[Senate Hearing 105-367]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 105-367
 
      ISTEA: REAUTHORIZING TRANSPORTATION PROGRAMS FOR SIX MONTHS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE

                                 OF THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   ON

THE INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT OF 1991 (ISTEA): A 
    PROPOSAL TO EXTEND AUTHORITY FOR SIX MONTHS IN THE ABSENCE OF A 
                  PERMANENT MULTI-YEAR REAUTHORIZATION

                               __________

                            NOVEMBER 4, 1997

                               __________

  Printed for the use of the Committee on Environment and Public Works



                      U.S. GOVERNMENT PRINTING OFFICE
46-625 cc                     WASHINGTON : 1998
_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402




               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED FIFTH CONGRESS

                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho               FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            HARRY REID, Nevada
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas             BARBARA BOXER, California
WAYNE ALLARD, Colorado               RON WYDEN, Oregon
JEFF SESSIONS, Alabama
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

                            NOVEMBER 4, 1997
                           OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana.........     3
Bond, Hon. Christopher S., U.S. Senator from the State of 
  Missouri.......................................................     4
Boxer, Hon. Barbara, U.S. Senator from the State of California...    30
    Letters, ISTEA funding, California State agencies............    31
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island     2
Kempthorne, Hon. Dirk, U.S. Senator from the State of Idaho......     4
Lautenberg, Hon. Frank, U.S. Senator from the State of New Jersey     9
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........    12
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama......     8
Smith, Hon. Robert, U.S. Senator from the State of New Hampshire.     8
Thomas, Hon. Craig., U.S. Senator from the State of Wyoming......     7
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................     1

                               WITNESSES

Basso, Peter J., Acting Assistant Secretary for Budget and 
  Programs, U.S. Department of Transportation....................    36
    Prepared statement...........................................    55
Massie, Steve, Transportation Construction Coalition.............    39
    List, member organizations, Transportation Construction 
      Coalition..................................................    69
    Prepared statement...........................................    66
Patton, Paul, Governor, Commonwealth of Kentucky.................    13
    Letter, Urging Congress to reauthorize ISTEA, several 
      Governors..................................................    15
    List, Status of ISTEA Funding in the States..................    17
    Prepared statement...........................................    52
Scheinberg, Phyllis, Associate Director, General Accounting 
  Office.........................................................    38
    Prepared statement...........................................    57

                          ADDITIONAL MATERIAL

Articles:
    Delay of Woodrow Wilson Bridge Criticized, Washington Post...    72
    Lack of Congressional Action Could Be Devastating to Iowa's 
      Transportation Program and Economy, Iowa Department of 
      Transporation..............................................    73
Letters:
    Association of Monterey Bay Area Governments.................    31
    International Union of Operating Engineers...................    77
    Kings County, California, Association of Governments.........    32
    Oakland, CA, Metropolitan Transit Commission.................    31
    San Diego Association of Governments.........................    33
    San Luis Obispo, CA, Council of Governments..................    32
    Transportation Construction Coalition........................    74
Statements:
    American Consulting Engineers Council........................    77
    American Road and Transportation Builders Association........    79
    Transportation Construction Coalition........................    70




      ISTEA: REAUTHORIZING TRANSPORTATION PROGRAMS FOR SIX MONTHS

                              ----------                              


                       TUESDAY, NOVEMBER 4, 1997,

                                       U.S. Senate,
 Committee on Environment and Public Works Subcommittee on 
                         Transportation and Infrastructure,
                                                     Washington, DC
    The subcommittee met, pursuant to notice, at 9:32 a.m. in 
room 406, Senate Dirksen Building, Hon. John W. Warner 
(chairman of the subcommittee) presiding.
    Present: Senators Warner, Chafee, Kempthorne, Bond, 
Sessions, Thomas, Smith, Baucus, Reid, Lautenberg, Boxer, and 
Graham.

OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE 
                    COMMONWEALTH OF VIRGINIA

    Senator Warner. Good morning, everyone.
    First, I wish to express my appreciation to our 
distinguished chairman. I approached him a week or so ago after 
the fourth cloture vote we failed to get up what I regarded--
past tense--and still regard and always will regard as a 
landmark piece of opposed legislation developed within this 
committee, beginning with the subcommittee of which I'm 
privileged to be the chairman, and then, under the leadership 
of our distinguished chairman, a markup where it was unanimous, 
together with Mr. Baucus of Montana, ranking member.
    Nevertheless, that chapter is history, and the chairman and 
I and other members of the committee believed, as did Mr. 
Baucus, that we should listen in a very pragmatic way to an 
assessment of those representing a diverse group in the 
transportation business to determine exactly, as best we can, 
exactly what is the status of the several States, all 50, not 
only with respect to their funding, but their individual 
capabilities to do contract work.
    We're fully aware here on the committee that southern 
States have a greater period of time within which to do their 
highway and surface transportation work as compared to States 
like the distinguished ranking member in Montana. The chairman 
will have further words, as will the ranking member, but I just 
want to thank all who worked so hard on the original bill. Bear 
in mind that this is really, next to the Department of Defense 
bill, the largest jobs bill that goes through the Congress.
    In this time, where there still remain some economic 
uncertainties in this country, I felt strongly that having this 
jobs bill in place would add stability to our overall economic 
situation, given that we authorized $145 billion over a 6-year 
period for the repair, construction, new construction, 
maintenance of our roads and bridges.
    Nevertheless, we are here today to learn from the experts 
exactly what is the situation among our several States.
    Mr. Chairman, would you kindly add your words of wisdom?

OPENING STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE 
                     STATE OF RHODE ISLAND

    Senator Chafee. Thank you very much, Mr. Chairman.
    Like you, I shared a great enthusiasm and pride in the bill 
which we reported out from this committee about 6 weeks ago. As 
you mentioned, we reported out unanimously, and I'm proud of 
the efforts that we had to come to an agreement on a very 
difficult piece of legislation.
    A number of events, as you mentioned, outside the control 
of this committee prevented us from completing work on a 6-year 
ISTEA reauthorization.
    Now, during today's hearing we will focus on the status of 
the Federal transportation programs in absence of a multi-year 
and in absence of a 6-year bill, and we'll examine what we can 
do to resolve the situation before us. Some members of the 
Senate would like to adopt a 6-month extension that was 
approved by the House earlier this month. I think members 
should be aware of some consequences of action if we did that.
    There are two potential pitfalls, as I see it. First of 
all, for most of the States the House bill provides money for a 
year's worth of instruction. The trouble with including funds 
that will run out a year from now is that there will be no 
pressure to enact a permanent ISTEA legislation until right 
before the 1998 elections. And, as we all know, it is tough to 
accomplish anything during an election year, and nearly 
impossible to enact a reauthorization bill so close to the 
House and Senate elections in 1998. That's the first problem.
    The second problem is that the House 6-month extension 
provides a smaller share of funding than the Senate 6-year bill 
for 34 out of the 50 States. In other words, the formula is not 
a favorable one for 34 out of 50 States. For that reason, the 
House formula clearly would be unacceptable to a majority of 
the members of the Senate.
    Despite the differences of opinion over the House 6-month 
extension, there are several things on which we can agree, I 
believe. First, there are a number of States that will be hard-
pressed to survive under existing obligated highway funds 
through the spring. That's the first point.
    Second, Federal truck safety programs, such as a motor 
carrier safety assistance program, which are outside the 
jurisdiction of this committee have to be reauthorized.
    Third, the budget of the Federal Highway Administration--
this is an important point--which relies on contract authority 
from the highway trust fund--in other words, the budget for the 
whole department and people that work in our States and 
obviously those that work here--will be depleted before the 
spring of 1998.
    Failing to provide additional funds for the transit 
program--this is another point--which is not in this 
committee's jurisdiction could possibly have some negative 
results.
    So we're going to hear from some good witnesses, Mr. 
Chairman, today, and I'm delighted that the Governor of 
Kentucky will be here, as well as the other representatives, 
and I look forward to hearing the testimony.
    Thank you.
    Senator Warner. Thank you, Mr. Chairman.
    Mr. Baucus?

  OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE 
                        STATE OF MONTANA

    Senator Baucus. Thank you very much, Mr. Chairman, and 
thanks also to the chairman of the full committee.
    How we deal with the funding issue over the next several 
months will have immense consequences, obviously, for our 
States, for our contractors, tens of thousands of workers, and, 
indeed, all of our citizens. And the committee, under your 
leadership, has put a lot of work into a 6-year reauthorization 
bill of ISTEA, and I think all of us very much appreciate that. 
After all, it passed the committee unanimously with a 
bipartisan vote of 18 to zero.
    With the campaign finance issue now resolved, I think most 
of us look forward to acting on that bill early next year, 
hopefully as the first order of business.
    But we must now decide what to do in the interim, and here 
is where we face some conflicting pressures.
    First, we can assure continuity in the highway program. 
There are a lot of workers whose livelihoods depend on highway 
construction. And, furthermore, several Federal programs, 
including safety programs, will be out of money at the end of 
this year.
    But, on the other hand, too much continuity could reduce 
the incentive to pass a full 6-year reauthorization bill early 
next year, and that would not be in our interest, either.
    It seems we have several options. One is do nothing this 
year and let the pressure build to pass a 6-year bill next 
year. I think that is a dangerous course. We--or, more 
correctly, the States--would be operating without any kind of 
financial safety net. And, while the Senate might act 
responsibly and pass a bill early next year, one cannot predict 
what the other body may do or how long it may take to reach 
agreement in conference. It also effectively shuts down several 
Federal programs, so this approach has some problems.
    Another alternative is the 6-month bill, which the House 
has passed. This option provides more certainty for States, but 
it involves the issue of formulas, as a chairman has suggested. 
So my guess is that this approach would involve some extended 
debate on the Floor. I'm not sure we have the time to do that.
    There is also the suggestion that States be given the 
authority to spend their unobligated balances. This would 
provide States with some degree of certainty over the next few 
months, but, since States could not continue indefinitely this 
way, there still would be interest in passing a 6-year bill. It 
also sidesteps the issue of formulas.
    I hope each of our witnesses will level with us about what 
they think of these options or any other suggestions they might 
have to address the situation.
    Again, I thank you, Mr. Chairman, for holding this hearing, 
and look forward to ideas to help us form a solution that best 
helps the States.
    Senator Warner. Thank you, Mr. Baucus. I thought it was 
very important to allow our members to express their views, 
because they've worked very hard on both sides of the aisle. We 
have excellent attendance this morning. I'm anxious to hear 
from all of our members who have that desire. But bear in mind 
we wish to get on with the hearing.
    Senator Kempthorne?

 OPENING STATEMENT OF HON. DIRK KEMPTHORNE, U.S. SENATOR FROM 
                       THE STATE OF IDAHO

    Senator Kempthorne. Mr. Chairman, let me commend you for 
your leadership. We do have an outstanding bill, bipartisan, 
and what a shame that that bill was not acted upon on the Floor 
of the Senate. I think that you, Senator Chafee, Senator 
Baucus, have very well laid out the predicament and options. 
There is great risk to going with a short-term. So I will 
refrain from any further statements. I look forward to hearing 
from our panel this morning, but continuing our efforts as a 
committee working together to find the right solution.
    Senator Warner. I thank the Senator from Idaho.
    Senator from New Jersey, do you have a comment or two?
    Senator Lautenberg. I thank you very much, Mr. Chairman. I 
would be more than willing to wait my turn, because I'm an 
invited guest here.
    Senator Warner. Thank you, sir.
    Senator Bond?

  OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, U.S. SENATOR 
                   FROM THE STATE OF MISSOURI

    Senator Bond. Thank you very much, Mr. Chairman. We 
certainly appropriate your calling this hearing, and we look 
forward to hearing from the important witnesses. But, following 
on the very insightful statement and analysis of Chairman 
Chafee and the comments of you, Mr. Chairman, and ranking 
member and others, I want to take a moment just to throw out an 
idea that we are drafting and putting in final form.
    As has been stated, there are some Senators who are pushing 
for a quick fix by saying we should pass the 6-month extension. 
As has already been said, the 6-month extension passed by the 
House has real problems. Others are saying that we should pass 
a 6-month extension with the Senate formula.
    I'm a strong supporter of what we passed out of this 
committee. I think it is ultimately the best compromise. But I 
don't think we can solve the formula issue for a 6-month 
extension in the limited time period we have available. If I 
recall, when the Senate bill was brought up, several Senators 
went to the Floor to complain about the Senate formula, and it 
was not unanimously endorsed or welcomed.
    Second, I know that I cannot and will not agree to the 
House formula, which is a continuation of the current formula, 
which is horrible for my State of Missouri and many other 
States. If we conference the House formula versus the Senate 
formula for a 6-month extension, my prediction is we leave here 
with nothing.
    There are some who say we should hold fast and refuse to 
pass anything to put the pressure on to pass a 6-year 
reauthorization. With all due respect, I'm not about to tell 
the folks in my State or other States, ``Tough luck if you run 
out of money.''
    Mr. Chairman, I throw out an idea that, as I say, we are 
drafting for a 6-month extension that has one major key 
distinction: no formula fight. The proposal would, first, be a 
real 6-month extension, not 3 months of money to be spread over 
6 months, and not 12 months of funding crammed into 6 months.
    Second, it would provide flexibility to the States on the 
use of their unobligated balances. I know there are some groups 
who might have a concern with the States borrowing money from 
the CMAQ program or the enhancements program. My proposal would 
contain a payback provision upon enactment of a 6-year 
reauthorization bill.
    Third, the proposal provides 6 months of funding for the 
safety programs, including the motor carrier safety program, 
the national driver register. In addition, 6 months of funding 
for transit and Department of Transportation operating costs.
    Finally, one of the big concerns with the unobligated 
balances is how they are distributed across the country. Many 
States, including my State of Missouri, tend to obligate the 
majority of their funds in the first 6 months of the fiscal 
year, so they are in need of funding now. Others tend to 
obligate the majority of their funds after the first 6 months, 
so they are not feeling the pinch. My proposal would provide 
what I guess I'll call a ``hold harmless'' provision. This 
provision would allow States to obligate up to either the first 
6 months of its obligation in the fiscal year 1996 or 1997, 
whichever is greater. For States who would need this, it would 
be a down payment on their fiscal year 1998 dollars that would 
come from the 6-year bill.
    Now, if that sounds complicated, it's not really. It's just 
saying that this will allow them to go forward and they will 
debit the amount of money provided against the full year's 
obligation, based on the formula that is ultimately passed and 
signed into law. I think it's the only way, at least that I can 
see, to keep the money flowing, the construction going, the 
doors open, and treat all States fairly.
    Mr. Chairman, we've handed out a simple analysis of it for 
my colleagues. We'd be happy to--and look forward to working 
with this committee, but--and we'll be happy to hear the 
witnesses' views on it. But I think it is important that we get 
something in the hopper, and I would be--I would hope to be 
able to introduce this measure within hours, or at least 
certainly within the next day or so.
    [The prepared statement of Senator Bond follows:]

  Prepared Statement of Hon. Christopher Bond, U.S. Senator from the 
                           State of Missouri

    Mr. Chairman, thank you for calling this hearing. It is 
important that we hear from our witnesses. However, I want to 
take a moment to ``throw'' out my idea to get us around the 
``roadblock'' we are in.
    Mr. Chairman, as you are aware, there are some Senators 
pushing a quick fix to the situation we now find ourselves in 
by saying we should pass the 6-month extension passed by the 
House. Others are saying that we pass a 6-month extension with 
the Senate formula.
    I don't think we can solve the formula issues for a 6-month 
extension in the limited time period we have. First, if I 
recall, when the Senate bill was brought up several Senators 
went to the floor to complain about the Senate formula reported 
from this committee. Second, I know that I cannot agree to the 
House formula which is a continuation of the current formula 
which is horrible for my State of Missouri. If we conference 
the House formula versus the Senate formula for a 6-month 
extension, we will leave here with nothing.
    Still others are saying that we should hold fast and refuse 
to pass anything to put the pressure on to pass a 6-year 
reauthorization. With all due respect, I am not about to tell 
my Missouri ``tough luck'' if they run out of money.
    Therefore Mr. Chairman, I ``throw out'' my idea for a 6 
month extension that has one major ``key'' distinction--no 
formula fight!
    My proposal is as follows:
    First, it is a ``real'' 6 month extension. Not 3 months of 
money to be spread over 6 months and not 12 months of funding 
crammed into 6 months.
    Second, it provides the flexibility to the States on the 
use of their unobligated balances. I know that there are some 
groups who might have a concern with the States ``borrowing'' 
money from the CMAQ program or the Enhancements program, etc. 
My proposal will contain a ``payback provision'' upon the 
enactment of a 6-year reauthorization bill.
    Third, my proposal provides the 6 months of funding for the 
Safety Programs, including the Motor Carrier Safety Program and 
the National Driver Register. In addition, 6 months of funding 
for transit and Department of Transportation operating costs.
    Finally, one of the big concerns with the unobligated 
balances is how they are distributed across the country. Many 
States, including my State of Missouri, tend to obligate the 
majority of their funds in the first 6 months of the fiscal 
year so they are in need of funding now. Others tend to 
obligate the majority of their funds after the first 6 months 
so they are not feeling the ``pinch''. My proposal would 
provide what I guess I will call a ``hold harmless'' provision. 
This provision would allow States to obligate up to either the 
first 6 months of its obligation in fiscal year 1996 or 1997, 
whichever is greater. For States who would need this--this 
would be a ``down payment'' on their fiscal year 1998 dollars 
that would come from the 6-year bill.
    This might sound a little complicated--but it is not 
really. This is the only way I see to keep the money flowing, 
the construction going, the doors open, and treat ``all'' 
States fairly.

    Senator Warner. Mr. Reid?

  OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE 
                        STATE OF NEVADA

    Senator Reid. Mr. Chairman, I appreciate your convening 
this meeting. I think it is instructive that we have someone 
representing the National Governors Association. I appreciate 
that very much.
    For a State like Nevada, that is growing so rapidly, we 
have some problems, and we do need a bill. I, of course, was a 
very strong supporter of what came out of this committee. I 
think we did an excellent job and I think, had we been able to 
get the matter to the Floor, it would have been resolved very 
quickly. It was a bill I think that we could have passed with 
relative ease.
    I'm concerned, having reviewed the testimony of the 
Department of Transportation witness here today--I mean, they 
have painted a pretty dire picture, at least the way that I 
read this. FHWA wouldn't be able to process requests from a 
number of States for Federal aid projects. That's very 
important to Nevada. Federal Highway Administration wouldn't be 
able to authorize Federal aid highway projects or obligate 
balances of Federal aid highway funds for design and right-of-
way acquisition, construction projects. States couldn't begin 
right-of-way acquisition, final design activities on projects 
ready for their approval. And there's a long list that goes on 
for 3 pages.
    The impacts on Nevada suggest that the State would be OK 
for a little while, a matter of really weeks. We have in April 
a very large bond payment that is due in Nevada, which would 
have to be paid out of State funds in the absence of 
reauthorization.
    The key impacts to Nevada would be no public land 
discretionary money, and, as you know, the State of Nevada is 
87 percent Federal land. There would be no liability for 
damages. We couldn't pursue right-of-way, pay our right-of-way 
balances in a timely fashion.
    And then we have another concern all over the western part 
of the United States, and there would be no emergency release 
money. And with the possibility of El Nino causing more harm 
than it already has, we have some problems.
    So I look forward to working with the committee. I really 
think we need to come up with something. I'm not sure that 
Senator Bond's compromise is exactly right, but I compliment 
him for trying to work our way out of this morass we're in and 
I look forward to looking at his legislation and working with 
you, Mr. Chairman and ranking member of the subcommittee, who 
is also the ranking member of the full committee.
    Senator Warner. Thank you very much, Mr. Reid.
    Mr. Thomas?

 OPENING STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM THE 
                        STATE OF WYOMING

    Senator Thomas. Thank you, Mr. Chairman. I think the 
problem has been pretty well defined, and I will move quickly.
    I think it is unfortunate we are having to have this 
hearing, of course, and that a minority of people on the Floor 
were able to hold off this important bill.
    I certainly don't support anything that will allow this 
procrastination to continue after we come back in January. I 
think we ought to do something that will alleviate what appears 
to be some real problems, but not allow us to go on by giving 6 
months, which will really be a year. I don't think that's what 
we ought to do.
    I must say also, frankly, I'm a little critical. The 
Department of Transportation comes up now with all this great 
crisis, but they didn't have much to say when it was being held 
up on the Floor, and the Administration could have helped move 
that, had they been inclined to do so.
    So I think we ought to find a solution. I don't support the 
House's proposition at all. Whatever we do ought to bring us 
back to getting this 6-year bill considered and passed 
immediately after our return, Mr. Chairman.
    [The prepared statement of Senator Thomas follows:]

Prepared Statement of Hon. Craig Thomas, U.S. Senator from the State of 
                                Wyoming

    Mr. Chairman, I must say that I am disappointed that this 
hearing needs to be held today. The members of this 
subcommittee worked very hard to craft a good 6 year bill to 
reauthorize the Intermodal Surface Transportation Efficiency 
Act (ISTEA), S. 1173 ``ISTEA II.'' It is unfortunate that the 
product of these efforts was blocked from consideration by a 
minority of senators.
    I am sensitive to the concerns of State transportation 
officials, the construction industry and others about the lack 
of a reauthorization of ISTEA. However, the answer to this 
problem is not extending the unfair formulas found in current 
law, as the House bill, H.R. 2516, does. Further, passing a 6-
month extension will merely give some Members of Congress more 
opportunities to delay consideration of a long-term 
reauthorization of the law. ISTEA legislation has already 
become a political football and formula fights on a 6-month 
bill merely exacerbate the problem.
    However, this subcommittee can and should explore some 
legislative options that would keep the program running while 
also maintaining the pressure on Congress to enact the bill 
that passed this committee unanimously, 18-0. We can act 
quickly on important funding, safety, highway, transit and 
flexibility concerns while avoiding divisive and protracted 
debate that a 6-month extension would create.
    I look forward to exploring these options with today's 
witnesses.

    Senator Warner. Thank you very much.
    Mr. Sessions?

OPENING STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR FROM THE 
                        STATE OF ALABAMA

    Senator Sessions. Mr. Chairman, thank you.
    I was just looking at an Associated Press article in 
Alabama, ``Congress' failure to pass a new highway bill has 
State officials scrambling.'' It starts off saying that, ``When 
the Department of Transportation awards interstate maintenance 
contracts it is now preparing for November and December, there 
will just be $7.10 left to spend on the rest of the work.'' In 
other words, they will exhaust the contracting authority at 
that time.
    Governor James has written that he would like to see us 
tackle some sort of authorization plan.
    I commend you and I commend Senator Bond for the work that 
you're trying to do to have some sort of interim relief, 
because I do not think we need to allow to roll the dice on 
some sort of bluff on this deal.
    Thank you for your leadership.
    Senator Warner. Thank you, Mr. Sessions.
    Mr. Smith?

 OPENING STATEMENT OF HON. ROBERT SMITH, U.S. SENATOR FROM THE 
                     STATE OF NEW HAMPSHIRE

    Senator Smith. Thank you very much, Mr. Chairman. I do have 
a statement for the record, but I just want to commend you and 
Senator Chafee for the job that you've done in trying your 
darndest to get the ISTEA legislation through this year, and I 
know it has been a frustrating experience and, regretfully, 
other politics got into the situation, which I don't believe 
should have happened. And I understand the concern among the 
State Agencies, especially the construction industry and the 
Federal Highway Administration about the lack of funds, but we 
have to look at alternatives, I think, to the 6-month 
extension. Otherwise, we're just going to get mired down into 
the same formula battles that we had over the 6-year bill.
    So I hope that we can work something out, Mr. Chairman, and 
commend you for holding a hearing to make an attempt to do 
that.
    Senator Warner. Thank you, Mr. Smith.
    [The prepared statement of Senator Smith follows:]

Prepared Statement by Hon. Robert Smith, U.S. Senator from the State of 
                             New Hampshire

    Thank you, Mr. Chairman. I want to commend you and Senator 
Chafee for your hard work and diligence in getting a 
responsible, 6-year ISTEA reauthorization bill to the Senate 
floor. S. 1173 is a good bill and should be passed by the 
Senate this year.
    However, it now appears more and more likely that the 
Senate will be unable to take up 5.1173 during the remainder of 
this session, and, thus, the reason for today's hearing. In 
light of this unfortunate predicament, it cannot go unstated 
that we wouldn't be sitting here today listening to witnesses 
about the impacts of not passing a transportation bill if 
members on the other side of the aisle had acted responsibly 
and allowed the Senate to consider a bill that was reported 
unanimously out of this committee.
    The Senate had an opportunity to take the high ground and 
pass a responsible, 6-year bill that would give our States the 
long-term funding certainty that they need, but a minority in 
the Senate was able to prevent that from happening this year. 
In lieu of passing a multi-year bill, several groups are 
calling for a short-term extension, which I believe is also 
fraught with problems.
    While I certainly understand the concern among State 
agencies, the construction industry, and the Federal Highway 
Administration about the lack of new funds becoming available, 
I believe we need to look at alternatives to passing a 6-month 
extension, which could get mired in the same formula battles as 
a 6-year bill.
    The pressure must remain on Congress to pass a long-term 
authorization bill. Many States have adequate funding through 
February or March if given additional flexibility on how they 
can spend their transportation dollars. Though I remain 
committed to moving a 6-year bill, I'm willing to take a look 
at various options to provide this additional flexibility, as 
well as funding for important safety programs, without getting 
us into a formula fight.
    With that in mind, I look forward to hearing from our 
witnesses on the impacts of the current situation and their 
views on various proposals to provide interim funding. Thank 
you, Mr. Chairman.

