[Senate Hearing 108-640]
[From the U.S. Government Publishing Office]



                                                      S. Hrg. 108 - 640


                   THE ADMINISTRATION'S PROPOSAL FOR
                     REAUTHORIZATION OF THE FEDERAL
                     PUBLIC TRANSPORTATION PROGRAM

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

     THE REAUTHORIZATION OF THE PUBLIC TRANSPORTATION TITLE OF THE 
 TRANSPORTATION EQUITY ACT FOR THE 21ST CENTURY (TEA-21) WHICH EXPIRES 
                         ON SEPTEMBER 30, 2003

                               __________

                             JUNE 10, 2003

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs

                    U.S. GOVERNMENT PRINTING OFFICE
96-194                      WASHINGTON : DC
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah              PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming             TIM JOHNSON, South Dakota
CHUCK HAGEL, Nebraska                JACK REED, Rhode Island
RICK SANTORUM, Pennsylvania          CHARLES E. SCHUMER, New York
JIM BUNNING, Kentucky                EVAN BAYH, Indiana
MIKE CRAPO, Idaho                    ZELL MILLER, Georgia
JOHN E. SUNUNU, New Hampshire        THOMAS R. CARPER, Delaware
ELIZABETH DOLE, North Carolina       DEBBIE STABENOW, Michigan
LINCOLN D. CHAFEE, Rhode Island      JON S. CORZINE, New Jersey

             Kathleen L. Casey, Staff Director and Counsel

     Steven B. Harris, Democratic Staff Director and Chief Counsel

                  Sherry Little, Legislative Assistant

                    Richard Steinmann, FTA Detailee

                   Sarah A. Kline, Democratic Counsel

                  Aaron D. Klein, Democratic Economist

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)


                            C O N T E N T S

1                              ----------                              

                         TUESDAY, JUNE 10, 2003

                                                                   Page

Opening statement of Chairman Shelby.............................     1

Opening statements, comments, or prepared statements of:
    Senator Johnson..............................................     3
    Senator Enzi.................................................     4
    Senator Corzine..............................................     5
        Prepared statement.......................................    38
    Senator Bunning..............................................     6
    Senator Stabenow.............................................     7
        Prepared statement.......................................    38
    Senator Miller...............................................     9
        Prepared statement.......................................    39
    Senator Santorum.............................................     9
        Prepared statement.......................................    40
    Senator Reed.................................................    10
        Prepared statement.......................................    40
    Senator Sarbanes.............................................    11
    Senator Carper...............................................    13
    Senator Bennett..............................................    26

                               WITNESSES

Norman Y. Mineta, Secretary, U.S. Department of Transportation 
  Accompanied by Jennifer L. Dorn, Administrator, Federal Transit 
  Administration, U.S. Department of Transportation..............    15
    Prepared statement...........................................    41
    Response to written questions of:
        Senator Reed.............................................    72
        Senator Sarbanes.........................................    75
        Senator Dole.............................................    77
William Millar, President, American Public Transportation 
  Association....................................................    29
    Prepared statement...........................................    48
    Response to written questions of:
        Senator Shelby...........................................    79
        Senator Reed.............................................    82
        Senator Sarbanes.........................................    84
Jeff Morales, Director, California Department of Transportation, 
  on behalf of The American Association of State Highway and 
  Transportation Officials.......................................    31
    Prepared statement...........................................    52
    Response to written questions of:
        Senator Shelby...........................................    86
        Senator Reed.............................................    88
        Senator Sarbanes.........................................    89
Robert Molofsky, General Counsel, Amalgamated Transit Union......    33
    Prepared statement...........................................    54
    Response to written questions of:
        Senator Shelby...........................................    89
        Senator Reed.............................................    95
        Senator Sarbanes.........................................    96
Harry W. (Woody) Blunt, Jr., President, Concord Coach Lines, 
  Concord, New Hampshire on behalf of the American Bus 
  Association....................................................    35
    Prepared statement...........................................    64
Jim Seal, Former Consultant, Federal Transit Administration......    36
    Prepared statement...........................................    68

              Additional Material Supplied for the Record

The Benefits of TEA-21 Funding Guarantees by the Jeffrey A. 
  Parker, December 2002..........................................   101

 
                   THE ADMINISTRATION'S PROPOSAL FOR
                     REAUTHORIZATION OF THE FEDERAL
                     PUBLIC TRANSPORTATION PROGRAM

                              ----------                              


                         TUESDAY, JUNE 10, 2003

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.

    The Committee met at 10:01 a.m., in room SD-538 of the 
Dirksen Senate Office Building, Senator Richard C. Shelby 
(Chairman of the Committee) presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The hearing will come to order.
    I am pleased this morning to welcome Transportation 
Secretary Norman Mineta. Mr. Secretary, it is always good to be 
with you. I am very glad you could come and be with us today. I 
appreciate that you and other panelists took the time to come 
before the
Committee.
    I asked Secretary Mineta to share the details of SAFETEA, 
the Administration's proposal to reauthorize the surface 
transportation program. Obviously, this Committee is most 
interested in the transit title of the bill. TEA-21 expires on 
September 30 of this year, and I have made transit 
reauthorization a high-priority item for the Committee's 
consideration. This is the second hearing, Mr. Secretary, we 
have had on transit at the Full Committee level, but it won't 
be the last.
    We had the benefit of hearing from Federal Transit 
Administrator Ms. Dorn, who is with us today, on March 13, when 
the Committee invited her to come discuss the details of the 
2004 budget proposal for FTA. Embedded in the budget were many 
of the Administration's ideas for reauthorization, so the 
Committee got an early opportunity to digest many of the 
central components of the proposal. When the SAFETEA proposal 
was formally conveyed to the Congress in late May, months later 
than it was expected--but better late than never, as we say--we 
were already armed with some advance information about its 
content.
    As such, we have had the opportunity not only to learn some 
of the details of the proposal, but we also have had the chance 
to react to them as well. Many of you have already heard that 
the Ranking Member and I are opposed to reducing the Federal 
match for New Start projects from 80 percent to 50 percent 
while maintaining the 80 percent Federal share for highway 
projects. I believe that would be a mistake and would create an 
imbalance between the two modes. I think our goal should be to 
remain mode-neutral and allow communities to make decisions 
about what best suits their needs and maintain a level playing 
field.
    I am most concerned, however, about the idea of eliminating 
the Bus Program. To many people, bus service is the lifeblood 
of the transit system. In the majority of communities, bus 
grants are an invaluable resource and buses the sole mode of 
public transportation. Eliminating the program would be 
detrimental to mid-sized communities who need lump sums to make 
bus purchases and build bus facilities.
    Another item I want to mention is the overall inadequacy of 
the total funding level. This is an argument that I anticipate 
that you will hear several Members of the Committee comment on. 
Mr. Secretary, you may be aware that the Senate passed an 
amendment to the budget that would increase the overall number 
for highways and transit. That amendment, which was passed with 
the support of 79 of my colleagues, bumped up the number for 
transit to $56.5 billion. Certainly that vote is reflective of 
the growing demand and need out there for more resources. 
Unfortunately, the $46 billion proposed in SAFETEA doesn't 
address the concern. The level proposed by the President is a 
current services budget and, I think, it is insufficient. Mr. 
Secretary, that gives you a thumbnail sketch of what about the 
proposal concerns me and others, so let me now move to tell you 
what I do like about your bill.
    I am pleased that rural transit is finally garnering the 
attention it deserves. I have seen value in fostering rural 
connectivity in communities all over the country. Currently, 40 
percent of rural counties offer no transit service at all, and 
increasing the opportunities to provide essential bus service 
in rural America I think is a very positive step.
    I also like the idea, Mr. Secretary, of expanded 
eligibility for bus rapid transit in the New Starts category. 
We need to have discussions about how exactly this would work 
in practical application, but I am favorable here. I think this 
is a good proposal. The Committee will be holding a hearing on 
just this issue on June 24. As it is an emerging technology 
that was not a viable option during the time of the TEA-21's 
writing, I think it is especially important that we look at it 
and look at it closely.
    I am pleased that you have put a focus on fostering 
coordination between the providers of social service 
transportation. This is an area long disregarded, and I think 
your proposal responds to a need, first identified by the GAO, 
to make human service coordination of transportation services a 
priority.
    There are several other areas I think represent progress 
and others where the basic idea was sound but the details may 
require some tweaking. I am intrigued by the idea of 
performance incentives for ridership increases. And I want to 
learn more about how you envision that working.
    I would like to make sure that there is an equal focus on 
building efficiencies, both in capital investments as well as 
operational expenses. Transit agencies should be held 
accountable for their cost and ridership projections for New 
Starts projects and, certainly, transit agencies should be 
making the utmost effort to identify areas in need of reform 
that drive up the daily cost of doing business. Addressing both 
of these items will be useful in ensuring that transit 
resources are carefully spent and are spent for the benefit of 
those to which it is intended--the riders of public 
transportation.
    With that, Mr. Secretary, we will see if there are any more 
opening statements. Senator Johnson.

                STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Thank you very much, Mr. Chairman. I 
appreciate you holding today's hearing to consider how to 
improve our transit programs.
    Welcome to Secretary Mineta, Ms. Dorn. Secretary Mineta is 
a long-time friend and a former colleague of mine in the golden 
days of the House of Representatives.
    Secretary Mineta. We all are.
    Chairman Shelby. All of us have served in the House. We are 
all colleagues.
    Senator Johnson. That is true. I am very appreciative of 
his continued public service to our country.
    As we work to develop a bill on transit funding, I want to 
work with the Committee to address the particular needs of 
rural States such as my own, South Dakota. I appreciate that 
when people think of transit, they largely think of urban 
areas, and properly so. I have been a long-time supporter of 
Amtrak and light-rail development, and I recognize the transit 
needs of our urban areas. My title is U.S. Senator, not South 
Dakota Senator.
    But at the same time, in the past rural areas have not 
received all the attention that they deserve. Many of my fellow 
South Dakotans rely heavily on transit. We have very low-
density areas in our State, and yet they need adequate transit 
service, particularly for senior citizens and disabled. My 
State, with an increasingly elderly population, is home to a 
significant transit-dependent population. Although the transit 
program should always have considerable emphasis on large urban 
areas, current transit formulas frankly do not adequately meet 
the needs of rural States such as mine.
    Mr. Chairman, I want to address the needs of my State as 
part of a plan that is good for the country as a whole, and I 
want to help the Banking Committee grow the program. 
Unfortunately, in my view, the Administration's SAFETEA program 
does not grow the program, and I share the concerns of many 
over the Administration's plan to reduce the Federal match for 
New Starts. I believe that rural transit does not receive a 
sufficient Federal match, and I certainly intend to work with 
my urban friends on the match issue for all of us.
    I want to make a few more points on rural transit. First, 
it is not enough to just increase funding for the rural 
program. The current rural formula just doesn't get enough 
money to States that need it most. We need a per-State minimum 
in some categories. Mr. Chairman, to do this will not cost very 
much. It is also important to remember that none of the New 
Start money goes to South Dakota.
    Mr. Chairman, South Dakota does participate, most years, in 
the Discretionary Bus Program that you have alluded to, and I 
share your discomfort with the elimination of that program. To 
illustrate my point, South Dakota's share of discretionary bus 
funding last year was greater than the additional funding that 
the
Administration would send to my State each year through 
increases in the Rural Transit Program.
    In conclusion, last year I cosponsored S. 2884, which 
provided a reasonable floor per State under the funding level 
for the Rural Program, for the Elderly and Disabled Program, 
and for small metro areas. And I was pleased that Senators 
Allard, Crapo, Hagel, and my friend Mike Enzi are Members of 
this Committee who also cosponsored that measure. That bill 
also clarified the ability to use Elderly and Disabled Program 
funds for operating assistance and would increase the Federal 
match for operating costs in the Rural Program.
    Western States do not have transit match parity with 
highways as the highway match in Western States is over 80/20 
due to the Federal lands adjustment in the Highway Program. 
This adjustment should also apply to the Transit Program, at 
least for the Rural Program, the Elderly and Disabled Program, 
and small metro areas such as Sioux Falls or Rapid City.
    I want to work with the Chairman and Ranking Member to 
strengthen public transportation as a whole, and I believe that 
the key concepts that others have joined me in advancing last 
year should and can be accommodated in our work this year.
    Thank you, Mr. Chairman. Thank you, Mr. Secretary, and I 
look forward to hearing from our panelists today.
    Chairman Shelby. Senator Enzi.

              STATEMENT OF SENATOR MICHAEL B. ENZI

    Senator Enzi. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    Over the weekend I was in Cody, Wyoming, and mentioned that 
I would be at this hearing, and State Senator Simpson sends his 
greetings to you.
    Secretary Mineta. I will see him on July 4.
    Senator Enzi. A lot of times people, when they think of 
Wyoming, do not think of transit. But we and South Dakota and 
some of the other Western States were the early developers of 
Share-a-Ride. That means two people on a horse.
    [Laughter.]
    Senator Enzi. We are interested in getting from one place 
to another, and that is how that came about. So despite our 
small
population, we have some very real transit needs that need to 
be addressed. Unfortunately, the current funding distribution 
model for transit programs leaves behind the States with 
smaller populations like Wyoming, and a lot of these comments 
will be an echo of what Senator Johnson said.
    This year, Wyoming entities received approximately $5.1 
million in transit funds. That equals approximately seven one-
hundredths of 1 percent of the transit program. Of these funds, 
50 percent came from a $2.5 million one-time allocation from 
the Discretionary Bus Program because of the fine work of 
Chairman Shelby on the Appropriations Committee. I did want to 
acknowledge and express my appreciation for your efforts in 
that matter. It was a tremendous help to Wyoming.
    Unfortunately, the Administration proposes in SAFETEA to 
end this critical program which may result in even fewer 
dollars for Wyoming. Although there will be an overall increase 
for rural programs, it does little to ease my concerns about 
the need to provide adequate transit funding for all States. 
Simply throwing more money in the pot will not yield the 
results we are hoping to achieve; rather, I fear it will 
produce some big winners and some big losers. Although each 
State may receive the same percentage increase, that won't help 
States like Wyoming that start out with only seven one-
hundredths of 1 percent of the transit budget.
    Last year, Senator Allard brought in a witness from rural 
Colorado who recommended a minimum of $5 million per State 
annually for the Rural Transit Program. That was picked up in 
the bill S. 2884 that Senator Johnson mentioned that a number 
of us are cosponsors of that kind of approach to this problem. 
We need a small-State minimum for both the Rural Transit and 
the Elderly and Disabled Program. Small-State minimums are 
common for a number of formula-based programs because certain 
costs are present regardless of the location or the population. 
A little does go a long way in these small States, and that is 
why I cosponsored that bill. It was a good bipartisan effort to 
address rural issues at a very modest cost.
    I am very pleased we are taking a closer look at these 
issues in
this hearing today because rural States do have transit needs, 
too, and the current rural formula does not work for the rural 
States. We need more vanpools and other systems to help seniors 
and disabled and others in small communities. In addition, we 
also have to find ways to get seniors, disabled individuals, 
and other community members more strongly connected to the 
world beyond the city limits.
    I was pleased to learn the Administration included in its 
proposal a section on intermodal transportation. Intermodal 
transportation will be particularly beneficial for people in 
rural areas who have limited access to air and rail 
transportation, and that, again, kind of defines Wyoming. 
Connecting these systems will provide some real efficiencies 
that will save both travelers and the Government real money.
    I am looking forward to working with you, Mr. Chairman, on 
the Committee's bill and on problems I have outlined today. A 
number of us will be vigilant as we will show our interest in 
the transit projects that are very interesting and critical to 
rural and urban
America.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Corzine.

              STATEMENT OF SENATOR JON S. CORZINE

    Senator Corzine. Thank you, Mr. Chairman, and I appreciate 
your holding this hearing, and I, like all my colleagues, 
welcome Secretary Mineta, who is a terrific voice for 
transportation in this country and a terrific voice in general 
of a servant for our Nation.
    That said, I have strong doubts that SAFETEA will be 
sufficient, in at least my perspective, on meeting the needs 
facing our Nation's mass transit infrastructure. Challenges 
posed by increased ridership and aging of the rail and bridge 
network require a strong level financial commitment from the 
Federal Government, and, unfortunately, I find the level not 
consistent with what the needs are being defined. I am quite 
positive all of us can talk about more resources, but I think 
that if we are to deal with the kinds of transportation 
problems we have in my State, the most densely populated State 
in the Nation--actually, more densely populated than India--we 
need to have the development of these mass transit systems for 
quality of life, environmental, and economic bases that
are important.
    I just think the amount, the $45 billion plus in mass 
transit spending over the next 6 years is just not adequate, in 
my view. By our perspective, it is a 1.2-percent cut, if you 
take into account inflation, under the authorized amount under 
TEA-21 and falls well below the Senate's $56.5 billion that we 
talked about.
    I think you are all aware of the Conditions and Performance 
Report, and the difference between what is requested here and 
the additions just do not match. We should be doing more both 
for the rural States, obviously, some of the needs that my 
colleagues have mentioned are important, but in no way do I 
think that can take away from the fundamental needs of our 
urban communities in, as I say, the most densely populated 
State.
    We have been very fortunate in New Jersey in the sense that 
we have been treated well in the New Starts Program, but that 
is only because we are catching up on huge gaps in investments 
that need to be made, and we have argued long and hard about 
light-rail projects which would significantly change, as I 
suggested, the quality of life, environmental considerations, 
and economic development in the region. I also would mention in 
that context that we are number 49 in the dollars sent off to 
Washington of the 50 States and receiving it back. It is a hard 
argument not to deal with in my State that such a fundamental 
need as mass transit is not talked about.
    I am deeply opposed to this proposal that would cap new 
Federal funding at 50 percent instead of the 80/20 Federal-
State split. It is going to be an unbelievably burdensome 
change with regard to our States, wherever you are, with regard 
to their current fiscal situation, the long-run fiscal 
situation as we see. So while I know of the Secretary's 
personal commitment to transportation, there is a lot of work 
for us to improve this. I would like to be as cooperative as 
possible and work closely with the Chairman and the Committee 
to make that possible.
    Thank you.
    Chairman Shelby. Senator Bunning.

                STATEMENT OF SENATOR JIM BUNNING

    Senator Bunning. Thank you, Mr. Chairman. I would like to 
thank all of our witnesses who are testifying today, and I 
would especially like to welcome my good friend Norm Mineta, 
Secretary Mineta, excuse me, to the Committee.
    As we all know, Congress will be working on a 
transportation reauthorization bill this year. This is a big 
deal to all of us, and we all have very many transit needs. We 
have been hearing from the communities in our States about 
their transit needs. Primarily in Kentucky, the needs are for 
rural transportation. We do have needs for buses in Lexington, 
northern Kentucky, and Louisville. Louisville is also 
interested in a light-rail system. They are very far along with 
their studies and would like to start the new construction 
phase. I would like to concentrate on the rural needs today.
    Kentucky has 30 rural transportation providers who receive 
Federal assistance. We also have three small urban systems 
serving largely rural counties: Henderson, which also serves 
Henderson County; Owensboro, which also serves Daviess County; 
and Ashland, which also serves Boyd County. Federal assistance 
is critical to these agencies. Without it, they would cease to 
operate, leaving hundreds of thousands of Kentuckians immobile.
    Many of the riders are elderly or disabled, and rural 
transit is their only way to shop, visit the doctor, go to 
church, and interact with others. Rural transit also provides 
transportation for our workers to their jobs in some of the 
most economically depressed areas of the State and the country.
    Rural transportation is vital to our Commonwealth and yet 
only requires a handful of new buses or vans statewide each 
year. And operating costs for the whole State are just a 
fraction of what any large metropolitan area needs.
    Finally, since this is my only shot at Secretary Mineta 
this year, I think I would be remiss if I did not mention some 
other transportation needs. We are a State that is bordered by 
two major rivers, so we have a lot of bridge needs. Louisville 
has a request in for two bridges, which I am sure you have been 
made well aware of. But northern Kentucky/Cincinnati, which 
also needs a bridge to replace the Brent Spence Bridge, that 
allows I-71 and I-75 to cross the Ohio River. The Brent Spence 
Bridge was designed to carry 80,000 vehicles per day. 
Presently, it is carrying 150,000 vehicles during rush hour, 
and it is nearly impassable and is a great safety hazard 
because of truck congestion and deterioration due to the very 
large volume.
    Because I-71 and I-75 are both major North-South 
interstates, it is truly a national project. It serves the 
busiest trucking corridor in the country, and these highways 
are the main routes for four major international airports. 
Kentucky and Ohio are united in their support for the 
replacement and are moving forward together, but we must have 
Federal assistance soon to ensure that a suitable replacement 
is constructed before the Brent Spence Bridge becomes 
unsuitable.
    Once again, thank you, Mr. Secretary, for being here and 
all the other witnesses that are going to testify.
    Thank you.
    Chairman Shelby. Senator Stabenow.

