“Project 2019” Task Force Report

“The BOLD Act”

A Comprehensive Federal Transportation Tax & Revenue Reform

Investment Package

Co Chairs: Rob Charter, Group President, Caterpillar, Peoria, Illinois

Ward Nye, President & CEO, Martin Marietta, Raleigh, North Carolina

Members: John Boyle, President, Mountaineer Contractors, Kingwood, West Virginia

Tony Boals, Vice President, Wright Brothers Construction, Charleston, Tennessee

Scott Cassels, President, Kiewit Infrastructure Group, Omaha, Nebraska

Tim Creson, President & CEO, Webber, LLC, The Woodlands, Texas

Matt Cummings, Executive Vice President, AECOM, Philadelphia, Pennsylvania

Tim Duit, President, TTK Construction, Edmond, Oklahoma

Jim Fehsenfeld, President & CEO, Heritage Materials & Construction, Indianapolis, Indiana

Mike Glezer, CEO, Wagman Heavy Civil, York, Pennsylvania

Paula Hammond, SVP/Transportation Market Leader, WSP-Parsons Brinckerhoff, Seattle,

Washington

David Harwood, Senior Vice President, Terracon Consultants, Olathe, Kansas

Chris Hawkins, Chief Operating Officer, Hawkins Construction, Omaha, Nebraska

Mark Johnnie, Vice President & General Manager, Balfour Beatty Infrastructure, Atlanta, Georgia

Kevin Kelly, President & CEO, Walsh & Kelly, South Bend, Indiana

Darren Kettle, Executive Director, Ventura (California) County Transportation Commission,

Ventura, California

Randy Lake, CEO, Oldcastle Materials, Atlanta, Georgia

Susan Martinovich, Highway/Bridge Market Sector Director, CH2M, Carson City, Nevada

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

Ross Myers, Chairman & CEO, Allan Myers, Worchester, Pennsylvania

Jule Smith, President, The Fred Smith Group, Raleigh, North Carolina

Len Toenjes, President, AGC of Missouri, St. Louis, Missouri

Melissa Tooley, Director, SW Region University Transportation Center, Texas A&M University

System, College Station, Texas

Paul Yarossi, President, HNTB Holdings, New York City, New York

Background

In January 2016, American Road & Transportation Builders Association (ARTBA) Chairman David Zachry, president

and CEO of the Zachry Construction Corporation, based in San Antonio, Texas, initiated the “Project 2019” Task

Force. Its mission was “To reach transportation infrastructure industry 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.”

The Task Force was specifically charged with developing goals and strategies for improving federal transportation

infrastructure 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.

The task force met July 13 at Caterpillar World Headquarters in Peoria, Illinois. At the meeting, the group focused

on how to ensure sustainable and robust future funding for the federal highway and public transportation

investment program. It 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. They also discussed the

National Infrastructure Bank concept and public and private financing options. They charted a new direction.

This report reflects the consensus decisions made at that meeting. The pages that follow provide an innovative,

comprehensive federal transportation tax and revenue reform and investment plan—the “Transportation Helps

Everyone: Building Our Legacy & Destiny Act” (“The BOLD Act”)—that can be advanced as part of any federal

infrastructure investment initiative or overall tax reform legislation that is initiated by the new Administration and

Congress.

“The BOLD Act”

to make America’s A Federal Transportation Tax and Revenue Reform Package nationally significant transportation infrastructure a strength that enhances—rather

than impedes—U.S. productivity and international competitiveness.

A New Paradigm for Sustainable Investment

The BOLD Act creates a new, sustainable paradigm for funding expanded federal investments in critical

intermodal transportation infrastructure. It does this by completely reforming the revenue stream that

undergirds federal Highway Trust Fund (HTF) investments and generating seed capital for creation of a robust

to leverage private-sector investment. National Infrastructure Bank (NIB)

The BOLD Act—for the first time—aligns the major source of revenue for federal transportation infrastructure

It does so in a way that is fair, use-based and investments with national economic growth. makes possible a

major reduction in the existing federal gas and diesel motor fuel tax rates and elimination of the federal heavy

truck taxes.

The BOLD Act sets in motion a

dynamic economic “flywheel effect”

by exclusively targeting new

revenue generated by freight

activity to high payoff, technology-

enhanced capital investments that

improve the safety and efficiency

of the National Highway Freight

(NHFN) designated by Network

Congress in the 2015 FAST Act (Sec.

1116). The NHFN consists of the

48,000-mile Interstate Highway

System (IHS) and an additional

18,000 miles of Critical Urban and

Rural Freight Corridors that connect the IHS to the nation’s major ports, inland waterways, airports, rail hubs and

intermodal terminals. As investments in this network come to fruition, they will facilitate productivity savings for

American shippers and workers that spur economic growth. That, in turn, will generate revenue growth for

ongoing NFHN improvements for decades to come.