    Senator Warner. Before we call our first witness, I----
    Senator Lautenberg. Mr. Chairman, did you want to----
    Senator Warner. You wish to now----

  OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, U.S. SENATOR 
                  FROM THE STATE OF NEW JERSEY

    Senator Lautenberg. If I may. I certainly wanted to step 
aside while the subcommittee members had their say, and I 
appreciate once again, Mr. Chairman, as you always want to do, 
your fairness in enabling me or permitting me to be with you 
today.
    Senator Warner. You have taken a lead in transportation 
matters on the Budget Committee, which is key to this. Thank 
you. Your modesty is overwhelming this morning.
    [Laughter.]
    Senator Lautenberg. Just keep on talking.
    [Laughter.]
    Senator Lautenberg. Thank you very much. Now I'm subdued 
totally. It's hard to be rude in the face of all that kindness.
    Mr. Chairman, every State is going to be affected if there 
is no extension of authority for transportation funding. I do 
think the Senator from Missouri came up with a novel idea. 
Unfortunately, the amount of unobligated funds throughout the 
country is by no means equal, and some States have used their 
funds almost to the last dollar, and that's a problem for them.
    But I think we've got to enact a stop gap measure that 
provides States with sufficient funding to meet their short-
term transportation needs.
    ISTEA expired over a month ago, and some States, again, had 
the carry-over funding, but not all. And the safety programs 
will have been hard hit. Mass transit programs, which have 
virtually no excess authority, will grind to a halt. It would 
be, I think, almost irresponsible to adjourn for the year 
without taking some action.
    Now, I first called for a temporary extension of current 
law because it was clear even then that Congress would not pass 
a multi-year authorization bill before we adjourned. A 6-month 
extension of current law is the easiest and the fastest way to 
proceed. It is without political controversy because it doesn't 
involve a battle over formulas. It provides the States with 
certainty.
    The House bill, which extends current law, is pending on 
the Senate calendar, and I'd like to see us move it by 
unanimous consent today, send it to the President for his 
signature.
    In contrast to some of my colleagues' statements about 
procrastination, I don't see it quite that way. It's the other 
side of the coin, as we know, and I see it as a chance to 
evolve a structure that will satisfy, if not all the States, 
many of the States that now feel left out of the thing. We are 
particularly focused on some of the urban areas--the States 
like New Jersey, mine, and Illinois, Massachusetts, other 
States.
    This isn't, in my view, an opportunity to get even. This is 
an opportunity to move ahead and make adjustments that are 
required and do something that has the support of almost all 
the States, if not all.
    I think we are looking at some problems ahead of us that 
will become very serious in short order, and without some form 
of reauthorization transit agencies, MPOs, local governments, 
safety programs, State planning and bidding activities would 
immediately be affected by Federal funding shortages.
    The situation is even more bleak for other programs 
authorized under ISTEA: the safety programs, intelligent 
research transportation systems programs, research, and, 
something very important to my State and many others, Federal 
transit program.
    While transit is not under the jurisdiction of this 
committee, everybody here should know that, unlike the highway 
program, nearly all of the excess contract authority for 
transit was rescinded earlier this year in the Emergency 
Supplemental Appropriations Act. So if there is no extension, 
transit agencies will have to defer purchases of buses, rail 
cars, other equipment, and transit project construction which 
is going on in many places will be delayed, increasing overall 
costs. States will not be able to spend the $400 million 
provided in the fiscal year 1998 Transportation Appropriations 
Act to purchase buses and contract construction of facilities 
necessary to house those buses.
    States cannot touch the $800 million provided for a fixed 
guideway modernization program. The States can't take advantage 
of the $2.3 billion for the programs which provide capital 
funding for rural and urban areas for the elderly and for the 
elderly and handicapped.
    And perhaps the most frightening risk posed by our failure 
to act is the safety of constituents--drunk driving prevention 
programs, truck and bus safety requirements, bridge 
inspections, highway rail crossing projects. They'll all come 
to a halt, and we could be endangering lives if we fail to 
simply enact the short-term extension of ISTEA. I hope that 
we'll do it, relieve us of this crisis.
    Mr. Chairman, in as much a good intention as we can supply 
or as I can supply, I know that there are adjustments that are 
going to be made. The question is, How do we phase in these 
adjustments so that the pain, the difficulty of getting on with 
smaller allocations is absorbable, instead of saying, ``OK, 
here we are. We are at the end of this line. Now we're going to 
change these things.''
    And I would hope, Mr. Chairman, that we have a chance over 
these next months and, once again, pledging as much as I can do 
to resolve some of the sticky issues, give us a chance to talk 
about it and get something new on the table.
    [The prepared statement of Senator Lautenberg follows:]

 Prepared Statement of Hon. Frank R. Lautenberg, U.S. Senator from the 
                          State of New Jersey

    Thank you, Mr. Chairman. I appreciate your leadership in 
bringing this important issue before the committee. Every State 
will be affected if there is no extension of authority for 
transportation funding.
    We must enact a stopgap measure to provide the States with 
sufficient funding to meet their short-term transportation 
needs. ISTEA expired over a month ago, and although some States 
have carryover funding, other States are already struggling. 
Highway safety programs have been particularly hard hit. Mass 
transit programs, which have no excess authority, will grind to 
a halt. It would be irresponsible to adjourn for the year 
without taking action.
    I first called for a temporary extension of current law, 
because it was clear even then, that Congress would not pass a 
multi-year authorization before we adjourned. A 6-month 
extension of current law is the easiest and fastest way to 
proceed, and is without political controversy because it will 
not involve a battle over radical restructuring of formulas. It 
provides the States with certainty. The House bill, which 
extends current law, is pending on the Senate calendar. I urge 
that we move it by unanimous consent today and send it to the 
President for his signature.
    Failure to temporarily extend IS TEA will immediately cause 
all State transportation plans for new construction, 
maintenance, and repair activities and projects to cease. 
Without some form of reauthorization, transit agencies, 
metropolitan planning organizations, and local governments, 
safety programs, and, State planning and bidding activities 
would be immediately affected by the Federal funding shortages.
    The situation is even more bleak for all the other programs 
authorized under ISTEA--the safety programs, Intelligent 
Transportation Systems program, all research programs, and, 
something very important to my State--the Federal transit 
program. There are no left over, unobligated funds for these 
programs.
    While transit is not under the jurisdiction of this 
committee, everybody here should know that, unlike the highway 
program, nearly all the excess contract authority for transit 
was rescinded earlier this year in the Emergency Supplemental 
Appropriations Act.
    If there is no extension, transit agencies will have to 
defer new purchases of buses, rail cars, and other equipment, 
and transit project construction will be delayed, increasing 
overall costs. States will not be able to spend the $400 
million provided in the fiscal year 98 Transportation 
Appropriations Act to purchase buses and construct bus 
facilities. States cannot touch the $800 million provided for 
the fixed guideway modernization program. The States also 
cannot take advantage of the $2.3 billion for the programs 
which provide capital funding for rural and urban areas, and 
for the elderly and handicapped.
    Perhaps the most frightening risk posed by our failure to 
act is the safety of our constituents, as drunk driving 
prevention programs, truck and bus safety requirements, bridge 
inspections, and highway/rail crossing projects come to a halt. 
We could be endangering peoples' lives if we fail to simply 
enact a short-term extension of ISTEA. We must enact an 
extension, and relieve us of this crisis.

    Senator Warner. Thank you.
    Senator Bond. Mr. Chairman?
    Senator Warner. Yes.
    Senator Bond. I'd like 30 seconds to respond to the Senator 
from New Jersey.
    Under the proposal that we have sent around in the summary 
form, the hold harmless provision would allow the obligation of 
the higher amount obligating the first 6 months of fiscal year 
1996 or 1997. That means for New Jersey the obligation 
contracted would be $352 million, as opposed to your existing 
unobligated balance of $275 million. So the option was put in 
there to account for States who may be in different 
circumstances in 1997 or 1996.
    Senator Lautenberg. I appreciate the Senator's comment. New 
Jersey is not terribly off, but there are States that are 
almost clear out of money, and that would be a disaster.
    Senator Warner. Well, we've got to get underway.
    Senator Reid. Mr. Chairman, I'd like to ask that a full 
copy of my statement be made part of the record.
    Senator Warner. Without objection.
    [The prepared statement of Senator Reid follows:]

 Prepared Statement of Hon. Harry Reid, U.S. Senator from the State of 
                                 Nevada

    At the beginning of this Congress, Chairman Chafee said 
that one of the things he likes the most about the Committee on 
Environment and Public Works is that it is quite possibly the 
least partisan one in the Senate. I agree with him.
    Over the years, this committee has successfully addressed 
some of the stickiest, most controversial issues facing our 
nation: Clean Air, Safe Drinking Water, Superfund. We have also 
produced one of the most innovative pieces of legislation ever 
when we wrote ISTEA in 1991.
    Our stated goal was to turn over more spending power and 
authority to the States and localities while maintaining a 
strong national transportation system. In the last 6 years we 
have made great progress and, when we are finally able to pass 
a bill, feel confident that ISTEA 11 will carry us further in 
the same direction.
    Until we get to that point, I fear that we might be getting 
ready do something unnecessary and unfair to the States: We 
might go home without passing a short-term measure that ensures 
that the State programs remain stable while we are finishing 
work on the reauthorization.
    ISTEA made the States partners with the Federal Government 
in building and maintaining a strong transportation system. 
Leaving them in the lurch now is no way to treat a partner.
    I understand that we will have witnesses this morning that 
will suggest that the average State will be able to make do and 
cobble together a program between now and next March without 
Congress doing anything other than funding the safety programs.

    Senator Warner. Before our first witness, I want to express 
appreciation--I'm sure my chairman and others join--for the 
leadership given by Senator Lott. Throughout the deliberation 
of this bill, he made it very clear to Chairman Chafee, myself, 
and others that the Senate would act independently of 
differences in the House and move ahead with a 6-year bill. No 
better corroboration of that strong leadership and support can 
be found than four times we went to a cloture vote.
    Last night we met with Leader Lott, and again he said, ``If 
there is some reasonable and acceptable solution, then show the 
to me.'' So we are here today to see whether or not we can 
assess the facts and, as a committee, present to our 
distinguished leader an option.
    Governor, would you kindly lead off?
    Senator Chafee. Mr. Chairman, while the Governor is coming 
up, I want to add to what you said about the majority leader. 
He has been very helpful to us. He has really stood firm on a 
6-year bill that we think is so important.
    Senator Warner. Absolutely.
    Governor, lead us out.

   STATEMENT OF HON. PAUL PATTON, GOVERNOR, COMMONWEALTH OF 
           KENTUCKY, NATIONAL GOVERNOR'S ASSOCIATION

    Governor Patton. Chairman Warner, Chairman Chafee, Senator 
Baucus, and other members of the Senate present, I am Paul 
Patton. I'm co-chairman of the National Governor's Association 
Task Force on Transportation, and I appear this morning 
representing the National Governor's Association. With me is 
Ray Scheppach, the executive director of the National 
Governor's Association.
    I have submitted a detailed testimony for the record, but, 
for the sake of brevity, I will try as best I can to summarize 
our position.
    Senator Warner. Your entire statement, of course, will be 
placed in the record.
    Governor Patton. Thank you, sir.
    Our position is that the Nation should pass a 
comprehensive, long-term, 6-year highway spending bill or 
transportation spending bill that spends the total trust fund 
on transportation issues. And our position is that it should be 
passed this session of Congress before the adjournment. It 
appears that that will be very difficult to do, but I would 
like to take a moment to emphasize to you why we take that 
position.
    Senator Warner. Governor, if I could interrupt, we have 
been handed, of course, the correspondence from the National 
Governor's Association, which is signed by 39 Governors.
    Governor Patton. Yes.
    Senator Warner. You might wish to refer to that, and we'll 
incorporate it in the record at the conclusion of your 
statement.
    Governor Patton. Yes, please.
    As to our overall contention that the entire trust fund 
should be spend on transportation issues, I think the record 
will show that in the last 35 or 40 years we were spending 
about .5 percent of the total gross domestic product on 
transportation, and that is now reduced to less than .3 
percent, while the use of the transportation facility has been 
dramatically growing.
    As individuals, I don't have an exact figure, but we spend 
a tremendous amount of our very limited time in the 
transportation facilities of this Nation, perhaps certainly 
well in excess of 10 percent of our waking time, and time is 
something that is very valuable to all of us and it is 
something that is limited for all of us. And, to the extent 
that that time is wasted, where we could be with our kids at a 
soccer game or we could be working harder and producing more 
for our family, or we could be at home with our family or doing 
other things, it is vital that we have an efficient 
transportation system for that reason, alone, in this Nation.
    As business, fully 10 percent of our productive capacity is 
tied up with our transportation portion of industry. And, as 
many businesses made plain to the Governors this summer in 
testimony, they are concentrating very hard on efficiency, on 
cash-flow, on just-in-time delivery, and they are in command of 
a lot of their facilities, their factory buildings, their 
machinery, their labor. They, through good management, can 
effect efficiency, but they can't change the efficiency of that 
part of their production system that is dependent upon the 
public transportation infrastructure. They are totally 
dependent upon us in government. They pay the money through the 
user fee, and they desperately need a more efficient system.
    For those reasons, we continue to support the position that 
all of the highway trust fund money be spent on transportation 
infrastructure and operation.
    But in appearing that that will not be possible to get a 6-
year program during this current session before adjournment, 
then our position in the interim is the continuation of a 
funding mechanism in the range of what it has been for a 
reasonable period of time to allow the Congress to act 
immediately after it returns in January.
    Without endorsing a specific plan, we're not even endorsing 
a specific timeframe, although it appears that 6 months would 
be about the amount of time that would be necessary for prudent 
action.
    And let me give you just a little bit of our reasoning 
which is contained in the statement. And, as you know, this 
position is endorsed in the letter that has been or will be 
delivered to all the members of the Senate today, signed by 39 
Governors, and I believe that at least four other Governors 
will be transmitting or have transmitted similar letters on 
their own, and so we think that the vast majority of the 
Governors support the basic fundamental position that we need 
to have continued funding authorization for a temporary amount 
of time in the magnitude of 6 months.
    Let me take my own State as an example. I understand that 
we have about 30 percent of our money unobligated. But the 
problem is it takes us a period of time, after we've authorized 
and spent the money, to get it obligated. We have to advertise 
for bids, we have to prepare specifications, we have to wait, 
we have to have time. We take the position that this money 
should be invested as rapidly as possible to produce a product 
which our people can use to get a return on their investment, 
and that is a finished product.
    And, to the extent that in Kentucky, at least, that we are 
delayed much beyond today, we are beginning to delay the 
delivery of a finished product to the citizens of Kentucky, and 
we think that is not a prudent action for this country to take.
    So we believe that a continued funding authorization is 
vital, and we believe that it should be to give the Congress 
reasonably accurate time after their return to address this 
situation.
    That's a general, brief summary of our position. I'll be 
glad to address any questions that the members of the committee 
would have.
    [The prepared statement of Governor Patton and letter from 
National Governor's Association follow:]




   National Association of Governors' Highway Safety Representatives
 impact of federal highway safety grant funding lapse on state highway 
                            safety programs
    Alabama.--The State Highway Safety Office (SHSO) has halted all 
safety programs. If funding lapse continues, then the office would be 
closed in approximately 45 days.
    Alaska.--The SHSO has had to prioritize funding for all planned 
projects. All but priority highway safety projects will be put on hold. 
Law enforcement training, equipment purchases and other non-essential 
activities will be delayed. If the lapse continues, there will be only 
minimal activity even in the priority areas.
    Arizona.--The State has enough carryover funding to last 3-4 
months. The SHSO hasn't executed any contracts for new projects with 
any State or local agency because of the funding uncertainty. If the 
funding lapse lasts until spring, then funding for projects which 
continue current safety activities will be delayed or halted 
altogether. Training, travel, and equipment purchases (for law 
enforcement in particular) will be curtailed.
    Arkansas.--The SHSO has delayed funding for new grant activities. 
If the lapse continues, the State may suspend overtime enforcement and 
try to limit funding to those projects that involve personnel.
    California.--150 highway safety projects have been put on hold. 
Equipment purchases (including speed radar guns and breath testing 
equipment), sobriety checkpoints, safety belt checks, and highway 
safety public information campaigns have been put on hold. Only 
existing projects which continue previously funded safety activity are 
being funded.
    Colorado.--Only about 20% of contracts are being funded because of 
their essential, high-priority nature. There are only enough funds to 
pay personnel for 60 days. After that, State personnel will be 
reassigned to other State employment. All travel and most training has 
been suspended.
    Connecticut.--As a result of the funding lapse, the SHSO has halted 
all public information campaigns, purchase of new equipment (including 
speed radar guns and breath testing equipment), and staff travel and 
training. All new fiscal year 98 project proposals are on hold. No 402 
funds are available for programming of law enforcement activities, such 
as sobriety checkpoints, speed control, and safety belt checks. Safe 
Community coordinators will cease operations by late November 1997. The 
impact on the SHSO staff after March 1 is uncertain.
    Delaware.--The SHSO is only funding salaries for staff and CTSP 
coordinators, as well as essential administrative costs. All programs 
have been put on hold and no equipment purchases are being made. 
Carryover funding would last until March. After that, the impact on the 
staff is uncertain.
    District of Columbia.--No enforcement or public information 
programs are being funded at this time. Funding problems have been 
compounded by DC budget problems.
    Florida.--Since Florida had only $64,000 in 402 carryover funds, 
only one project with continuing salaries could be funded. For the 
subgrantees with whom no contract has been entered, matching funds are 
being used where available. However, the vast majority of subgrantees 
have no matching funds and are therefore either working without pay, 
working on non-safety related projects, or are not working at all. Of 
the 114 subgrant contracts approved for funding in Florida, only 29 
could be funded (28 projects with 410 funds and 1 with 402 funds).
    Georgia.--The SHSO has about 2-3 months worth of carryover funding. 
All programs would be shut down in mid to late January. Not long after 
that, the SHSO would have to evaluate staff situation and make 
necessary layoffs.
    Idaho.--The SHSO has about 3-4 months worth of carryover funding. 
High priority projects will be funded. Others would be funded on a 
limited basis or not at all. Travel and equipment purchases are being 
limited or delayed. At this point, the impact on the staff is 
uncertain.
    Illinois.--The highway safety program is not adversely by the 
funding lapse. The State has already apportioned funding for the fiscal 
year 98 program and will be reimbursed when the Federal highway safety 
grant program is reauthorized and funds allocated to the state.
    Indiana.--The SHSO has a sizable amount of carryover funding, so 
the safety program is not affected at present. If the lapse continues, 
the SHSO will delay some projects.
    Iowa.--If the lapse continues, all contracts will be put on hold 
except those which involve the funding of personnel. All funding for 
travel, training, equipment purchases will be deferred. No funding will 
be provided for new initiatives.
    Kansas.--The SHSO may have enough carryover funding for several 
months. Presently, only projects which continue current activities are 
being funded. No new safety activities have been funded. All funding 
for travel, training, purchases has been stopped. In the longer term, 
funding for most projects will be suspended.
    Kentucky.--Every new project is on hold. There is no funding for 
travel, training, and equipment purchases. There is no funding for 
overtime enforcement of impaired driving, occupant protection, speed 
and other safety laws. Carryover funding is being used to some 
enforcement activities and Safe Community activities.
    Louisiana.--If there is no extension, all projects will be 
suspended. Carryover funding will be utilized for salaries. However, 
such funding will be depleted by February.
    Maine.--The SHSO has enough carryover funding to last for nearly 12 
months. Not in any immediate danger of having to eliminate programs or 
staff.
    Maryland.--The State has only enough carryover funding to continue 
funding some grant activities through December. After December, there 
will only be enough funding to support staff and provide severely 
limited, if any, services. No funding will be available to inform the 
public about the state's new primary belt law. Among other things, 
Maryland has ordered child passenger safety educational materials for 
all of the states in Region in (Maryland, Pennsylvania, Virginia, West 
Virginia, Delaware and the District of Columbia.) There will be no 
funds with which to make the purchase.
    Massachusetts.--The funding lapse has had no impact on State 
highway safety activities yet. However, if it continues, all program 
operations will be suspended, starting next month.
    Michigan.--If there is no extension, Michigan would immediately 
suspend all new grants and maintain personnel only. The SHSO has enough 
carryover funding to last until early January. After that, all current 
programs and equipment purchases (including speed radar guns and breath 
testing equipment) will be suspended. Staff situation would be 
reevaluated with possible layoffs.
    Minnesota.--The SHSO has enough carryover funding to continue 
operations for approximately 3 months. At this point travel, training, 
and equipment purchases have been severely cut. Funding will only be 
used for staff salaries for next 3 months.
    Mississippi.--Travel and training has been curtailed and some 
projects are being delayed. The State has been forced to continue 
normal safety activities by relying on other Federal grants it has 
received (such as the 410 impaired driving incentive grant program.) If 
program authority is not extended and funding is not made available, 
then most safety grant activities would be put on hold.
    Missouri.--SHSO has enough carryover funding to continue operations 
for approximately 4 months. In the mean time, staff travel and training 
has been severely restricted. Funding for new equipment (such as speed 
radar guns and breath testing equipment) has been eliminated. 
Educational materials will be distributed until supply is exhausted, 
but no reorders will be placed. Expenditures by subgrantees have been 
frozen until further notice, with the exception of personnel costs.
    Montana.--The SHSO has halted all new highway safety projects, 
including several planned public education campaigns. The SHSO has 
enough carryover funding to maintain operations until approximately 
February 1. Soon after that, all funding will run out and the office 
will be faced with staff layoffs and the prospect of closing the doors.
    Nebraska.--The SHSO has enough carryover funding to continue 
operations for approximately 2-3 months. The State staff is ``slowing 
down,'' warning grantees about funding problem. After carryover funding 
runs out, public information and enforcement programs would cease.
    Nevada.--The SHSO has halted all new highway safety programs. 
Projects funded with carryover funding will continue until January 1. 
After that, it is unknown what level and for how long the State will 
fund State staff positions and office operating expenses.
    New Hampshire.--State funding will cover State personnel costs in 
the short term. Equipment purchases, overtime enforcement, seat belt 
initiatives, judicial and prosecutorial training, school-based 
education programs and highway safety public information campaigns have 
all been put on hold. Very limited carryover funding has been applied 
to existing contracts. By January, all funding will run out and the 
office will be faced with staff layoffs or the prospects of closing the 
doors.
    New Jersey.--In the short term, the State can fund some impaired 
driving activities (enforcement, public information campaigns) with its 
fiscal year 97 Section 410 impaired driving incentive grant funding. 
But that funding cannot be used for occupant protection purposes, so 
little can be done to implement DOT's Buckle Up America program. New 
projects and some continuation projects are not being funded. Travel 
and equipment purchases have been halted.
    New Mexico.--In the short term, essential projects (such as safety 
belt enforcement, Safe Communities) are being funded, but most new 
activities or expansion of existing safety activities are not. In the 
long term, funding for most projects (except State crash data 
collection) would be put on hold. The SHSO would ask the State for 
assistance if necessary.
    New York.--Impact uncertain.
    North Carolina.--Projects which continue current safety activities 
are being funded while all new projects are being put on hold. In the 
longer term, the State could run out of Planning and Administration 
(P&A) funding and be forced to lay off staff.
    North Dakota.--Existing contracts are being restricted to 25% of 
their fiscal year 98 budget and funded with carryover money. No new 
major expenditures are allowed, which affects enforcement of highway 
safety laws and community-level safety activities. Funding for 
Emergency Medical Services (EMS) training, for local roadway safety 
projects, for occupant protection programs have all been put on hold.
    Ohio.--Ohio has enough P&A funding to fund State staff for the rest 
of the year. However, if the lapse continues, then grant activities 
will be limited to priority projects and funding for new projects will 
be halted. (The State is currently reprioritizing grants, grant amounts 
and cost categories in order to limit funding to the most important 
grants. Low priorities such as travel, training, equipment purchases 
will be limited if the lapse continues.) Travel is currently being 
reviewed and limited on a case-by-case basis.
    Oklahoma.--Presently, the SHSO is limiting subcontracts to a 
portion budgeted funding. New projects will not be funded if there is 
no new Federal funding. Travel, training, equipment purchases are being 
curtailed. Subcontracts involving salaried personnel would be canceled 
if the lapse continues.
    Pennsylvania.--The State safety program is not feeling the impact 
yet but will use up all its carryover funding by mid-December. All new 
projects will be put on hold. The funding will be used to continue 
current activities only. If the lapse continues, the SHSO will send 
notices to local subgrantees that they will not be paid.
    Rhode Island.--SHSO has enough carryover funding to continue 
operations for approximately 2-3 months. After that all highway safety 
projects would cease with potential of personnel cuts.
    South Carolina.--The SHSO has warned all grantees of funding 
problems. Staff and grantee travel has been eliminated and no new 
equipment (such as speed radar guns and breath testing equipment) is 
being purchased. Carryover funding would last until approximately 
March.
    South Dakota.--The highway patrol has had to reduce its drunk 
driving enforcement efforts.. 1500 child safety seats which were 
ordered have been put on hold because there are no funds with which to 
make the purchase. EMS training and local roadway safety projects have 
been given only limited funding for the short term. All grants for law 
enforcement equipment (breath testing equipment, speed radar guns, 
etc.) has been put on hold, as has funding for major EMS equipment. No 
new highway safety projects have been allowed to start.
    Texas.--SHSO staff are State funded, and the State has a sizable 
amount of carryover funding, so there is no immediate impact. However, 
full-time subcontractors could be affected in the long term. Under the 
worse case scenario (a lapse of 6 months or more), up to 230 projects 
as well as 17 local and 31 State subcontractors could be affected.
    Utah.--No new projects have been staked. By using all the State 
matching funding, the office could operate until mid-January but with 
no grant activity at all. Safe Community coordinators and other 
subgrantees wouldn't be funded. Many are already looking for other work 
because of the funding uncertainty. It would take a long time for the 
State to find and train new coordinators.
    Vermont.--For the shorn term, the State is continuing 402-funded 
law enforcement activities. All other current and new projects have 
been suspended. All training, community-level grants, DUI grants, 
education programs, safety belt and child restraint grant-funded 
programs have been halted. Carryover funding will only last until 
January 1.
    Virginia.--The SHSOis forced to delay payments to State agencies. 
The office has approximately 3 months of carryover funding remaining. 
After carryover funding expires, they would not be able to honor 
funding requests until Federal funding is allocated.
    Washington.--2/3 of the fiscal year 98 planned safety projects have 
been delayed. The remaining 1/3 of the projects have been put on notice 
that funding will be available only through the end of October. If 
there are funkier funding lapses, the State Highway Safety Office will 
be able to operate only until January 1, 1998. After that, the office 
will be forced to shut down.
    West Virginia.--SHSO has very little carryover funding available. 
All programs will be halted and of rice will be closed in December 
1997.
    Wisconsin.--The SHSO has delayed funding for all new grant 
activities. Funding being dedicated to personnel costs. If funding 
lapse continues, of rice would be closed and staff positions 
eliminated.
    Wyoming.--The SHSO has carryover funding that will last 
approximately 3-4 months. All safety programs have been either 
curtailed or put on hold so as to protect subgrantee staff from layoffs 
for as long as possible. The SHSO of lice staff are funded through 
State funds so they are protected from layoffs for the time being.
      