              STATEMENT OF SENATOR DEBBIE STABENOW

    Senator Stabenow. Thank you, Mr. Chairman, and welcome to 
all of those who will be testifying. Secretary Mineta, it is 
wonderful to see you again.
    Mr. Chairman, I do want to speak for a moment but have my 
full comments in the record.
    Chairman Shelby. Without objection, your statement will be 
made part of the record.
    Senator Stabenow. Thank you.
    Ensuring safe and efficient public transportation is one of 
the most critical issues that we will face as a Committee, and 
I know we all share a great interest in this, and I look 
forward to working with you, Mr. Chairman, and with the 
Committee.
    Michigan is known as an automobile State, and we take great 
pride in producing and driving our automobiles. But we also 
have tremendous mass transit needs. And in the year 2002 alone, 
Michigan buses carried over 88 million passengers, so this bill 
is a big deal for Michigan and for our citizens.
    There are bus systems operating in every one of our 83 
counties, from urban Wayne County to rural counties in the 
Upper Peninsula. And despite covering all the counties, service 
in many of our areas is minimal, creating a hardship for 
working families who cannot afford to own a car. I share the 
concerns of my colleagues regarding rural communities, and 
northern Michigan and other parts of our State, as well as my 
colleagues who talk about urban areas, we have both and have 
needs in both.
    Last month, a Detroit News series chronicled how 
underfunded our transit systems are and how they impact our 
working families. The article focused on following Detroiter 
Karen Gholston, who stands at the bus stop every morning at 
3:30 in the morning with her 2-year-old daughter in one hand 
and a can of pepper spray in the other, waiting to catch a bus 
for her 6 a.m. class. This is not unusual among those who are 
working and trying to get ahead as part of working families.
    Despite the fact that her class is only 12 miles away, it 
takes Karen 2\1/2\ hours to get there because the bus only runs 
once an hour and is often late and sometimes doesn't come at 
all. This is an example of what we in Michigan are facing, and 
given that fact, I have serious concerns about the 
Administration's SAFETEA proposal and am looking forward to 
your comments.
    First, SAFETEA not only fails to grow the transit program 
to help us and help the woman that I just spoke of, but it also 
cuts funding from the prior TEA-21 authorization. The 
Administration's proposal only provides $37.6 billion in 
guaranteed funding, which is a 7.6-percent cut from TEA-21's 
guaranteed funding level when adjusted for inflation. And this 
is of great concern to me.
    The SAFETEA proposal also eliminates the guaranteed funding 
for the General Fund portion of the transit program, and, 
again, limiting this funding is forcing transit to compete for 
20 percent of its funding in a very tight, difficult budget is 
of grave concern to me.
    Finally, the Administration's proposal eliminates the 5309 
Bus Discretionary Program, and as a representative of a State 
that relies almost solely on bus systems for its public transit 
needs, even though we are looking to options for light rail, we 
predominantly use our bus systems right now, I find this 
particularly alarming.
    According to the Michigan Department of Transportation, 
Michigan's estimated transit capital and operating needs total 
nearly $1.5 billion over the next 6 years. And much of this 
capital investment is needed to simply keep existing service 
going, even though ridership is increasing.
    Under TEA-21, Michigan received over $124 million under the 
Bus Discretionary Program, but our capital needs have exceeded 
$600 million. So there is a huge gap there. This shortfall 
exists despite the significant contributions by Michigan 
taxpayers. Michigan ranks sixth behind five States with rail in 
direct support for our public transit systems, and we 
unfortunately already rank last in Federal transit funding 
among the Great Lake States and only receive 43 cents back on 
every transit dollar that we contribute to the Highway Trust 
Fund.
    These are serious issues for us. I am looking forward to 
working with you to address these. The people in Michigan are 
counting on us to be able to do a better job for them, and I 
look forward to working with my colleagues on the Committee.
    Chairman Shelby. Thank you.
    Senator Miller.

                COMMENTS OF SENATOR ZELL MILLER

    Senator Miller. Mr. Chairman, I would like to thank you and 
Senator Sarbanes for organizing this hearing, and I would 
certainly like to thank Secretary Mineta and the other members 
of the panel that we are going to be hearing from. I have some 
prepared remarks that I would like to ask unanimous consent be 
made part of the record.
    Chairman Shelby. Without objection, so ordered. It will be 
made part of the record in their entirety.
    Senator Miller. I would also like to say this for a few 
minutes. I was around as a Governor in 1991 when ISTEA came 
along, and I was still around in 1998 when TEA-21 came along, 
so I know very well the benefits of these programs to the 
States of our Nation. And there is no doubt that in 
transportation, like in so many other areas right now, the 
needs outpace the resources, and we are going to have to deal 
with that. So I am interested in listening and hearing about 
the funding level of SAFETEA, but at the same time, Mr. 
Secretary, I am also interested in retaining the important 
flexibility and the minimum guarantees and what I call the 
firewalls that State transportation planning organizations 
enjoy today.
    Thank you.
    Chairman Shelby. Senator Santorum.

               COMMENTS OF SENATOR RICK SANTORUM

    Senator Santorum. Thank you, Mr. Chairman. I just also 
would like to submit my statement for the record.
    Chairman Shelby. Without objection, it will be made part of 
the record.
    Senator Santorum. Thank you, Mr. Chairman.
    Just a couple of things that I wanted to stress, and that 
is, the idea of transportation, public transportation, and the 
role in welfare and the role that it has played and the 
important role that I hope it continues to play in getting 
people to jobs who are transitioning off of welfare. We have 
programs that we passed in the 1996 welfare bill, and I want to 
continue to see those programs grow as a way for us to get some 
of these intractable problems that we have, not just in our 
inner cities but in our rural areas. And I look forward to 
working very closely with you, Mr. Secretary, and the 
Department in making sure that those programs are expanded and 
create better access for those people in need of transportation 
to get to their jobs, again, to transition themselves off 
welfare.
    I, too, want to express concerns--at least I have some 
concerns about the New Starts at 50/50, and I just see that as 
a real prejudice with any kind of major projects. In a sense, 
the closer you get to funding these projects at 50/50, the 
harder it is, obviously, for the locals to come up, and that 
means these big projects, some of which are very, very 
important and transformational for our cities in particular, 
tend to get pushed back in favor of smaller projects that are 
easier for those communities to budget for.
    I am not too sure in the long run that you end up with 
better transportation networks as a result, and so I think that 
locking in that number is not going to be beneficial for the 
efficient use of transit in our urban communities in 
particular. And having two large urban communities in my State, 
both of whom have major projects in the pipeline, I want to put 
my marker down as expressing a very deep concern about that 
allocation.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Reed.

                 STATEMENT OF SENATOR JACK REED

    Senator Reed. Thank you very much, Mr. Chairman. It is good 
to welcome Secretary Mineta and Administrator Dorn. They both 
do an extremely good job for us.
    I am pleased that you are here today, and I think your 
presence and the fact that the Chairman is holding this hearing 
signifies the importance of transit all across the country. 
Last year, in the Subcommittee we listened to representatives 
from cities like Salt Lake City, Atlanta, and other major 
communities across the country, and they all spoke to the 
critical importance of transit, not just in terms of moving 
people around but in making sure there is a quality of life and 
an economic vitality in their cities.
    I am pleased that in the proposal the Administration has 
put forth, principally, I think, through the leadership of both 
of you, that there is a preservation of the share of the 
transit funding from the gas tax at the levels of 20 percent of 
the fund. I think this reflects your longstanding support for 
balanced national intermodal transportation policy. But I have 
three major areas of concern with the bill that has been 
proposed.
    First is the failure to provide new resources for transit. 
I think everything you have heard today from every Member is 
the need, the growing need, for more resources for transit, and 
that is not just in the traditional Northeastern or West Coast 
urban centers, but it is in places like Atlanta and Albuquerque 
and Denver. More resources are necessary, and I do not think 
there are sufficient resources to do the job.
    The second point I would raise would be the failure to 
guarantee the transit funding in SAFETEA. There has to be a 
strong guarantee that transit funding will be there, that it 
won't be subject to rather innovative financing mechanisms or 
other ways to do it, but it will be there guaranteed.
    And, finally, I am concerned also that there is 
insufficient specific funding for transit security. We had 
several hearings last year, and, indeed, Senator Sarbanes and I 
asked the GAO to do a report. They looked at just eight transit 
systems, and they determined that those systems alone would 
need $700 million to effectively protect them from terrorism. 
And that is just an example of the kind of resources we will 
need as we prepare ourselves--we hope it is just simply 
preparation and never an eventuality, but prepare ourselves for 
possible terrorist activity.
    I look forward to working with you, Mr. Secretary, and with 
Administrator Dorn, Chairman Shelby, Ranking Member Sarbanes, 
and Chairman Allard to craft a TEA-21 successor bill that will 
provide the resources and the flexibility to continue our 
success in transit.
    It is good to see you are well, Mr. Secretary, after your 
operation. I knew your anesthesiologist who was my classmate at 
West Point. That was my only concern.
    [Laughter.]
    Chairman Shelby. Thank you.
    Senator Sarbanes.

