote by the full House could come as soon as tomorrow or Thursday. The reason for the haste, say some close to State House, is to have legislators move on so they can concentrate on the governor’s $9 billion budget.

That’s not the way some of those in the trucking industry see it. For them, the plan is being pushed before its flaws can be exposed, before anti-toll momentum gains any additional strength, and because the governor and legislative leaders believe the voters will forget the tolls before the election.

Then there’s Job Lot. The company’s decision to put the new distribution center on hold was announced by executive director David Sarlitto.

Sarlitto said yesterday the company averages 25,000 truck trips annually from Rhode Island, and if the maximum daily toll per truck were $40 – $20 one way, plus $20 back – as proposed, Job Lot would be faced with an additional $1 million in costs. This compares to the $150,000 in tolls paid annually for Job Lot trucks to crisscross eight states, he said.

In response to Raimondo’s take that Job Lot plans to go ahead with the 500,000-square-foot distribution center and the threat to leave Rhode Island is a bluff, Sarlitto said, “We’re not politicians, we don’t bluff.”

On the other hand, Sarlitto said, “We absolutely want to build here.” He said up until this point, Job Lob had planned to start construction on the 500,000-square-foot warehouse addition to its existing 850,000-square-foot office and warehouse in the next 18 months.

He sees the issue as not being the RhodeWorks proposal to address deficient bridges and make road repairs, which Job Lot favors, but rather how the plan will be funded.

“Those jobs,” he said of the 6,000 jobs RhodeWorks is projected to create, “are going to happen either way.” Sarlitto said Job Lot “would very much entertain” alternatives to tolls, including a set annual $1,000 per truck fee as has been discussed with the governor’s office. Also, he argues, as has been proposed by Rep. Patricia Morgan, that bridge repairs could be funded by trimming state expenditures by half of 1 percent.

In an email exchange with the House speaker’s office on Sunday, Mattiello said he would be meeting with Job Lob CEO Marc Perlman on Monday.

“Ocean State Job Lot has received many benefits from state government, including a reduced corporate tax rate, an elimination of the sales tax on utility expenses, and the creation of a highway leading into its facility at Quonset Point. The state has been, and will continue to be, a partner in assisting Ocean State Job Lot with incentives. Tolls are a tax-deductible business expense and the company will derive great benefits from improved roads and bridges throughout the state,” he said.

Mattiello also notes that there has been corporate support for tolling and that the plan has been endorsed by the Greater Providence Chamber of Commerce.

Truckers report fuel use

@T_Basic:One little-known fact, even to legislators who were learning of it for the first time in committee testimony Thursday evening, is that truckers pay state taxes on fuel whether they fuel up in Rhode Island or not.

How this works, explained Tom Byrne, owner of TW Byrne Transport of Warwick, in an interview Friday, is that truckers file a quarterly log of miles driven in each state. On average, Class 8 trucks, which would be the larger rigs subject to tolls under the legislation, get five miles per gallon of diesel fuel. Using that figure arrives at a number of gallons used, which is then multiplied by the state tax. So, for example, if Byrne’s trucks fuel up in Rhode Island, but use most of that fuel out of state, he would get a credit of Rhode Island taxes that would offset taxes due in other states. The system is run by the Interstate Fuel Tax Association. Therefore, if the diesel tax were increased, truckers using Rhode Island roads would pay it whether they fueled up here or not.

But can an increase in the diesel tax pay for the RhodeWorks program as outlined by the governor and Peter Aliviti, director of the Department of Transportation?

Berman said a one-cent increase in the tax would generate $600,000. The tax now yields $21 million.

“The initial surge of repairing the most deficient bridge is approximately $180 million, so as you can see, raising the diesel tax falls far short of what the DOT needs to address the major bridge problem,” Berman writes in an email. “It’s just not enough money.”

Projected toll revenues are $45 million, an amount seen as sufficient to carry the costs of the $300 million surge to address 150 deficient bridges.

Michael Collins, co-founder of M&D Transportation of North Kingstown, challenges the $45 million figure.

“Our focal point is the numbers,” he said in telephone interviews Friday and Sunday.

He said Ocean State roads have faced 30 years of neglect, and that he and other truckers “want to help you [the governor] fix it.” He said toll revenues, in order to tally $40 million annually, would require daily revenues of $109,890.11 and a traffic count of 5,494 Class 8 vehicles. To get to $45 million, the traffic count would need to be 6,800 vehicles. Collins said according to the American Traffic Research Institute, the actual daily count in Rhode Island is 2,740 Class 8 vehicles.

State data questioned

In a phone interview yesterday Darrin Roth, vice president of highway policy for the American Trucking Association, said his group’s studies show 1.2 million to 1.5 million “through truck trips” in the state annually. As he said there are more direct ways to reach destinations north and south of Rhode Island, he believes most of Rhode Island’s through truck traffic is made up of truckers seeking to avoid tolls in other states.

This incentive would disappear with Rhode Island tolls, thereby targeting all local traffic, Roth concludes.

He is also confounded by the assumptions made in the Rhode Island plan since they aren’t supported by the data the association has access to.

“They’re putting out information and don’t explain where they’ve gotten it,” he said.

Roth said Rhode Island would be the “guinea pig” in establishing truck-only tolls as well as tolls of only a certain class of truck. To his knowledge, there is only one exit on the New York Thruway that tolls trucks only, but that elsewhere across the country tolls apply to cars and trucks.