    Senator Warner. I'll just proceed. Your words are very 
carefully selected.
    Governor Patton. I hope.
    Senator Warner. Let's see if we can get a little more 
definitive.
    There are the unobligated accounts, and if we were to give 
the States a greater degree of flexibility as to how to expend 
those, do you think that would meet the request of the 39 
Governors?
    Governor Patton. Certainly would not in Kentucky, and I 
can't--I think it would not the majority of the States, 
although there evidently are States that do have large 
unobligated balances that they perhaps could get by. But, 
again, let me repeat that, in the average, it is going to take 
Kentucky 3 months to spend money once it is authorized to 
obligate the money, so that would be 25 percent of an annual 
balance, and I understand we have a 30 percent balance. So it 
would appear that we in Kentucky are doing what it is our 
philosophy to do, which is to get this money to work for the 
people of Kentucky as quickly as is reasonably and prudently 
possible.
    And it just takes time. Once you authorize us to obligate 
the money, it just takes time to do that, about 3 months.
    Senator Warner. Just speaking for myself, I get the message 
that the unobligated avenue is not sufficient. Is that it, in 
short?
    Governor Patton. We do not believe it addresses the 
problem.
    Senator Warner. And that means that you're going to have to 
open the barn door and get some more money? Is that about it?
    Governor Patton. For Kentucky to not interfere with the 
delivery of the services to the people, that's necessary. And I 
think the majority of the States that would be the case.
    Senator Warner. How do we open the barn door to get some 
more money without opening up all the formula disputes, all the 
other disputes? That seems to me to be the issue.
    Governor Patton. That is the issue. And let me note that 
the National Governors Association has not taken the position 
on the formula issue and on the distribution of the money.
    Senator Warner. I understand that. You've sidestepped that. 
But I just, for the moment, don't quite really understand how 
we can--seems to me we can do some technical amendments and we 
can deal with the unobligated, give more flexibility. But once 
we move toward additional money, that seems to me to open up a 
whole realm of issues. Therein is where I have my problem.
    Governor Patton. We understand the difficulty of that 
issue. That is an issue that the Congress must address, and I'm 
confident you will eventually address it. I'm here to say that 
in our State and in I believe the majority of the States, 
further delay without new funding authorization will affect 
delivery of the services.
    As to the flexibility with existing funding, that doesn't 
address issues. For instance, some of the transportation money 
goes directly to local entities. They don't have additional 
sources from which to draw funding to make up that. In 
Kentucky's case, we're already, 1 month into this lapse, 
probably any delay beyond the next week or two----
    Senator Warner. Let me just go to a second question to 
pursue my line. Many States have indicated, in the absence of 
additional Federal funds, States can use advance construction 
options and other State funds to proceed with these projects. 
How widely used is advanced construction among the States? And 
so many States have the ability to supplement the delay in 
Federal funds with available State funds?
    Governor Patton. I'm going to have to ask the staff to talk 
to other States, but let me talk for Kentucky. We try to spend 
our State funds as prudently and as rapidly and get them 
working for the people as quickly as possible, so we have the 
same problem with--we would not be able to supplement Federal 
highway funds with State highway funds, and our State highway 
funds are dedicated. I do not have the authority to take 
surplus general fund moneys and spend it in the highway fund. 
So for Kentucky that is not a viable option. And I don't know 
how many other States that would be the case.
    Senator Warner. It has been made known to the Chair here 
that a survey by AASHTO's State transportation officials 
indicated that many States would use advance construction to 
continue operations.
    Governor Patton. To the extent that funds are available.
    Senator Warner. My concern is, if we go beyond the 
unobligated funds and we deal with some sort of allocation, not 
only have you opened up all of the debate and the question 
about whether the Congress is going to remain in session long 
enough to accommodate a proper debate on those subjects, but, 
more seriously, I think you start piecemealing funds out, 
you're going to further delay and delay and delay the absolute 
duty of the Congress to come to grips with the 6-year funding 
bill. That's my view.
    Mr. Chairman?
    Senator Chafee. Thank you, Mr. Chairman.
    Here's the situation, Governor. There is about $12 billion 
out there amongst the States, which is more than 6 months. In 
other words, it is more than half the year's amount of money 
that goes out to the States normally. The problem, of course, 
is that it's not--each State doesn't have the same amount 
proportionate to its normal amounts, and also it is locked up 
in different accounts. Could be a CMAQ account, could be an 
enhancement account, whatever.
    Senator Bond has proposed in his second point flexibility 
to the States on the use of their unobligated balances. In 
other words, what Senator Bond would say, if Kentucky has got a 
stack of money in the CMAQ account, they would be able to 
borrow from that and put it in their highway construction 
account, and subsequently, obviously, when they got their 
moneys would pay it back.
    Now, that's the first thing. And, after all, we're talking 
substantial sums of money. As I say, there's $12 billion out 
there.
    In the first 6 months of each of the last 2 years, the 
total amounts that the States has obligated has been around $9 
or $10 billion, so we can see that when we talk to $12 billion 
we're talking very substantial amounts of money compared to 
what they have normally had.
    What do you say to Senator Bond's point on that one? Are 
you saying that wouldn't help you in Kentucky?
    Governor Patton. Well, I'm saying that it takes some time 
to get this money obligated once we're authorized to obligate 
it, and so I would put that in the magnitude of 3 months. So 
take the first 3 months of the 6-months that you're talking 
about, on average, I think that may give you nationwide a 3-
month window, but that doesn't apply to Kentucky because we're 
already down to 30 percent, I understand.
    So the first thing you have to do is understand it's going 
to take 3 months of money in the pipeline for us to get it 
obligated. And so if there are 3 more months out there on 
average, you may be correct. I would assume those States are 
trying to invest their money as rapidly as is prudent to get 
the service available to the people. That I would think would 
be every State's objective. It is certainly our objective. And 
so I would assume, if there are States that aren't able to 
invest their money within 3 months, as Kentucky is, there is 
probably a reason that they can't get it. I don't think it is 
that people don't need the transportation facilities.
    Senator Chafee. The other point Senator Bond has in his 
suggestions is a hold harmless provision, which would allow the 
States that were in a situation where they weren't helped by 
this flexibility to borrow money from the Federal Government in 
anticipation of the passage of ISTEA in next year, next 
calendar year--it could be in February or early March if we get 
right to it. The majority leader has indicated that this is 
going to be the first piece of business when we come back. We 
come back in the latter part of January. Certainly that gives 
us all of February and the early part of March. So this bill is 
going to be passed. Now, what happens in the House we don't 
know, but I'm talking about the Senate.
    Senator Bond, in the interim, would say to have this so-
called ``hold harmless'' provision, which the States that 
weren't able to use the flexibility provision to their benefit, 
there wasn't enough in the CMAQ account or the enhancement 
account, or whatever it is, that didn't help them, because 
perhaps they had spent that money in CMAQ or enhancement 
programs.
    So, under Senator Bond's proposal, he'd let the States 
borrow some in anticipation. Now, what do you say to that?
    Governor Patton. Well, I'd like to see the fine print of 
it. Let me say personally that has some appeal. It would appear 
on the surface to address the problems that I talk about, if I 
understand correctly the Senator's proposal.
    Senator Chafee. But he would have this--this would be 
immediately. In other words, we would try and pass legislation 
incorporating this this week or, if we're going to be here next 
week, next week--in other words, before we go out.
    Mr. Scheppach. Mr. Chairman, I might indicate that, on the 
borrowing authority, there are some States that have State laws 
or even constitutional restrictions, and so some States would 
not be able to access that money, regardless of the 
legislation. So there would still be some problems.
    Senator Chafee. I mean, obviously you are more familiar 
with these things than I am, but I would be surprised if they 
couldn't have an advance from the Federal Government on what is 
going to be their funds ultimately. I'd be surprised if they 
couldn't handle that.
    Governor Patton. I would think that we should research that 
subject and provide the committee with a more definite opinion 
later on today.
    Senator Warner. I think that would be very helpful, Mr. 
Chairman, because the Bond proposal is worthy of very serious 
consideration.
    Governor Patton. Yes, it is.
    Senator Warner. Now, Mr. Baucus.
    Senator Baucus. Thank you, Mr. Chairman.
    Governor, you're basically saying doing nothing and hoping 
that that puts more pressure on the Congress to pass the full 
6-year bill early next year is not a gamble that you want to 
take.
    Governor Patton. Well, I am saying that the people of 
Kentucky will suffer the delivery of timely delivery of 
services if that is the option. It will affect the timely 
delivery of transportation facilities in Kentucky.
    Senator Baucus. So you're saying, regardless of taking the 
gamble, the point is the people of Kentucky will lose anyway, 
regardless----
    Governor Patton. Yes.
    Senator Baucus.--because you have only 30 percent left and 
it takes 3 months, once you obligate, to get the dollars out on 
the project.
    Governor Patton. Yes.
    Senator Baucus. Is it also true that delaying has the 
effect of delaying larger projects? That is, that highway 
commissions and States, in an uncertain period where there are 
fits and starts and not a lot of certainty over a long period 
of time, tend to put off and delay the longer-term projects for 
the benefit of the shorter-term projects? Does that tend to 
happen?
    Governor Patton. Yes. And let me say that, in certain 
cases, a 2-month delay could make a major delay in the project, 
particularly in the States which have construction seasons. A 
2-month delay could cause the project to go into two 
construction seasons, increasing the cost of the project, or it 
could delay it into a total new construction season, which 
would delay the project for a year. So there are many nuances 
to just a 2-month delay in the ability to have a program that 
is planned and logical and sequential and in the efficient 
obligation of this money.
    Senator Baucus. Could you just explain that in a little 
more detail so that this committee has a better feeling for 
that?
    Governor Patton. Say you are in a State that is in the 
northern half of the country that has got maybe a 7-month 
construction period, so you've got to----
    Senator Baucus. In my State that's sometimes shorter.
    Governor Patton. In Kentucky it is sometimes 7 months. 
You've got your project designed to be built in 7 months, and 
you don't get it started until 2 or 3 months into the season. 
If you have to hold that project over during the winter, do 
half of it this summer and half of it the next summer, it is 
more expensive to do. The option might be to delay it to the 
next construction season. That's just a nuance of the business.
    Senator Baucus. I appreciate that, Governor. I want to take 
more time just to say that I very much hope we can pass some 
kind of interim provision here. I agree with the Senator from 
Missouri that extension of the House bill is just not an 
option, but he has come up with an approach which I think is on 
the right track. It probably needs a little fine tuning. And 
it's an approach, frankly, that others have talked about.
    Governor Patton. We would like to study the details and 
see, as Ray indicated, if there would be any legal inhibition 
on some of the States' parts. I don't even know in my State 
whether or not there would be a legal inhibition. As Senator 
Chafee said, I suspect that we will be authorized to accept 
advances from the Federal Government, but I would want our 
legal counsel to check on that.
    Senator Baucus. Back on advance construction, are you 
saying that Kentucky has no ability to transfer State funds to 
the Federal highway program?
    Governor Patton. I'm not sure we have the State funds 
available. No. We could--I believe that we would have the 
authority to go ahead and build a project all with State money 
with the understanding that we could replenish that money from 
a Federal authorization. I'm not sure we've got the money to do 
that. We try as best we can to get our money over a 
construction season actually to work. And, assuming that we are 
as low on State money as we are on Federal money--and I don't 
have those figures--we wouldn't have the money to advance the 
Federal side.
    Senator Baucus. So you're saying you may have the 
authority, but those other State funds are already committed to 
or obligated.
    Governor Patton. They very may well be. I don't happen to 
have that particular figure for Kentucky.
    Mr. Scheppach. Senator, I might indicate, too, that some of 
this surplus that States have is in rainy day funds that cannot 
be accessed just by the Governor. A lot of times it takes a 
State legislature vote to release those funds in those surplus 
rainy day funds.
    Senator Baucus. Thank you.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you very much.
    Mr. Smith, we're just going to go in order here. Do you 
want to go here? We didn't keep an early bird roster because 
everybody showed up at one time, but you were a little tardy. I 
don't think Mr. Kempthorne would mind.
    Senator Smith. If you want to use the early bird rule, I've 
been the victim of it before, Mr. Chairman.
    [Laughter.]
    Voice. Not if the record notes he was tardy.
    [Laughter.]
    Senator Smith. Golly, you guys are tough. My side of the 
aisle, too.
    Senator Chafee. The chairman said, ``I'm sure Senator 
Kempthorne won't mind,'' without asking Senator Kempthorne.
    Senator Smith. Let me just echo the comments made by my 
colleagues regarding Senator Bond's attempted compromise here. 
I think it is reasonable, and, considering the circumstances 
we're in, it's something we ought to seriously consider.
    I might also say, Governor, picking up on what Senator 
Thomas had to say--I don't want to get into his turf, as I'm 
sure he wants to ask some questions on this, but it would have 
been nice if we'd had this letter 4 or 5 weeks ago when a 
totally unrelated matter was holding up the entire highway bill 
by some of our colleagues. It is a day late and a dollar short, 
maybe literally. This is dated November 4th. When many of us 
were saying it was not the right thing to do to take campaign 
finance reform and tie it to an ISTEA authorization, that's 
what happened, and that's why we're sitting here in this mess. 
I wish we had gotten this letter. Perhaps it might have been 
more effective.
    Let me just ask one question, and then I'll yield. In terms 
of a straight 6-month extension, which you talked about, it is 
pretty difficult, isn't it, for the planners to lay out the 
long-term plans that they want to use, the programs, the 
projects that they want to do with that 6-month extension, 
isn't it? I mean, just using your own State as an example, if 
you get a 6-month extension, even with some of the flexibility 
that's in the bond compromise, some decisions are not going to 
be able to be made in terms of long-term project starts; isn't 
that correct?
    Governor Patton. Well, I know we would assume that the 
Congress is going to pass a bill, and we--Kentucky, and I think 
other States--assumed and hoped that it would be in this 
session, and so we have continued our planning process and our 
obligation process as if there would have been no interruption, 
and so we're asking that we be able to continue to do that for 
6 months. That would give the Congress about 2 months after 
they return to actually pass a bill.
    We certainly strongly support the passage of a bill. We've 
written several letters over the past year urging our position 
on the passage of a bill. We think the Governors have been 
very, very strong with both the Administration and the Congress 
in support of a passage of a long-term commitment bill.
    And if there is a 6-month extension, I think most States 
will assume that there's going to be a permanent bill after 
that and they're going to continue as if there would be, but if 
there doesn't then we'll have to stop at that point. But I 
don't think we're going to assume that a 6-month extension is 
the end and plan for an end. We're going to plan for the 
Congress having passed a bill by that time.
    Senator Smith. OK. That's important to understand, from 
your perspective, then. You're saying that these programs--
nothing would be interrupted in a 6-month extension; you would 
just simply project as if it were a 6-year authorization and 
you would just go ahead and continue to do what you're doing, 
project-by-project, without any change, just assuming that the 
thing would be extended 6 months again from now?
    Governor Patton. That's what we did in Kentucky. Up till 
this past deadline, we continued to obligate as if there was 
going to be a bill October 1st.
    Senator Smith. Thank you, Mr. Chairman.
    Senator Warner. Thank you, Mr. Smith.
    The Senator from New Jersey.
    Senator Lautenberg. Very briefly, Mr. Chairman, as I looked 
at your letter--and I appreciate your testimony and your urging 
us to get on with putting a bill into place for 6 months. That 
extension I think is very, very important, also.
    If I understood correctly, you said earlier you were 
avoiding any formula discussion.
    Governor Patton. Yes. The NGA does not have a position on 
formula.
    Senator Lautenberg. Right. So I just want to be clear. Are 
you advocating a 6-month extension, even based on current 
structure, just to keep the flow going?
    Governor Patton. No, sir. We're advocating approximately a 
6-month extension of some kind of a right to obligate, but in 
the magnitude of what we could expect would be in a new bill. 
In the magnitude----
    Senator Lautenberg. So then you do present a point of view 
about the reformulation of the distribution?
    Governor Patton. No, because I don't think any formula is 
not going to dramatically wipe anybody out or enhance anybody's 
position.
    Senator Lautenberg. We have a formula in place, Governor, 
and, if you said just a 6-month extension, I draw the 
implication that it would be based on current distribution. 
Whatever money New Jersey got, Kentucky got, Wyoming, just 
continue that for 6 months and make sure you don't interrupt 
the cash-flow.
    Governor Patton. We are not taking that position. We're 
saying some kind of continuing authorization to obligate on the 
magnitude of what we could expect. To me, Senator Bond's 
proposal could fit into that category, as could the House 
formula. And we're really just saying some kind of a 
continuation authority in the magnitude of what we could 
reasonably expect will be the final product.
    Senator Lautenberg. OK. I guess it's not real clear to me, 
when you say the Governors Association is not going to be 
involved in any formula discussion, when, in fact, as we 
discuss it now, it is clearly based on a new formulation that 
has yet passed the final test, and that is to get turned into 
law.
    So would you be, therefore, willing to obligate your 
State's funds to programs for which you may not be compensated? 
I don't think so.
    Governor Patton. We wouldn't expect any outrageous 
difference in funding that Kentucky has received or would 
receive under a continuation of ISTEA or some other variation, 
perhaps as passed by this committee. It wouldn't be just a 
tremendous difference in what we're going to get. We're going 
to get about the same amount of money in relative terms, within 
10 percent, no matter which formula is passed.
    Senator Lautenberg. Well, I thank you very much, Mr. 
Chairman. Thank you, Governor.
    Senator Warner. Mr. Kempthorne.
    Senator Kempthorne. Mr. Chairman, thank you very much.
    Governor, I appreciate your testimony and your 
representation of the Governors.
    If I may, I'd like to quote from the letter which the 
National Governor's Association has provided us, signed by 39 
Governors. It says it is ``imperative for the Senate to 
consider and pass short-term legislation providing funding for 
highway, transit, and safety programs, and to complete a 
conference on that legislation with the House of 
Representatives.''
    Imperative? Is it so imperative that the NGA would support 
the Senate agreeing to the House 6-month extension?
    Governor Patton. Again, the NGA does not wish to get 
involved in that controversy. If you are saying if the only 
choices were no extension or the House extension, then I think 
that, in that case, we would support the House extension. But 
are you saying, ``Would the NGA support Senator Bond's proposal 
a proposed to the House bill,'' I think we would say that 
either would be acceptable.
    Senator Kempthorne. No. I think the first question is a 
very pertinent question, and that is no extension versus the 
House, because it would be interesting, among the 39 Governors 
here, I don't know how many of them are from the 34 States that 
will do worse by the House legislation than they would by the 
formula that the Senate has come up with. So it puts our States 
in a real dilemma.
    Governor Patton. It does.
    Senator Kempthorne. And I don't know that any deal is 
better than a bad deal, because that's where I think we may be 
headed.
    Governor Patton. Well, let me say I'm one of those 34 
States that would do better under the Senate bill than the 
House bill, but I still believe that at this point in the game, 
when it is obvious that--it appears obvious that Congress won't 
enact a formula before adjournment, before recess, then to me, 
if there is not an extension, the people of Kentucky are going 
to suffer substantial loss of the use of this investigation, 
and I don't think that they should do that. And hopefully, when 
the Congress gets back, it will address this subject within a 
couple of months and do it diligently, without regard to 
whether or not we've had to use the tool of depriving our 
citizens of services, prompt delivery of services, just to 
force us to act.
    Senator Kempthorne. And, Governor, I appreciate that.
    Mr. Chairman, I think we have to be sensitive to States 
such as Kentucky that are in a real dilemma, and yet my concern 
is that if we now, because of this imperative need, go in and 
change the formula, I think then, when we come back after the 
first of the year, whatever formula we used as an interim 
measure becomes the starting point, and I think we are all in 
terrible shape if that's the situation.
    So, again, I hope that we can be creative and innovative in 
finding a solution, but the House 6-month extension to me is no 
solution.
    Senator Warner. I certainly concur with the Senator from 
Idaho, and I'm listening very carefully as you speak about the 
Governor and his role now.
    Senator Kempthorne. May I have one final question?
    Senator Warner. Yes, go ahead.
    Senator Kempthorne. Governor, how do you like being 
Governor?
    [Laughter.]
    Governor Patton. It's great. Good. I recommend it.
    Senator Warner. Before turning to Mr. Graham, I'm going to 
pose a question to Mr. Bond. Think about it a little bit. As 
your proposal is being given very serious consideration, is the 
downside risk to the--24 States, according to my calculation, 
would be eligible under your formula. Is there a disadvantage 
to the other 26 that are not eligible, and could it be written 
in so that they could borrow if they so desire? We'll come back 
to you in a moment.
    Mr. Graham?
    Senator Graham. Thank you, Mr. Chairman.
    If I could take that same prerogative and ask a question, 
and as one who arrived somewhat tardy, Senator Bond's proposal 
starts with the phrase ``real 6-month extension to March 31, 
1998.'' What does the word ``real'' mean?
    Senator Bond. The House, Senator Graham, has a jacked-up 
approach that tries to incorporate the entire year funding 
formula. This proposal we have on the table is, I think, 
responsive. And I want to follow this up with the Governor. 
It's responsive to the Governor's need to say you can spend 
money either up to your current unobligated balance, without 
regard to the categories it's in, or, if your funding--if your 
obligations in previous years for the first 6 months has been 
greater than the total amount of your unobligated balances, 
then you will get an advance allotment against whatever it is 
that you're going to get under the finally passed bill.
    So all States would get the flexibility. About probably a 
little less than half of them would not have enough unobligated 
balances, so it would not be borrowing. Missouri can't borrow. 
Most States can't borrow without a vote of the people. But 
there isn't anything that says that we can't give an advance on 
funds to be allocated to the State subsequently and then simply 
debit the amount that we have forwarded funded from their 
further allocation. It has nothing to do with the credit of the 
State. It does not obligate the citizens of the State to pay 
back the money. It's their money, anyhow, because they paid it 
in, but it's how we get it back to them.
    Senator Graham. Mr. Chairman, if I could ask a followup 
question. Would that indicate that--let's assume that we do 
pass a new 6-year bill in March 1998.
    Senator Bond. Let's hope we do.
    Senator Graham. Then whatever that bill provided in terms 
of distribution to the States would be retroactive to the 1st 
of October 1997, and all of those benefits that your proposal 
would provide would be debited against what the State would 
receive retroactive to October 1, 1997, based on a formula 
passed in March 1998. Is that----
    Senator Bond. To be specific, Florida, according to October 
1, 1997, statistics has $225 million available in unobligated 
funds. No. 1, Florida, under the proposal that I have put 
forward, would be able to move that from category to category 
to whatever category it's needed. In addition, since in 1997 
Florida obligated $239 million in the first 6 months, then the 
Federal Government would advance roughly $14.5 million to 
Florida so that Florida would be able to obligate, through 
March 31, 1998, a full almost $240 million, which is what it 
obligated last year.
    When we cut the deal and get it signed into law, we hope, 
early in 1998, then whatever amount is coming to Florida 
subsequently will be debited by the $14,489,000 that had 
already been advanced to Florida, and then Florida would pick 
up and fill in the programs to the extent authorized under the 
bill as passed and signed into law. But they would be able to 
go ahead with contracting, the critical period being through 
March 31.
    Senator Warner. Wouldn't the short answer to the question 
be yes?
    [Laughter.]
    Senator Warner. The Senator from Florida posed it, you 
answered it, but it is yes.
    Senator Bond. Mr. Chairman, you cut through it.
    Senator Warner. Mr. Thomas? We've got to keep moving along.
    Senator Thomas. Let the Senator from Missouri go. I'm 
interested in more of his information than--if that's OK.
    Senator Warner. Yes. Do you wish to----
    Senator Bond. Thank you, Mr. Chairman. Just to followup--
and I commend the Governor and my old friend, Ray Scheppach, 
for getting 39 Governors on to any kind of letter. Back in 
years past I used to work with Ray doing that. It was like 
trying to load frogs in wheelbarrows.
    [Laughter.]
    Senator Bond. And, Governor, if you think this is a 
fractious bunch, wait till you join the National Governor's 
Association. We do appreciate the viewpoint.
    As I look at the figures before us, Governor, Kentucky has 
unobligated balances of $314 million as of October 1 this past 
year. That's more than you have obligated through the first 6 
months in either of the past 2 years. So the measure that I'm 
proposing--and I think you've gotten a copy. I think we've 
given you a copy of it--would allow your transportation highway 
transportation entity to obligate, to let contracts up to that 
$134 million. You've got about $95 million in the surface 
transportation program. You can move funds back and forth so 
you can make the optimal use of that money.
    You are not a State which would need to have the advance 
funding formula that we described that would be debited against 
your account in the rest of the year, so you would get full 
flexibility to utilize that unobligated balance, which should 
give you more than you've utilized in the last 2 years.
    And, to be quite clear, in answer to Senator Lautenberg's 
question, no formula is grandfathered in for 1998. This is 
formula neutral, which is, I believe, the only way we're going 
to get anything done, because if you try to cram a bad formula 
down our throats--and every formula is bad to somebody--there 
is going to be a real cat fight that is probably going to keep 
us from enacting it into law.
    So Mr. Scheppach's question, there is no borrowing; it is 
an advance allocation. There is no problem in my State, and I'm 
confident that no other State is going to have a problem 
borrowing because they don't have to sign an obligation to 
repay that. We're just going to debit whatever is advanced. And 
it's only about $1.3 billion that would have to be debited, 
according to the figures from the Federal Highway 
Administration.
    Senator Warner. And we thank you, Senator.
    Senator Thomas. Would the Senator yield just for one quick 
question?
    Senator Warner. We want to hear from the Senator from 
California, I think in fairness. Yes, Senator?

OPENING STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM THE 
                      STATE OF CALIFORNIA

    Senator Boxer. Thank you so much. I will go quickly.
    Senator Smith of course raises the question of the fact 
that this was delayed due to the fact that many of us teamed up 
on both sides of the aisle and said we wanted to make a point 
about campaign finance reform. I don't think it does much use 
to go back and talk about that. The fact is we are where we are 
now and we have time to deal with this now. We've got time to 
deal with this. And, regardless of that whole issue, the House 
only did a 6-month extension, which is anathema to many of us. 
We would have been in a difficult position we wouldn't have 
been able to move.
    I want to compliment Senator Bond for, I think, coming up 
with an idea that could lead us to some light here. I'm very 
impressed with it. And also to Senator Warner for pressing 
forward, regardless of the fact that he's tormented by the 
choices that we have.
    And I would join with you, Senator. In my case the House 
formula is very bad for our State, and we need to do something 
different.
    I would offer an idea, if Senator Bond's idea doesn't move 
forward. Maybe what we would think about doing--and this is 
just something to think about--take the formula that this 
committee decided on, take the formula the House has done, meet 
somewhere in the middle in the 6-month extension, and then just 
say that's just a starting place and we'll continue this fight 
later. It's just a thought.
    I would ask unanimous consent to place several letters into 
the record from California.
    Senator Warner. Without objection.
    Senator Boxer. Thank you very much.
    [The information to be supplied follows:]
      
                           Metropolitan Transit Commission,
                                     Oakland, CA, October 29, 1997.

    Senator Barbara Boxer,
    United States Senate,
    Washington, DC 20510.

    Dear Senator Boxer: On behalf of the Metropolitan Transportation 
Commission I am writing to express our desire to see the passage of a 
short-term extension of ISTEA in the absence of a multi-year ISTEA 
reauthorization bill in this session of Congress. The short-term 
extension should maintain the structure and integrity of the landmark 
ISTEA legislation that has a balanced and efficient transportation 
system
    As you know, ISTEA II (S. 1173) failed to achieve cloture after 
four attempts and it appears that debate of the bill will be delayed 
until the next session of the 105th Congress. While a short-term. 
extension does not address the long-term planning needs of the San 
Francisco Bay area, simply allowing the program to expire would be much 
more harmful. The transit program would be traumatized without funding 
for capital improvement projects that are underway and the highway 
program would eventually shut down. The delays in construction would 
impede economic development and compromise the safety of our roads and 
bridges.
    We thank you for your consideration of this issue. MTC is deeply 
appreciative of your efforts on ISTEA reauthorization during the past 
year. California's interests have been well-served by your involvement 
in this legislation. We look forward to the next session of Congress.
    If you require additional input concerning continuation of the 
Federal highway and transit programs, please contact Tom Bulger, our 
Washington Representative, at (202) 775-0074.
            Sincerely,
                                         Lawrence D. Dahms,
                                                Executive Director.
                               __________
               Association of Monterey Bay Area Governments
                                      Marina, CA, November 3, 1997.