             STATEMENT OF SENATOR PAUL S. SARBANES

    Senator Sarbanes. Well, thank you very much, Mr. Chairman. 
First, I want to commend you for holding this hearing and also 
for your indication that other hearings on this important issue 
will be following.
    Chairman Shelby. Absolutely.
    Senator Sarbanes. I want to thank Secretary Mineta for 
appearing, and Administrator Dorn, we are pleased to have her 
back before the Committee.
    Actually, sometimes people say, you know, all those opening 
statements by Members of the Committee, what purpose do they 
serve? But I have been sitting here this morning listening very 
carefully to my colleagues, and I must say I think they have 
laid out a lot of very serious and important concerns. We are 
getting this reflection from the grass roots, so to speak, with 
respect to the transit programs. So, I think it is serving a 
very important purpose here this morning to put before the 
Secretary and the Administrator the challenges that are ahead 
of us.
    As Senator Reed commented, we held hearings in the last 
Congress. In fact, the full Committee and Senator Reed's 
Subcommittee, held a series of eight hearings on transit 
issues. Secretary Mineta, you kicked off those hearings, 
actually, last year. And the witnesses included elected 
officials, business leaders,
transit operators and riders, consumer users, and they gave us 
some very thoughtful testimony, which I think, frankly, can be 
summarized by saying that TEA-21 has worked. That was the 
general view.
    Investment in transit over the last 6 years has increased 
by almost 50 percent. As a result, we have seen increased 
ridership all across the country. Transit saw the highest 
percentage of ridership growth among all modes of surface 
transportation in the period from 1993 to 2001, experiencing 
almost a 30-percent increase. More and more communities are now 
considering transit investments, and this is a record of 
success which needs to be built on.
    We also face a struggling economy. The unemployment rate is 
the highest in 9 years. With TEA-21's reauthorization, we have 
an opportunity to support a program with a proven record of job 
creation. The U.S. Chamber of Commerce estimates that each $1
billion invested in transportation infrastructure creates about 
48,000 jobs. Transportation investment has a broader economic 
benefit as well. The U.S. Conference of Mayors has pointed out 
how much of our Nation's economic output and jobs are in the 
metropolitan areas. Increasingly over the last decade, 
congestion is threatening the economic viability and livability 
of these areas, costing millions of Americans time and money 
that could be put to more productive use.
    Earlier this year, when Administrator Dorn was here to 
present the Administration's fiscal year 2004 budget request, I 
outlined three basic principles that I believe any 
reauthorization bill must include if we are to address the 
challenges we face. And some of those have already been 
enunciated by others, but I very briefly want to reiterate 
those principles.
    First, we need to enlarge the transit program. I think 
virtually everyone recognizes that. I am concerned that the 
Administration's proposal not only fails to grow the program, 
taking into account inflation, but it also cuts guaranteed 
funding over the 6-year period so that the guaranteed level in 
fiscal year 2009, $6.6 billion, is
actually less than the program level today at $7.2 billion. 
This is
the guaranteed level. We need to increase the overall amount,
but within that, we need to make sure that we sustain the 
guarantee levels.
    DOT itself has identified $14 billion a year in capital 
needs simply to maintain the condition and performance of our 
transit systems, $20 billion to improve conditions and 
performance. And some of the witnesses on our second panel 
today have estimated even greater needs.
    Second, we need to maintain the funding guarantees which 
have been very important in enabling local and State 
governments to plan effectively. As I understand it, while the 
Administration's proposal maintains those guarantees around the 
portion of the transit program that comes from the trust fund, 
it eliminates those guarantees from the portion of the program 
that comes from the General Fund, which accounts for about 20 
percent of the program. So there is a shrinking back of the 
guaranteed level, which is a source of great concern.
    Also, one of the points made last year at the hearings was 
that the funding guarantees must be preserved. It has been, I 
think, fair to say that the guarantee level has effectively 
established the size of the transit program under TEA-21.
    We need to preserve the balance established by ISTEA and 
TEA-21 between highways and transit--I know the Chairman made 
reference to that in his opening statement--both in terms of 
overall investments and in terms of Federal matching ratios for 
the highway and transit programs.
    We have worked out an accommodation between highways and 
transit over the last several authorizations. It has stood us 
in good stead, commands general support, and yet the 
Administration has proposed to lower the Federal match for New 
Starts Transit projects but has not proposed a corresponding 
change for highway projects. And Senator Corzine and Senator 
Santorum and others made specific reference to that.
    Just to underscore the point, when John Inglish, the head 
of the Utah Transit Authority, was before our Committee last 
year, he said:

    Without an 80/20 match, our North-South, our original line, 
would not have been built. As a relatively poor system, of the 
quarter-cent in sales tax at the time,
we could not have done it with any other match. As it happened, 
that line so
transformed.

    Senator Santorum used the word ``transformation.''

    ``As it happened, that line so transformed our community, 
that within a year they doubled the sales tax to expand the 
public transit system and the program has continued to grow.''

    If you weigh it so the highways are at 80/20 and the 
transit is at 50/50, you are going to lose that transformation 
effect. And I thought Senator Santorum made a very important 
point. People will shy away from the major projects that really 
change the whole transportation network. They will be more 
inclined to do the small incremental things, and we will lose a 
major impetus for transforming the transportation 
infrastructure.
    Having said all of that, I want to take a moment to commend 
the Department for including the Transit and Parks Program in 
your reauthorization proposal. This has been a pet of mine, 
legislation I have introduced now in the last couple of 
Congresses to alleviate traffic congestion, improve the visitor 
experience in our national parks and other public lands by 
providing visitors with alternative transportation options when 
they visit these national treasures. What is happening now, you 
know, families line up in an automobile, a huge line, emitting 
pollution. They all edge up to the admission kiosk. Then they 
get there and are told the park is full, and they cannot come 
in, there is no more parking and away they go. And we need to 
develop systems where they can put their cars somewhere else 
and everyone can be brought into the park. It is being done in 
some places across the country, and it is working with great 
success.
    We have a big challenge here ahead of us. The interest of 
the Committee is obviously manifest. You have a quorum already 
who have come today in order to be here for this hearing, and 
we look forward to working closely with the Department. But it 
is my own view that we need to strengthen this proposal in a 
number of significant respects, and I hope we will be able to 
do that in the weeks to come.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Carper.

             STATEMENT OF SENATOR THOMAS R. CARPER

    Senator Carper. Thank you, Mr. Chairman.
    I was in your State of California 2 weeks ago, Mr. 
Secretary, and flying into an airport down around LA, not LAX 
but John Wayne Airport, as I recall. I thought, ``Well, I never 
knew him.'' Then I flew into San Jose, and I was walking 
around, and I see everywhere I went, it said Norm Mineta 
Airport. I said to a lot of people, ``I know him.'' Good 
looking airport. They remember you fondly, and almost every 
day, I am told.
    Senator Sarbanes. That is a preliminary to getting a Thomas 
Carper Airport in Wilmington, Delaware.
    [Laughter.]
    Senator Carper. In Delaware we do not have any commercial 
air service. Amtrak used to have a marketing campaign and the 
theme of the marketing campaign is, ``Maybe your next flight 
should be on a train,'' and in Delaware all of our next flights 
are on trains. Maybe I can get a train station named after me 
if I am lucky. Although, Senators Johnson and Stabenow both 
told me since I walked in that in my absence you decided to 
eliminate funding for Amtrak. So, maybe we will have to find 
something else to name after me. Who knows?
    Mr. Secretary, thanks for joining us today, Administrator 
Dorn. It is good to see you both, and I am looking forward to 
this hearing on SAFETEA. Senator Sarbanes said that he regards 
TEA-21 as a success in his State and around the country. I do 
as well. And it sparked in my little State about a 20 plus 
increase in transit ridership since its enactment and that is a 
very good thing. And we believe at the heart of the success of 
TEA-21 is this combination of several things, the program 
flexibility, State and local control, and substantial 
resources. And SAFETEA, I am generally pleased to see efforts 
to expand flexibility and local control so that communities can 
further define and direct the transportation solutions that fit 
their respective needs.
    Having said that, I do believe the proposal does lack 
enough of a third key ingredient, and I am sure you heard some 
of that this morning, and that is substantial and guaranteed 
resources, and I am afraid that this may be a fatal flaw. 
SAFETEA provides, as I understand it, about $46 billion in 
total authorization and some $37\1/2\ billion in guaranteed 
funding for transit over the next 6 years, and when you compare 
that to what we have provided in recent years, it represents 
about a little over a 1 percent cut, and maybe a 7\1/2\ percent 
cut respectively from TEA-21's total funding level when 
adjusted for inflation. I believe in fiscal 2004 the transit 
program will be flatlined, the same as that in 2003.
    I had a chance to see the highways in your old part of the 
world, Mr. Secretary, and I know they look a lot like ours in 
the Mid-Atlantic. The highways are clogged with gridlock and 
the skies are filled with smog. The critical need for transit 
service across our Nation has become I think clearer and 
clearer. I believe we need to spend more, not less, to promote 
and strengthen transit options in both rural and in urban 
areas.
    The funding levels put forth in SAFETEA will not allow 
Delaware or our Nation to tackle our impending mobility crisis. 
These low funding levels are the direct result of the 
Administration's opposition to increasing revenue measures such 
as raising Federal fuel taxes despite an obvious need for 
transportation investment. I realize the difficulties 
associated with finding additional revenues for transportation 
in these lean times. As a Governor, I sought to raise motor 
fuel taxes. We succeeded once, but a couple of other times we 
were not as successful. But the money we raised, we put it to 
good use.
    But I think it is our job to determine the appropriate 
funding level and to provide a fair plan to generate that level 
of funds, and I hope to work with my colleagues here and in the 
Senate to do just that.
    Beyond the question of overall funding, I have a couple of 
specific concerns with policy changes put forth in SAFETEA. Let 
me just mention them. Principally, SAFETEA proposes eliminating 
the guaranteed funding or the firewall protection of the 
General Fund contributions to the mass transit account of the 
trust fund, which would mean reduced funding for transit due to 
the competition we all know is going to exist for scarce 
discretionary dollars. Guaranteed funding is perhaps the most 
crucial component of TEA-21, and I will work hard to resist 
changes to the guarantee that could negatively affect the 
transit program. I am also concerned by the proposed change of 
the statutory Federal share of funding for the New Starts 
Program from 80 to 50 percent. I think Senator Sarbanes alluded 
to that. I just think we need to maintain an equal funding 
level with highway projects, or we risk dissuading communities 
from making transit investments, even those that make sense.
    I hope to learn more about these issues from your 
perspective today, and also about other program changes such as 
the elimination of the Bus Discretionary program, changes to 
the job access and reverse commute program, and the eligibility 
of nonfixed guideways projects through the New Starts Program. 
While some of these changes may enhance flexibility and 
simplify the program structure, I would like to ensure that 
they do not have unintended consequences.
    In closing, I just want to again say, Mr. Secretary, 
Administrator Dorn, thanks for being with us today, and for the 
work that has gone into preparing SAFETEA. I believe the 
proposal provided us with a good starting place to being our 
debate, and we look forward very much to being part of that 
debate with all of you. Thank you.
    Thanks, Mr. Chairman.
    Chairman Shelby. Thank you.
    Mr. Secretary, your entire prepared statement will be made 
part of the record in its entirety. You may now proceed as you 
wish.

