August 2014

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Page 23 of 67

22 | www.cedmag.com | Construction Equipment Distribution | August 2014 Highway Funding As CED readers well know, the federal highway program is facing an unprecedented crisis, and saving it is a top priority for AED. The reason it's so important is simple: Each dollar spent on roads generates an aver- age of 6.4 cents in market activity for dealers (sales, rental, and product support). That means the $41 billion the federal government invests in highways each year contributes more than $2.4 billion to dealer revenues. We also know from past AED Cost of Doing Business surveys that each $600,000 in dealer revenues supports, on aver- age, one dealership job, meaning that about 4,000 jobs at AED member companies are associated with federal highway work. Keep in mind those numbers don't include the impact of the state investment induced by the federal funds or the construction work associated with transit projects (which receive another $10 billion per year from the feds). In other words, by any objective measure, the impact of federal surface transportation spending on the construction equipment industry is huge. How Did We Get Here? Why the highway program is on the brink of collapse is complicated. To understand the situation, you need to rewind several decades. Prior to the mid 1990s, not all the money collected by highway user fees like the gas tax was paid into the federal Highway Trust Fund (HTF). Lawmakers also didn't spend all the revenues that came in, and they maintained balances in the HTF to help make the federal budget deficit look smaller. In the late 1990s, all that changed. AED and its construction allies success- fully lobbied Congress to restore trust to the Trust Fund. Since then, all user fees have been deposited in the HTF (continued on page 24) Funding Conundrum A look at the origins of the highway crisis, why it matters for distributors, and what AED is doing to get federal infrastructure programs back on track. BY CHRISTIAN A. KLEIN

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