    The Honorable Barbara Boxer,
    United States Senate,
    Washington DC, 20510.

    Dear Senator Boxer: We understand that the U.S. Senate is debating 
whether to simply let ISTEA expire instead of extending it 6 months as 
the House has already approved. If ISTEA expires, this would translate 
to no Federal transportation funds until a new multi-year law is 
enacted.
    For the Monterey Ray region, this would have a drastic impact. As 
the Metropolitan Planning Organization for the Central Coast 
encompassing Monterey, San Benito and Santa Cruz Counties, the 
Association of Monterey Bay Area Governments (TRIBAL) transportation 
planning program would be virtually unfunded as the small amount of 
local funding we have budgeted is primarily in-kind from other agencies 
with whom we supplement with pass-through Federal planning funds. Any 
further delay (regardless of three, Six or nine mouths) in extending 
ISTEA in lieu of passage of new reauthorizing legislation would mean a 
hiatus of our metropolitan planning program, and the products thereof 
(e.g., long range plans, transportation improvement program, travel 
demand model development, air quality conformity determinations, 
population forecasts disaggregation, Geographic Information Systems 
development, etc.), and the need to put our transportation planning 
staff on unpaid leave of absence.
    In addition to AMBAG, the public transit operators in the region 
(Monterey-Salinas Transit, San Benito Transit, and the Santa Cruz 
Metropolitan Transit District) would be adversely impacted cash-flow-
wise as Federal capital and operating funds provide a reasonably large 
portion of their budgets and there are no temporary replacement 
sources.
    We urge your support in extending ISTEA now! I am available for 
your staffs questions.
            Sincerely,
                                        Nicholas Papadakis,
                                                Executive Director.
                               __________
                    Kings County Association of Governments
                                     Hanford, CA, November 3, 1997.

    Senator Barbara Boxer,
    Senate Office Building,
    Washington, DC 20510.
Subject: Extension of ISTEA
    Dear Senator Boxer: Kings County has been monitoring legislation to 
reauthorize the Intermodal Surface Transportation Efficiency Act 
(ISTEA). Since ISTEA expired on September 30, 1997, and Congress is 
scheduled to adjourn soon, it appears that a new multi-year 
transportation funding package will not be enacted. An extension of 
ISTEA has been proposed and should be enacted.
    By not approving an extension to existing law, it could have a 
direct impact on Kings County's ability to fund local transportation 
projects. Kings County and its focal jurisdictions depend on Federal 
transportation funds to continue the improvement and maintenance of the 
local transportation system. Transit agencies also depend an Federal 
funds to continue operating local transit systems that are essential in 
less populated areas. Without transit operating funds, elderly, 
disabled, low income, and other transit dependent persons can not get 
to necessary services like medical care and employment.
    Local agencies have prepared their budgets with the assumption that 
new Federal reauthorization of ISTEA would be enacted prior to its 
expiration, thereby continuing Federal funding for transportation 
purposes. Local budgets of rural counties like Kings are already 
severely impacted by the lack of funding to meet identified needs.
    We urge Congress to act expeditiously to approve an extension of 
ISTEA so that local jurisdictions can continue to fund needed local 
transportation improvements and operate local transit systems.
    I hope you find this information useful as you consider the impacts 
of the Senates action on the reauthorization of ISTEA.
            Sincerely,
                                        William R. Zumwalt,
                                               Executive Secretary.
                               __________
                     San Luis Obispo Council of Governments
                             San Luis Obispo, CA, October 31, 1997.

    The Honorable Barbara Boxer,
    United States Senate,
    Washington, DC 20510.
Extension of ISTEA
    Dear Senator Boxer: On Tuesday November 4, your committee, the 
Senate Environmental and Public Works Committee, has scheduled a 
hearing to consider the extension of the Intermodal Surface 
Transportation Efficiency Act (ISTEA). Our agency is the Metropolitan 
Planning Organization for San Luis Obispo County, responsible for 
planning and programming all State and Federal transportation funds in 
the region. We would urge you to approve a six month extension of the 
existing law. consistent with action taken recently by the House of 
Representatives.
    Expiration of the existing law would result in the cessation of all 
Federal transportation funds until a new multi-year law is enacted. 
This would have a devastating impact to our agency, our region, and our 
residents. One third of our agency funding comes from Federal funds. 
Should Federal funds cease our staffing would have to be reduced by 40 
to 50%. This would result in an inability for our region to comply with 
State and Federal requirements.
    At risk would be the FTIP, our Federal Transportation Improvement 
Program, which controls the flow of $76.2 million of federally-funded 
programs just in FY97/98, as well as important local projects, some of 
which are currently under construction. With half the staff, all 
projects would suffer. Moreover, most local and State transportation 
projects are largely funded with Federal funding. Expiration of ISTEA 
would delete all Federal funding creating significant financial 
hardships for those projects under construction and would certainly 
delay most others. The effects of such drastic funding cuts would 
create undue local hardships not easily reconcilable.
    We strongly urge you to approve a six month extension of ISTEA. 
Thank you for your previous support and assistance. We look forward to 
hearing from you on this urgent matter.
            Sincerely,
                                        Ronald L. De Carli,
                                                Executive Director.
                               __________
                      San Diego Association of Governments,
                                                  October 31, 1997.

    Senator Barbara Boxer,
    United States Senate,
    Washington, DC 20510.

    Dear Senator Boxer: Rusty Selix of CALCOG requested that we provide 
you an assessment of the possible impacts to the San Diego region 
resulting from a three, six, or nine-month delay in the ISTEA 
Reauthorization/ISTEA Extension.
    Caltrans District 11 staff have heard that a 3-5 month extension 
would probably have a minimal effect on the State highway program. 
During this shorter timeframe the use of Advance Construction combined 
with the current large State Highway Account cash balance would be able 
to fund most programs and projects scheduled in this period.
    If the ISTEA Reauthorization/Extension were to be delayed beyond a 
six-month period some project delays could occur. SANDAG/Calrans have a 
joint funded SR125 freeway project scheduled for construction in mid-
1998. This $23 million project could be delayed due to its need for 
Federal Surface Transportation Program (STP) funding. Delays in Federal 
funding beyond 6 months would begin to affect the Regional STP and 
Congestion Mitigation and Air Qualifier (CMAQ) programs although we do 
not have my major project delays identified at this time. Also Federal 
funding delays beyond 6 months could begin to affect Federal 
transportation planning activities in the region.
    We have asked the San Diego Metropolitan Transit Development Board 
staff for an assessment of the impacts any delay would have on their 
programs. We will provide you any information at we receive from MTDB.
    If you have further information needs please call me or Stuart 
Shaffer at 619-595-5331.
            Sincerely,
                                                Bill Tuomi.

    Senator Boxer. I certainly will not read from them, other 
than to say they're all very concerned and upset. One of our 
planning groups says they'll have to lay people off if we don't 
do something. So I think it is very important.
    Another point I wanted to raise to everyone here, 
including, Mr. Chairman, you and Senator Bond, if I could catch 
his eye for 1 second. It has been brought to my attention that 
the Federal emergency aid part of ISTEA would be in deep 
trouble. In other words, if we have a problem with El Nino or 
any kind of flooding anywhere in the country--we've all been 
involved with it--the Administration says FHWA would not be 
able to approve and allocate available Federal aid emergency 
relief funds, ER funds, to the States for necessary repairs to 
damaged highways and bridges. So I would hope whatever we do we 
would certainly include that extension, because we're apt to 
face this December, January, and February.
    So, wrapping it up, I just want to compliment my colleagues 
from both sides for their work. I am ready to do whatever it 
takes, the hard work, to stay here till we get something done.
    Senator Warner. I thank you, Senator. I think we're having 
a good bipartisan discussion here. We're beginning to isolate 
the options, as I see them. I'll return to the Senator from New 
Jersey in a moment.
    Senator Boxer. Senator Warner, could we just hear if 
Senator Bond included that emergency relief?
    Senator Warner. Let me explain.
    Senator Boxer. OK.
    Senator Warner. In the first place, anything that moves 
with regard to highways in the next whatever days of this 
session will have technical fixes, and that will be one.
    Senator Boxer. OK.
    Senator Warner. We're really faced with the following 
situation. The leadership has the ability to put into 
legislative form technical fixes such as yours and to give 
flexibility with the unobligated balances. The sheer line here 
is whether we try to go a step forward and do something in the 
nature of a freestanding type piece of legislation, as 
advocated by the distinguished Senator from Missouri. That, to 
me, is the balance before us.
    And I would once again offer you the opportunity. What do 
you tell the 26 Governors who do not have borrowing authority? 
As you know, having been a Governor, the State next to you, the 
highway folks say, ``You've got some money next door. We 
didn't?'' How do we answer that?
    Senator Bond. Very simply, Mr. Chairman. You're going to be 
able to spend as much as you spent last year or the year before 
in the first 6 months, and if you do get an advance, if you're 
one of the States that gets an advance, it's coming out of your 
next year's allocation, whatever the formula is.
    Senator Warner. I understand that, but if you can't----
    Senator Bond. For example, Virginia has $212 million 
unobligated balance as of October 1.
    Senator Warner. That's because of very prudent and careful 
planning.
    Senator Bond. In the last 2 years, the most you've ever 
spent in the first 6 months is $183 million.
    Senator Warner. I've made my point. But in the real world 
when half get and half don't get, you've got----
    Senator Bond. Let me ask the Governor to comment on that. I 
mean, you can spend as much as you spent in the past, and you 
can even gear it up. Governor, does that make sense?
    Senator Warner. I think we've framed the question, and I'm 
not so sure Governor Patton hadn't----
    Governor Patton. I would like the opportunity to clarify, 
if I may, because the Senator's explanation of his proposal 
means that I didn't understand it as well as I thought I did 
and I'm not quite as enamored with it as I was because----
    [Laughter.]
    Governor Patton.--it takes about 3 months to spend the 
money, to obligate the money, after I know I have it, and that 
is the problem.
    Senator Bond. That's why we want to give it to you now, so 
you can have--so I hope before we go home, before November is 
over, you're going to know how much money you can spend through 
March 31.
    Governor Patton. But let's say that we do all that. What 
about in the next quarter? I can't begin to advertise 
expenditure in the next quarter. I can't begin to do that. So 
let's say that we go ahead and do that and we spend that money 
and obligate it and sign contracts for it in the first 6 
months. I'm going to be another 3 months that I don't obligate 
anything because--say you pass a law, and let's say you pass 
the law by the end of March that gives me more authority. The 
fact is I've got about 3 months that I can't do anything 
because I can't--I have to prepare, I have to advertise. I have 
to prepare all this stuff. It takes about 3 months, and that 
is, the way I now understand your proposal, what would happen 
in Kentucky.
    Senator Warner. We've got to move along. Governor, we thank 
you very much.
    Senator Baucus. If I could make just one very quick point 
or two. There are some States delay huge balances because they 
have big projects, a lot bigger than average, coming down the 
line, too, and some of those States might be in that situation.
    Senator Warner. There is a real diversity among the several 
States here.
    Thank you very much, Governor.
    Governor Patton. Thank you, Mr. Chairman.
    Senator Warner. Senator Thomas?
    Senator Thomas. I guess I was going to ask the Governor, 
before you get away, it seems to me that you all ought to be 
supportive of--we're going to end up here in March with the 
same thing again unless we do something that is an interim 
thing. I mean, you tend to sound like you want to go ahead and 
make the permanent arrangement. We'll be right back here in 
March unless we do something that gives you a real tie over the 
time, but that we're still forced to come up with a decision.
    I presume you want a long-term decision?
    Governor Patton. Yes.
    Senator Thomas. So I hope that you give some thought to 
that so that this interim one will be one that drives us to do 
something in March and that you don't insist on doing something 
that's so permanent that in March we'll be right where we are 
again and have to go through this whole damn formula business 
again.
    Governor Patton. And that's the reason the concept of the 
Senator's proposal of getting an advance against whatever it is 
that we would get under a formula is attractive. My problem is, 
as I understand it, there's that delay that will affect. I say, 
as I understand it.
    Senator Thomas. And I understand that. And we need to do 
something. But I guess all I'm saying is I hope that we're 
willing--there's going to be a little pain here. We are where 
we are, regardless of Senator Boxer's notion that we shouldn't 
talk about it. We're where we are, and it is a tough situation, 
and we need to solve it, and there may be some pain for all of 
us to do that. I hope we don't look for a totally painless 
operation so that it goes on forever and we're back right where 
we were again.
    I appreciate your being here.
    Senator Warner. Senator Thomas, those are very wise words 
of wisdom to conclude this first witness.
    Senator Thomas. Thank you, sir.
    Senator Warner. Thank you very much. Aren't you glad you 
came, Governor?
    Governor Patton. Thank you, Senators.
    Senator Warner. Now we have Mr. Basso, acting Assistant 
Secretary for budget and programs, U.S. Department of 
Transportation.
    Mr. Basso, you've been through many years of experience 
here. I had the privilege of discussing this issue at great 
length yesterday in my office.
    We'd like to also introduce Ms. Scheinberg, Associate 
Director of the General Accounting Office; and Steve Massie, 
Transportation Construction Coalition. Give us a viewpoint of 
those that are out there right on the front lines of this issue 
trying to improve our surface transportation.
    We'll lead off with you, Mr. Basso. And we'll ask each 
witness to limit their testimony to 5 minutes, and I'll ask the 
clerk to use the light for that purpose.
    Thank you very much.

  STATEMENT OF PETER J. BASSO, ACTING ASSISTANT SECRETARY FOR 
     BUDGET AND PROGRAMS, U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Basso. Thank you very much, Mr. Chairman. I will be 
brief and summarize my statement.
    Mr. Chairman and members of the committee, I do appreciate 
the opportunity to appear before you to discuss the potential 
consequences if surface transportation programs under the 
Intermodal Surface Transportation Efficiency Act are not 
reauthorized.
    I have submitted my prepared statement in great detail for 
the record, but let me hit the high points of that. I think I 
can summarize that into three major issues.
    First of all----
    Senator Warner. I want to make clear in our discussion, 
you've consulted with the Secretary of Transportation, and the 
statement which you're about to make is one that reflects the 
Secretary's views?
    Mr. Basso. It reflects the Secretary's views, Mr. Chairman, 
and the Administration's position.
    First and foremost, the question of safety. The highway 
safety programs, including the State and community highway 
safety program, the motor carrier safety assistance program, 
and the outlaw programs administered by the Traffic Safety 
Administration have, in fact, no unobligated balances and are 
running at the State levels on what little carry-over funds 
there were from fiscal year 1997.
    In the case of the motor carriers safety assistance 
program, there's approximately 3,600 State employees that are 
paid from these funds, and we've been told that, in fact, many 
of those States will run out of money during this first 2- to 
3-month period, and just a couple of examples. States have 
pointed out to us that they will have to lay off personnel or 
furlough personnel as early as the end of November. Rhode 
Island, Mr. Chairman, is one area that I picked up, and there 
are three others that have told us that, and there are probably 
many others that will follow suit.
    On the State and community highway safety program, 
important programs that provide for safety, provide for alcohol 
countermeasures, provide for seat belt measures, and other 
areas, clearly will be strapped. Again, from my own experience, 
I know personnel in those programs are often financed out of 
these funds, and States, again, have indicated to us after the 
first quarter they're going to have to make substantial 
decisions about not only cutting back in programs, but the 
personnel that administer them.
    Let me turn my attention, if you would, to the internal 
problems of the Department of Transportation. The 
administrative funds that run the Federal Highway 
Administration, and also the Bureau of Transportation 
Statistics, and the Traffic Safety Administration's grant 
programs depends on in fact will run out, and we estimate in 
early January that we will have to basically furlough or shut 
down the operations of the Federal Highway Administration, the 
BTS, and about 100 employees that administer grant programs in 
the Traffic Safety Administration.
    These are real concerns, not only because there are 
personnel, but, more to the immediate point, these are the 
people who will authorize the $12.3 billion and approve those 
programs and make payments to the States, who will not be on 
board, Mr. Chairman, to do those functions. And there are 
virtually no reasonable alternatives to that.
    The last point on the question of States which is, I think, 
paramount in this discussion, in addition to the other issues, 
clearly the Administration is for a multi-year authorization 
bill. It has become clear to the Secretary and certainly to 
myself that that's not possible at this juncture, so the 
question becomes what steps need to be taken.
    And one of the things that I can say with virtual certainty 
is that the Administration clearly supports, first and 
foremost, dealing with the safety issues and what's necessary 
to keep those programs running, the matters that are necessary 
to keep these agencies running so they can both deal with the 
questions of what the States need out of them and also, 
candidly, what the Congress needs in terms of technical 
support, which we provide substantial amounts. And, finally, to 
assure that infrastructure programs are moving forward as best 
they can, because it does mean jobs. More importantly, it is 
critical to the economy.
    Thank you, Mr. Chairman. I'd be happy to answer questions.
    Senator Warner. They're all here. All of those problems, 
which I place in what we call the technical category of fixes, 
are in this statement. Yes, sir. Thank you very much.
    Senator Warner. Ms. Scheinberg?

 STATEMENT OF PHYLLIS SCHEINBERG, ASSOCIATE DIRECTOR, GENERAL 
                       ACCOUNTING OFFICE

    Ms. Scheinberg. Thank you, Mr. Chairman and members of the 
subcommittee.
    I'd like to introduce my colleague, Yvonne Pufahl. We 
appreciate the opportunity to appear this morning to discuss 
the status of Federal surface transportation programs in the 
absence of funding from a new highway reauthorization act.
    In order to respond to your request for information, we 
compared unobligated Federal highway fund balances at the 
beginning of this fiscal year with the highway funds that 
States obligated during the first part of last fiscal year.
    Our comparison is based on Federal Highway Administration 
data on total obligations for Federal highway projects for all 
50 States. In addition, we contacted nine States to obtain 
their views on how they would operate without new Federal 
highway funds in the short term.
    Because of our focus, we did not address other important 
areas that Mr. Basso raised, such as the potential effects on 
the operations of the agencies within the U.S. Department of 
Transportation or the effects on particular programs such as 
safety. In addition, we did not look at the impact on transit.
    We found that the total unobligated balance of over $12 
billion available to the States at the beginning of this fiscal 
year exceeds the total actual obligations of over $8 billion 
that all States combined made during the first 6 months of 
fiscal year 1997. However, a comparison of individual State 
unobligated balances with their actual fiscal year 1997 
obligations reveals that some State highway programs may 
experience financial difficulties by the middle of the fiscal 
year if their obligations are compared to last year.
    The analysis indicates that, while most States have 
unobligated balances that are greater than their actual Federal 
highway obligations in the first 6 months of fiscal year 1997, 
14 States have an unobligated balance that is lower than their 
actual obligations during the 6-month period.
    Tables comparing the States' unobligated balances and their 
1997 obligation levels for all 50 States for 4 months, 5 
months, 6 months, and 7 months are attached to my written 
statement.
    It is important to note, when making these types of 
comparisons, that the level of obligations that States incurred 
in fiscal year 1997 may not correspond to their plans for 
obligating Federal highway funds in this fiscal year. Further, 
some States may be limited in their ability to use available 
unobligated balances because of the restrictions on the 
specific type of highway programs that the funds can be used 
for.
    Nonetheless, the comparisons do indicate that, while many 
States may be able to continue financing highway projects for 
some time, some States may have difficulty with even a short-
term absence of new Federal highway funds.
    There are a number of strategies that could help the States 
respond to the absence of new Federal highway funds in the 
short term. For example, the Congress could provide States with 
the flexibility to use their unobligated balances across the 
range of Federal highway programs, rather than keeping the 
balances tied to specific highway funding categories and 
demonstration projects. As a result, some States would be 
better positioned to more fully use their unobligated balance 
funds.
    The individual States could also consider a number of 
strategies, such as temporarily substituting State funds for 
Federal highway funds. The States could also begin highway 
projects by using advance construction, under which a State 
obtains capital from a variety of sources, including its own 
funds and private capital, and later receives reimbursement 
from Federal highway obligations. However, many of these 
strategies may delay other planned projects within the 
individual States.
    Furthermore, these strategies may not be feasible for some 
States or for an extended period of time. Clearly, all States 
are likely to be impacted to some degree by the absence of a 
highway reauthorization. The level of the impact will differ in 
the various States, based on their individual circumstances, 
resources, and the spending priorities. But those States with 
relatively small unobligated balances compared to their past 
obligation levels may face particularly acute problems.
    This concludes my statement. I'd be happy to answer any 
questions.
    Senator Warner. Are you sure you were able to include it 
all, irrespective of the light?
    Ms. Scheinberg. Yes.
    Senator Warner. This is exceedingly valuable testimony that 
you're contributing here.
    Ms. Scheinberg. Thank you.
    Senator Warner. Now, does your colleague have any 
supplementary comments?
    Ms. Scheinberg. Not at this time, but she can answer 
questions.
    Senator Warner. Fine.
    Mr. Massie, from down in the trenches and the front, how is 
it going to affect contracting?