            STATEMENT OF NORMAN Y. MINETA, SECRETARY

         ACCOMPANIED BY JENNIFER L. DORN, ADMINISTRATOR

                 FEDERAL TRANSIT ADMINISTRATION

               U.S. DEPARTMENT OF TRANSPORTATION

    Secretary Mineta. Mr. Chairman, thank you very, very much. 
Senator Sarbanes and Members of the Committee, let me thank all 
of you for this opportunity to appear before you to discuss the 
Administration's proposal to reauthorize our surface 
transportation programs entitled the Safe, Accountable, 
Flexible, and Efficient Transportation Equity Act of 2003 or 
SAFETEA.
    I am pleased to have Jennifer Dorn, our Administrator of 
the Federal Transit program, here to help me answer any of the 
detailed questions you might ask.
    The Administration's proposal serves as the largest Federal 
transportation investment in our Nation's history. SAFETEA 
builds upon the principles, values, and achievements of ISTEA 
of which I was the proud principal author in 1991. Of course 
then many of you worked on TEA-21 in 1998, while recognizing 
the need to address the new challenges.
    As a former Member of Congress and having served on the 
city council in San Jose and then elected its mayor, I 
recognize the importance of this year's reauthorization cycle 
to securing the funds and the framework for long-term 
investments in our system of transportation. Because the need 
for funding predictability for infrastructure investments is 
critical to our State and local partners, our Nation cannot 
afford the uncertainty of a short-term extension of current 
law. So, I urge the Congress to reauthorize a comprehensive 6-
year surface transportation program before the current law, 
TEA-21, expires on September 30, 2003.
    Though some might suggest an even greater increase in 
spending, the facts are clear, the President's proposal 
represents a record Federal investment in surface 
transportation. From fiscal year 2004 through fiscal year 2009, 
SAFETEA would invest over $201 billion on highway and safety 
programs and nearly $46 billion on public transportation 
programs which is a 28 percent increase over TEA-21. Simply 
put, with more than a 28 percent increase in spending over TEA-
21, SAFETEA represents the largest Federal commitment to public 
transportation in our Nation's history. SAFETEA promotes common 
sense transit solutions by reducing the number of different 
program silos and distributing all programs by formula except 
New Starts. Rather than have States try to match projects to 
specific pots of money, the Federal Government should help 
States to maximize mobility and to create a seamless 
transportation network. Accordingly, our proposal provides 
States and localities with much needed flexibility to fund 
priority projects in their communities.
    Stable formula funds help agencies to do more with less. 
They
provide financial markets the confidence to support transit 
investments, provide communities an incentive to commit their 
own long-term resources and instill confidence in local 
developers. The
necessary transit commitments to support infrastructure growth 
will be honored.
    SAFETEA proposes a shift to dependable formula and capital 
funding and a larger New Starts Program by restructuring FTA 
programs into three major categories from the present five. 
Under SAFETEA, urban areas will have increased flexibility and 
have more predictable funding to improve their ability to make 
longer-term investment plans and to acquire necessary 
financing. We must ensure that every year each community can 
count on a share of these funds. SAFETEA would expand the New 
Starts Program by 55 percent and expand capital assistance for 
new nonfixed guideway corridor systems and extensions that meet 
the New Starts criteria. Today, a fixed guideway is often not 
the most cost effective way to provide new or expanded public 
transportation service. Today's rules too often require 
communities to choose a more expensive, fixed guideway system 
in order to qualify for a New Starts grant. Moreover, some 
small- and medium-sized communities that might otherwise 
benefit from the creation of new transit options simply cannot 
generate enough riders or travel time savings to justify a more 
expensive fixed guideway system. While fixed guideway projects 
are critical and will continue to be eligible for funding, 
worthy public transportation projects with lower cost nonfixed 
guideway solutions also deserve consideration.
    SAFETEA is also based on common sense transit solutions 
providing States and localities the opportunity to determine 
how they can best service those heavily reliant on public 
transportation including rural residents, older adults, persons 
with disabilities, and low-income riders. Unfortunately, about 
40 percent of rural counties today have absolutely no public 
transportation, while others enjoy only limited service. 
Because it is exactly these rural residents that most often 
rely on rural transit, our proposal increases public 
transportation funds for rural communities by 87 percent over 
TEA-21.
    With stable formula funding, streamlined programs, 
performance incentives, and simplified administrative 
requirements, our communities will be in a much better position 
to leverage the Federal transportation investment in public 
transportation and provide Americans with common-sense 
solutions to meet their transportation needs. Mr. Chairman, 
Senator Sarbanes, and Members of the Committee, that is exactly 
what the President's proposal would provide.
    Again, thank you for giving me this opportunity to appear 
before you today. I would be more than pleased to take your 
questions.
    Chairman Shelby. Thank you, Mr. Secretary. I have heard 
several times from you and the Administration and the 
Administrator, who is here, Ms. Dorn, that one of the goals of 
the reauthorization is to reduce program silos that have had 
the effect of altering local decisionmaking based on the 
availability of funds, and I applaud that effort.
    I note an inconsistency in that approach in SAFETEA, 
however. If the theory is to remain mode neutral, and not allow 
the Federal Government's program structures inappropriately to 
influence local decisions, why change the Federal match for New 
Starts? Would that not cause a highway project to look like a 
more attractive option than a transit project?
    Secretary Mineta. Next question.
    [Laughter.]
    Chairman Shelby. You can pass that on to Ms. Dorn, but I 
think she is leaning toward you, Mr. Secretary.
    Secretary Mineta. Mr. Chairman, there are probably two 
overriding issues that people bring up about SAFETEA. One is 
the funding level and the other is about the change in the New 
Starts Program. Again, let me reiterate that this is the 
largest bill involving public transportation investment by any 
Administration, larger than ISTEA, larger than TEA-21, and so 
from that perspective we are very proud of the bill.
    When in doing ISTEA, if you will recall, at the time 
highways were 90/10, transit was 75/25. Local communities were 
making decisions based on where do they put out the money and 
get the most back? Obviously, it was the highway, 90/10, 
because transit was at 75/25. That is why in ISTEA I made it 
all 80/20, so that everybody made decisions based on what is 
the best transportation solution, not where do I get the most 
money back for the money that I put on the table? So that was 
preserved in TEA-21.
    As we look at the experience of what we have in public 
transit today, it is something like 49 percent is really the 
level of contribution in terms of what comes from the local 
communities. The pattern has been that even though the law was 
80/20, local districts, in order to get up the food chain, 
increased their own local investment in their system and tried 
to get more favor because there is more local transit dollars 
being invested, and that way, they would be looked upon with 
favor by the FTA. The principle of 80/20 is still there in all 
of the programs. We have changed it as it relates to New 
Starts. We believe we are not only conforming to what we are 
experiencing, but it is also the way to be able to spread more 
of the money across the country in terms of communities that 
want to develop a New Start program.
    You mentioned the silos, and that really has been a 
problem, and I experienced that as a mayor, and if I might take 
the time to give an example. In 1972, President Nixon decided 
that he wanted to do a block grant type program, and of course 
we had discretionary pots of money in those days, and so as the 
mayor of the local community, they chose 14 communities to try 
something regarding a block grant program. So we came up with 
all of our needs in our community. One of the needs that we 
wanted were four community centers, and when I was meeting with 
the HUD officials they said, ``We do not have money for your 
four community centers. We have money for two. But we notice 
that you did not have any submission for sewage programs. So do 
you not go ahead and think up $100 million worth of sewage 
treatment programs?'' I said, ``I will tell you what, give me 
the $100 million and I will go ahead and build the other two 
community centers.''
    Discretionary pots of money restrict the ability to be 
flexible. That is why in this program we have reduced it from 
five to three, and given much more flexibility, as Senator 
Carper was mentioning, in order to be able to have governors or 
mayors, transportation people, be able to use that flexibility 
to direct their resources to what is facing them in their local 
community or in their States. Because otherwise what we do is 
use this theory of, I guess, you might say, margarine spread on 
the piece of bread. But that is not how Delaware is, as 
compared to Alabama, as compared to Utah, Pennsylvania, and I 
think the flexibility that we have in this program really is 
giving governors and local transportation people the ability to 
be much more flexible and direct their resources.
    That is why we have eliminated the silos, why we are trying 
to conform to what in reality is occurring right now, and that 
is that the local share is now 49 percent.
    Chairman Shelby. Senator Sarbanes.
    Senator Sarbanes. Thank you very much, Mr. Chairman.
    Secretary you mentioned the overall level of funding and 
the New Starts ratio as two issues that are being raised. I 
also want to talk about the funding guarantees as a very 
important additional issue.
    But on the New Starts, let me just say that the fact that 
as a practical matter you are getting a higher match does not, 
in my view, undercut the desirability that the match be the 
same between transit and highways at 80/20 in their 
overwhelming needs, and if communities are prepared to do a 
little more in order to move the project, that is one thing, 
but they ought not right up front be confronted with this 
discrepancy between 80/20 and 50/50 because it is going to, as 
you indicated when you did the 90/10 and 75/25, it is going to 
skew their decisionmaking. I go back to this quote from the 
head of the Utah Transit Authority, that I read at the outset 
in my statement, which I think is very meaningful when he said:

    Without an 80/20 match our north-south, our original line, 
would not have been built. As a relatively poor system of the 
quarter-cent in sales tax at the time, we could not have done 
it without any other match. As it happened that line so 
transformed our community that within a year, they doubled the 
sales tax to expand the public transit system and the program 
has continued to grow.

    I mean there is pretty strong testimony there. They never 
would have embarked on it at 50/50, at least according to this 
testimony.

