The recently approved highway bill that was passed by lawmakers will create $13 billion in economic activity related to construction equipment and generate 4,000 jobs at equipment dealerships, according to a new study released by the Associated Equipment Distributors.
The Oak Brook, Ill.-based group said Wednesday the new $305 billion highway bill will stimulate approximately 6.4 cents in growth the equipment industry for every dollar that is spending on infrastructure.
“The new analysis clearly illustrates what AED told lawmakers for almost a decade: restoring certainty to the federal highway program will yield positive economic benefits for equipment distributors, manufacturers and their employees,” AED President Brian McGuire said in a statement.
{mosads}“Equipment distributors were decimated during the recession and recovery has been slow due to volatility surrounding federal infrastructure programs,” McGuire continued. “The FAST Act will revive the industry, create jobs, and lay the groundwork for solid economic growth.”
The 1,300-page bill, paid for with gas tax revenue and a package of $70 billion in offsets from other areas of the federal budget, is the first multiyear highway funding measure approved by lawmakers in a decade.
The bill calls for spending approximately $205 billion on highways and $48 billion on transit projects over the next five years. It also reauthorizes the charter of the controversial Export-Import Bank until 2019.
Congress had not passed a transportation funding bill that lasted longer than two years since 2005 prior to the completion of the new measure, much to the chagrin of infrastructure advocates in Washington.
The equipment distributors association said Wednesday it has been a long, winding road to the completion of the multiyear year highway bill.
“Restoring the Highway Trust Fund’s solvency has long been AED’s top legislative priority,” the group said. “The association strongly supported the FAST Act and will work with policymakers to identify real and sustainable revenue streams to increase and stabilize the federal Highway Trust Fund for decades to come.”
The new bill formally reauthorizes the collection of the 18.4 cents per gallon gas tax, which is typically used to pay for transportation projects, and also includes $70 billion in “pay-fors” to close a $16 billion deficit in annual transportation funding that has developed as U.S. cars have become more fuel-efficient.
The gas tax has been the traditional source for transportation funding since its inception in the 1930s, but lawmakers have resisted increasing the amount that drivers pay. The federal government typically spends about $50 billion per year on transportation projects; the gas tax only brings in $34 billion annually.
Congress has been struggling for years to come up with ways to pay for a long-term transportation funding extension without raising the gas tax. The offsets in the agreement that was announced on Tuesday include changes to custom fees and passport rules for applicants who have delinquent taxes.
Additional mechanisms include contracting out some tax collection services to private companies — over the objection of unions that represent federal IRS workers — and tapping dividends from the Federal Reserve Bank.
The full study on the economic impact of the highway bill for equipment distributors can be read here.