John Hausladen, president, Minnesota Trucking Association
8301 Creekside Circle #920, Bloomington, MN
55437 December 9, 2011
Verne Johnson (chair, phone), Dan Loritz (vice chair), David Broden, Janis
Clay, Pat Davies, Paul Gilje, Jim Hetland, Sallie Kemper, Tim McDonald,
Jim Olson, Wayne Popham
Summary of discussion:
John Hausladen, President of the Minnesota
Trucking Association, argues in favor of existing taxing mechanisms to
support necessary road and bridge construction and maintenance. He raises
his point amidst growing public concern that the current systems for
funding roads and bridges are dated and insufficient to meet future needs
in an age of improving gas mileage. Any taxing system to pay for roads and
bridges needs to be as effective, efficient, and fair as possible,
Hausladen argues, and says the current system succeeds on these counts
better than any alternative proposed to date.
A. Welcome and introductions
- John Hausladen is President and Chief
Executive Officer of the Minnesota Trucking Association, a position he has
held since 1996. In that capacity he is responsible for overall management
of the organization's statewide advocacy, safety, and member service
Hausladen has spent 29 years in association work, 26 of
those in management capacities. He has had significant experience in
membership development, marketing, strategic planning, communications, and
The Minnesota Trucking Association is a non-profit trade
organization representing over 700 member trucking companies and allied
firms from across the state. The membership reflects the diversity of the
Minnesota trucking industry, including trucking operations categorized as
less-than-truckload, truckload, bulk, agricultural, heavy specialized, and
Hausladen is a 1982 summa cum laude graduate of Bethel
College, and has taken graduate coursework at Metropolitan State
B. Discussion -
The Minnesota Trucking Association (MTA) has been in
existence since the 1930's, and has evolved over the years with the many
changes in technology that have occurred since its beginning. In the early
years the industry was largely a less-than-truckload, unionized system.
Now MTA members primarily offer truckload, non-unionized, and on-demand
shipping for customers.
"Rail may have some advantages with heavy loads over long
distances, Hausladen said, "but it is generally up to trucks to deliver
the first and last mile of nearly all freight." He stressed that the rails
and trucking currently have greater partnerships than any time in history.
Particularly in the age of Internet shopping all the small online
purchases are being delivered to final destinations by trucks.
There is a perception, Hausladen said, that that the state
transportation funding mechanisms in place today are inadequate to address
potential revenue losses caused by increased fuel efficiency of vehicles
and non-taxed vehicle power sources such as electricity. This perception
has led some to contend that the whole funding system needs to be scrapped
Hausladen believes both of these presumptions are flawed,
leading to unsound policy recommendations for alternative funding systems
that are both less effective and less efficient than the present model.
The goal of policy Hausladen said should be to adjust
and/or expand funding mechanisms to continue predictable and reliable
To address this goal, there are two essential questions
about transportation funding that drive the discussion, Hausladen said:
How much do we need, both now and in future years, and how should we
If the present funding is not meeting the perceived need,
Hausladen suggested, people are often too quick to propose throwing out
the old funding mechanism. Doing so, he contends, is short sighted. He
offered another approach to resolve the deficiency.
Six recommendations are outlined.
Hausladen suggests six policy recommendations for the
- Retain the fuel tax and other current highway system
funding mechanisms, improving them if necessary but not fundamentally
- Subject vehicles powered by novel sources of energy
to the fuel tax, to the extent those sources allow it, at rates that match
those on traditional fuels. There are some new sources that may be
found. If so, treat them the same as gas.
- Assess fees directly on alternative energy sources
via such available means as the metering of liquid propane and natural
- Assess additional registration fees on those
alternatively fueled vehicles, such as electric vehicles and hybrid
vehicles, for which the fuel tax is an inadequate levy. Weight-based
registration fees are presently assessed on trucks; the same policy
concept could be applied to other types of vehicles.
- Assess an additional motor vehicle sales tax on
alternatively fueled vehicles whose power source is unsuited to the fuel
- To the extent that these adjustments in the current
highway funding structure yield more revenues, dedicate all the
supplemental revenue to the highway trust fund for use exclusively on
highways and bridges. Truckers are concerned about the many
opportunities for diversion, Hausladen said: transit, bike paths,
beautification-anything that is not pavement and concrete for the use of
the taxed vehicles should be funded separately.
Existing funding mechanisms are sufficient.