    Senator Bennett. That is true.
    Senator Sarbanes. It has just been corroborated by the 
senior Senator from Utah.
    Secretary Mineta. If I might interject, I wonder if Salt 
Lake City might now have been a special program because of the 
Olympics coming there, and as we do with Olympics, whether it 
was in Los Angeles, Atlanta, or as it was in Salt Lake City, we 
do pour a great deal of money into those communities. I think 
that that has helped, especially when the Governor took the 
initiative to tear down I-15 and start all over again, and it 
was a program that we supported because of the traffic pattern 
in Salt Lake City.
    Senator Bennett. I do not want to intrude on your time, but 
the light rail proposal started before Salt Lake got the 
Olympic bid, and we had to do it to deal with the problem 
there. Utah is thought of as a rural State, but 85 percent of 
our population lives between the mountains and the lake, and it 
is a very relatively narrow situation, and we had to have some 
transportation up in there. You talk about tearing up I-15. In 
order to get I-15 done in time, the State actually paid more 
than 50 percent of the cost of I-15, and we had to do that for 
the Olympics. But for the record, the light rail was begun, the 
80/20 match was approved and we were underway before Salt Lake 
achieved the Olympic bid. I do not, by any means, want to 
suggest that the Olympics did not have an impact. You are 
right. I think we moved up the queue because of the Olympic 
bid, and we received the full funding grant agreement probably 
faster than we would have, but in terms of the actual 
chronology, it was in before the bid came to Salt Lake.
    Senator Sarbanes. Right.
    Senator Bennett. Thank you.
    Senator Sarbanes. Let me turn to the guaranteed funding 
issue. The DOT is on record in numerous venues as supporting 
guaranteed funding for the transit program. In fact, the 
Administrator
testified here last April, one of the most visible and 
important elements of TEA-21 has been the tremendously positive 
impact of stable and dependable funding streams on transit 
development. You, yourself stated in March: ``The budgetary 
firewalls have created confidence among grantees regarding 
Federal funding, an extremely important aspect of program 
delivery for State and local
officials.''
    As I understand it, over the life of TEA-21 the transit 
program received 100 percent of TEA-21's guaranteed amount, $36 
billion, and only one-half of 1 percent of TEA-21's 
nonguaranteed authorization, $25 million out of $5 billion. So, 
in effect, the funding guarantees establish the size of the 
transit program.
    SAFETEA proposes to guarantee highways at $201 billion and 
purports to fund transit at $46 billion. But assuming that 
transit is actually funded only at the guaranteed level, as was 
the case under TEA-21, that would be a highway program of $201 
billion compared to a transit program of $37.6 billion. In 
other words, you are not providing the guarantee for the 
transit money that comes out of the trust fund about 20 percent 
of the money. In TEA-21, that money was guaranteed as well, and 
as I have indicated, the transit money in effect paralleled the 
guarantees. So it seems to me this is a potentially very 
serious reduction in transit money. I disagree with your 
assertion about this being the biggest program ever. I mean in 
nominal terms that is true, but as I understand it, if we 
adjust it in real terms for inflation, it does not reach the 
TEA-21 levels, but leaving that to one side, the drop of a 
guarantee for 20 percent of the money has potentially extremely 
severe implications for transit. What is your take on that 
issue?
    Secretary Mineta. In TEA-21, the guarantees only apply to 
the amount that comes from the trust fund, both the highway and 
mass transit account, as you have indicated. The portion that 
comes from General Funds is not guaranteed. There are no other 
guaranteed programs in the Federal budget. And the only one 
that was guaranteed was transit.
    We feel confident transit programs can compete effectively 
for General Funds, even if they are not included in the 
firewall. This was a discussion that went on for a long time 
and part of it is the fact that how do we isolate transit 
programs for the total Federal programs and say, yes, they 
should have a guarantee? It then
precludes Congress or the Administration from shifting 
priorities whenever some need arises including, let us say, 
September 11. So that is why we felt that the feeling was that 
we should not tie the hands of future Congresses or the 
President with General Fund firewalls.
    Senator Sarbanes. I thought September 11 was a very 
powerful argument for further enhanced investment in transit. 
Am I wrong about that? That is my understanding, that the one 
response to that is we have to beef up these transit systems. 
These people were moved out of Washington and New York on the 
transit systems, were they not?
    Secretary Mineta. Well, most of the movement was I think on 
the commuter rails rather than on the local transit systems, 
the MTA, but mostly the----
    Senator Sarbanes. Amtrak.
    Secretary Mineta. Amtrak, New Jersey Transit.
    Senator Sarbanes. So you are back to supporting Senator 
Carper on Amtrak? We are going to keep moving you from one slot 
to another on this.
    Secretary Mineta. And the Governor Thomas Carper Station in 
Delaware as well.
    Senator Sarbanes. Thank you.
    Chairman Shelby. Senator Bunning.
    Senator Bunning. Thank you, Mr. Chairman.
    Secretary Mineta, let me get back to the original statement 
I made. Do you share my concerns about rural transit needs, and 
will you work with us to eliminate those concerns?
    Secretary Mineta. Yes, sir. And SAFETEA really does reflect 
an emphasis on the rural transit needs. As I recall, under 
SAFETEA, as compared to TEA-21, the rural program is an 88 
percent increase in rural formula programs, and so there is 
recognition of what we have not been doing in rural transit in 
the past, and we are trying to correct that in SAFETEA.
    Senator Bunning. I know the overall increase, but how about 
the ability to have the local governments match up in paying?
    Secretary Mineta. These monies, of course, go to the State 
and then they work with local governments. What we have done is 
to increase the planning and technical assistance that can be 
provided at the State level in order to strengthen not only the 
State but also the local communities in terms of their own 
planning capabilities, to make sure they get the ridership for 
their local programs. But what we are trying to do is 
strengthen the planning and just the capabilities at the State 
and local level.
    Senator Bunning. This question is kind of off the wall, so 
you can pass it on to someone else or you can answer it.
    Secretary Mineta. Ms. Dorn, if you would?
    [Laughter.]
    Senator Bunning. Last fall, Congress passed legislation to 
arm airline pilots by very large margins both in the House and 
in the Senate. Last week it was reported that only 44 pilots 
out of a possible 60,000 have been armed. Many pilots believe 
the TSA is trying to kill the program by foot dragging and 
making the program burdensome. At the current rate you are 
training pilots, it will take several hundreds of years to arm 
them all. It is clear to me that we have not trained enough 
pilots to have them be any type of deterrent. We have thousands 
of commercial pilots who served in the military and many still 
do. Yet the TSA has only been able to arm 44 of them. Do you 
have any idea why there is such a delay in implementing the law 
as it is written?
    Secretary Mineta. First, as you know, the Transportation 
Security Administration was transferred on March 1 to the 
Department of Homeland Security. But prior to that transfer, 
this program was initiated. Congress had provided no funding to 
TSA, so we readjusted some monies and reallocated the financial 
resources to go ahead and do this training of the initial 44 
pilots who volunteered for this program, but there is no 
funding.
    Senator Bunning. Even in the new appropriation bills that 
were passed in January?
    Secretary Mineta. None of the supplemental appropriations.
    Senator Bunning. No, not supplemental. I am talking about 
the regular appropriations.
    Secretary Mineta. The regular did not.
    Senator Bunning. The Omnibus Appropriation Bill.
    Secretary Mineta. I do not believe in the Omnibus it was 
provided. I will check on that, because that was after March 1, 
and I did not follow it in terms of the Omnibus Appropriations 
Bill after March 1 when TSA got transferred to Homeland 
Security. I can get that for the record and submit it to you. 
(Information was not received in time for publication.)
    Senator Bunning. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Shelby. Thank you.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman, and thank 
you, Secretary Mineta.
    Senator Sarbanes mentioned we held eight hearings on 
transit issues, and if I may give you a condensed summary of 
what the findings are I believe. First, transit has been 
extremely successful under ISTEA and TEA-21. Ridership has 
increased. Systems have been renovated, rejuvenated, and all 
across the country transit has taken on a new energy and a new 
popularity. In addition, I think that there is increased demand 
as a result for new transit systems and for increased funding 
for existing transit systems. That is a result, not just of our 
transportation policy, but also environmental policy. My 
Director of Transportation in Rhode Island frankly told me 
there is just no more room for highways in Rhode Island. If we 
do not have complementary transit systems, if we do not have 
remote satellite parking to put people into trains and the 
buses, even if we had the money, we could not build more 
highways.
    That demand requires additional resources, and it is a 
demand, as I suggested in my opening remarks, that is not 
exclusive to any part of the country. Boise, Idaho, the mayor 
testified about the need for transit in Boise. We have talked 
about Salt Lake City. They were there testifying. Atlanta, Las 
Vegas, Denver, and of course New York moves about 33 percent of 
its people each day in mass transit; Boston. And those are 
systems that have peculiar problems because of the age and the 
need to continually renovate a very old system.
    The other aspect that I could summarize is that local 
transit authorities, both State transportation officials and 
local authorities, need certainty and predictability in terms 
of their planning. They need that for their own purposes. If 
they are going to make a significant commitment of local 
resources, they know the Federal Government will be there, not 
just this year and next year, but in 5 and 10 years out, 
because those are the scale or scope of these planning 
processes.
    And that brings me to the criticisms that you have heard 
repeated here many, many times. Flatlining the transit budget 
does not give a sense of certainty that these increased demands 
will be met, that ultimately it will be robbing Peter to pay 
Paul, and probably robbing Peter and Paul to pay somebody else, 
given the fiscal situation of the United States. The end of the 
guarantee, sent a strong signal that there may not be a lot of 
certainty any longer. I know you indicated that transit is 
popular, and we will find a way, but again, in a declining 
fiscal situation with increasing deficits, such efforts might 
not be successful. The increase of the transit match vis-a-vis 
the highway match for New Starts sends exactly the wrong signal 
to planners.
    All of this, I think, has to be on the record. I think you 
recognize it. You point out that this is an increase in terms 
of size. Without inflation adjusted figures it might be, but 
nevertheless, it is not just a question of absolute size. It is 
a question of adequate resources for the demand, and everything 
we heard in 8 Subcommittee hearings, everything you have heard 
today, indicates that demand is increasing dramatically. Not 
only is this satisfying just a popular demand, but also we will 
never meet the goal of a comprehensive intermodal 
transportation system that addresses the issues of pollution 
and congestion unless we have vigorous investment in transit. I 
know you know that, and I believe that you will be able to work 
with us to correct some of these issues.
    I do not want to ask any specific questions because the 
questions have been raised and you have responded. I do not 
want you to respond again. Let me turn to a specific issue, and 
that is the lack of funding for identified transit security 
issues. I understand that there is this new arrangement between 
the Department of Homeland Security and your department, so you 
might comment on that relationship, and also on what you 
propose to do in terms of security issues for transit systems.
    Secretary Mineta. One of the most extensive programs we 
have probably undertaken through the great efforts of 
Administrator Dorn is the work that she has done in conjunction 
with APTA on getting to the districts or transit districts 
about security concerns, and also not only transit districts, 
but also first responders, and that has been, I think, a 
program that we have aggressively undertaken, but maybe I will 
have Ms. Dorn give more of the details of what she has done 
with transit and security issues.
    Administrator Dorn. Certainly. Mr. Chairman, I appreciate 
your strong support for the efforts that we are undertaking at 
the Department, and specifically at FTA. Early on Secretary 
Mineta encouraged me, in partnership with the transit industry, 
to be as aggressive as possible about conducting a series of 
security assessments, which we did 37 security assessments 
across the country in order to prioritize the risks and the 
vulnerabilities. This helped the transit agencies understand 
how they could best prioritize those risks and those 
vulnerabilities, and to help the transit agencies to understand 
how they could best prioritize those risks and those 
vulnerabilities and put together emergency response plans.
    The results of those efforts have been two-fold. Number 
one, they have yielded really important outcomes for the 
individual transit agencies, because as we have discussed 
before, it is impossible to do a cookie cutter kind of approach 
in terms of security. And number two, we have learned in terms 
of our team of experts, some very important principles about 
best practices that can be shared with the industry.
    We also then are in the middle of doing technical 
assistance follow-up teams. We identified some vulnerabilities 
such as emergency response preparedness, and those sorts of 
activities are being taken into account right now as we have 
teams on the ground and will over the next year into 60 transit 
agencies.
    The Secretary mentioned our security forums in which we are 
bringing the first-line responders together with the transit 
agencies to make sure that those emergency response 
preparedness plans are acted upon, and we have given 
approximately 85 grants for drills for community-wide drills.
    In the course of our work together, we have discovered that 
the three most important principles of funding, in terms of 
getting the most bang for the buck--and we did have limited 
funding for this activity through the generosity of the 
Administration and the Congress. We found the three most 
important investments relate to transit employee training, 
first-line supervisors, they know what to do and how to react, 
and we have seen significant improvement across the board. 
First, our transit agencies are safer than they have ever been, 
and of course, as we have discussed before, because it is an 
inherently open and accessible environment, we have a situation 
that is difficult to address. Public awareness is the second. 
We can have eyes and ears of our passengers, and they can plan 
an important role, and many of our transit agencies have 
partnered with not-for-profits and with other parts of cities 
in order to make sure that that public awareness level is 
increased. The third and final piece is the emergency response 
preparedness and drilling against those plans.
    Those are the three most important investment arenas in 
which we think it is important to undertake real solid work.
    We have worked very closely with the TSA, and now it, of 
course, is in the Department of Homeland Security. They have 
taken our risk assessment of the 37 top agencies, and they are 
incorporating those in determining which and how grants should 
be given to transit agencies. We have an ongoing, daily 
partnership with Department of Homeland Security. And we 
believe it is appropriate for them, in the position from which 
they operate, to be able to determine what other prioritized 
risk, is port security or another sector more important in 
terms of those kinds of investments? So we believe that the 
sharing of expertise continues and the responsibilities 
appropriately allocated between FTA and TSA. We have a daily, 
working relationship, and I am confident it will get even 
better over the course of the months and years to come.
    Senator Reed. Thank you.
    Chairman Shelby. Senator Santorum.
    Senator Santorum. Thank you, Mr. Chairman. I am going to 
try to run down a few questions very quickly.
    I think you have heard from the Committee as to our concern 
about this 50/50 funding. I just have a question with respect 
to your comments that a lot of transit organizations are trying 
to jump ahead in the queue by going to better, more even 
matches, 50/50 matches.
    Could you provide me a list of those projects? I want to 
see whether what I suggested in my earlier comments is true. 
Are those smaller projects that are easier to fund, or are 
these big, major projects that are being bid up? I suspect they 
are probably not. I might be wrong, but I would like to see. 
And if, in fact, they are smaller projects that are jumping 
ahead in the queue, I think it proves the point that that is 
what we are going to get more of.
    Chairman Shelby. Senator Santorum, would you please yield? 
Would you ask them to furnish that not only to you but also to 
the entire Committee?
    Senator Santorum. Yes, Mr. Chairman, I would be happy to.
    Senator Sarbanes. Could I add a wrinkle on that? I think it 
is important that we know whether it changed over time. Some of 
these projects, they start out at 80/20, and then in order to 
keep them moving or to expand them, once they have proven their 
value to the local community, they are willing to do more. And 
I think we need to know that as well.
    You may have something that shows up at 60/40 in an 
expansion, but its genesis was at 80/20. And if that is the 
case, we need to know that as well.
    Senator Santorum. I appreciate that additional request to 
my request. Thank you.
    A couple other things. First off, with respect to the Job 
Access and Reverse Commute, my understanding is you are 
proposing a formula for that. I have to just put my marker down 
that I agree with my former Transit Administrator out of 
Pittsburgh, Bill Millar, who has expressed concern that is 
going to spread things a little bit too thinly from my 
perspective and I think could have the impact of diminishing 
the program's effectiveness. And I just want to make a comment 
to that effect and suggest that that is something the Committee 
needs to look at as to how we can best utilize those resources 
in an area where it is going to maximize their efficiency.
    A couple other things. I am also on the Finance Committee, 
and there is a proposal floating around by Senator Grassley and 
Senator Baucus with respect to transit bonding. Can you give me 
the Administration's opinion on that proposal?
    Secretary Mineta. We do not support that 2.86-cent 
diversion at all and feel that the Grassley-Baucus, I believe 
it is, approach should not be undertaken.
    Senator Santorum. Thank you, Mr. Secretary.
    One final comment. I am going to get off the transit 
bandwagon here for a second. This is my only chance. I do not 
sit on any of the relevant Committees on other issues regarding 
transportation.
    I come from Pennsylvania, a State that has more roads than 
New York, New Jersey, and all of New England combined. And 
there are proposals floating around saying that all States 
should get in the new authorization 95 percent funding as a 
minimum level of funding. I just want to suggest that, as a 
State that basically connects the entire Northeastern part of 
the United States to the rest of the country, certain States 
are more important for interstate transportation than other 
States; and that if we are going to go to a system that says 
that everybody is going to basically get back what they put in, 
what is the point of having a program that is supposed to be 
modeled after improving efficiency for the entire country?
    With that comment in advance, I would like to know what the 
Administration's viewpoint is on a funding formula that would 
require that all States get at least 95 percent of the money 
they put into the system back?
    Secretary Mineta. In SAFETEA, we have retained the 
provisions of ISTEA of staying at 90.5 percent. Now, there is a 
group called SHARE that is pushing for the 95 percent proposal. 
That would add $6 billion to the Highway Program itself, and, 
frankly, we do not know where that funding would come from.
    Our $201 billion program is based on moving the 2.5-cent 
ethanol tax that is now going into the General Fund, moving 
that over to the Highway Trust Fund, and digging into the 
resources of the unobligated balance in the Highway Trust Fund 
in order to come up with the $201 billion program on the 
highway side, which again, as I said and would reiterate, is 
the largest highway program. But to get to 95 percent return 
for every State is an additional $6 billion, and we just do not 
have the resources to----
    Senator Santorum. If you give me just an additional minute, 
maybe I should ask the question a different way. Assuming we 
could come up with $6 billion, would that be the best way to 
spend it? I mean, that is really the question here. Congress 
very well may come up with more money. My point is that if we 
do come up with more money, is that the most efficient way to 
spend that money to make sure that we are improving the road 
network to provide better infrastructure for the interstate 
transportation of goods in this country?
    Secretary Mineta. Without having any other discussions with 
OMB or Domestic Policy Council, but as a personal opinion, I 
would say it would not be a good application of the resources.
    Senator Santorum. I hope you weigh in with those other 
agencies to express your opinion. Thank you.
    Senator Sarbanes. Could I point out that to get 
expeditiously from the North to the South along the Eastern 
corridor in this country, you have to go through Maryland as 
well.
    [Laughter.]
    Secretary Mineta. Maryland will get all the $6 billion.
    [Laughter.]
    Chairman Shelby. Senator Bennett.