    STATEMENT OF STEVE MASSIE, TRANSPORTATION CONSTRUCTION 
                           COALITION

    Mr. Massie. Mr. Chairman and fellow members of the 
subcommittee, thank you for this opportunity to appear before 
you all.
    My name is Steve Massie. I'm a highway contractor from 
Williamsburg, Virginia. Today I am testifying on behalf of the 
26 member organizations of the Transportation Construction 
Coalition, which is known as TCC. I appreciate the opportunity 
to testify before you concerning the importance of the Federal 
aid highway program. I will keep my comments brief, but I would 
like to have my entire statement and attachments made a part of 
the record.
    Senator Warner. Without objection.
    Mr. Massie. The TCC supports a multi-year reauthorization 
of the Federal surface transportation program funded at the 
highest level that can be supported by the highway trust fund. 
Because this is not possible before Congress adjourns this 
year, it is essential that the programs in ISTEA be temporarily 
extended until a new multi-year authorization can be passed.
    It is imperative that the program not be allowed to lapse 
any longer. State DOTs are largely dependent on the Federal aid 
highway program for capital funding. On average, Federal funds 
account for 44 percent of highway capital investment. I have 
heard some in Washington, D.C., claim that a short-term 
extension of the ISTEA legislation is not necessary because all 
States have unobligated balances that they can use until a 
multi-year bill is completed next year. This is not true.
    The TCC estimated earlier this year that by March 1998, 26 
States will expend all unobligated balances. By the end of 
February, 11 States, including Florida, Alabama, Arkansas, 
Missouri, New York, and Oregon are expected to run out of 
budget authority. In March, California, Connecticut, Idaho, 
Maine, Nevada, Virginia, and Wyoming will also run out of 
funds.
    It should be noted that this is the brightest scenario, and 
it assumes that the States will be granted full flexibility in 
manipulating their accounts.
    Also critical in our eyes is what the available funding can 
be used for. In Virginia, for example, we have less than $3 
million in the national highway system account, $4 million in 
the interstate maintenance account, and $50 million in the 
bridge account, totaling $57 million in usable highway 
construction funds.
    Due to Virginia's use of advanced construction funding, my 
State will not have another complete letting with federally 
funded projects until a reauthorization bill or extension is 
enacted, thereby potentially crippling our State's construction 
industry.
    In Virginia, the failure to temporarily extend ISTEA will 
impact 281 projects valued at $255.7 million in the first two 
quarters of fiscal year 1998.
    DOT has estimated that for every $1 billion invested in 
highway construction, 42,100 jobs are created. So, using 
AASHTO's survey estimates, Congress is jeopardizing over 
300,000 jobs in the first 3 months of fiscal year 1998.
    If no bill is enacted by July 1 of 1998, the total amount 
of projects delayed is estimated at $11 billion, which would 
impact over 470,000 jobs.
    If there is no bill through the month of January, we will 
lose the entire spring construction season. In the likely event 
there is no bill until June 1998, we will lose the entire 
spring and summer construction seasons. This would be 
absolutely devastating to the construction industry. At the 
very least, it would result in massive layoffs, and, in worst-
case scenarios, many small family owned companies would go out 
of business.
    Without an extension of the Federal aid highway program, I 
will begin laying off my employees in January 1998. I will not 
be able to rehire them until a bill is enacted, and I won't use 
them again until 45 or 60 days after the bill is signed.
    A delay in reauthorizing the Federal aid highway program 
will also put lives at risk. According to FHWA, poor road 
design and conditions were factors in 30 percent of the 42,000 
fatalities on the Nation's highways last year. The temporary 
extension of ISTEA will enable the States to continue to 
improve our highway system and, in turn, will reduce fatalities 
on our roadways.
    Due to this winter's looming budget battle and several 
controversial amendments to the reauthorization bill, it is 
unlikely that a multi-year reauthorization bill will be passed 
until the second quarter of fiscal year 1998. Since 26 States 
will be out of funding by March, it is imperative that Congress 
pass a bill that provides funding for the highway program until 
a new multi-year bill is enacted.
    Hundreds of thousands of American jobs and the safety of 
our Nation's roads are in Congress' hands. This program is too 
important to our Nation's productivity and our economic well-
being to leave it unfunded for the coming months. Please do not 
go home without passing an extension to the Federal highway 
program.
    Thank you, again, for the opportunity, Senator. I would be 
happy to answer any questions you have.
    Senator Warner. I'm going to first ask of all witnesses to 
take a look at the Bond proposal and supplement your testimony 
today with regard to your comments on the Bond proposal. That 
seems to be one that has, on both side of the aisle, engendered 
a good deal of interest here, and certainly the Chair is quite 
interested in it, but I have so many unanswered questions that 
I'm not ready to take a position at the moment.
    You've assured the Chair that this statement by the 
Administration covers all the technical fixes. I categorize 
them as ``technical'' because I'm confident the joint 
leadership of the Senate will see that those can be put in 
place legislatively.
    My great concern is to whether or not any freestanding 
proposal of the magnitude of $1 to $2 billion, as espoused by 
Mr. Bond, can get through. My immediate concern is what do I 
say to those Governors of 26 States, assuming that the 24 
calculation is about the number eligible under the Bond 
proposal, how they would react to this and transmit that 
reaction back to their Senators. We'll have to view this.
    Do you have any initial reaction to that proposal, Mr. 
Basso?
    Mr. Basso. Mr. Chairman, let me say I haven't had the 
opportunity to review the proposal, but let me make this 
observation.
    Senator Warner. And I hope that you can do it in a very 
short turn-around time.
    Mr. Basso. I will do that, sir. I'll do it as soon as we 
leave here.
    But let me mention one thing that I think I should point 
out to the committee, on the question of flexibility, I was 
doing a little calculation. There is, as we mentioned, about 
$12 billion out there to be obligated. Of that, in excess of $9 
billion is that which falls in the obligation limitation, about 
$2 billion in demonstration projects and a little bit in 
minimum allocations, $600 million.
    The point I'd like to make very briefly, Mr. Chairman, is 
that there is substantial flexibility in a number of those 
categories. For example, the largest----
    Senator Warner. Existing under law today?
    Mr. Basso. Yes, sir. The most substantial component of the 
unobligated balances subject to the limitation is the surface 
transportation program, as there are much smaller balances in 
interstate maintenance, in the national highway system program.
    There's about a billion in the area of congestion 
mitigation air quality. There's close to a billion in other 
transportation enhancement areas which are, in fact, 
restricted. And the Administration feels, I think, very 
strongly about the environmental programs and preserving them.
    So my point briefly, Mr. Chairman, is that there is 
considerable flexibility in parts of the money that is there 
now.
    Senator Warner. Yes, but I want to make sure. Does the 
Administration take the position that there is in place in law 
today sufficient flexibility regarding the $12 billion, and 
therefore you would not support Congress giving additional 
flexibility to the several States?
    Mr. Basso. Mr. Chairman, I don't think I could go that far. 
I think I can say that we would like to examine, obviously, the 
Bond proposal or any other proposal this committee has. But I 
did want to point out certainly in part----
    Senator Warner. What you're pointing out is, in your 
professional judgment, there's a good deal of flexibility, but 
that you decline at this time to say whether or not the 
Administration would oppose Congress giving additional 
flexibility with regard to the unobligated balance?
    Mr. Basso. That's correct, Mr. Chairman. I'll need to 
consult.
    Senator Warner. Fine. Thank you.
    Ms. Scheinberg, what's your view of the Bond proposal? And, 
specifically, my concern is to how the Governors of 26 States 
would react hearing that they are not going to be a beneficiary 
because they have presumably some sufficient funds.
    Ms. Scheinberg. Senator, I'd like to take some time and get 
back to you after the hearing on that, but I would just say, in 
general, that the Bond proposal provides more flexibility and--
--
    Senator Warner. Wait a minute. Let's isolate. More 
flexibility with regard to the $12 billion?
    Ms. Scheinberg. Well, also, even beyond my understanding of 
it, unless I'm missing it, is that it gives the States an 
option to use more than the $12 billion by getting the advance.
    Senator Warner. That's correct.
    Ms. Scheinberg. And so the States would have even more 
flexibility than they would certainly currently and if the 
Congress were to give the States the flexibility to spend their 
$12 billion across programs.
    Senator Warner. Yes.
    Ms. Scheinberg. And our view is that, to get through the 
short-term period without reauthorization, as much flexibility 
as possible would be best.
    Senator Warner. Yes?
    Ms. Pufahl. If I may interject, the flexibility to use the 
unobligated balances, a number of States told us that there is 
a problem now because of the way those balances are aligned. 
Missouri was one of the States that we talked to, and they said 
that they would be able to use less than a third of their 
unobligated balances because of the categorization of the 
funds.
    We also looked at where these unobligated balances lie as 
far as program categories. For the national highway system, it 
is less than 3 percent of the $12.1 billion. Mr. Basso is right 
in saying that there is a certain degree of flexibility, such 
as with STP funds, but even within that broad category there 
are set-asides such as enhancements.
    If you look at the enhancements set-aside, which is for 
activities such as bikeways and pedestrian walkways and 
landscaping, there's about $1 billion. And you look at the NHS, 
and it's less than half that amount.
    So that is obviously why States are complaining and asking 
for more flexibility.
    Even if you gave them flexibility, though, it would be 
limited if you didn't advance some States money. When we just 
compared what they had obligated in the past to the 6-months in 
1997, what we found was that 14 States would come up with a 
shortfall. But, if I understand his proposal correctly, then by 
providing for an advance you'd be loaning money to those 14 
States.
    Also, we were concerned that perhaps fiscal year 1997 would 
not be typical, so if you looked at what is the greater of 
fiscal year 1996 or 1997, you circumvent that problem.
    Thank you.
    Senator Warner. Mr. Massie, I presume that the bond 
proposal would go a long way to meet the concerns that you very 
clearly expressed on behalf of the professionals that have to 
do the work.
    Mr. Massie. It would, and the flexibility is the biggest 
deal in there. To allow the States to manipulate the accounts, 
that would be absolutely critical. Just like you just finished 
saying, the unobligated funds in the CMAQ and the enhancements 
are sitting there. States cannot get to them. And I guess, 
realizing that those funds are so large, maybe that would put 
into question the idea of really having to repay them even.
    Senator Warner. Thank you.
    Mr. Chafee?
    Senator Chafee. Thank you, Mr. Chairman.
    Ms. Scheinberg, I'd like to refer to page 3 of the 
testimony that you handed out. It seems to me that what you're 
saying there--and, by the way, I think your testimony is 
excellent, and I want to commend everybody who has testified. 
It has been very helpful here.
    What you say is in the middle of page 3 in your testimony, 
some States may be limited in their ability to use available 
unobligated balances because of restrictions. In other words, 
you're addressing that. And then you get on to say, ``The 
comparisons indicate, while many States may be able to continue 
financing, some States may have difficulty dealing even with 
short-term.''
    So you address two problems. First, you address the 
flexibility problem in the bottom of the page. ``Congress could 
provide the States with flexibility to use their unobligated 
balances across the range of Federal highway programs--'' 
exactly what Senator Bond is suggesting in his point two, 
flexibility to States on use of their unobligated balances. 
That's the first thing.
    I think it's clear that after reauthorization Congress 
could reimburse the appropriate funded categories. In other 
words, presumably there would be a provision in there you can't 
strip CMAQ and then use it all on highways. You can under the 
flexibility, but then you've got to repay the CMAQ account, and 
that's fair enough. I'm for that.
    And then you get into--at the top of that page you talk 
about those who have unobligated balances lower than their 
actual obligations during the same period. In other words, you 
take 1996, and that's where you come up with your 14 States. 
And I don't know where people are getting these 26 States, but 
I--does that figure arise from the amount, if you take not 1997 
but you take 1996 and try to have them to have as much as they 
had in either of those years?
    Ms. Scheinberg. No. We looked at 1997, the first 6 months 
of 1997, but the 14 States assumes that they would have 
flexibility we assume that Congress would provide the States.
    Senator Chafee. And even with that flexibility they don't 
still have enough to compare with what they did in the first 6 
months of 1997. Is that what you're saying?
    Ms. Scheinberg. Yes.
    Senator Chafee. OK. And Senator Bond deals with that. He 
has a hold harmless provision, which allows States to obligate 
up to either the first 6 months of its obligation in fiscal 
year 1996 or 1997, whichever is greater. So I see a lot of 
merit in the Bond proposal. Obviously, it has got to pass both 
branches, clearly, but it seems to me we take care--that 
Senator Bond has taken care of the problems that could arise. 
Do you see some gap he's left?
    Now, let's assume that we've taken care of what Mr. Basso 
addressed, namely, the safety and the way of paying the 
Department of Transportation employees and so forth--which, by 
the way, Mr. Basso, I think each quarter of the Department of 
Transportation employees is about $70 million. Am I right?
    Mr. Basso. Yes, sir.
    Senator Chafee. So, therefore, it would be $140 million to 
carry them from October 1 through the end of March?
    Mr. Basso. Yes, sir.
    Senator Chafee. The first two quarters.
    What do you say to all of this, Ms. Scheinberg?
    Ms. Scheinberg. Well, we would need to do the analysis 
against the 1996, the first 6 months actual obligations against 
1996, to see how that compared with the 14 States which showed 
up comparing to the 1997. So I'd like to do some analysis and 
get back to you, Senator.
    Senator Chafee. Because you just used 1997?
    Ms. Scheinberg. Exactly.
    Senator Chafee. Yes. OK. There's a vote on. I can't tell. 
Are they in the second part?
    Senator Lautenberg. They're down to about 4 minutes.
    Senator Chafee. All right. Do you want to ask some 
questions now or do you want to go vote?
    Senator Lautenberg. I don't want to speak that fast.
    Senator Chafee. Take all the time you want.
    Senator Lautenberg. I have some rather complicated 
questions.
    Senator Chafee. I would suggest, as John Warner suggested, 
that we take a little recess and come back.
    [Recess.]
    Senator Warner. The hearing will resume.
    Chairman Chafee, you were questioning at the time we 
adjourned for the vote. Had you completed?
    Senator Chafee. I had, and Senator Lautenberg was next up 
at bat.
    Senator Warner. He is to return.
    Mr. Baucus, you go ahead.
    Senator Baucus. Thank you, Mr. Chairman.
    I'd like to ask Mr. Massie if it isn't true--actually, I'll 
get back to you in a minute. Ms. Scheinberg, the chairman asked 
whether there are any holes or any problems with the Bond 
proposal, do you see any at least questions that might be 
addressed, and we were discussing your statement, and in some 
respect isn't the answer to that question the middle paragraph 
of the statement, beginning with the first sentence, ``It is 
important to note, when making these types of comparisons--'' 
that is, comparing 1997 and 1996 and 1998, etc.--``that the 
rates at which States obligate funds in fiscal year 1997 may 
not correspondence to their plans for obligating Federal 
highway funds in fiscal year 1998.''
    Ms. Scheinberg. Right. That was a big assumption that we 
had to make, that 1997 was a typical year or typical of this 
year, in fact. I mean, it seems like the Bond proposal is 
trying to even that out a little bit by using 1996. In the best 
of all worlds, you know, you might look at a longer period of 
time and get the average over many years.
    But I think from the State's perspective every year is a 
little different because of weather, because of projects, the 
mix of the program.
    This is the best--in the sense of fortune telling, this is 
the best that we can do, but you're absolutely right that every 
year is different and it's very hard to predict.
    Senator Baucus. So some States have higher unobligated 
balances now because they have big projects in mind; is that 
right?
    Ms. Scheinberg. That's possible. Yes.
    Senator Baucus. Is it also true that the Bond proposal tend 
to favor the donor States because the minimum allocation comes 
off the top and is a separate limitation compared with the 
limitation that otherwise would apply to obligated balances?
    Senator Warner. Feel free to take that important question 
for the record before you launch out on it, because that's a 
key, key question.
    Ms. Scheinberg. Yes. Maybe we'll take that one for the 
record.
    Senator Baucus. That's fine.
    Ms. Scheinberg. I'd like to think about it a little.
    Senator Baucus. Yes.
    Senator Warner. Can we have the question again?
    Senator Baucus. Yes. The basic question is: without getting 
into the degree as to how much, doesn't the Bond proposal tend 
to favor donor States that receive a minimum allocation amount, 
that that limitation, off the top of the program and also 
separately from the limitation that States receive, generally 
receive on their obligated authority.
    That is, the way the program is written, minimum allocation 
is a separate limitation from the regular limitation, and 
that's----
    Senator Warner. It's a key question.
    Senator Baucus. It's my understanding that, without getting 
to the degree to which it tends to favor those States, there 
would be that tendency.
    Ms. Scheinberg. We can provide more details for the record.
    What we did look at was where the unobligated balance is 
coming from, and, of the $12.1 billion, $652 million is coming 
from minimum allocation, and minimum allocation, as you know, 
can be used for a wide range of programs, whether it's the NHS 
or STP or whatever.
    Senator Baucus. But that's separate. That's a separate 
account, minimum allocation.
    Ms. Scheinberg. That is correct, but there's a lot of 
flexibility in there for using the funds.
    Senator Baucus. OK. It's my understanding that when ISTEA 
is under-funded, obligated balances grow, and under-funding 
affects non-donor States, but it does not to the same degree 
affect donor States. That is when ISTEA is under-funded. Is 
that correct?
    Ms. Scheinberg. You're talking about obligation 
limitations?
    Senator Baucus. Yes.
    Ms. Pufahl. There would be a difference, but there is a 
fairly large chunk of the unobligated balance that's just 
coming from demonstration projects, nearly $2 billion, and 
that's exempt from any obligation limits.
    Senator Baucus. But still, the point I make is true.
    Ms. Pufahl. Still, yes.
    Senator Baucus. It's true. Mr. Massie, one of the key 
fundamental questions we're facing here is how far to go in a 
short-term bill. We want to go far enough to maintain a 
continued continuity in the program. We don't want to go too 
far to take pressure off of a 6-year bill. And I'm just curious 
of your general feeling, representing contractors. Would you 
advise us to err more going to short-term to put more pressure 
on 6-year bill, or would you urge us to go longer, which tends 
to put less immediate pressure on passing the 6-year bill.
    Mr. Massie. As a contractor, I think you should err on 
having too long of an extension. The continuity of the program 
is absolutely critical. When you get it down to the contractor 
level, the majority of the contractors that build these 
highways are small businesses. We do long-term planning. We do 
our financing long-term. And the interruption in the program 
would kill some of the companies.
    The way we do our business, we all operate in a season. We 
have a working season. In Virginia we generally lose January 
and February, but we can plan our work around that and do some 
things in the ground for those 2 months. We're not as fortunate 
as Florida, who work year-round, but we're definitely better 
off than your State.
    And so we plan around everything. We plan our work around 
Mother Nature. It is very difficult to plan our work around 
Congress.
    [Laughter.]
    Senator Baucus. It's difficult for us to plan our work 
around Congress.
    Ms. Scheinberg, as you understand the Bond proposal, 
roughly how long will that allow States to maintain the 
continuity without turning and twisting and contorting into all 
sorts of different gyrations?
    Ms. Scheinberg. My understanding is that it is to allow the 
States to feel comfortable for the 6-months to have a full 6-
month program. Of course, what happens at the end of that 6 
months is an unknown, and how they project at the end of that 
6-month period for the future could be an issue. But it seems 
like it would give the States a full 6-month program.
    Senator Baucus. And it tends to avoid the formula fight.
    Ms. Scheinberg. Exactly.
    Senator Baucus. Which I think is very helpful and very 
important.
    Thank you, Mr. Chairman.
    Senator Warner. I've just been advised by Senator Bond's 
senior staff person that the bill will be completed this 
afternoon and available for some distribution. That will help 
various expert witnesses, like yourself, to give your 
independent professional judgment to Members of Congress.
    Now, our distinguished colleague from New Jersey.
    Senator Lautenberg. Thank you kindly, Mr. Chairman. Once 
again, I appreciate the opportunity to participate.
    I wonder whether anybody here, based on what we've heard 
about Senator Bond's proposal, can tell us whether--where would 
the funds come from that--the authorization for the funds to 
obligate them for the States that need financing in less than 6 
months? Does it have to be drawn from other accounts? We would 
have to be talking about a specific sum, wouldn't we, to carry 
the obligation authority for a 6-month period?
    Ms. Pufahl. I would assume that the advance that he's 
talking about would just be tapped through the highway trust 
fund.
    Senator Lautenberg. Well----
    Senator Warner. In a sense it would be new money under from 
that fund.
    Senator Lautenberg. Well, I mean, that does have some 
effects. I mean, it's not without some consequence. That money 
has got to be appropriated and would have to be----
    Senator Baucus. It has all been appropriated.
    Senator Warner. That's correct.
    Senator Baucus. Per year. That's right. There's no 
appropriation necessary.
    Senator Warner. But authorization would be.
    Senator Baucus. Right.
    Senator Lautenberg. OK. Now, the various States would have 
different dates at which time they would need further funding, 
and so we'd have to have an open-ended thing that would say 
that there would have to be some understanding of what could be 
drawn down from the fund.
    Senator Warner. You mean in terms of amount?
    Senator Lautenberg. Right. Because those States that would 
be--we have an example or two of States that are very short-
term, have very little in their unobligated balances. They 
technically would be getting an advantage that other States do 
not have.
    If State ``A'' had sufficient unobligated balances to carry 
them for 4 or 5 months, State ``B'' has only enough to carry 
them a month into the year, then State ``B'' would have gotten, 
technically, a bonus because they would have gone beyond their 
original formula calculations. Is that correct?
    Ms. Pufahl. I agree with your observation about technically 
it seems like they would be getting an advantage, but what they 
would essentially be doing is borrowing on their future their 
own money that would be forthcoming to them.
    In some respects I see all States benefiting because it is 
giving them flexibility to more fully use the unobligated 
balances.
    Senator Lautenberg. Yes. And if we fail to pass a bill 
before the fiscal year has expired, we would be then proceeding 
under the allocation of funds that was put through the 
Appropriations Committee, and that might or might not be 
enough, depending on what we do with the formula, that there 
would be certainly questions for each State.
    Would you think that an extension would have to be reviewed 
in the context of changed formulas or operating at the same 
level that we currently do to see where we'd be?
    I mean, if we took a 6-month extension--and I don't want to 
drag any of you into this. Mr. Massie, you might be drawn in, 
but you don't work for the same company that we all work for. 
I'm not going to ask you whether you prefer old formula or new 
formula. I don't think it's fair to you.
    But I think there is some information, as we heard from the 
chairman, that Senator Bond will be delivering a more-complete 
explanation. We'll take a look then. Meanwhile, I want to ask 
Mr. Basso a question.
    You testified States will be able to use their full 
obligation authority; that under a more-flexible program that 
$12 billion roughly would be available for highways; is that 
correct?
    Mr. Basso. That's correct.
    Senator Lautenberg. OK. What happens with transit, Mr. 
Basso? Is there any unobligated authority for transit? It has 
been wiped out, as we understand it, by previous legislation, 
right?
    Mr. Basso. That's correct, Senator. Transit, unlike 
highways, really only has carry-over unobligated balances that 
are already committed to the States. It's about $1.4 billion. 
All of the excess, a similar situation to what we would have in 
highways, was wiped out in the rescissions.
    Senator Lautenberg. So we don't have the same opportunity 
to extend any funding there?
    Mr. Basso. I would say this: we don't have the same ability 
to use flexibility.
    Senator Lautenberg. One of the things that you mentioned 
that I think needs a little focus is the shut-down of some of 
the facility that would be necessary to take care of the 
implementation and enforcement of programs, etc.
    Mr. Basso. Yes, sir.
    Senator Lautenberg. That's a pretty serious situation, and 
we'd have to guard against any of that. We tried shutting down 
parts of government once, and we didn't like it. The public 
didn't like it, either. So what would we do? How would we carry 
on if we didn't provide the funding?
    Mr. Basso. Senator, if we don't provide the funding, 
there's absolutely no choices left to us to carry on. 
Basically, the personnel who deal with these programs, both the 
Federal aid authorizations and all that goes with that and the 
safety programs that I mentioned, would have to be laid off and 
those programs would have to be shut down. It's a matter of 
law. Anything else would be a violation of the Anti-Deficiency 
Act.
    Senator Lautenberg. If we----
    Senator Warner. If I could just intervene, I'm sure that we 
have the assurance of Republican leaders and Democrat leaders 
that these technical things will be cared for. I would hate to 
have this hearing have a word out of it that people are going 
to get laid off and fired. I just feel we have that 
responsibility. It's important to bring it up and I want to 
speak to that. Certainly our leader has assured me that somehow 
this can be fixed.
    Senator Lautenberg. I think that's an important point, Mr. 
Chairman, but I wanted to make sure that, even though Mr. Basso 
said it earlier, I want to make sure that it's clearly 
understood the consequences are serious.
    Mr. Basso, how might we carry out the basic tenets of 
ISTEA, because if there is money shifted around to just provide 
for highway construction--and I'm for continuing that, Mr. 
Massie. Let me at least make sure that record is clear. How do 
we know that programs for the environment, interstate 
maintenance, MPOs--how do we know that those programs are going 
to be carried on?
    Mr. Basso. Senator, I would say that I think the question 
really resides on where the balances that are there are applied 
and whether flexibilities are applied to them. To be more 
specific, congestion mitigation air quality program has about a 
billion dollars in it. It's about one-twelfth of the total $12 
billion that we're talking about.
    Senator Lautenberg. Right. But if it could be used 
elsewhere, this State may want to continue using the funds for 
congestion mitigation, whereas this State might not want to use 
it.
    Mr. Basso. That's correct.
    Senator Lautenberg. That's a problem.
    Mr. Basso. The Administration clearly is concerned about 
anything that would degrade the environmental programs.
    Senator Lautenberg. I just want to ask Mr. Massie a 
question. You recognize that there is some tension here among 
those who want to continue the formula as it is or have their 
concerns about a change in mid-stream here, and it is a change 
in mid-stream, and my State is one of those affected by it. And 
I'm aware enough that changes may be made, but a sudden change 
like that which is proposed would be quite unsatisfactory in 
our case. Maybe if it was in the transition phase over the next 
6 years so that we wouldn't just drop off the cliff, we might 
feel differently about it.
    But, in your opinion, Mr. Massie, what is the fastest, 
easiest way to keep the program going? I mean, do you have a 
concern about whether or not we extend on present formula or 
new formula as an organization?
    Mr. Massie. In the short time that's left, if anybody 
starts talking about formula it's dead. And that's just----
    Senator Lautenberg. Yes.
    Mr. Massie. You cut it to the chase, sir. If anybody talks 
about it, it's over. It will not happen. Everybody will go 
home. We will lay people off.
    And another thing, you know, when we talk about the 
construction industry laying people off, we already have a 
shortage of people in the industry, and if we lay people off 
and we do not hire them back in the spring, they will go find 
work elsewhere.
    Senator Lautenberg. Absolutely.
    Mr. Massie. Then we are in the process of training all over 
again, finding a new work force and training them and bringing 
them up to speed. That hasn't been mentioned here at all, and 
that is a huge, huge problem.
    And if you're going to have an extension of the program, 
the simplest way to do it, in the eyes of a dirt mover, is you 
just take a current program and you extend it for 6 months. 
We've lived with it for 6 years. We will live with it for 6 
years and 6 months. We'll give you all the opportunity to work 
through all the nuances of a new program.
    Senator Lautenberg. That's a frank response, and I'm frank, 
and I would say that it would be my earnest desire to work with 
those who advocate change to try and get it done in that 6-
month period.
    I think, if the 6-month extension is done in such a rigid 
manner that there is not automatic extensions, then perhaps 
that's the kind of size pebble we need in the shoe to get this 
thing done.
    Thank you very much. Thanks, Mr. Chairman.
    Mr. Massie. Thank you.
    Senator Warner. Unless there are further questions----
    Senator Chafee. Let me just ask a quick question here. I'm 
just not sure I see all these problems. And I'm going back to 
the Bond proposal.
    First, the flexibility on the unobligated balances. Mr. 
Basso, you indicated some concern that the CMAQ fund might be 
raided, and you're concerned about the environment, which I 
share, but the arrangements would be that when this flexibility 
went into effect that they have to pay it back. So the CMAQ 
might have, in one State, $50 million account in it. They want 
to use that for highways. When they get their money, they're 
going to get money next year, that would be repaid. So I set 
that worry aside.
    Second, when you compare what the State spent or obligated 
in the first 6 months of 1996 and the first 6 months of 1997 
and you take the highest amount, and if they don't have that 
money, then there would be an account under the Secretary that 
they could borrow from. Are we on the same wavelength, Ms. 
Scheinberg?
    Ms. Scheinberg. They would get an advance against----
    Senator Chafee. That's right. We shouldn't use the term 
``borrow.'' They'd get an advance because the money is 
obviously going to be there when we finish this program. And so 
I think that's the so-called ``hold harmless'' provision which 
Senator Bond talks about in his provision.
    As for the safety in the Department of Transportation and 
the transit programs, just go ahead and give them whatever they 
spent in the first 6 months, what it cost them for the first 6 
months. You indicated $70 million per quarter for the DOT 
payroll, so that's $140 million that they would get that would 
be out there to be approved for the payment of the employees.
    I'm not sure I see all the problems here. Are you and I in 
sync here, Ms. Scheinberg?
    Ms. Scheinberg. Yes, Senator. I think----
    Senator Chafee. Is there something I'm missing?
    Ms. Scheinberg. My quick analysis of this, based on what 
we've talked about this morning, is that the Bond compromise 
seems, just from what we've said, to address the problems that 
I identified in my statement. It talks about flexibility, it 
provides flexibility. The advance would help the States that 
have a shortfall or potentially have a shortfall in the next 6 
months. And if last year was not a good comparison, it gives 
them the comparison of the 1996 alternative.
    So I think the issues that we have raised seem to be 
addressed from as much as we know right now.
    Senator Chafee. And when he talks, his first point, a real 
6-month extension to March 31, I take it that, as of that date, 
you can't do any more drawing down getting advances, and that's 
where the payments that have gone to the Department of 
Transportation for safety, truck inspections, and all that, it 
ends then.
    And therefore the virtue of this proposal, which obviously 
I think there's a lot of merit to, is that when we--we're 
coming back here, I believe, on January 26th. The leader has 
said this is the first program on the Floor. We go on the 
Floor. We've got a little time in January. We've certainly got 
all of February and we've got all of March to not only pass it 
but to go to conference and get that ironed out.
    Senator Warner. That's assuming the House----
    Senator Chafee. All right. But if the House doesn't want to 
act, that's always a problem. We face that no matter what we 
do. But I can't believe that the House is going to say, when 
the Senate passes a bill and it's ready to go to conference, 
the House is going to say, ``No, we don't want the go to 
conference. We'll let Mr. Massie and his people suffer through 
without contracts and without jobs.'' I can't believe the House 
is going to do that.
    Senator Warner. I share your views.
    I think we've pretty well exhausted the witnesses on this, 
and what I would urge each of you to do--and we will facilitate 
transmitting to you a copy--is to reply to the chairman's 
request that your comments are forthcoming as quickly as 
possible.
    I think you have, in a very splendid way, given us your 
strong professional opinions, and I believe it provides us with 
enough factual guidance to determine the policy considerations 
that have to be done to put in place something to avoid the 
really catastrophic consequences as outlined by Mr. Massie. Of 
course, that only relates to the contractors, and there are 
many other facets of the transportation industry that will 
suffer irreparable damage, not the least of which is the 
people, themselves, of this country who look to the Congress to 
accept the responsibility to keep in place an adequate funding 
stream to provide for the modernization of our transportation 
system.
    Speaking for myself, and I'm sure my good friend and 
lifelong friend the chairman here, we're going to do our very 
best, and we have the support of the Republican leaders to do 
something on this.
    Thank you.
    [Whereupon, at 12:07 p.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
   Statement of Hon. Paul E. Patton, Governor of the Commonwealth of 
       Kentucky, on behalf of the National Governors' Association
    Good morning. I am Paul Patton, Governor of Kentucky, and I am here 
today to present the views of the National Governors' Association on 
the critical issue of transportation funding. With me is Raymond 
Scheppach, Executive Director of the National Governors' Association. I 
would like to thank the chairman, the ranking member, and the other 
Senators of this subcommittee for inviting me to testify on the 
potential impact of the current lapse in the authorization of the 
Federal highway, transit and highway safety programs. I would 
especially like to thank the many Senators who have worked hard to 
increase Federal transportation investment. Governors stand ready to 
work with you next year to ensure that transportation is fully funded.
Transportation is Critical to the Economy
    Before I describe the impact on States of a continued lapse in 
highway, transit, and highway safety programs, I would like to take a 
moment to outline the Governors' position on transportation funding. 
Transportation is critical to the productivity of the U.S. economy and 
the competitiveness of our businesses. Governors have heard a clear, 
consistent message from all types of businesses--large and small, 
manufacturers, retailers, and farmers. These businesses are investing 
billions of dollars in just-in-time production and distribution to 
speed their products to market. They fully understand that time is 
money. They can, through good management, control the cost of capital 
and the productivity of labor.
    The public transportation systems are just as much a part of the 
system of production as labor and capital, yet businesses are powerless 
to remove congestion caused by a transportation facility whose use has 
exceeded its capacity. Businesses and individual citizens are paying 
the user fees necessary to build a much improved system but the system 
is not being improved. In fact, we are falling behind.
    These businesses and individuals are relying on us in government to 
make sure the roads, ports, and airports are in good condition and free 
of congestion. We cannot let them down, not this year, not next year, 
and not in the years ahead. We must fully fund our transportation 
programs. Today's levels of transportation funding are inadequate to 
maintain current conditions. There is an $18 billion annual gap between 
current transportation spending by all levels of government and that 
required simply to maintain the current performance of our nation's 
highways, bridges and public transit systems.
    As a percentage of Gross Domestic Product (GDP), Federal 
transportation investment has declined from nearly 0.5 percent in 1977 
to less than 0.3 percent today. This decline would continue through 
2002 under the spending assumptions in the 1998 congressional budget 
resolution. At the same time that Federal investment is declining, 
revenues from the Federal gas tax have been rising. These dedicated 
transportation revenues will grow rapidly over the next several years, 
and are sufficient to support significant increases in Federal 
transportation spending. If current revenue and spending projections 
hold true, the unspent balance in the Highway Trust Fund, which today 
stands at $24 billion, would increase to $90 billion by 2003.
    Disinvesting in our national transportation system while the user-
tax revenues are dramatically increasing will undermine the moral and 
legal commitment on which these taxes are based.
    If we do not increase our Federal investment in transportation the 
result will be deteriorating roads, increased congestion, lower 
economic productivity and profitability of U.S. firms, loss of 
employment for U.S. workers, and ultimately lower tax revenues to 
Federal, State, and local governments.
    Congress must pass a short-term funding mechanism prior to 
adjournment The importance of transportation to our growing economy is 
the reason the National Governors' Association has made it a priority 
to urge the Congress to significantly increase the Federal investment 
in our nation's transportation infrastructure. To that end, Governors 