Roth also said that if the state imposes truck tolls as planned it would be the first state-imposed toll on an existing interstate highway.

Collins says 2,740 Class 8 trucks, about half of what the governor projects, would reduce toll revenues to $19.8 million. He said that 50 to 70 percent of the trucks the governor is looking to have pay tolls would avoid the state, thereby reducing revenues to under $10 million. He said when the cost of gantries and administration is added the amount is further reduced.

“They end up with nothing,” he said.

“How are they going to pay the nut [the $300 million borrowed to launch the five-year surge] back?” he added. “We’ve got an economic train wreck.”

Collins and his brother have more than 40 “power units” that haul 53-foot trailers. He said the tolls would cost his company $240,000 to $250,000 a year and ultimately put him out of business or force him to move out of the state.

Byrne sees a similar fate for his business. Furthermore, he sees out-of-state truckers “boycotting” the state.

“Rhode Island has never been a favorite state to come through,” he said, as there is no easy place to fuel and “there’s no place to sleep.” Worse yet, he reasons tolls will force out what businesses the state has left, such as Job Lot.

“I’ve hauled for every major shipper. They’re all gone and they’re not coming back,” he said, listing Davol, APC, Leviton, Leesona, Triangle Wire and Hasbro. Both Byrne and Collins say truckers will divert from toll gantries, despite claims made by the governor and Alviti that even when faced with thousand-dollar fines, truckers still used the Pawtucket Bridge on Route 95. Because of deterioration, a weight limit was placed on the bridge.

Collins doubts fines of $3,000 were paid. If imposed, he said they would have been contested. The maximum fine he has knowledge of is $85.

“This is Raimondonomics; it’s forcing people out of business,” Collins said of the toll legislation.

Diesel tax alternative

Collins favors raising the tax on diesel fuel from 32 to 50 cents per gallon. He points out that this could be done immediately without additional administrative or gantry costs. He said the Rhode Island Trucking Association is in favor of the plan and reasons it is fair since diesel fueled vehicles average twice the mileage of gasoline-powered vehicles and are currently being taxed less on a mile driven basis than gas-powered vehicles. The 18 cents would generate $10.8 million. Collins then proposes taking the diesel fuel portion of the 19 cents per gallon of all fuel sales that former Gov. Lincoln Chafee earmarked for road repairs and allocating it to bridges, which would mean an additional $11.4 million for a total of $22.2 million.

Add to this a $20 million increase in federal Fixing America’s Surface Transportation (FAST) Act funding, and there would be $42.2 million for bridge repairs. As the FAST Act funding is spent over five years, Collins suggests the $15 million the state is now paying for the 38 Studios bond be allocated to the bridge program once the bonds are paid.

Collins is open to alternatives. He reasons there are numerous ways to raise the funds other than tolls, which he says will drive business out of the state.

“You can do this with a multiple of mechanisms,” said Chris Maxwell, president of the Rhode Island Trucking Association. In addition to a diesel fuel tax and allocation of FAST Act funds to bridges, he cited the plan to use GARVEE, or grant anticipation revenue vehicles, to finance repairs.

“It would negate the need to go down this path of wrong,” he said.

Comments

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  • HerbTokerman

    If they really want to improve bridges and roads, they should start by gutting the entire management of the DOT that has been inept for decades and turning a blind eye to sub-par work being done by their contractors.

    The problem is not that there isn't enough money in the existing budget, there is plenty of money in the existing budget to fix our bridges and roads.

    The main problem is that whatever work is done, is done so half-assed that the contractors are guaranteeing themselves doing the same work over and over again since there are only two contractors that are ever used on RI roads.

    It would not surprise me at all if people are getting paid off to look the other way in terms of quality control.

    Tuesday, February 9, 2016 Report this

  • RISchadenfreude

    Remember when RIDOT was able to build and repair roads?

    Starting in the late '60's and early '70's, RI legislators, at the behest of their mob friends who are (silent) partners in the construction companies, began to gut the RIDOT budget and transfer more of the road construction and repair work to contractors under the guise of "savings" to the budget; this continued until RIDOT (and RI municipalities followed suit, particularly Providence) until highway departments were gutted and can do little more than fill potholes.

    Unfortunately, those legislators are long-since retired or taking dirt naps and won't or can't explain why they chose such a shortsighted solution, other than threats or the largesse of the contractors and their "partners".

    Fast-forward to today, and RI'ers are at the mercy of construction contractors with bloated budgets, schedules, material costs, and poor safety records. Contracts can be written to hold their feet to the fire and make them competitive, but at the DOT, the fix is in and there's plenty of wiggle room for the Contractors. After all, no one wants to get beaten up in the parking lot or have their vehicle damaged for not hiring the "right" contractor.

    It's sad to see other States repair their own roads, sometimes in a matter of days, or build 20 miles of roads and bridges in less than two years.

    What a windfall for the connected (again), Giner.

    Thursday, February 11, 2016 Report this

  • RISchadenfreude

    Gov. Gump proposed an equally stupid tax ("toll", "tax", "fee"- it's all the same) on warehouse stock, but it failed when Job Lot and others threatened to leave RI- make conducting business inconvenient for the private sector and they'll adapt (i.e.; leave RI).

    As long as RI is punitive to business, the State economy will continue to decline.

    If you want to see where RI is headed, look no further than Detroit.

    Thursday, February 11, 2016 Report this