             STATEMENT OF SENATOR ROBERT F. BENNETT

    Senator Bennett. Thank you, Mr. Chairman.
    Senator Santorum asked my leading question about Grassley-
Baucus, and I am happy to hear you say that the Administration 
is opposed to that.
    A quick little bit of comment and history. When the 
interstate highway system was first proposed, it was going to 
be bonded. And Senator Harry Byrd from Virginia said, ``Roads, 
yes, gentlemen. Bonds, no, gentlemen. We are going to pay for 
this as we go.'' And the Highway Trust Fund was created and the 
gas tax was created to see to it that we did not create bonds 
but that we paid for this as we went along. And given that 
history that goes back 50 years, I get nervous that people are 
now talking about bonds to pay for transportation again.
    We had a hearing in the Joint Economic Committee on 
Transportation, and this is an oversimplification of the 
subject that was discussed, but toll roads came up. And it was 
a new vision of how toll roads, actually toll lanes, put market 
forces into transportation, in that people would be willing to 
pay a higher price to get on an express lane. In an emergency--
the evidence where it has been tried would indicate that it 
wouldn't go to the rich in every instance, that people who have 
an emergency have to get to a hospital, have to get to an 
appointment, say it is worth the extra $2 or $3 that I would be 
charged with a ``smart tag'' kind of collection system. And I 
just pull into the lane and go there, and I know I am going to 
be charged as I go past the various places, but it is worth it 
to me. And others say I cannot afford that, and it is worth it 
to me to take a little while longer to get to work, and that 
would change the mix of highways pretty dramatically and 
provide another source of funding. Going along with the 
proposal for an increase in the gas tax, if you start talking 
about the highest rate of expenditure ever for transit and 
highways, we have got to have another source of funding 
somewhere.
    Have you looked into that kind of thing? And do you have 
any opinion about it?
    Secretary Mineta. And, in fact, in SAFETEA we allow HOV 
lanes to be used for what is referred to as ``hot lanes.''
    Senator Bennett. ``Hot lanes''--that is the name I could 
not come up with. Thank you.
    Secretary Mineta. And so that is a facet of our Highway 
Program in SAFETEA that is new that we allow.
    Senator Bennett. Have you done any studies as to how much 
money that might raise? What contribution--I assume that would 
all go into the Highway Trust Fund, or would that all go to 
local----
    Secretary Mineta. No. It would go to the local agencies 
that are doing that, and probably the best example of that is 
State Route 91 in California. But there are other agencies that 
are now considering the idea of a hot lane. And the biggest 
thing about the hot lane is how to identify whose car or what 
car it is, and are they already registered as a prepaid 
customer of the toll lanes so that they would then have their 
account debited for being in the hot lane.
    Senator Bennett. Thank you. One other question. We have a 
vote and I recognize that. Would you consider in all of this 
debate about 80/20, 50/50, et cetera, perhaps bifurcating 
between New Starts and additional expansions. The experience in 
Salt Lake City has been cited. I can tell you that there was 
great opposition to light rail in Salt Lake in some sectors. 
They were more vocal than they were numerical, but there was a 
great expression of concern about ``snail rail,'' as they 
called it.
    I remember attending a political activity where I was the 
only member of the elected delegation introduced to the crowd 
who did not get an automatic standing ovation. And it was 
because of my support for ``snail rail,'' and these people were 
sufficiently opposed to it.
    Once the North-South system was built, as Senator Sarbanes 
has quoted, all of the opposition to ``snail rail'' 
disappeared, and suddenly everybody had been for it all along. 
And everybody had thought what a wonderful idea it was all 
along, like people now saying how great it is that Saddam 
Hussein is no longer in power, never suggesting that they 
wanted to keep him in power.
    It was much easier to get the local match for the extension 
of the system in the East-West fashion and then up to the 
hospital at the University of Utah based on the success. And, 
frankly, there was more money because we did better at the fare 
box than any of
the initial projections had been, and we were able to pay a 
higher percentage out of the fare box of the successful line in 
the first
instance.
    So you do not have to commit here on the record, but think 
about the possibility of maintaining the 80/20 for a New Start, 
and then saying once you have achieved a certain level of 
success, then the local community will be asked to come up with 
50 percent, or something of that kind, if they want to expand 
it.
    Secretary Mineta. Well, the 50/50 is only applicable to the 
New Starts Program, and the 80/20 is there for the rest of the 
program in public transit. So that 50 percent is only as it 
applies to the New Starts Program.
    Senator Bennett. I am suggesting that you might think about 
flipping that.
    Secretary Mineta. I understand.
    Senator Bennett. Because it is much easier to raise money 
on the basis of success than if you just have a concept that 
you are trying to sell an electorate that doesn't want to come 
up with the 20 percent.
    Secretary Mineta. And in these other projects, we do have 
incentives for increased ridership to the local transit 
district, because we want to give them incentives as well to 
improve their own service to their localities.
    Senator Bennett. I just have to make the clear point on the 
record that FTA/DOT has been fabulous to work with, that we in 
Salt Lake City have been tremendously benefited by the 
expertise of your agency. That preceded your coming in, but it 
has continued in the period that you have been in charge, and I 
shouldn't leave the opportunity without getting that statement 
clearly on the record and thanking you for all your help.
    Secretary Mineta. Well, it was, without a doubt, your 
service at the Department of Transportation that set the pace 
for all of us who are there today.
    Chairman Shelby. Mr. Secretary, that was quite a few years 
back now.
    Secretary Mineta. Yes, indeed.
    [Laughter.]
    Senator Bennett. The first Assistant Secretary of 
Intergovernmental Affairs.
    Chairman Shelby. Senator Carper. I know we have a vote, but 
go ahead.
    Senator Carper. Thanks very much.
    Mr. Secretary, Administrator Dorn, I am pleased to hear you 
indicate that you do not find favor in the proposal put forth 
by Senators Baucus and Grassley with respect to a bonding 
approach for funding transit. I think that is a symptom, and it 
is a symptom of a bigger problem, and the bigger problem is 
there aren't enough resources that are available to be 
committed over the next 6 years for highways or for transit. 
And I appreciate your statements that this is more money than 
you have ever allocated before for ISTEA or for TEA-21. But I 
think when we actually adjust for inflation and for changes in 
demographics, we find that the resources are inadequate, and as 
a result, we see proposals well-intended but ultimately, I 
think, not very helpful that the likes of which Senators Baucus 
and Grassley have put forward.
    I do not want to get Administrator Dorn in any trouble 
today. I do want to come back--and you have heard us visit and 
revisit this funding question for New Starts, whether it should 
be 80/20, 50/50. And I have a note here that Administrator Dorn 
may have said something to the effect of this, and just correct 
me if I am wrong. But if we are going to pursue a policy that 
high demand for Federal funding should dictate a lower Federal 
share, we should apply that to highway programs as well. And I 
think you may have said that in one of our hearings. I am not 
trying to put words in your mouth or to get you into trouble. 
But if you ever said or thought that, I just want to say I 
agree.
    Chairman Shelby. Thank you.
    Mr. Secretary, you and Administrator Dorn have been very, 
very patient.
    We will continue to hold hearings on transit because it is 
so important, as Senator Sarbanes pointed out. We thank you for 
your appearance today.
    We have a second panel, and we will get into the second 
panel as soon as we vote and come back.
    Secretary Mineta. Thank you very much, Mr. Chairman.
    Chairman Shelby. Thank you, Mr. Secretary.
    [Recess.]
    Chairman Shelby. The hearing will come back to order.
    Our second panel today includes William Millar, President, 
American Public Transportation Association; Jeff Morales, 
Director, California Department of Transportation, who will 
testify on behalf of the American Association of State Highway 
and Transportation Officials; Robert Molofsky, General Counsel, 
Amalgamated Transit Union; Harry W. Blunt, President, Concord 
Coach Lines, Concord, New Hampshire, testifying on behalf of 
the American Bus Association; and Jim Seal, a Federal Transit 
Administration consultant.
    We welcome all of you here. All of your written statements 
will be made part of the record, and in the interest of time, 
if you would briefly sum up your remarks, please.
    Mr. Millar, we will go with you first.