would like Congress to pass a multi-year highway, transit and highway 
safety authorization bill where contract authority is set equal to the 
revenues coming into the trust fund.
    It does not appear that Congress has sufficient time remaining in 
this legislative session to accomplish this goal. Therefore, Governors 
respectfully request that Congress pass short-term legislation which 
continues funding for highway, transit and safety programs. If the 
current lapse in authorization continues into 1998 the impacts on State 
transportation programs could be severe. This is a serious concern for 
Governors from all regions of the country, regardless of party 
affiliation.
    In the past week many Governors have written to Congress in support 
of short term funding for transportation programs. This morning NGA 
delivered the following letter, signed by 39 of my fellow Governors, to 
Senate Majority Leader Trent Lott and Minority Leader Thomas Daschle. I 
would like to share copies of the letter with members of this 
subcommittee. The text of the letter reads, in its entirety: ``It is 
imperative for the Senate to consider and pass short-term legislation 
providing funding for highway, transit, and safety programs and to 
complete a conference on that legislation with the House of 
Representatives before adjourning for the year. Such legislation will 
minimize the interruption in funding to State and local governments, 
and would avoid the disastrous effects that a several-month lapse in 
authorization would have on many States' transportation programs.''
The Potential Impact of a Continued Lapse in Transportation Funding
    Let me now turn to the impact on State transportation programs of a 
continued lapse in authorization of these Federal programs. The impact 
of any lapse will vary among States and will greatly depend on the 
length of time without a reauthorization. While a few larger States 
would not be significantly affected by a delay in authorization well 
into 1998, such an extended lapse would have a severe impact on most 
States' transportation programs, resulting in:
      Delays in thousands of highway and transit construction 
projects valued in the billions of dollars;
      Increased project costs as delayed projects are extended 
into two construction seasons;
      Layoffs among truck and bus safety inspectors, and 
reduced enforcement of impaired driving laws; and
      Potential increased accident losses.
    The American Association of State Highway and Transportation 
Officials (AASHTO) conducted a recent survey to determine the impact on 
State transportation programs of a lapse in authorization of the 
Federal highway program. AASHTO found that in the first quarter of the 
Federal fiscal year nearly 2,000 projects nationwide, valued at over $3 
billion, could be affected. If the lapse continued through the second 
quarter of the year an additional 2,926 projects, valued at $4.4 
billion could be affected. If the lapse in authorization continued 
through the third quarter of the fiscal year an additional 2,729 
projects valued at $3.8 billion could be affected. Finally, if the 
lapse continued for the entire fiscal year yet another 2,130 projects 
valued at over $4 billion could be affected.
    Based on the U.S. Department of Transportation's estimate that $1 
billion of highway spending supports 42,000 jobs, more than 126,000 
jobs could be lost during the first quarter of the year alone. More job 
losses would result from a lapse beyond December 31 of this year.
Highway and Truck Safety
    Highway and truck safety programs have already been affected by the 
current lapse in authorization, as States have begun to curtail truck 
and bus inspections and impaired driving enforcement. Truck and bus 
safety and hazardous material inspection programs will come to a 
complete halt in most States by the end of this calendar year. A lapse 
in authorization through the end of March 1998 would result in 500,000 
fewer roadside truck inspections nationwide. If highway safety programs 
are not reauthorized soon States will begin to lay off personnel, and 
drunk driving and speed enforcement will be jeopardized during a 
critical time of the year, Thanksgiving to New Year's Eve.
    Individual examples of the impact of a lapse on State safety 
programs include:
      In my own State of Kentucky, all new highway safety 
projects are currently on hold. There is no funding for overtime 
enforcement of impaired driving, occupant protection, speed and other 
safety laws.
      The Nevada State Highway Safety Office has halted all 
highway safety programs as a result of the funding lapse, and will have 
to close down in early 1998 if no additional funds are provided.
      In Florida forty highway safety contractors have not been 
paid, none of the planned projects for fiscal 1998 are funded, and 
staffs of several highway safety contractors have been working the past 
month without pay.
Public Transit
    Nearly $4.3 billion of Federal transit funding for fiscal 1998 will 
be unavailable to transit agencies unless an authorization is enacted. 
A continued lapse in authorization would force transit agencies to 
defer new construction, the purchase of new equipment, and maintenance 
of existing equipment, and most transit agencies would not be able to 
fund new capital projects. Rural and smaller transit agencies will be 
especially hard hit, as they may not have adequate funding to operate 
their systems beyond December of this year, forcing reductions in 
service.
      In Kentucky, our rural transit agencies are already 
cutting back service. Particularly vulnerable are the new welfare-to-
work services provided by our rural transit operators.
      New York City is already experiencing a detrimental 
impact on its Elderly and Persons with Disabilities transit program.
      In St. Louis, Missouri, funding for the expansion of that 
city's light rail system will be jeopardized by a continued lapse in 
the transit authorization.
Highway Construction
    Many States will experience minimal impacts on their highway 
construction programs through the end of 1997. However, if no 
authorization is provided by early 1998, State transportation agencies 
will be forced to delay planning and bidding activities. Some Northern 
States could face the loss of an entire construction season if bid 
advertising is delayed beyond December of this year. Here are a few 
examples of the impact on individual States.
      Kentucky's unobligated balance of $134 million is equal 
to much less than half of our fiscal 1998 Federal highway funding. If 
the current lapse in the highway program continues several months into 
1998 many Federal-aid highway projects will be postponed, including a 
$169 million modernization and safety improvement to US 119 in Pike 
County, as well as widening and safety improvements to Interstate 75 
south of Cincinnati and the widening of the Paris Pike between 
Lexington and Paris.
      Connecticut has already suspended advertising of all new 
highway projects, and eight previously advertised projects totaling $52 
million cannot be awarded until authorizing legislation is passed.
      Reconstruction of the Stevenson Expressway (I-15) in 
Chicago, Illinois may have to be delayed a full year if a 
reauthorization bill is not enacted by December.
      In Iowa, failure to reauthorize the Federal aid highway 
program has already caused that State's transportation director to 
postpone by 30 days his decision to proceed with the February contract 
letting, while the decision to proceed with the March letting has been 
postponed indefinitely.
      In Nevada the planned widening of Interstate 15 in Las 
Vegas to provide congestion relief, and maintenance of Interstate 80 
could be delayed or postponed if the current lapse continues well into 
1998.
      A lapse in authorization into 1998 may force Oklahoma to 
delay or postpone reconstruction of several regionally significant 
congestion relief projects including: US-281 from Interstate 40 North, 
US-283 North of Altus, and State Highway 99 from State Highway 9 North.
      Oregon's unobligated balance of $91 million is $26 
million short of the Federal funding needed to carry out the highway 
projects scheduled through March 1998. More immediate will be the 
postponement of eight local bridge projects totaling $3.4 million.
Conclusion
    In closing, I urge you again to enact short-term legislation 
providing funding for highway, transit, and safety programs. While I 
admire the dedication and commitment of the members of this committee 
to pass a full ISTEA reauthorization in early 1998, I must caution you 
that the effectiveness of State highway, transit and safety programs 
must not rest on that commitment alone. As Governors of the States we 
understand the difficulty and unavoidable delays of the legislative 
process, but as the executives responsible for the nation's roads, we 
are very concerned about the failure of the Congress to act, and the 
impact this inaction would have on such a vital government service.
    We ask for a long term commitment to full funding for the national 
transportation program as quickly as possible, but until that program 
can be enacted we ask for short-term legislation providing funding for 
highway, transit, and safety programs. This interim program will not 
prejudice the outcome of the debate over funding formulas or program 
structure. But failure to enact a short-term funding mechanism will 
jeopardize program efficiency, hinder timely project development, 
unnecessarily increase the cost of repairing our roads, bridges and 
transit systems, and perhaps cost the economy tens of thousands of 
jobs.
    Mr. Chairman, we cannot now afford these costs. I will be happy to 
answer any questions.
                               __________
Statement of Peter J. Basso, Acting Assistant Secretary for Budget and 
              Programs, U.S. Department of Transportation
    Mr. Chairman and members of the committee. I appreciate the 
opportunity to appear before you today to discuss the potential 
consequences for our surface transportation programs if the Intermodal 
Surface Transportation Efficiency Act of 1991 (ISTEA) is not 
reauthorized by the end of this session of Congress.
    There will be adverse impacts on safety programs, potential 
construction delays with associated job losses, and adverse impacts on 
transit operations if the Federal highway, traffic safety, and transit 
programs are put on hold. The Administration continues to support 
enactment of multi-year ISTEA reauthorization legislation as soon as 
possible and believes its NEXTEA proposal forwarded last March provides 
a sound basis for action. While some construction activity will be able 
to continue with carryover highway and transit grant funds, we will see 
increasing impacts in States and local communities as these carryover 
balances--unevenly distributed across the country and across programs--
are drawn down. The need is even greater, though, in the case of safety 
grants and operating funds to keep the Federal Highway Administration 
and the Bureau of Transportation Statistics in business.
    Let me summarize some of the most significant problems that will 
result from continued lapse in this important legislation.
Safety Programs
    Several critical highway safety programs are completely without 
funding this fiscal year. This means that Federal support has ceased 
for major safety initiatives such as safety belt use, child seat use, 
and drunk driving countermeasures. The net effect would be a reduction 
in lives saved and injuries avoided. Highway safety grant programs have 
no unobligated balances available from prior years' authorizations. 
These include Section 402 (State and community safety grants), Section 
410 (impaired driving incentive grants program), and the National 
Driver Register (NDR). With no contract authority for the Section 402 
program for fiscal year 1998, new funding has not been available since 
October 1 for the States to initiate highway safety and Safe 
Communities projects. States are operating with funds obligated in 
fiscal year 1997, and most States have sufficient funding to last only 
an estimated 2-3 months. Once these balances are exhausted, many State 
highway safety offices may have to close. Some States are already 
making adjustments by delaying or curtailing projects.
    Kentucky, California, Louisiana, Florida and North Carolina, for 
example, have placed some or all of their highway safety programs on 
hold pending new authorizations. Special alcohol and seat belt 
enforcement programs by dedicated State police are being particularly 
hard hit and could result in police officers being laid off if new 
funding is not forthcoming in the near future.
    The Section 410 (impaired driving) program has also been operating 
with funding obligated in fiscal year 1997, and that will run out in 
the early spring, forcing the program to be shut down. This means that 
NHTSA would be unable to carry out statutory requirements to provide 
incentive grants to encourage States to deal more effectively in 
reducing drunk driving.
    Also, the National Driver Register (NDR) would have to be shut 
down. The NDR is operating on funds obligated in fiscal year 1997. 
Since funding for the NDR contract runs out in March, the program will 
have to be shut down and staff dismissed. This means that State motor 
vehicle agencies will not be able to query the NDR to avoid licensing 
problem drivers. In addition, the shutdown will be felt by other 
transportation-related organizations, such as the Federal Aviation 
Administration, Federal Railroad Administration, United States Coast 
Guard, air carriers and employers, who are authorized to use the NDR in 
determining whether to hire or certify operators of motor vehicles or 
other transportation conveyances.
    In addition, there is no Federal funding for the approximately 
3,200 State enforcement personnel funded exclusively by the Motor 
Carrier Safety Assistance Program (MCSAP). States may be limited 
severely in their ability to perform driver or vehicle inspections or 
compliance reviews, thereby permitting potentially unsafe commercial 
motor vehicles and unqualified drivers to operate undetected on our 
Nation's highways. The safety impact of the lack of reauthorization 
legislation is beginning to be felt now. For example, South Carolina is 
already out of MCSAP funds, and Rhode Island will have to lay off 
inspectors at the end of November. Without Federal funds, we are 
advised that the New Mexico, Ohio, and Nebraska motor carrier safety 
enforcement programs will shut down on November 15. Several other 
States have reduced roadside safety inspections just as pre-holiday 
freight movements are peaking. Many States are using State funds to 
support motor carrier programs, but national safety objectives may not 
be met. By January 1, most motor carrier safety programs could come to 
a complete halt without additional authorizations.
    Because 80 percent of MCSAP pays the salaries of State safety 
investigators, States will likely have to lay off these employees. 
Highway safety could be severely jeopardized without the important 
enforcement activities conducted by safety investigators, including: 
reviews of truck and bus companies to ensure they are complying with 
safety regulations and have an effective safety management program, 
roadside inspections of vehicles and drivers, hazardous materials 
enforcement, special safety investigations, traffic enforcement, drug 
interdiction, and truck size and weight enforcement.
                             dot operations
Federal Highway Administration
    The Federal Highway Administration (FHWA) has only enough funds to 
continue to pay salaries to its full staff during the first quarter of 
fiscal year 1998. Without some relief, FHWA will be forced to shut down 
in early January when all carryover funds are estimated to be depleted. 
This could result in 3,600 employees being furloughed, including over 
2,600 employees who work in FHWA division and regional offices across 
the country in every State.
    When FHWA shuts down, even though the States will still have 
Federal-aid highway funds to use, the Federal-aid program will 
essentially stop since there will be no FHWA personnel to carry on the 
legally required steps related to authorizing Federal projects. This 
means that:
      The FHWA would not be able to process requests and 
reimburse States for Federal-aid projects already under construction, 
or participate in the operating cost of traffic management centers. 
Since reimbursements are made electronically--with some States being 
reimbursed daily and many others being reimbursed weekly--a cut-off in 
reimbursements would immediately affect States' cash flow and their 
ability to pay contractors (with potential layoffs resulting), purchase 
equipment, materials, and supplies, and meet State payrolls or other 
commitments.
      The FHWA would not be able to authorize Federal-aid 
highway projects or obligate balances of Federal-aid highway funds for 
design, right-of-way acquisition, or construction projects. States also 
use Federal-aid highway funds for inspections of major bridges, and 
obligations for those inspections could not be approved.
      States could not begin right-of-way acquisition or final 
design activities on projects that are ready for this approval. States 
also rely on the FHWA for coordination with other Federal agencies in 
advancing projects through the NEPA process and obtaining other reviews 
and clearances. Last year about 50-75 major projects were advanced with 
an environmental impact statement (EIS), and 500 intermediate scale 
projects were advanced with a finding of no significant impact (FONSI). 
If this trend continues in fiscal year 1998, a shutdown would have 
proportionate impacts on projects that would otherwise be advanced this 
year.
      In the event that new natural disasters or catastrophic 
failures occurred, FHWA would not be able to approve and allocate 
available Federal-aid Emergency Relief (ER) funds to the States for 
necessary repairs to damaged highways and bridges. Furthermore, staff 
would not be available to process reimbursements to States for repairs 
from previous disasters already completed.
    There would be no funds for the Federal motor carrier safety 
program. No Federal staff will be available to review State grants or 
to conduct safety inspections, compliance reviews, and other 
enforcement activities performed by the approximately 230 Federal motor 
carrier safety investigators.
    FHWA's research and technology activities will be severely 
curtailed. Since there cannot be an administrative takedown from new 
authorizations until after a reauthorization bill is enacted, new 
funding for research and technology activities, such as Intelligent 
Transportation System operational tests and technical assistance to 
communities throughout the Nation, financed through FHWA's General 
Operating Expenses, cannot be made available.
National Highway Traffic Safety Administration
    By early February 1998, NHTSA's regional and Headquarters State and 
Community Services staff, who administer the Section 402 program, will 
have to be furloughed since the largest portion of their salaries is 
funded from the Section 402 program.
Bureau of Transportation Statistics
    There is no new funding for the Department's Bureau of 
Transportation Statistics (BTS), since it is financed from contract 
authorizations from the Highway Trust Fund. By deferring staff 
increases, delaying programs, and rescheduling some repayments, BTS has 
enough carryover to last through the first quarter of fiscal year 1998, 
at which point, without new spending authority, it will have to shut 
down. In addition to furloughs of more than 40 BTS employees, 60 
contractor staff will have to be let go. There will be long-term 
impacts from such short-term effects as contractor employees seek work 
elsewhere. There will be interruptions in data collection, which will 
seriously impact the overall quality of data.
Federal Transit Administration
    Administrative funds for FTA are provided in the DOT Appropriations 
Act and therefore we do not face the same problem that we do with FHWA 
and NHTSA grant program administrative costs.
Federal-aid Highway Program
    States will be able to continue their infrastructure programs by 
using the $12.25 billion in unobligated balances from prior year 
apportionments and allocations of Federal-aid highway funds. This total 
will permit the States, in aggregate, to operate at the 1997 levels for 
more than half the year and at the 1998 level for approximately one-
half of the year. However, these balances vary greatly among States and 
program categories.
Transit Programs
    Both FTA's discretionary and formula grant programs are affected by 
the lack of legislation. These programs will have available about 14 
percent of the funding that they could otherwise expect in fiscal year 
1998, including $240 million in general funds provided in the fiscal 
year 1998 DOT Appropriations Act and $392 million for New Starts 
discretionary grants carried over from previous years because of 
obligation limitations. This $392 million would be distributed based on 
the fiscal year 1998 Appropriations Act. Other unobligated balances 
already apportioned or allocated to grantees will be available pre 
current law, but the availability of these funds is uneven across the 
country and across programs.
                                summary
    Failure of Congress to take some action to address safety funding 
needs and FHWA, NHTSA and BTS administrative costs before it recesses 
will have significant impacts on both critical programs and DOT 
personnel. The Administration continues to support enactment of multi-
year ISTEA reauthorization legislation as soon as possible. However, 
time is running out on this session of Congress. Under these 
circumstances, we believe that Congress must take action before 
adjourning for the year, to temporarily provide sufficient funds and 
authority to address the critical safety and other urgent programmatic 
needs set forth in this testimony.
    That completes my prepared statement. I would be pleased to answer 
any questions you may have.
                               __________
Statement of Phyllis Scheinberg, Associate Director for Transportation 
  Issues, Division of Resources, Community, and Economic Development, 
                       General Accounting Office
    Mr. Chairman and members of the subcommittee: We appreciate the 
opportunity to provide information on the status of Federal surface 
transportation programs in the absence of funding from a new Federal 
highway reauthorization act. As you know, in 1991, the Intermodal 
Surface Transportation Efficiency Act of 1991 (ISTEA) authorized over 
$122 billion in Federal funds for highway programs for fiscal years 
1992 through 1997. This authorization expired on September 30, 1997, 
and no new Federal highway funds have been authorized for fiscal year 
1998. The States can, however, use their unobligated balances that 
remain from the ISTEA authorization period. For all 50 States, these 
Federal-aid highway balances totaled $12.1 billion at the beginning of 
fiscal year 1998.
    Specifically, you asked that we compare unobligated Federal highway 
fund balances at the beginning of fiscal year 1998 with the highway 
funds that the States obligated during the first part of fiscal year 
1997. We performed this analysis using actual obligation data for 
Federal-aid highway projects during the first 4 through 7 months of 
fiscal year 1997. For illustrative purposes, however, this testimony 
will focus on the 6-month period. (Details for the 4- through 7-month 
periods are presented in apps. I and II.) At your request, our 
testimony will also address strategies that could temporarily help the 
States continue to fund highway programs in the absence of a Federal 
highway authorization act.
    Our work is based on the Federal Highway Administration's (FHWA) 
obligation data for all 50 States. In addition, we contacted 9 States 
to obtain their views on how they would operate without new Federal 
highway funds in the short term. When we analyzed FHWA's obligation 
data for the 50 States, the analysis was limited to total obligation 
levels for Federal highway projects. We did not address other important 
areas, such as the potential effects on the operations of agencies 
within the U. S. Department of Transportation or the effects on 
particular programs, such as transportation safety programs. In 
addition, we did not look at the impact on transit programs.
    In summary, we compared the level of unobligated highway fund 
balances available at the beginning of fiscal year 1998 with the actual 
obligations that the States made during the first part of fiscal year 
1997. The total unobligated balance of $12.1 billion exceeds the total 
actual obligations of $8.1 billion that all States combined made during 
the first 6 months of fiscal year 1997. However, a comparison of the 
unobligated balances of individual States with their actual fiscal year 
1997 obligations reveals that some State highway programs may 
experience financial difficulties by the middle of fiscal year 1998 if 
their obligation rates for this year are comparable to those for fiscal 
year 1997. The analysis indicates that while most States have 
unobligated balances that are greater than their actual Federal highway 
obligations in the first 6 months of fiscal year 1997, 14 States have 
an unobligated balance that is lower than their actual obligations 
during that same period. The nine States that we contacted identified 
various strategies that they would use to try to continue their highway 
operations, such as relying more extensively on State funds. However, 
some of these States also noted that they would soon be postponing 
highway projects if new Federal funds are not available within the next 
few months.
    It is important to note when making these types of comparisons that 
the rates at which States obligated funds in fiscal year 1997 may not 
correspond to their plans for obligating Federal highway funds in 
fiscal year 1998. Furthermore, some States may be limited in their 
ability to use available unobligated balances because of restrictions 
on the specific types of highway programs that the funds can be used 
for. Nonetheless, the comparisons do indicate that while many States 
may be able to continue financing highway projects for some time, some 
States may have difficulty dealing even in the short term with the 
absence of new Federal highway funds.
    A number of strategies could help the States respond to the absence 
of new Federal highway funds in the short term. For example, the 
Congress could provide the States with the flexibility to use their 
unobligated balances across the range of Federal highway programs, 
rather than keeping the balances tied to specific highway funding 
categories and demonstration projects. Then, after reauthorization, the 
Congress could ``reimburse'' the appropriate funding categories. The 
individual States could also consider a number of strategies, such as 
temporarily substituting State funds for Federal highway funds. The 
States could also begin highway projects by using advance construction, 
which enables a State to access capital from a variety of sources, 
including its own funds and private capital, and later receive 
reimbursement through Federal highway obligations. However, such 
strategies may delay other planned projects within individual States. 
Furthermore, these strategies may not be feasible for some States or 
for an extended period of time.
                               background
    ISTEA authorized over $122 billion for highway programs for fiscal 
years 1992 through 1997. The authorization was funded primarily through 
Federal highway user taxes such as those on motor fuels (gasoline, 
gasohol, and diesel), tires, and trucks. Funds from these sources are 
collected from users and credited to the Highway Trust Fund for highway 
and mass transit projects or related activities. The fund is divided 
into a highway account and a mass transit account.
    Except for a few minor deductions, such as those for Federal 
administrative expenses, Federal highway funds are provided to the 
States through FHWA, which is part of the U. S. Department of 
Transportation. The money is generally distributed to the States 
through various formula calculations. The current formula, established 
by ISTEA, determines the distribution of funds for 13 funding 
categories, such as the Interstate Maintenance, the National Highway 
System, and the Congestion Mitigation and Air Quality (CMAQ) programs.
    During the ISTEA authorization period, FHWA annually apportioned to 
the States authority to obligate funds. And, if the Congress took no 
further action, the States could proceed to obligate all the authority 
apportioned to them by FHWA. However, the Congress also imposed an 
annual obligation limitation as part of the appropriation process on 
most elements of the Federal highway program. These limits did not take 
back spending authority that was already apportioned to the States; 
rather, the obligation limits acted to control the obligation rate.
    The congressionally imposed obligation limits acted to control 
total obligations but left the States with some discretion to decide 
how they would use their obligation authority across the range of 
Federal-aid programs. For example, in a particular year, a State could 
obligate all its Interstate Maintenance and National Highway System 
funds. But the State would then have to compensate by obligating a 
smaller part of its Federal highway funds from other categories. In 
addition, a few categories of highway funding are exempt from 
obligation limitations--the two largest are minimum allocation and 
demonstration projects.
    Once FHWA approves a project that a State proposes, the Federal 
share of the project's cost is considered ``obligated'' against the 
State's apportionment. The State then proceeds--doing detailed design 
engineering, advertising for bids, and selecting a contractor for the 
construction work. The State incurs costs, pays the bills, and then 
seeks reimbursement of the Federal share from FHWA. Federal outlays--
that is, actual expenditures--do not occur until the State is 
reimbursed. Furthermore, the funds are outlayed over a number of years.
    comparing unobligated highway balances with previous obligations
    At the beginning of fiscal year 1998, the total unobligated Federal 
highway fund balance for all States was $12.1 billion. This unobligated 
balance came from two sources. First, $9.6 billion in unobligated 
balances exists because the Congress annually imposed an obligation 
limit during the ISTEA period to control spending for most Federal 
highway funding categories. Second, another $2.5 billion in unobligated 
authority remains for a few highway funding categories that were exempt 
from the obligation limitation. The two largest exempted programs were 
minimum allocation ($0.65 billion) and demonstration projects ($1.85 
billion).
    From a national perspective, the total unobligated highway balance 
of $12.1 billion at the beginning of fiscal year 1998 (including 
program funds exempt from obligation limits) is nearly 1.5 times the 
$8.1 billion that all States obligated during the first 6 months of 
fiscal year 1997. This does not mean, however, that each State's 
unobligated balance is greater than its obligations during the first 6 
months of fiscal year 1997. FHWA's data show that the unobligated 
balances for each of 14 States fall short by 1 percent to 30 percent or 
by $1 million to almost $82 million of its actual obligations during 
the first 6 months of fiscal year 1997. Several States were in the 20 
to 30 percent range. For example, Indiana's total unobligated balance 
is over $80 million less than its total highway obligations during the 
first 6 months of fiscal year 1997. This represents about a 28-percent 
difference. Similarly, North Carolina's total unobligated balance is 
about $94 million less than the amount it obligated during this same 
period in fiscal year 1997--a difference of about 26 percent. (App. I 
provides a State-by-State comparison of the fiscal year 1998 
unobligated balance of $9.6 billion (from highway programs subject to 
the obligation limit) to actual State obligations during the first 4 
through 7 months of fiscal year 1997. App. II provides a similar 
comparison based on the combined total unobligated balance of $12.1 
billion.)
    It is important to note that these comparisons imply that the 
State's obligation rates for fiscal year 1997 correspond to those for 
fiscal year 1998, which may or may not be the case for individual 
States. Furthermore, the total unobligated balance of $12.1 billion 
includes balances from programs that were not subject to the obligation 
limitation. As of October 1, 1997, seven States had little or no 
unobligated balances in these program categories.
        strategies that could help the states in the short-term
    A number of strategies could help the States get through a short 
period without a new highway funding authorization. At the Federal 
level, the Congress could provide the States with the flexibility to 
use their unobligated balances across the range of Federal highway 
programs, rather than keeping the balances generally tied to specific 
highway programs and demonstration projects. At the State level, some 
States may be able to obtain State, local, or private resources to 
begin projects and later seek Federal reimbursement for these costs 
through advance construction authority.
Flexibility Needed if Unobligated Balances Are to Be Fully Used in the 
        Short Term
    The unobligated balance of $9.6 billion (from programs subject to 
the obligation limit) represents the sum of the unobligated balances 
remaining from specific programs, such as the Interstate Maintenance, 
National Highway System, Surface Transportation, and CMAQ programs. 
These balances may now generally be obligated in accordance with the 
individual program categories.
    Throughout the ISTEA period, the obligation limits acted to control 
``total'' obligations, thus leaving the States discretion to decide how 
they would use their obligation authority across the range of specific 
Federal-aid highway programs. For example, in a particular year, a 
State could have opted to obligate all of its available National 
Highway System funds, but it would have had to make up for its full use 
of these funds by obligating less in another funding category, such as 
the CMAQ program.
    Differences in the priorities that the States assigned to different 
highway programs are now reflected in significant variances in the 
unobligated balances that remain from ISTEA authorizations for these 
programs. For example, the National Highway System had a total 
unobligated balance of over $426 million at the beginning of fiscal 
year 1998, which represents only about 13 percent of the total fiscal 
year 1997 apportionment for this program. In comparison, the Surface 
Transportation program started fiscal year 1998 with an unobligated 
balance of $4.2 billion, or nearly half of the fiscal year 1997 
apportionment for this program. Furthermore, the CMAQ program had an 
unobligated balance of $1 billion, or 108 percent of the fiscal year 
1997 apportionment for this program. Because of the variances in the 
unobligated balances remaining across Federal highway programs, these 
balances may not be consistent with State funding priorities or 
projects that the States planned for this year.
    To identify any problems that the States might have in using their 
unobligated balances and to identify strategies that the States may use 
to help them respond to the absence of new Federal highway funds in the 
short term, we contacted nine States--Arkansas, Connecticut, Indiana, 
Iowa, Missouri, New York, North Carolina, North Dakota, and South 
Dakota. These differed in the extent to which they expected that their 
unobligated Federal highway balances would help them respond to any 
short-term absence of new Federal highway funds. Several of the States 
did note that the usefulness of these unobligated balances will be 
somewhat limited because they are tied to specific programs. For 
instance, a Missouri transportation finance and budget manager 
estimated that in early fiscal year 1998, the State will be able to use 
only $50 million of its total of $169 million in unobligated funds 
because the balance of the money is for categories such as CMAQ or 
transportation enhancements in which the State does not have projects 
ready to go. Similarly, the Transportation Director of Program 
Management for New York commented that it is very difficult to say 
exactly when the State will use its unobligated balance because some of 
this money is limited to programs that (1) are not a State priority or 
(2) do not have projects that are ready to go.
    If the Congress were to enact legislation that would give the 
States the flexibility to use unobligated balances interchangeably 
among Federal highway programs, then some States would be better 
positioned to more fully use their unobligated Federal highway funds. 
In addition, while minimum allocation funding can be used for numerous 
Federal highway programs, demonstration project funds must be used only 
for the specific projects for which the funds were authorized under 
current law. These demonstration project funds, which generally were 
not subject to the obligation limits, ended fiscal year 1997 with a 
total unobligated balance of about $1.9 billion. If the Congress were 
to provide the States with the flexibility to use program as well as 
demonstration project funds to meet other highway program needs, a 
later reauthorization could provide for reimbursement to the borrowed 
fund account.
States May Have to Rely More on State Funding for Highways
    Federal highway funding represents one of the many financial 
sources used to support the nation's highways. The Department of 
Transportation's statistics indicate that the revenue available for 
highways totaled $92.5 billion in 1995, the latest year for which data 
are available. About $59.6 billion of this revenue came from highway 
user taxes--$18.3 billion from Federal highway user taxes, $39.3 from 
State highway user taxes, and $2 billion from local highway user taxes. 
The balance came from a variety of sources, such as $5.1 billion from 
property taxes and assessments and $7.6 billion from bond receipts.
    To compensate for the lack of new Federal highway funds being 
available for part of fiscal year 1998, some States may be able to fund 
a proportionately larger share of their planned highway projects in 
early fiscal year 1998 with State funds. Later in fiscal year 1998, 
these States could use the Federal funds made available to them. This 
assumes that at some unspecified time in fiscal year 1998, new Federal 
highway funds will be available; however, this uncertainty poses 
problems for some States. A few of the nine States we contacted noted 
that they would be postponing highway projects if new Federal funds are 
not available within the next few months.
    The States also differ in their ability to provide greater funding 
in fiscal year 1998. For instance, the Commissioner of North Dakota's 
Department of Transportation stated that the disastrous flood this year 
left North Dakota without any additional State funds to pay for highway 
projects. In contrast, Indiana's Deputy Commissioner for Finance stated 
that the State does not face a financial crisis in early fiscal year 
1998. He noted that Indiana's Department of Transportation has, if 
necessary, the ability to use $600 million in bonding authority to 
begin projects in fiscal year 1998. However, if the States draw on 
their own resources, they may have to delay other planned projects. 
Also, this short-term solution could have a defined payback period. For 
instance, a Missouri transportation official noted that the State 
expects to award highway contracts through December 1997, using $100 
million of State funds. He noted that this State money will be borrowed 
from other State programs and must be returned to the other accounts by 
June 30, 1998, the end of the State's fiscal year.
    One financial tool that may help some States is advance 
construction. Under advance construction, a State can begin a highway 
project by obtaining capital from a variety of sources, including its 
own funds and private capital, and later receive reimbursement through 
Federal highway obligations. Indiana's Deputy Commissioner for Finance 
stated that without new Federal funds, Indiana will begin its highway 
program using advance construction with State funding. New York also 
indicated that it would turn to advance construction to help with its 
highway financing. The New York Transportation Director of Program 
Management remarked that he expects to keep the State's planned highway 
projects on schedule in early fiscal year 1998 through the use of 
advance construction. He stated that New York will use State money to 
keep the projects on schedule and then backfill with Federal funds once 
a new authorization is passed.
    In July 1997, the American Association of State Highway and 
Transportation Officials (AASHTO) conducted a survey to determine the 
possible effects of a delay in the reauthorization of the Federal 
surface transportation program on State transportation programs. Many 
States reported to AASHTO that they would use advance construction to 
continue operations and project schedules. However, AASHTO noted that 
advance construction will not help some States that have already 
heavily relied on this technique.
    Mr. Chairman, this concludes my testimony. I would be pleased to 
respond to any questions that you or other members of the subcommittee 
may have.

