Testimony of
Bill Vernon, State Director, National Federation of Independent Business
In Opposition to House Bill No. 7409
Relating to State Affairs and Government – Rhode Island Bridge Replacement, Reconstruction and Maintenance Fund — Tolls
Before the House Finance Committee
February 4, 2016
Chairman Gallison and Members of the House Finance Committee:
My name is Bill Vernon. I am the Rhode Island Director of the National Federation of Independent Business (NFIB). A non-profit, non-partisan organization, NFIB is the nation’s and Rhode Island’s largest small business advocacy group. In Rhode Island, NFIB represents hundreds of small and independent business owners involved in all types of industry, including manufacturing, retail, wholesale, service, and agriculture. The average NFIB member has five employees and annual gross revenues of about $450,000. In short, NFIB represents the small Main Street business owners from across our state. On behalf of those small and independent business employers in Rhode Island, I urge you to oppose House Bill No. 7409, creating a truck tolling program to fund the replacement, reconstruction, and maintenance of bridges in Rhode Island.
This bill would create a new funding mechanism for road and bridge repair in Rhode Island. Certainly we do not contest the need to improve the conditions of Rhode Island’s roads and bridges. And we certainly appreciate the effort to find the best method to fund this important public investment in the state’s infrastructure, as well as the effort to modify the tolls in light of the availability of additional federal highway assistance. We support the inclusion of the passenger vehicle exclusion from tolls. We believe however that the tolling program will still add another cost of doing business in Rhode Island at a time when we should be focused on finding ways to lower costs. Whether those additional costs are focused on a particular industry or are socialized and become ‘pass through’ costs that affect most businesses in the state, the additional costs on the state’s economy will be imposed, especially with the elimination of the local carrier credit.
The Rhode Island Public Expenditure Council’s recently released study shows that the proposed tolling program is unique in the nation (compared to other states’ tolling) in its application on multiple roads throughout the state. Further the report shows that none of the projected revenue from tolls is actually needed to accomplish the road and bridge replacement, construction and maintenance goals of the tolling program. The tolling program contained in this bill will, according to RIPEC, entail the largest “local cost” of more than $530 million when compared to alternative proposals, thus giving credibility to small business owners’ concerns about tolling’s impact on the cost of doing business in Rhode Island as noted above.
In fact, under the current plan, the state will have insufficient revenue to accomplish its construction goals in the first six years of the program, but the state will enjoy an annual revenue surplus in the out years. Essentially a new revenue stream will be created for the state. Such a stream may be justifiable if the current revenue stream for roads and bridges from the gas tax – an admittedly declining and regressive revenue source – were eliminated or reduced. Or at least the elimination of the indexing of the gas tax were a part of the plan. But no such tax adjustments have been included in the plan.
Small business owners are also concerned with the fiscal responsibility of the program. Incurring interest payments on bonds over several years beyond the useful life of the maintenance projects is a plan that essentially ‘kicks the can down the road’ for future generations, but also takes resources in the short term from the job of reconstruction and maintenance of roads and bridges. As RIPEC notes, this level of borrowing costs is not necessary.
Rhode Island’s small business owners constitute the backbone of the state’s economy. A first class transportation system of roads and bridges is essential to economic health and growth in the state. But Rhode Island is already a high cost state for businesses, as proven by national report after report that ranks Rhode Island’s business climate at or near the bottom of the list of states. Rhode Island’s economy has improved in recent months and years. But this is no time to take our eye off the ball and add a new cost, which may be unnecessary to accomplish the mutually desired goal.
NFIB/RI opposes House Bill No. 7409.
