“THE BOLD ACT”

PROJECT 2019 TASK FORCE

REPORT TO THE

AMERICAN CONCRETE PAVEMENT ASSOCIATION

November 30, 2016

“PROJECT 2019”

TASK FORCE

Initiated by Chairman David Zachry in January 2016

Mission: “To reach ARTBA leadership consensus on the strategic legislative and regulatory issues that are most important to our members and to establish a direction for securing the desired changes to our market.”

Develop goals and strategies for improving federal transportation funding and achieving regulatory changes that could be advanced and, hopefully, accomplished before 2019 to help ensure a smooth reauthorization of the federal surface transportation programs in 2020.

“PROJECT 2019”

TASK FORCE

Co Chairs: Rob Charter, Group President, Caterpillar

Ward Nye, President & CEO, Martin Marietta

Members: John Boyle, President, Mountaineer Contractors

Tony Boals, Vice President, Wright Brothers Construction

Scott Cassels, President, Kiewit Infrastructure Group

Tim Creson, President & CEO, Webber, LLC

Matt Cummings, Executive Vice President, AECOM

Tim Duit, President, TTK Construction, Edmond, Oklahoma

Jim Fehsenfeld, President & CEO, Heritage Materials & Construction

Mike Glezer, CEO, Wagman Heavy Civil

Paula Hammond, SVP, WSP-Parsons Brinckerhoff

David Harwood, Senior Vice President, Terracon Consultants

Chris Hawkins, Chief Operating Officer, Hawkins Construction

Mark Johnnie, Vice President & GM, Balfour Beatty Infrastructure

Kevin Kelly, President & CEO, Walsh & Kelly

Darren Kettle, Exec. Dir. Ventura (California) Cnty Trans.Comm.

Randy Lake, CEO, Oldcastle Materials

Susan Martinovich, Highway/Bridge Market Sector Director, CH2M

Chris Miller, Executive Vice President & COO, Granite Construction,

Ross Myers, Chairman & CEO, Allan Myers

Jule Smith, President, The Fred Smith Group

Len Toenjes, President, AGC of Missouri

Melissa Tooley, Director, SW Region UTC, Texas A&M University

Paul Yarossi, President, HNTB Holdings

“PROJECT 2019”

TASK FORCE

Meeting at Caterpillar: July 13, 2016

Focus: How to ensure sustainable and robust future funding for the federal highway and public transportation investment program.

Reviewed and discussed, in the context of the current political environment:

All of the major use-based funding options that are—or could be—available to achieve these goals

National Infrastructure Bank concept and public and private financing options

The Task Force will look at regulatory reforms next.

“PROJECT 2019”

TASK FORCE

“PROJECT 2019”

TASK FORCE

Consensus:

Our objective is to expand funding robustly to meet needs/performance outcomes identified by U.S. DOT in report to Congress—“just filling the hole” and inflation is not acceptable outcome

There has been no creative thinking on highway funding in Congress or White House for two decades, we need to provide it

Politics of gas tax increase at federal level obvious deterrent to moving forward… need to change discussion

Packaging is key… provide a mix of revenue streams… give something to get something… must be results oriented

“PROJECT 2019”

TASK FORCE

We should offer a comprehensive, multi-faceted “Federal Transportation Revenue & Tax Reform”/Investment Package

Would fit in the context of overall tax reform

Would provide funding for any “infrastructure initiative” from new Clinton or Trump Administration

Any proposed new revenue streams should be dedicated to meeting a defined national need to rebuild public confidence in the federal program

Must produce tangible, measurable benefits

Not just provide “more money for the highway and transit program”

THE BOLD ACT

FEDERAL TRANSPORTATION REVENUE & TAX REFORM/

INVESTMENT PACKAGE: TAX REDUCTION

2. Give U.S. shippers some “bottom line” tax relief…

Eliminate federal heavy truck taxes

12 percent federal excise tax (FET) on the sale of new heavy

trucks, tractors and trailers

Annual Heavy Vehicle Use Tax

New tire sales FET

1. Take one for the team and remove the political poison…

Reduce the federal gas and diesel motor fuel tax rates

by 5 cents per gallon (- 27%, - 20%) and index them to

CPI

THE BOLD ACT

FEDERAL TRANSPORTATION REVENUE & TAX REFORM/

INVESTMENT PACKAGE: REVENUE ENHANCEMENT

Initiate 6.25% federal “Highway Transportation

Services Tax” (HTST) on the cost of shipping

goods domestically by Class 7 and 8 heavy trucks

Creates parity with long-standing 6.25% federal “Air Cargo

Tax” which supports Airport & Airways Trust Fund

programs

Funding stream grows annually as U.S. economy grows

THE BOLD ACT

FEDERAL TRANSPORTATION TAX REFORM &

INVESTMENT PACKAGE: REVENUE ENHANCEMENT

Initiate “Alternative Fuel Vehicle Highway Use Parity Tax”