   UNOBILIGATED FEDERAL HIGHWAY BALANCES (SUBJECT TO THE OBLIGATION LIMITATION) AT THE BEGINNING OF FISCAL YEAR 1998 COMPARED WITH OBLIGATIONS FOR THE FIRST 4 TO 7 MONTHS OF FISCAL YEAR 1997  
                                                                                      Dollars in thousands                                                                                      
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Unobligated   Difference between unobligated  Difference between unobligated  Difference between unobligated  Difference between unobligated
                                                      balance     balance and fiscal year 1997 4- balance and fiscal year 1997 5- balance and fiscal year 1997 6- balance and fiscal year 1997 7-
                                                    subject to        month obligation total          month obligation total          month obligation total          month obligation total    
                      State                         obligation   -------------------------------------------------------------------------------------------------------------------------------
                                                  limit as of 10/                                                                                                                               
                                                       01/97          Amount          Percent         Amount          Percent         Amount          Percent         Amount          Percent   
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.........................................        $142,290         $70,523              98         $54,933              63         $18,011              14        -$13,762              -9
Alaska..........................................          94,192          59,601             172          12,980              16          -5,331              -5         -19,351             -17
Arizona.........................................         144,747          61,638              74          48,153              50          35,920              33          27,297              23
Arkansas........................................          87,129         -11,524             -12         -28,961             -25         -32,323             -27         -40,468             -32
California......................................         816,665         535,661             191         494,274             153         406,101              99         215,761              36
Colorado........................................        117, 689          73,357             165          14,684              14          -1,177              -1         -28,065             -19
Connecticut.....................................         166,353          11,568               7         -12,887              -7         -32,651             -16        -117,730             -41
Delaware........................................          54,052          48,091             807          46,936             660          40,646             303          20,332              60
Florida.........................................         225,197         136,682             154          75,480              50         -14,489              -6        -258,506             -53
Georgia.........................................         293,339         184,098             169         158,972             118         118,093              67          83,185              40
Hawaii..........................................         139,085               a               a               a               a               a               a               a               a
Idaho...........................................          50,407          22,596              81           5,743              13           5,457              12              39               0
Illinois........................................         255,153         146,891             136          82,100              47         -14,927              -6        -236,031             -48
Indiana.........................................         182,028          47,488              35         -50,888             -22        -102,013             -36        -124,776             -41
Iowa............................................         115,924          13,004              13             415               0         -25,943             -18         -27,335             -19
Kansas..........................................         128,419          57,528              81          51,050              66          45,803              55          35,262              38
Kentucky........................................         134,226          92,030             218          60,001              81          11,759              10         -12,999              -9
Louisiana.......................................         270,665         211,548             358         196,015             263         192,316             245         176,085             186
Maine...........................................          48,887          16,706              52              57               0         -10,845             -18         -10,548             -18
Maryland........................................         158,942         116,473             274          41,191              35          20,355              15         -29,096             -15
Massachusetts...................................         793,225         614,708             344         374,672              90         298,761              60         256,679              48
Michigan........................................         217,146          93,236              75          52,661              32          11,239               5         -15,783              -7
Minnesota.......................................         178,687         141,349             379          38,120              27          28,273              19          16,178              10
Mississippi.....................................         102,719          46,798              84          38,873              61           7,882               8          -6,233              -6
Missouri........................................         168,587          26,114              18         -67,796             -29        -100,490             -37        -111,528             -40
Montana.........................................          88,072          73,364             499          41,622              90          33,642              62          13,022              17
Nebraska........................................          77,809          47,919             160          39,276             102          -5,837              -7          -7,870              -9
Nevada..........................................          55,011          46,620             556          11,803              27          -1,210              -2          -3,184              -5
New Hampshire...................................          59,340          43,848             283          34,426             138          11,932              25           3,535               6
New Jersey......................................         274,799          85,692              45          41,416              18          28,863              12         -28,507              -9
New Mexico......................................          69,402          44,746             181          42,160             155          38,298             123          24,543              55
New York........................................         477,584         123,935              35         -57,004             -11        -121,836             -20        -154,403             -24
North Carolina..................................         214,972         -15,865              -7         -90,838             -30        -143,299             -40        -178,181             -45
North Dakota....................................          50,447           5,887              13          -2,979              -6         -24,791             -33         -32,363             -39
Ohio............................................         356,246         231,419             185         200,963             129         158,654              80          79,029              29
Oklahoma........................................         159,309          74,298              87          57,668              57          47,037              42          15,515              11
Oregon..........................................          92,166          42,543              86          24,747              37          15,926              21            -397              -0
Pennsylvania....................................         456,826         325,819             249         298,829             189         213,084              87          84,355              23
Rhode Island....................................          65,379          51,918             386          36,309             125          30,320              86          20,101              44
South Carolina..................................         179,141         101,532             131          27,858              18          16,615              10           8,401               5
South Dakota....................................          69,729          12,996              23          -8,395             -11         -22,791             -25         -33,301             -32
Tennessee.......................................         196,644          67,328              52          20,013              11         -22,553             -10         -81,974             -29
Texas...........................................         619,695         193,004              45         136,984              28          58,399              10         -25,147              -4
Utah............................................          89,670          66,048             280          35,048              64          27,477              44          18,313              26
Vermont.........................................          71,618          58,166             432          50,025             232          36,629             105          26,728              60
Virginia........................................         212,321          99,361              88          68,801              48          28,694              16           2,329               1
Washington......................................         204,873         167,859             454          87,103              74          68,522              50            -493              -0
West Virginia...................................         120,166          84,653             238          37,892              46          12,857              12         -13,368             -10
Wisconsin.......................................         163,333         -10,469              -6         -63,820             -28         -74,008             -31         -82,887             -34
Wyoming.........................................          53,579           7,042              15          -6,478             -11         -15,180             -22         -23,071             -30
      Total.....................................      $9,563,884      $4,987,272             109      $2,893,616              43      $1,295,871              16       -$590,668              -6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note 1: Bold type indicates that previous obligations exceed the unobligated balance.                                                                                                           
Note 2: The comparison represents data for the States only and does not include data for the District of Columbia, American Samoa, Puerto Rico, the Virgin Islands, Guam, and the North         
  Marianas.                                                                                                                                                                                     
a. Not available.                                                                                                                                                                               
Source: GAO's analysis based on FHWA's data.                                                                                                                                                    


   UNOBILIGATED FEDERAL HIGHWAY BALANCES (SUBJECT TO THE OBLIGATION LIMITATION) AT THE BEGINNING OF FISCAL YEAR 1998 COMPARED WITH OBLIGATIONS FOR THE  
                                                         FIRST 4 TO 7 MONTHS OF FISCAL YEAR 1997                                                        
                                                                  Dollars in thousands                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     Unobligated     Difference between        Difference between        Difference between        Difference between   
                                       balance     unobligated balance and   unobligated balance and   unobligated balance and   unobligated balance and
                                      subject to  fiscal year 1997 4-month  fiscal year 1997 5-month  fiscal year 1997 6-month  fiscal year 1997 7-month
               State                  obligation      obligation total          obligation total          obligation total          obligation total    
                                     limit as of -------------------------------------------------------------------------------------------------------
                                       10/01/97      Amount      Percent       Amount      Percent       Amount      Percent       Amount      Percent  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama............................     $198,888     $127,121          177     $111,531          128      $74,609           60      $42,836           27
Alaska.............................       94,192       59,601          172       12,980           16       -5,331           -5      -19,351          -17
Arizona............................      184,093      100,984          122       87,499           91       75,266           69       66,643           57
Arkansas...........................      153,005       54,352           55       36,915           32       33,553           28       25,408           20
California.........................    1,091,527      810,523          288      769,136          239      680,963          166      490,623           82
Colorado...........................      117,689       73,357          165       14,684           14       -1,177           -1      -28,065          -19
Connecticut........................      167,954       13,169            9      -11,286           -6      -31,050          -16     -116,129          -41
Delaware...........................       54,052       48,091          807       46,936          660       40,646          303       20,332           60
Florida............................      298,813      210,298          238      149,096          100       59,127           25     -184,890          -38
Georgia............................      487,021      377,780          346      352,654          262      311,775          178      276,867          132
Hawaii.............................      148,605            a            a            a            a            a            a            a            a
Idaho..............................       82,813       55,002          198       38,149           85       37,863           84       32,445           64
Illinois...........................      284,971      176,709          163      111,918           65       14,891            6     -206,213          -42
Indiana............................      203,799       69,259           51      -29,117          -13      -80,242          -28     -103,005          -34
Iowa...............................      136,787       33,867           33       21,278           18       -5,080           -4       -6,472           -5
Kansas.............................      147,075       76,184          107       69,706           90       64,459           78       53,918           58
Kentucky...........................      157,586      115,390          273       83,361          112       35,119           29       10,361            7
Louisiana..........................      339,687      280,570          475      265,037          355      261,338          334      245,107          259
Maine..............................       57,472       25,291           79        8,642           18       -2,260           -4       -1,963           -3
Maryland...........................      166,683      124,214          292       48,932           42       28,096           20      -21,355          -11
Massachusetts......................      799,910      621,393          348      381,357           91      305,446           62      263,364           49
Michigan...........................      250,289      126,379          102       85,804           52       44,382           22       17,360            7
Minnesota..........................      238,211      200,873          538       97,644           69       87,797           58       75,702           47
Mississippi........................      116,125       60,204          108       52,279           82       21,288           22        7,173            7
Missouri...........................      187,257       44,784           31      -49,126          -21      -81,820          -30      -92,858          -33
Montana............................       88,072       73,364          499       41,622           90       33,642           62       13,022           17
Nebraska...........................       84,959       55,069          184       46,426          120        1,313            2         -720           -1
Nevada.............................       55,012       46,621          556       11,804           27       -1,209           -2       -3,183           -5
New Hampshire......................       63,770       48,278          312       38,856          156       16,362           35        7,965           14
New Jersey.........................      331,142      142,035           75       97,759           42       85,206           35       27,836            9
New Mexico.........................       71,431       46,775          190       44,189          162       40,327          130       26,572           59
New York...........................      529,008      175,359           50       -5,580           -1      -70,412          -12     -102,979          -16
North Carolina.....................      264,629       33,792           15      -41,181          -13      -93,642          -26     -128,524          -33
North Dakota.......................       58,999       14,439           32        5,573           10      -16,239          -22      -23,811          -29
Ohio...............................      495,754      370,927          297      340,471          219      298,162          151      218,537           79
Oklahoma...........................      173,644       88,633          104       72,003           71       61,372           55       29,850           21
Oregon.............................       98,712       49,089           99       31,293           46       22,472           29        6,149            7
Pennsylvania.......................      968,126      837,119          639      810,129          513      724,384          297      595,655          160
Rhode Island.......................       85,502       72,041          535       56,432          194       50,443          144       40,224           89
South Carolina.....................      201,518      123,909          160       50,235           33       38,992           24       30,778           18
South Dakota.......................       74,690       17,957           32       -3,434           -4      -17,830          -19      -28,340          -28
Tennessee..........................      225,294       95,978           74       48,663           28        6,097            3      -53,324          -19
Texas..............................      770,416      343,725           81      287,705           60      209,120           37      125,574           19
Utah...............................       92,600       68,978          292       37,978           70       30,407           49       21,243           30
Vermont............................       88,085       74,633          555       66,492          308       53,096          152       43,195           96
Virginia...........................      333,797      220,837          196      190,277          133      150,170           82      123,805           59
Washington.........................      204,887      167,873          454       87,117           74       68,536           50         -479           -0
West Virginia......................      307,110      271,597          765      224,836          273      199,801          186      173,576          130
Wisconsin..........................      181,199        7,397            4      -45,954          -20      -56,142          -24      -65,021          -26
Wyoming............................       53,579        7,042           15       -6,478          -11      -15,180          -22      -23,071          -30
Total..............................  $12,066,439   $7,489,827          164   $5,396,171           81   $3,942,319           49   $2,055,720           21
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note 1: Bold type indicates that previous obligations exceed the unobligated balance.                                                                   
Note 2: The comparison represents data for the States only and does not include data for the District of Columbia,                                      
American Samoa, Puerto Rico, the Virgin Islands, Guam, and the North Marianas.                                                                          
a. Not available.                                                                                                                                       
Source: GAO's analysis based on FHWA's data.                                                                                                            

     Statement of Steve Massie, Williamsburg, VA, on behalf of the 
                 Transportation Construction Coalition
    Good morning. My name is Steve Massie. I am a highway contractor 
from Williamsburg, Virginia. Today, I am testifying on behalf of the 26 
member organizations of the Transportation Construction Coalition 
(TCC). A list of the coalition's membership is aftached. I appreciate 
the opportunity to testify before you today concerning the importance 
of the Federal-aid Highway program to my company, its 80 employees and 
their families, and thousands of construction companies, construction 
supply companies, engineering and design companies, and the skilled 
construction labor that really implement this program where the rubber 
meets the road. I will keep my comments brief, but would like to have 
my entire statement made part of the record.
    The Transportation Construction Coalition supports a multi-year 
reauthorization of the Federal surface transportation program funded at 
the highest level that can be supported through the Highway Trust Fund. 
If this is not possible before Congress adjourns this year, however, it 
is essential that the programs in the Intermodal Surface Transportation 
Efficiency Act of 1991 (ISTEA) be temporarily extended until a new 
multi-year authorization can be passed.
    Construction is a major force in the national economy. The last 
Census of the Construction Industry tallied 572,851 construction 
companies with a total employment of 4.6 million persons, annual 
estimated payroll of $118 billion and value of work put in place of 
about $528 billion annually in the United States. Because the 
construction industry puts in place the infrastructure that keeps 
America's economy on track, derailing the construction industry is 
tantamount to derailing the nation's economy.
    More specifically, for this hearing, I want to discuss the 
disastrous impact an extended delay of highway reauthorization 
legislation will have on the highway construction industry and the 
American economy, and why we believe a short-term extension of the 
program is crucial.
    As you know, on September 30, the authorization for the nation's 
highway and transit programs expired. Until Congress approves a new 
highway bill, or at least extends the expired bill, the U.S. Department 
of Transportation (DOT) cannot release new highway funds to the States. 
It is imperative that the program not be allowed to lapse any longer. 
The highway construction industry is largely dependent on the Federal-
aid highway program for capital funding. On average, Federal funds 
account for 44 percent of highway capital investment.
    While it appears that a multi-year reauthorization bill is not 
possible this year, I want to impress upon you why an extension of the 
program is essential. I would like to use an example from Saturday's 
Washington Post. The article, ``Delay of Wilson Bridge Funding 
Criticized'' quotes Virginia DOT Secretary Robert Martinez saying, ``if 
everything goes right, we are right at the brink of a major, regional 
transportation crisis.'' AAA President, Robert L. Darbelnet seems to 
agree saying, ``With each passing day 172,000 vehicles pass over the 
bridge, making it a little less structurally sound and bringing it 
closer to the day when traffic restrictions will have to be imposed.''
    I know what you are thinking--a short term bill would not fix the 
Woodrow Wilson Bridge. I understand that. The Wilson Bridge is a 
popular and proximate example for the infrastructure problems facing 
our country. Nearly \1/3\ of the nearly 600,000 bridges on our nation's 
Federal-aid eligible highways are rated deficient. While a short term 
bill would not fix the Woodrow Wilson Bridge, the problems that smaller 
structures face are similarly exacerbated by delays.
    I have heard some in Washington, D.C. claim that a short-term 
extension of the ISTEA legislation is not necessary because all States 
have unobligated balances they can use until a multi-year bill is 
completed next year. This is absolutely not true. The Transportation 
Construction Coalition estimated earlier this year that by March 1998, 
assuming the States could flex all unobligated balances into needed 
accounts, 26 States will expend all unobligated balances. By the end of 
February, 11 States are expected to run out of budget authority 
including Florida, Alabama, Arkansas, Missouri, New York and Oregon. In 
March, California, Connecticut, Idaho, Maine, Nevada, Virginia and 
Wyoming will run out of funds. It should be noted that this is the 
brightest scenario, if States are granted complete flexibility.
    Also critical in our eyes is what the available funding can be used 
for. While it is true that the Federal Highway Administration (FHWA) 
estimates that as of September 30 States had $10 billion in unobligated 
highway account balances, only $2.6 billion of that funding is 
available in the core highway construction accounts of Interstate 
Maintenance, National Highway System, and Bridge. In fact, 17 States 
had less than $1 million in funding for the National Highway System. In 
my State of Virginia, for example, we have only $2,967,000 in the 
National Highway System account, $3,851,000 in the Interstate 
Maintenance account, and $50,873,000 in the Bridge account--totaling 
$57,691,000 in useable highway construction funds. Virginia will not 
have another letting with Federal funds until a reauthorization bill is 
enacted, thereby crippling our State's construction industry.
    To illustrate what the actual impact of not passing any 
reauthorization legislation will be to the States, the American 
Association of State Highway and Transportation Officials (AASHTO) 
conducted a survey and found that 1,982 transportation construction 
projects valued at $3.07 billion will be affected in the first quarter 
of fiscal 1998 (Oct.-Dec. 1997). During the second quarter of the 
fiscal year, an additional 2,926 projects valued at $4.4 billion will 
be affected by the delayed authorization. In Virginia, this will impact 
281 projects, valued at $255.7 million, in the first two quarters of 
fiscal 1998.
    DOT has estimated that every $1 billion invested in highway 
construction creates 42,100 jobs. So, using the AASHTO estimates, 
Congress is jeopardizing over 300,000 jobs in the first 6 months of 
fiscal 1998 (Oct. 1997--March 1998). If no bill is enacted by July 1, 
1998, the total amount of projects delayed is estimated at $11 billion, 
which would impact over 470,000 jobs. A short-term extension of the 
program would alleviate much of this unnecessary pain because Federal 
funds would flow to the States, the Federal-aid highway program would 
continue, and hundreds of thousands of jobs would not be lost.
    The reauthorization legislation is vital to States because States 
will delay the planning and bidding of highway construction projects 
until legislation authorizes new money to flow to the States. The 
delays directly impact the American economy because States do not make 
progress on needed construction work, which, in turn, puts construction 
contractors and suppliers out of business. Without work, construction 
companies will not be able to provide jobs and will have difficulty 
making payments on machinery and facilities. In Virginia, without an 
extension of the Federal-aid highway program, I will begin to lay off 
my employees beginning in January, 1998, and I will not be able to 
rehire them, until a bill is enacted. Furthermore, I will stop using my 
concrete, pipe, steel, cement, asphalt and guardrail suppliers 
beginning in March 1998, and I wont use them again until 45-60 days 
after the bill is signed.
    If there is no bill through January, we will lose the entire spring 
construction season. In the likely event that there is no bill until 
June 1998, we will lose the entire spring and summer construction 
seasons, which would put many construction companies out of business. 
Construction does not operate like an assembly line that we can just 
shut down. The design and construction of highway projects are 
carefully planned months in advance. Projects to be constructed in 
April or May, must be planned and funded by January or February. 
Virginia has the following lettings of Federal-aid highway funds 
scheduled for December, 1997 through August, 1998 that will be canceled 
without an extension of the highway program.