There is much concern that the state will not have enough
money for infrastructure maintenance as fuel economy increases and
alternative fuels such as electricity, which are not taxed for roads,
become more common. But the truth is, Hausladen argues, if policy makers
were to increase the existing gas tax, vehicle registration fees, and
vehicle sales taxes the state could meet any determined needs effectively
The fuel tax is highly efficient, Hausladen said, because
the cost to administer it is very low. He argued that it far exceeds any
other mechanism for its ease and effectiveness to implement. Any
alternative transportation tax would need to be as efficient. The present
tax costs only 2-3 percent to administer mainly because the wholesaler
pays it in advance. While the consumer sees the tax amount at the gas
pump, in fact that tax has already been remitted to the state by the gas
wholesaler. Since the tax is collected up front there is limited
opportunity for evasion.
Fuel consumption will not decrease in foreseeable future.
The prospect of electric cars becoming a major factor is
vastly overstated, Hausladen said. Industry analysts predict that there
will only be 7,500 electric cars in the state in 2015 out of approximately
4,800,000 cars on the road in 2009.
He's also skeptical that fuel efficiency will appreciably
drive down revenue from the gas tax. Fuel efficiency has been increasing
since the 70's and 80's and into the 90's, Hausladen said, and it's only
recently that there have not been any major improvements. There could be a
significant improvement for cars but it won't happen for trucks soon, he
Heavy trucks pay their fair share for road maintenance.
To a question regarding the obligation of truckers to
contribute more to the maintenance of roads, since the state must build
roads and bridges that are capable of carrying heavy vehicles, Hausladen
said they presently pay a fair share.
When all the taxes are taken in total-state fuel tax,
registration fee (adjusted higher for weight), sales tax, federal heavy
vehicle use tax, and excise tax on truck tires-they add up to over $16,000
Annual State Highway-User Taxes on a Typical 5-axle
Tractor-Semitrailer Combination weighing 80,000 pounds
Diesel taxes based on state average diesel tax
of $0.271 and 20,870 gallons of diesel
***Does not include operating authority fees, or
property, sales and excise taxes.
Annual Federal Highway-User Taxes on a Typical 5-axle
Tractor-Semitrailer Combination weighting 80,000 pounds
Federal Diesel Taxes3
Federal Heavy Vehicle Use Taxes
Federal Excise Taxes4
Federal tire tax5
Federal diesel tax of $0.244 on 20,870 gallons
Federal 12% excise tax on $100,000 purchase
price, amortized over 4 years
Federal tire tax on 12 tires (assuming the
other 6 are untaxed retreads)
Roads are built for use, Hausladen said. They have a
construction standard that is meant to be appropriate for cars and trucks.
Bridges are a bit different because they do have a break point and must be
engineered for the maximum intended load.
Increase tax rates if it is clear the system needs more.
The last time there was a proposal at the legislature for
a fuel tax increase the association supported it, Hausladen said, but with
clear parameters: First it must be clear that the transportation system
needs more money, and then any additional tax revenue must go to the
building and maintenance of roads. The MTA contends that a fuel tax
increase should not be used for rail, bike paths, or beautification, but
rather for roads and bridges.
The lines are blurring between private and public post.
Hausladen added that the industry of trucking and shipping
continues to change as once public or quasi-publics service looks for
improved economics. Packages that used to be delivered only through Fed Ex
or the United States Postal Service are often now carried by both during
transit. We may soon see the day when private truckers are fully active in
all public delivery.
Mileage-based user fees do not stack up well
To bring the discussion back to the relative merits of
taxing methods, Mr. Hausladen compared the proposed mileage-based user fee
or MBUF with the current funding mechanisms. His organization believes the
MBUF does not stack up well, contending an MBUF is:
More complicated for users and system providers
More costly to administer
Excludes meaningful public input regarding fee setting
Lends itself to potential diversion to non-highway uses
Increases the likelihood of evasion
Offers no absolute guarantee of data privacy
Engages in unnecessary social engineering to modify behavior
C. Conclusion -
The most important element is predictability.
Truckers are the masters of "workaround", Hausladen said,
and they are adaptable whenever logistical roadblocks occur. But the one
thing the trucking companies want more than anything is
predictability-because whatever the situation, if conditions are
predictable they can build that into both their pricing and the
expectations of customers. A fuel tax, he contends, is far more
predictable than a tax based on mileage.
The true test of any taxing system to pay for roads and
bridges is its effectiveness, efficiency and fairness, he reiterated. To
his mind the current system clearly succeeds better than any alternative
on these counts.
Thank you Mr. Hausladen for the discussion.
The Civic Caucus
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Verne C. Johnson, chair; David Broden, Marianne Curry,
Paul Gilje, Jim Hetland, Marina Lyon,
Joe Mansky, John Mooty, Jim Olson,
and Wayne Popham