Truckers' lament: times getting tougher - includes related article - Industry Overview

New Mexico truckers are playing a wait-and-see game this year while lawmakers consider new tax packages that could send the industry down some bumpy roads if not right over the cliff.

Things never seem to look rosy for those who make a living transporting goods, and that's especially true if they do it by truck in New Mexico.

The trucking industry is one of the most heavily taxed industries in the nation and it could get worse.

"There are some very good bills that have been introduced to promote economic development, but quite honestly, a lot of the other bills introduced negate those.

"They are anti-business and don't make it practical for a business to be here," says Vic Sheppard, managing director of the New Mexico Motor Carriers Association Inc. headquartered in Albuquerque.

It seems the trucking industry is the target of yet more taxes and regulation despite the already difficult climate felt throughout the entire country, even in states where regulation and taxes aren't so severe.

"We've got to make it attractive for people to be here, and in trucking we don't do that," says Sheppard. "We seem to have been an easy target in the past and it's easy to pass on increases in gasoline and special fuels.

"But it does affect everybody. Everything in this state moves by truck in one way, shape or form somewhere in its journey, and it's going to have an impact on the average citizen."

New Mexico is dependent on the trucking industry. Business, commerce and industry can't do without it.

In 1989, for instance, trucks moved 33.4 million tons of cargo in and out of the state, accounting for over 87 percent of the state's total inbound and outbound freight.

In 1990, 38,478 workers or one of every 11 New Mexicans was employed in the trucking industry, making an average wage of $27,927.

Although signs of productivity growth have been strong for the industry, New Mexico's trucking companies and freight industries continue to operate at a disadvantage compared with other states in allowable gross vehicle weights.

On average, trucks in surrounding states can carry 25 percent more weight than allowed in New Mexico. Arizona and Utah trucks can carry nearly 50 percent more.

And now facing the industry are more taxes.

The New Mexico Legislature passed a six cent per gallon increase on gasoline and a two percent increase on diesel user fees, and that's a tough, hard blow for truckers, in particular.

Those percentages don't include President Clinton's planned energy tax, which has everybody speculating about its final effects on an economy trying to recover whether you're a trucker or not.

"When you start taxing gasoline and diesel, we've got a very thinly populated, large state," says Sheppard. "A lot of people have to travel a lot of miles, and it can get very, very expensive.

"With the president's plan, we see an increase anywhere from 20 to 25 cents a gallon."

A major part of Clinton's new tax plan, aimed at cutting the skyrocketing federal deficit, is to tax nearly all forms of energy consumption. The idea is to pass on the costs to everyone so no one industry will feel the pinch, and everyone will share the cost.

But the trucking industry will feel the pinch more than most because passing on the costs is not as simple as just raising prices.

"We will have to go through the process of applying to increase our rates because we are a regulated industry," says Sheppard. "It costs $250 up front to apply to change your tariff, you have to take time, you have to employ the services of a lawyer.

"It can be costly, and that's just intrastate," he says. "Then you have to go through the Interstate Commerce Commission. It's very time consuming, and in the meantime, you're eating that increase."

With average national profit margins at two percent in the trucking industry, eating those costs can be deadly.

"Profit is not a dirty word," he says. "It allows companies to put in health benefits, training, retirement programs, etc.

"We represent some dump truck companies as well, and some of these guys just don't make enough to get by. Think of what a six-cents increase would do to these guys. That's a 40 percent increase on their fuel costs. We should be encouraging those guys; they're trying to make it, but here we are penalizing them for doing it."

It's not that motor carriers don't want to pay their fair share. It always seems they pay more than their fair share and don't realize any of the benefits.

The whole idea of user taxes on fuels is to use those funds for highway and road improvements, but typically much of that money never finds its way to a highway.

Last year, New Mexico sucked over $30 million out of the highway fund and transferred it to the general fund.

"We don't need the taxes; we've been taxed to death," says Bob Clover, owner and operator of Clover Inc., an Albuquerque company which runs 17 trucks in 48 states and two provinces.

"My big concern is how many more taxes can this industry take? Somewhere down the line, they've got to spend what they've got," he says. "At this point we're just surviving, and that's what everyone is doing."

Clover, a member of the New Mexico Motor Carriers Association, says it's difficult for most in the industry to even make the two percent profit margin because of the increased regulations and taxes that haunt the industry.

"More fines, more taxes, more regulation, when you put them all together, it's more than you can handle," says Clover.

The state may have a low diesel tax, but surrounding states don't have a weight-distance tax, which the legislature considered increasing as well. In New Mexico, depending on the weight of a vehicle, companies pay for every mile they run plus all the other fees and taxes they pay on fuel.

With a top rate of 80,000 pounds a truck can haul in this state, that weight-distance tax works out to over three cents a mile. Say a truck gets an average of six miles to the gallon, break all of it down and the company is paying 18 cents in weight-distance tax, and that's 34 cents for every gallon of diesel.

"In 1991, we lost over 460 jobs out of Albuquerque and Tucumcari alone. We have a considerable number of companies on our eastern border who are seriously contemplating moving across the border to Texas and Oklahoma because of our tax situation and worker's compensation."

BLB Trucking recently moved 38 trucks and 68 jobs out of state, and by doing so, the company added a quarter million dollars to its bottom line, according to Sheppard.

There is also the increased cost of safety regulations, including drug testing.

"The increased regulations are costing more and more money," Sheppard says. "All of these things add up."

"There are two sides to economic development: attracting new jobs to the state and maintaining the jobs that are here. As a state, we need to look at it a little different."

The association has lobbied to create a transportation business council to get the state's leading departments together with members of industry to help solve some of these problems.

"Do you give a break to an out-of-state company to move into New Mexico, or should we be encouraging the companies in New Mexico to expand . . . ?

"Maybe we need to look at how to give those guys a chance," says Sheppard.

E. David Grenham is a Belen newsman and free lance writer.

Truckers' View of Free Trade Issues

* Three years after NAFTA is ratified, Mexican citizens will have permission for full ownership rights in a U.S. international trucking company. U.S. citizens won't have the same rights in Mexico.

* Mexican carriers already have access to U.S. commercial zones. Under NAFTA, U.S. carriers won't be allowed to cross into Mexico for three years.

* The U.S.-Mexico income tax treaty doesn't treat motor carriers equitably with other transportation modes.

* The Mexican portion of an international freight movement by a U.S. carrier is subject to the Mexican value-added tax. Mexican carriers do not face the same value-added tax.

COPYRIGHT 1993 The New Mexico Business Journal
COPYRIGHT 2004 Gale Group