Creates parity with gas tax (10-year gas tax at new rate equivalent, indexed)

One time FET levied on first retail sale of alternative fuel vehicles—paid by seller

Electric only: $870

Electric/Gas Hybrid: $435

85% Ethanol Powered: $740

Deposited in Highway Trust Fund Mass Transit Account for dedicated, sustainable mass transit investment revenue stream

THE BOLD ACT

FEDERAL TRANSPORTATION REVENUE & TAX REFORM/

INVESTMENT PACKAGE: REVENUE ENHANCEMENT

Fill the remaining HTF “funding gap” by adjusting

the federal “Oil Spill Liability Tax” by $6.75 per

barrel and direct revenue stream to the HTF

This has been proposed as H.R. 4848, introduced by Rep.

Peter DeFazio (D-Ore.), ranking Democrat on House

Transportation & Infrastructure Committee

Use to fund federal highway and transit responsibilities not

on the NHFN.

THE BOLD ACT

FEDERAL TRANSPORTATION REVENUE & TAX REFORM/

INVESTMENT PACKAGE: REVENUE ENHANCEMENT

Highway Trust Fund Revenue Streams FY 2017 FY 2018 FY 2026

Per Gallon Gasoline $25.5B $18.5B $18.9B

Per Gallon Diesel Motor Fuel $10.0B $8.0B $9.7B

Heavy Truck Taxes $6.7B 0 0

Highway Transportation Services Tax 0 $40.0B $55.1B

Per Barrel Transportation Oil Tax 0 $22.9B $19.3B

Alternative Fueled Vehicle Parity Tax 0 $1.8B $2.2B

TOTAL REVENUE TO HTF $42.2B $91.2B $105.2B

FY 2018: - $15.7B Existing + $64.7B New = + $49.0B NET

THE BOLD ACT

FEDERAL TRANSPORTATION REVENUE & TAX REFORM/

INVESTMENT PACKAGE: REVENUE ENHANCEMENT

THE BOLD ACT

FEDERAL TRANSPORTATION TAX REFORM &

INVESTMENT PACKAGE

HIGHWAY TRANSPORTATION

SERVICES TAX

After NIB start-up, revenue

dedicated exclusively for

investments to upgrade the 68,000-

mile National Highway Freight

Network designated by Congress in

the 2015 FAST Act.

SHIPPERS PAY, SHIPPERS SEE

BENEFIT… EVERYONE WINS

Funds the “Critical Commerce Corridors” (3Cs) Program first envisioned by the Fehsenfeld

Family (Heritage Construction & Materials) and 2008 ARTBA Chairman Charlie Potts, advanced by

ARTBA since 2006, and made statutory in the 2015 FAST Act.

THE BOLD ACT

FEDERAL TRANSPORTATION TAX REFORM &

INVESTMENT PACKAGE

HIGHWAY TRANSPORTATION

SERVICES TAX

First $25B “seed capital” for

“National Infrastructure Bank”

start-up.

Leverage to $225B for high-cost, multi-

modal transportation infrastructure

projects

Support new “Build America Bonds”

program

Trump suggesting bonds… bipartisan

supporters on Capitol Hill

ADVANCING “THE BOLD ACT”

FEDERAL TRANSPORTATION TAX REFORM &

INVESTMENT PACKAGE

FY 2017

$22B

FY 2021

$46B

FY 2017

$23B FY 2017

$25B

FY 2021

$25B FY 2017

$12B FY 2017

$13B

FY 2017

$0

Obtain third-party vetting of “Highway Transportation

Services Tax” revenue stream forecast and statutory

language for U.S. Treasury Department reporting and collection

protocol from shippers (i.e., PriceWaterhouseCooper, $200K).

Start outreach to seek congressional champion(s) to embrace

concept, or similar, and move to include in any “infrastructure

initiative” and/or comprehensive federal tax reform vehicle that

starts moving in 2017.

Seek support of transportation construction-related national

associations for The BOLD Act proposal and strategic approach.

THE BOLD ACT

FEDERAL TRANSPORTATION REVENUE & TAX REFORM/

INVESTMENT PACKAGE

Ask to ACPA and its member firms…

1. As an organization, consider supporting The BOLD Act underlying premises and concept

2. Provide lobbying & grassroots support for demanding Transportation Revenue & Tax Reform as part of any comprehensive federal tax reform package that moves forward in 2017

3. Joining others in financially supporting the National Highway Freight Network investment 2017 communications strategy & campaign