                       Letting Date Value of Work                       
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
December, 1997.................................            $  31,250,000
January, 1998..................................               15,790,000
February, 1998.................................               25,225,000
March, 1998....................................               61,260,000
April, 1998....................................               12,420,000
May, 1998......................................                9,880,000
June, 1998.....................................               17,260,000
July, 1998.....................................              107,510,000
August, 1998...................................               49,185,000
      Total....................................             $329,780,000
------------------------------------------------------------------------

    Without an extension of the highway program, the FHWA, which 
oversees the Federal-aid highway program, the motor carrier safety 
program, and research programs, will be shut down at the end of 
December. The 3,700 FHWA employees that approve projects and actually 
keep the Federal-aid highway program going, including the State's 
ability to obligate funds in a timely manner, will be laid off.
    Furthermore, since the program expired, States have already begun 
to lay off truck safety enforcement officers because funding is no 
longer available in the Motor Carrier Safety Assistance Program (MCSAP) 
in many States. There are virtually no unobligated balances of grant 
funds or new Federal funds available to the States for motor carrier 
safety activities. According to the Commercial Vehicle Safety Alliance 
(CVSA), by the end of December, up to 8,000 inspectors nationwide 
funded by MCSAP will be in jeopardy. Nearly 170,000 inspections per 
month, training, hazardous materials, and other enforcement activities 
supported by the Federal program would be cut back or cease altogether.
    A delay in reauthorizing the Federal-aid highway program will also 
put lives at risk. According to the FHWA, poor road design and 
conditions were factors in thirty percent of the 42,000 fatalities on 
the nation's highways last year. The inability of States to make 
improvements to our nation's highways will likely result in increased 
fatalities.
    Mr. Chairman, one of the major problems with letting the Federal 
highway program lapse is the uncertainty it is causing for all of us in 
the industry. It is easy for Congressional leaders in Washington to say 
``wait until next year'' and use the highway program as a political 
football. But that is like telling us and our employees to wait until 
next March, or so, for our paychecks. We can't survive like that.
    Except for a few large highway contractors, most of us are small 
firms and we are going to be badly hurt by a shutdown of the program. 
This uncertainty is already having a psychological effect on our 
outlook for the future. Contractors are putting off hiring and 
purchasing decisions until we have a better idea of where the highway 
program is going. This is going to have a strong ripple effect 
throughout the economy. If highway contractors aren't hiring or buying, 
some other firm isn't selling, and that is going to cause production 
and jobs to decline.
    It is not just highway contractors and their workers who will be 
hurt if Congress does not extend the highway program. The highway 
program also affects a lot of other industries. There are engineering 
firms that help design and manage highway projects. There are suppliers 
of concrete, aggregates and other highway materials. There are 
manufacturing firms that build highway construction equipment. Shutting 
down the highway program will be like taking a knife to the heart of 
these industries.
    Research conducted recently by a TCC member took a look at how the 
Federal highway program affects two important industries--the 
aggregates industry and the construction equipment manufacturing 
industry--and I would like to submit the results of those studies for 
the hearing record. Concerning the construction machinery industry, the 
research found that each $1 billion of government highway construction 
spending generates about $300 million of equipment sales. Important 
companies like Caterpillar, JI Case, Cummins Engine and a lot of others 
are going to take a real pounding if there is no highway program. 
Without the $23 billion in highway money enacted for 1998, sales of 
construction machinery could go down as much as $6 to $7 billion from 
the current level, and that means a hundred thousand people or more 
could be temporarily laid off in this industry until Congress acts.
    Since the multi-year reauthorization bill is likely to be entangled 
in the looming budget battle this winter, it is unlikely that a multi-
year reauthorization bill will be passed until after the second quarter 
of fiscal year 1998. I am sure Senator Domenici and members of the 
Budget Committee will want to discuss the overall ISTEA authorization 
levels in the context of the budget resolution next year. Additionally, 
many controversial amendments to the reauthorization bill will still 
need to be debated. From what I understand, they will not proceed in 
the House until after the budget resolution is completed. Noting that 
26 States will be out of funding by March, it is imperative that 
Congress pass a bill that provides funding for the Federal-aid highway 
program until the multi-year bill is enacted. This expected, extended 
delay to reauthorizing the highway program is what makes this a true 
crisis to the construction industry.
    I am disappointed that the 6-year reauthorization bill was 
sacrificed by the insistence that it be the vehicle for campaign 
finance reform. Thousands of American jobs and the safety of our 
nation's roads are in Congress' hands. This program is too important to 
leave unfunded for the months ahead. Please do not leave for the year 
without passing an extension of the Federal-aid highway program.
    I would like to ask that in addition to our statement the record 
include two letters in support of a short-term extension from the 
Laborers and Operating Engineers unions; a TCC letter to senators that 
describes some of the issues we have discussed in more detail; a FHWA 
chart indicating unobligated balances as of September 30, 1997; an 
analysis of when States will run out of Federal highway funding; a 
Washington Post article entitled, ``Delay of Wilson Bridge Funding 
Criticized''; news release from the Iowa Department of Transportation; 
and copies of the economic studies I have referenced.
    Thank you again for the opportunity to testify. I would be happy to 
answer any questions you may have.
                               __________
    Additional Statement from Transportation Construction Coalition 
                   Concerning Senator Bond's Proposal
    On behalf of the TCC, I would like to express our gratitude to 
Senator Bond for his work in crafting a proposal to extend the Federal-
aid highway program for 6 months. Within one week of unveiling the 
proposal, the Senate passed a modified version of the Bond proposal. 
Most importantly, the legislation allows States to continue to let 
contracts through the spring construction season, thereby saving 
hundreds of thousands of jobs.
    The TCC strongly supports the flexibility that the legislation 
grants to the States to transfer funds from one account to another. As 
I mention in my statement, only a limited amount of the unobligated 
balances as of October 1, 1997 are available in the core highway 
construction accounts of Interstate Maintenance, National Highway 
System, and Bridge. Significant balances, however, remain in the 
smaller Congestion and Mitigation and Air Quality (CMAQ) and 
Enhancement accounts. The CMAQ account has over $1 million in 
unobligated balances, while the Enhancement account, within the Surface 
Transportation Program (STP) account, has over $900 million. Both the 
unobligated balance in the CMAQ and Enhancement accounts exceed what 
the accounts were apportioned for the entire fiscal year 1997. The 
ability to transfer funds to the needed accounts will enable States to 
maximize the use of the limited funds.
    While the TCC supports the freedom to transfer funds within the 
various categories, we question the need to require States to repay the 
accounts from where money is transferred. The reason States will 
transfer money from the accounts with large unobligated balances, 
namely the CMAQ account and Enhancement account, is because States do 
not plan to use that money, as is evident from the large unobligated 
balances, and States have much more crucial needs improving their 
interstate and national highway system roads and bridges. This debate 
has certainly underscored the need to provide States the flexibility to 
use their Federal funds to meet their States unique needs and 
priorities. While this legislation temporarily provides States this 
needed flexibility, we believe next year's multi-year reauthorization 
should include permanent flexibility. As our highways and bridges are 
crumbling, CMAQ and Enhancement funds are set aside and used, or not 
used as is demonstrated by the large balances, for such non-highway 
purposes as pedestrian or bicycle facilities, landscaping and 
beautification, rehabilitation and operation of historic buildings, or 
other non-highway purposes.
    Although we would make the aforementioned alteration to the ``Bond 
proposal,'' the TCC commends Senator Bond for developing the six-month 
compromise legislation and ensuring the continuation of federal-aid 
highway program.
                               __________
                 Transportation Construction Coalition
                          member organizations
    American Road & Transportation Builders Association (co-chair)
    Associated General Contractors of America (co-chair)
    American Coal Ash Association
    American Concrete Pavement Association
    American Concrete Pipe Association
    American Consulting Engineers Council
    American Portland Cement Alliance
    American Subcontractors Association
    American Traffic Safety Services Association
    Asphalt Emulsion Manufacturers Association
    Asphalt Recycling & Reclaiming Association
    Associated Equipment Distributors
    Construction Industry Manufacturers Association
    Equipment Manufacturers Institute
    International Slurry Surfacing Association
    International Union of Operating Engineers
    Laborers-Employers Cooperation and Education Trust
    Laborers' International Union of North America, AFL-CIO
    National Asphalt Pavement Association
    National Association of Surety Bond Producers
    National Ready Mixed Concrete Association
    National Aggregates Association
    National Stone Association
    National Utility Contractors Association
    Precast/Prestressed Concrete Institute
    The Road Information Program
                               __________
  Supplemental Statement by the Transportation Construction Coalition
how soon will states run out of federal highway funding if the highway 
           program is not reauthorized by september 30, 1997?
    If Congress fails to reauthorize the Federal-aid highway program 
before the Intermodal Surface Transportation Efficiency Act expires on 
September 30, 1997, States will start running out of contract authority 
early in 1998, according to an analysis of Senate Appropriations 
Committee and Federal Highway Administration (FHWA) data conducted for 
the Transportation Construction Coalition (TCC) by the American Road & 
Transportation Builders Association's Economics and Research Division. 
This would bring to a halt Federal funding for new projects to repair 
or construct highways.
    Florida is projected to be the first State to run out of regularly-
apportioned Federal highway funds, exhausting its existing unobligated 
balance in January, 1998.
    Another 10 States will exhaust their Federal highway funds in 
February, including Illinois, Michigan and New York.
    The majority of States, including California and Texas, are 
projected to be out of money by March and almost all will be out of 
funds by May.
    Without a timely reauthorization of the Federal-aid highway 
program, most States will run out of highway funds during the peak of 
the spring and summer repair and construction season, according to the 
TCC's analysis, causing further deterioration of our nation's highways 
and job loss for thousands of highway construction workers.
    The TCC analysis is based on data from the Senate Appropriations 
Committee and the Federal Highway Administration, and the FHWA's 
recently-announced interim allocation of obligation limitation.
    If Congress fails to reauthorize the Federal highway program by 
September 30, the FHWA plans to distribute an interim first-quarter 
Federal-aid obligation limitation among the States, according to 
Department of Transportation (DOT) Assistant Secretary for Governmental 
Affairs Steven Palmer. \1\
---------------------------------------------------------------------------
    \1\ As explained in a July 29, 1997, letter to Senators Bob Graham 
and Carl Levin.
---------------------------------------------------------------------------
    This plan would distribute the obligation limitation appropriated 
for FY 1998 (approximately $21.8 billion less administrative and other 
expenses) among the States based on each State's share of FY 1997 
contract authority under current ISTEA distribution formulas States 
would be permitted to obligate one-fount, of the computed amount during 
the first quarter of FY 1998. After new authorizing legislation is 
enacted, the interim distribution would be adjusted to reflect any 
changes in the distribution formulas, so that the full-year 
distribution would be under the new formulas.
    Although FHWA has not issued plans for distributing obligation 
authority past the first quarter of FY 1998 if new authorizing 
legislation is not enacted before December 31, 1997, the ARTBA team has 
used the interim first quarter formula to project the date at which 
each State would exhaust its existing unobligated balance and run out 
of authority to spend money on highways if reauthorization is delayed. 
The results are presented in the attached table
    The first column shows each State's projected allocation for FY 
1998 as computed by the Senate Committee on Appropriations, based on 
current law distribution formulas and the obligation limit included in 
the Senate-passed version of the DOT appropriations bill. These figures 
may change slightly when Congress passes the final DOT appropriations 
bill this fall.
    The second column shows the expected unobligated balance for each 
State or. October 1, 1997, (the start of FY 1998) based on data from 
FHWA.
    The third column shows how much each State would be permitted to 
obligate during the first quarter of FY 1998 under FHWA's interim plan.
    The final column projects when each State would exhaust its 
unobligated balance--and thus run out of new highway funds--assuming 
the interim program formula is continued for the rest of the year. \2\
---------------------------------------------------------------------------
    \2\ The projections assume States will fully obligate the reminder 
of their FY 1997 limitation and the interim obligation limitation for 
the first quarter of FY 1998. States that do not fully obligate up to 
their limit may be able to extend the date on which they exhaust their 
unobligated balances. Since the Federal-aid highway program consists of 
separate programs with separate allocations, States will exhaust the 
unobligated balance for some programs before the indicated date and 
some after. To the extent that a State's unobligated balance is in low-
priority program areas, the State will exhaust funds for high-priority 
projects sooner than shown.
---------------------------------------------------------------------------
    This does not mean States would have to shut down their highway 
program on the date in the fourth column. They would be able to 
continue work on existing projects to the extent they were funded out 
of earlier allocations or out of State money. But no new projects 
dependent on Federal funding could be started.
    For most States, the exhaustion of contract authority will occur 
just at the peak of the highway repair and reconstruction season, 
causing serious disruptions in State programs. Without timely 
reauthorization, the delay will cause further deterioration in our 
nation's highways.
    Questions on the analysis should be directed to Dr. William 
Buechner, ARTBA's director of economics and research, at 202-289-4434.



              [From the Washington Post, November 1, 1997]
               Delay of Wilson Bridge Funding Criticized
 span 's limited life puts region on ``brink'' of crisis, area leaders 
                                  say
                         (By Richard Tapscott)
    Washington area leaders said yesterday that Federal delays in 
providing money for a replacement Woodrow Wilson Bridge threaten to put 
the region on the ``brink'' of a transportation crisis.
    With highway legislation bogged down on Capitol Hill, the leaders 
called on U.S. Transportation Secretary Rodney E. Slater to develop a 
comprehensive funding proposal that Congress can consider when it 
returns to work early next year. They asked Slater to name a commission 
that would draft a detailed plan within 90 days.
    Frustrated that a year has elapsed since plans were unveiled for a 
near, 12 lane Wilson Bridge, local business, highway and consumer 
groups said it may be difficult to build a replacement in time to avoid 
banning trucks or imposing other weight restrictions on the aging span 
over the Potomac on the Capital Beltway.
    Virginia Transportation Secretary Robert E. Martinez said the 
Wilson Bridge, which links Alexandria with Prince George's County, has 
seven to nine more years of ``useful life.'' At a news conference 
yesterday, Martinez emphasized the time it would take to build a new 
bridge. Even if everything goes right," he said, we are right at the 
brink of a major, regional transportation crisis."
    A spokesman for Slater's department said he could not say whether a 
commission will be appointed but added that Slater looks forward to 
working with local authorities to ensure the success of the project."
    The Wilson Bridge, which is owned by the Federal Government and is 
the only drawbridge on the interstate highway system, carries 172,000 
vehicles daily, more than twice its design capacity. Because it is six 
lanes wide, it is a continual traffic bottleneck for vehicles entering 
from the eight lane Beltway on either end. Critics also say the Wilson 
Bridge is among the reasons Washington has the second most-congested 
highways in the nation.
    David L. Instead, Maryland's transportation secretary, said local 
officials have done their part in coming to an agreement on a $1.6 
billion bridge plan as the replacement. We still don't have a critical 
Federal response.'' Winstead: said.
    In a letter to Slater, AAA President Robert L. Darbelnet decried 
the fact that the project had come to a standstill. ``With each passing 
day 172,000 vehicles pass over the bridge, making it a little less 
structurally sound and bringing it closer to the day when traffic 
restrictions we have to be imposed.
    Restrictions could force Interstate 95 truck traffic onto already 
congested alternate routes through the District or into Maryland via 
the American Legion Bridge.
    A Senate highway construction measure, fashioned by Sen. John W. 
Warner (R-VA), would set aside $900 millon for a replacement bridge. 
The House counterpart bill contains no dollar figure for the bridge. 
Both bills have been stymied by unrelated issues and are not expected 
to be acted upon until next year. The Clinton administration had 
proposed only $400 million for the bridge, an amount that Martinez 
yesterday ceded ``ridiculous."
    If the money for building a replacement span were available now and 
construction went perfectly, Martinez said a new bridge might be built 
before weight restrictions had to be imposed.
    John J. Collins, a senior vice president of the American Trucking 
Associations, said the bridge has the highest accident rate on the 
Beltway. His organization, Collins said, wants the Federal Government 
to pay for a bridge and opposes tolls for safety reasons.
    Lon Anderson, a spokesman for AAA Potomac, said disaster is still 
preventable. However, he added, ``We have no money, and time is running 
out.''
                               __________
     [From the Iowa Department of Transportation, October 30, 1997]
      Lack of Congressional Action Could Be Devastating to Iowa's 
                   Transportation Program and Economy
                     dot schedules news conference
    Ames, IA.--The failure of Congress to pass a Federal highway 
financing bill may prove devastating to Iowa's sound economy, public 
safety, and future highway improvements.
    Tuesday, October 28, 1997, the Senate apparently abandoned its 
efforts to authorize a new highway and transit bill denying Iowa and 
other States essential funds for construction of highways and bridges, 
highway safety programs, and for mass transit programs. According to 
reports, Senate Majority Leader Trent Lott of Mississippi pronounced 
the highway measure "apparently dead for the year."
    To reveal the potentially disastrous impact on Iowa's 
transportation program and the construction industry the DOT will be 
holding a special news conference Friday, October 31. DOT Director 
Darrel Rensink will speak about how a lack of Federal funding will 
affect bid lettings scheduled for January through March 1998.
    Representatives from the Associated General Contractors of Iowa, 
Iowa Concrete Paving Association, Asphalt Paving Association of Iowa, 
and the Iowa Limestone Producers Association, Inc. will share their 
organization's reaction to the news.The news conference will be held at 
the State Capitol, Room 118, in Des Moines, beginning at 10:30 am.
                                 ______
                                 
    Ames, IA.--Tuesday, October 28, 1997, the Senate apparently 
abandoned its efforts to authorize a new highway and transit bill 
denying Iowa and other States essential funds for construction of 
highways and bridges, highway safety programs, and for mass transit 
programs. According to reports, Senate Majority Leader Trent Lott of 
Mississippi pronounced the highway measure ``apparently dead for the 
year.''
    Iowa receives over $200 million in Federal funds for highway and 
bridge construction each year. Without Federal funding, the DOT will be 
unable to proceed with the planned contract lettings for next year. 
Additionally, contracts planned by counties and Sties will also be 
impacted.
    According to Darrel Rensink, director of the Iowa Department of 
Transportation, ``Iowa has enough money in the pipeline to last through 
the month of January 1998. However, I'm going to postpone my decision 
about whether to proceed with the February letting for 30 days. The 
decision about whether to hold the March letting, and those beyond, is 
being postponed indefinitely.),
    Delaying contracting of projects could postpone the completion of 
many projects for another year. The DOT's current schedule shows over 
$233 million in highway and bridge construction projects being let in 
January through March of 1998.
    A lack of Federal funds will directly affect the continued 
development of Iowa's six mayor highway corridors included in the DOT's 
Transportation Improvement Program. The six corridors are Avenue of the 
Saints, Des Moines to Burlington, Iowa 5 in Polk and Warren Counties, 
Iowa 60 from Sioux City to the Minnesota State line, Iowa 330 from Des 
Moines to Marshalltown, and U.S. 151 from Cedar Rapids to Dubuque.
    Since the Federal highway program expired September 30, Iowa has 
been using unobligated Federal funds to keep as many programs going as 
possible. However, the DOT is running out of Federal money and a fiscal 
impasse is expected early next year.
                               __________
                     Transportation Construction Coalition,
                                  Washington, DC, October 30, 1997.
    The Honorable John W. Warner, Chairman
    Subcommittee on Transportation and Infrastructure
    Senate Office Building
    Washington, DC. 20510

    Dear Senator Warner: The 26 member organizations of the 
Transportation Construction Coalition support a multi-year 
reauthorization of the Federal surface transportation program funded at 
the highest level that can be supported through the Highway Trust Fund.
    If this is not possible before Congress adjourns this year, 
however, it is essential that the programs in the Intermodal Surface 
Transportation Efficiency Act of 1991 (ISTEA) be temporarily extended 
until a new multi-year authorization can be passed. To minimize 
disruption to the program, which would compromise highway safety and 
cause economic hardships to our industry, we suggest that such a 
temporary extension by Congress include the following provisions:
    The duration of the extension should be a minimum of 6 months, 
preferably at least 8 months. State departments of transportation must 
make funding and contracting plans well in advance of the typical 
March-October peak construction and maintenance period. That requires 
an assured source of timely Federal support. If Congress adjourns 
without either enacting new multi-year authorizing legislation or 
extending the current program at least 6 months, most States will lose 
much or all of the 1998 construction season.
    The Federal Highway Administration must remain operational. Failure 
to provide additional spending authority for the highway program could 
result in a virtual shutdown of the Federal Highway Administration in 
the near future. The agency's administrative operations are largely 
financed by set-asides from funds authorized for individual highway 
construction programs. Just as there are some unobligated funds 
available for State construction activities, the agency has a limited 
amount of carry-over funds for operations. These funds are likely to be 
exhausted by the end of 1997 and FHWA could be forced to shut down. 
Such a situation would end the agency's oversight of program activities 
and would prohibit the payment of salaries to FHWA employees. A short-
term extension of ISTEA would prevent a shutdown of the Federal Highway 
Administration.
    If Congress does not pass a multi-year reauthorization bill this 
year, an extension of the existing ISTEA legislation should temporarily 
allow States to flex money among the various categorical programs to 
meet their most pressing transportation needs. Since an extension will 
provide new budget authority for only a short period of time, States 
should be allowed to use the money where it is most needed by 
temporarily transferring spending authority from lower-priority 
programs. When a new multi-year program is passed, the States that made 
use of this flexibility could be required to restore the categorical 
balances.
    Any extension of the current program should allocate apportioned 
funds to the States according to a timetable designed to support their 
construction needs. The six-month extension passed by the House of 
Representatives (H.R. 2516) instructs the Secretary of Transportation 
to distribute half of the obligation limitation for FY 1998 on October 
1, 1997, and half on July 1, 1998. July 1, however, comes too late for 
the 46 States which have fiscal years that begin on July 1 and end on 
June 30. Many of these States would have only half of their FY 1998 
distribution in time to accomplish their FY 1998 construction programs. 
We urge that the second distribution be made on April 1, 1998, giving 
the States the funds they need in a timely manner and without 
interruption.
    The attached correspondence is offered for your background. We hope 
these suggestions are helpful.
            Sincerely,
                  The Transportation Construction Coalition



                International Union of Operating Engineers,
                                  Washington, DC, November 3, 1997.

    Senators John H. Chafee and Max Baucus,
    Senate Committee on Environment and Public Works
    Washington, DC 20510

    Dear Chairman Chafee and Ranking Member Baucus: The International 
Union of Operating Engineers (IUOE) represents 400,000 members 
throughout the country, the majority of whom are skilled heavy 
equipment operators in the construction industry. We have been actively 
engaged with other building trades unions, as well as our construction 
industry counterparts, in seeking reauthorization of ISTEA. While you 
both have worked diligently to pass a comprehensive six-year bill in 
the Senate. other extraneous political issues thwarted that effort As a 
result, the Senate now faces the choice of a short-term extension or no 
extension of ISTEA in the final days of this session of Congress.
    On behalf of our hard-working members who earn their livelihood 
building the transportation infrastructure of this country, we strongly 
encourage you to advocate passage of six-month ISTEA extension similar 
to what the House has passed. While a six-month bill may be less than 
ideal in addressing the range of transportation infrastructure issues 
which a more comprehensive bill should to, nonetheless Congress must 
ensure that badly needed highway and transit funds keep flowing to the 
States. The IUOE will continue to aggressively work with you in the 
coming months as Congress considers and passes the necessary multi-year 
ISTEA reauthorization.
    Thank you again for your continued leadership on this critical 
piece of legislation.
            Sincerely,
                                              Frank Hanley,
                                                 General President.
                               __________
  Statement of James R. Thomas, Jr., P.E., FACEC, President, American 
                      Consulting Engineers Council
    Mr. Chairman and members of the Committee, thank you for the 
opportunity to share with you the views of those who, working in 
partnership with State transportation departments, plan and design our 
nation's surface transportation systems. My name is Jim Thomas and I am 
a managing partner of George, Miles & Buhr Engineers-Architects in 
Salisbury, Maryland.
    The American Consulting Engineers Council (ACEC) is the largest 
trade organization of its kind, representing over 5,700 consulting 
engineering firms from across the country, employing some 250,000 
people. Our members are consultants to public and private entities, and 
furnish professional services in planning, engineering, maintenance, 
and operation of our nation's transportation systems.
    Our message today is a simple one. Congress should not adjourn its 
First Session without completing one of its basic responsibilities, the 
reauthorization of the Intermodal Surface Transportation Efficiency Act 
of 1991 (ISTEA).
    Mr. Chairman, ACEC testified this past March before the 
Transportation and Infrastructure Subcommittee that the delivery of 
transportation projects in this country is taking too long and is 
costing American taxpayers in terms of delayed safety, convenience and 
economic vitality. We submitted a number of recommendations that would 
shorten the average delivery time of projects from 10 years to 7 years 
without weakening our environmental laws or limiting public or agency 
participation in the planning of projects.
    Our proposals were embraced by Senators and Members of Congress on 
both sides of the aisle and have been included in the underlining ISTEA 
reauthorization bills pending in both the House of Representatives and 
the U.S. Senate.
    When ACEC made its recommendations and estimated the impact they 
would have on the project delivery schedule, a key underlining 
assumption was that ISTEA would be reauthorized before the September 
30, 1997 expiration date. Should Congress adjourn without even enacting 
a temporary extension of the ISTEA program, then the gains that might 
have been made with respect to the ``timesaving'' project delivery 
schedules included in both S. 1173 and H.R. 2400 will be lost in both 
the short- and long-run.
    I want to share with you what ACEC members, many of them small 
business owners, are saying about the impact shutting down the ISTEA 
program will have on their lives, jobs, and the nation's transportation 
system. These quotes are from actual letters sent to their Senators on 
this very issue.
    A Professional Engineer from Missouri writes: ``I am very concerned 
that a new Highway Bill has not passed or the current ISTEA Program 
extended. With the start of the new fiscal year, I am already seeing 
projects that are ready to be constructed being held up due to funding 
issues in Washington. Further delays may hurt the economy due to lack 
of construction projects; and, with the coming of winter, jobs may also 
be lost.''
    A Civil Engineer from Wisconsin writes: ``Congress' non-support 
(for enacting a short-term extension) will have an economic impact. I 
am President of a consulting firm in Wisconsin, employing over 200 
people, and a lack of funding for road and highway projects will cause 
a real loss of jobs. We will not have sufficient work to keep our staff 
of Transportation Engineers and Technicians gainfully employed.''
    A Professional Engineer and Chairman of the Board for a consulting 
engineering firm in Florida writes: ``A six-month loss of Federal 
funding would have an unacceptable negative impact on our economy, 
costing up to 42,000 jobs for every $1 billion delayed, would increase 
the level of public health and safety concerns, and would significantly 
increase the cost of delayed projects. This company will personally 
feel that impact, as we are currently performing approximately $3 
million in annual services for the Florida Department of 
Transportation.''
    Mr. Chairman, these are not isolated comments but just a mere 
sampling of the hundreds of letters ACEC members have been sending 
their Senators about the impact of not reauthorizing ISTEA.
    ACEC members are not alone in their views. The American Association 
of State Highway and Transportation Officials surveyed the States on 
the impact to department operations of letting the program lapse. 
Idaho, for example, reports that postponing Federal project development 
activity would have disastrous consequences for the timely progress of 
projects. Moreover, federally assisted preliminary engineering, 
(including consultant contracted work), right-of-way acquisition, and 
planning activities would no longer proceed.
    Mr. Chairman, stopping the program even for a brief period will 
also impact project delivery schedules in the long-run. If preliminary 
engineering and design work is not allowed to proceed, then 
construction will not occur and, in fact, be deferred into a second 
construction season, thus crowding out and delaying projects that were 
planned for the second year. The effect would be a rippling delay that 
may take years for States to fully recovery. More importantly, projects 
that effect safety will be deferred.
    In closing, Mr. Chairman, ACEC urges you and the other 
distinguished members not to let ISTEA's program lapse. There is still 
time for the Senate to do its job to enact a short-term extension of 
ISTEA so that ACEC members may continue do our job, which is to design 
high quality and safe highways, bridges and transit systems for the 
American people.
    Thank you, Mr. Chairman, for giving ACEC this opportunity to 
include our views for the record.