The BOLD Act makes possible, for the first time in decades, a national initiative that could aggressively target

and upgrade—with state-of-the-art materials and technologies—the well-defined transportation infrastructure

that is most critical to our economy. It could usher in a new era of safety, shipping efficiency and environmental

improvement that would come with the elimination of major traffic bottlenecks on our Interstate highways,

initiation of dedicated truck lanes separated from general traffic, and electronic vehicle screening and

credentialing systems like weigh-in-motion truck inspection and technologies.

“The BOLD Act” Revenue Components

The BOLD Act federal transportation tax reform package:

(1) , from 18.3 cpg to 13.3 cpg— Reduces the federal gas tax rate by 5 cents per gallon (cpg) a 27 percent

—and indexes the new rate annually thereafter to the Consumer Price Index (CPI); decrease

(2) , from 24.3 cpg to 19.3 cpg—Reduces the federal diesel motor fuels tax rate by 5 cents per gallon a 20

—and indexes the new rate annually thereafter to the CPI; percent decrease

(3) Eliminates the 12 percent federal excise tax (FET) on the sale of new heavy trucks, tractors and trailers, the

annual heavy vehicle use tax and the FET on new tire purchases.

(4) Creates parity with the longstanding federal Air Cargo Tax (Sec. 4271) by likewise initiating a 6.25 percent

federal “Highway Transportation Services Tax” (HTST) on the cost of shipping goods domestically by Class 7

Over the period FY 2018-19, $25 billion in HTST-generated revenue will be and Class 8 heavy trucks.

designated as seed money for capitalization of a new “National Infrastructure Bank.” The remaining HTST

revenue FY 2018-20—and then all of the revenue generated by this mechanism thereafter will be deposited in

a newly-created HTF “National Highway Freight Network Account” to ensure the money being contributed

by shippers will be dedicated exclusively to infrastructure investments from which they will benefit.

(5) Ensures parity among all highway users in supporting transportation infrastructure investment by initiating

a one-time FET on the use of alternative fuel-powered motor vehicles. A new federal “Alternative Fuel

Vehicle Highway Use Parity Excise Tax” (AFVHUP-FET) will be levied on the first retail sale of such vehicles,

with the tax collected from the seller. The AFVHUP-FET rates are $870 for an electric-only vehicle, $435 for a

hybrid electric/gasoline vehicle, and $740 for an 85% ethanol powered vehicle. These rates are the 10-year

equivalent of the lower federal gas tax the average American motorist would pay over the same period driving

a gasoline-only powered vehicle. The funds derived from this FET will be deposited in the HTF Mass Transit

Account, providing a dedicated, sustainable revenue stream for federal investments in public transportation.

(6) Addresses the chronic HTF structural revenue shortfall by adjusting the existing federal Oil Spill Liability Tax

as proposed in H.R. 4848. This revenue (Sec. 4611) to $6.75 per barrel on transportation-related use oil

stream will be directed to the HTF’s Highway and Mass Transit Accounts to fund federal responsibilities not on

the NHFN.

What “The BOLD Act” Makes Possible

This new revenue stream mix will generate $84 billion in FY 2021 for federal transportation infrastructure

This makes possible a FAST Act reauthorization that provides in FY 2021: investments.

$46 billion for investments in the NHFN, the level the U.S. Department of Transportation’s needs and

performance report to Congress suggests is necessary to fund all “economically beneficial investments” to

the NHFN and to begin making possible funding for congressionally-authorized “High Priority Corridors” ;

; and $25 billion for investment in all existing non-NHFN-related highway programs

. $13 billion for Mass Transit Program investments

With The BOLD Act revenue generation started in FY 2018, an additional $60 billion will be available over the

remaining years of the FAST Act authorization. This revenue will be used to:

Provide a $25 billion capitalization of a new “National Infrastructure Bank” to fund major projects in all

transportation modes that will increase U.S. competiveness. It is estimated such a capitalization will provide

leverage to support up to an additional $225 billion in direct loans, loan guarantees, and other forms of credit

enhancement and make possible a renewed and expanded Build America Bonds program.

Take advantage of the FAST Act provision that makes possible higher authorizations if additional HTF revenue

is available. About $30 billion will be put toward “fast tracking” the National Highway Freight Network

upgrade initiative.

The BOLD Act reinforces the constitutionally-based federal role in supporting critical transportation

infrastructure investments that facilitate interstate commerce. It puts in place a permanent revenue

solution for HTF programs that is fair, use-based and sustainable. It directly addresses market changes

like increasing motor vehicle fuel efficiency and the use of alternative motor fuels. And it eliminates

the funding uncertainty that has plagued HTF programs for more than a decade.