                  STATEMENT OF WILLIAM MILLAR
                   PRESIDENT, AMERICAN PUBLIC
                   TRANSPORTATION ASSOCIATION

    Mr. Millar. Thank you very much, Mr. Chairman, and thank 
you for inviting us to the hearing today.
    Having heard the opening statements of all the Members and 
the subsequent concerns of the Secretary, I am almost inclined 
to just say ``Thank you'' and leave it at that, but I do have 
just a couple of things that I would like to add.
    I certainly want to thank you for the role that you and the 
Committee have had in crafting TEA-21. The good news is that--
and apparently, all the Members who are here today spoke to 
it--TEA-21 works. We have seen an unprecedented level of 
investment in transit; the public has responded with an 
unprecedented growth in the usage, and therefore, we believe 
that this reauthorization should be evolutionary in nature, not 
revolutionary.
    Chairman Shelby. So we need more money.
    Mr. Millar. Yes, sir, we do. And we appreciate the 
leadership that you and the Committee have shown in trying to 
figure out the best way to get more money, and we especially 
appreciate the letter that you sent to the leaders of the 
Finance Committee expressing concern about the bonding 
proposal.
    We too share that concern. We do not believe that taking 
funds from the Mass Transit Account to fund the highway program 
and then trying some other way to put money in there is the 
right way to go, and we thank you very much for your leadership 
and the leadership of all the Committee leaders in that regard.
    As I comment on SAFETEA, let me organize it around the 
three basic principles that I have testified to this Committee 
and the Subcommittee earlier: Grow the program, protect the 
guarantees, and improve the program delivery.
    First, with growing the program, as all of you said earlier 
today, we simply need to have a higher level of investment. 
APTA has proposed doubling the size of the investment over the 
next several years. As was pointed out, the Administration's 
own numbers as well as work done by my colleagues at AASHTO, as 
well as independent economic analyses, all show we should be 
spending tens of billions of dollars more on public transit 
every year than we are.
    We need to see more investment, not less, and as was very 
clearly pointed out by the Members this morning, the SAFETEA 
proposal does not meet that standard.
    Second, we would like to see the funding guarantees 
maintained. They have been a great boon. They have brought 
predictability to the program, they have provided certainty so 
that major projects can go to Wall Street, get private 
financing to speed up the projects, to bring them in in shorter 
time and with more benefit. Without the funding guarantees, 
that goes away.
    APTA did do a study in the last year on the benefits of the 
funding guarantees, and with your permission, sir, I would like 
to insert that in the record.
    Chairman Shelby. We will make that apart of the record 
along with your testimony.
    Mr. Millar. Thank you very much. We also have worked with 
our colleagues in the transportation construction industry and 
in the highway construction industry, and we have also 
completed a study by the firm of Global Insight* that outlines 
the stimulative effect and the good economic benefits of 
investments.
---------------------------------------------------------------------------
    * Held in Committee files.
---------------------------------------------------------------------------
    Mr. Millar. It should be pointed out particularly in this 
Committee that it was at the insistence of the bipartisan 
leadership of this Committee in 1998 that the General Funds for 
the program were included in the guarantees when others would 
have proposed simply the trust fund. So again, we thank you for 
that work then, and we thank you for your continued support 
today.
    Finally, with regard to the improvements in program 
delivery, our reauthorization proposal, which I previously 
submitted to the Committee, carries 40 pages worth of ideas on 
how we might speed up program delivery. We certainly appreciate 
that the Administration wishes in some ways to improve the 
efficiency of the program and the distribution of the funds of 
the program, but we do not think a major overhaul such as they 
have proposed is appropriate.
    We also believe that if there are to be major changes in 
the structure of the program, that should only be done with new 
growth in the program. That way, we avoid taking away from the 
existing program successes--for example, those that Senator 
Santorum pointed out in his State. That way, we avoid 
shortcutting those successes while we do meet priorities that 
have to be met--for example, more money for rural public 
transportation.
    In APTA's proposal, the largest single category of increase 
that we propose, some 110 percent increase, would go into rural 
and small urban transportation. We have additional proposals 
there for high intensity use, small urban systems and 
additional proposals for bus replacement and van replacement 
throughout those areas.
    To conclude, we certainly share the Committee's expressed 
view this morning--we can see no good policy reason to 
differentiate between New Starts, Federal match, and any other 
part of the program. We would strongly urge that we maintain 
the New Starts Federal share at 80 percent.
    Let me close by saying thank you, Mr. Chairman, thanks to 
all the Committee, and we look forward to your questions.
    Chairman Shelby. Thank you.
    Mr. Morales.

                   STATEMENT OF JEFF MORALES
       DIRECTOR, CALIFORNIA DEPARTMENT OF TRANSPORTATION
            ON BEHALF OF THE AMERICAN ASSOCIATION OF
           STATE HIGHWAY AND TRANSPORTATION OFFICIALS

    Mr. Morales. Thank you, Mr. Chairman.
    I appreciate the leadership that you and Senator Sarbanes 
are showing on this issue and moving forward, and we certainly 
look forward to working with you as the process goes forward.
    I will start by agreeing with the basic premise here, which 
is that the transit provisions of TEA-21 are working well and 
should be continued. Clearly, the funding must grow.
    AASHTO has proposed that the transit program be funded at 
$7.5 billion in 2004, increasing to at least $11 billion in 
2009. We also support the higher APTA-recommended level that 
would rise to $14 billion, assuming that that funding can be 
provided as net growth and not come at the expense of other 
programs.
    The Administration's proposed funding levels for transit 
fall substantially short of its own documented needs, based on 
the Conditions and Performance Report. Under SAFETEA, transit 
funding would grow only from $7.2 billion to $8.1 billion, 
which would represent $1.1 billion below the funding level for 
2003, when adjusted.
    AASHTO is concerned that the SAFETEA proposal, while 
guaranteeing funds for the mass transit account, contains no 
similar guarantee for the General Fund component of transit 
funding. State and transit agencies need stable, predictable 
funding in order to construct major transit projects. It is 
very critical that both the Highway Trust Fund and the General 
Funds for transit are guaranteed in reauthorization.
    I would join, I believe everyone here today in also saying 
we do not support the proposed reduction of funding for New 
Start projects from 80 percent to 50 percent. There is no clear 
policy basis for doing so, and I would add that certainly in 
California's case, we do overmatch on many projects, both in 
transit and in the highway program, which has not been 
discussed today, but we do so on a project-by-project basis, 
based on what makes the most sense. There is really no basis 
for making an arbitrary, across-the-board reduction in the 
amount of Federal funds that could go to a given project.
    One of the major moves in ISTEA and carried forward in TEA-
21 was enhancing and strengthening the local planning process, 
and we should not as a matter of policy restrict that process 
by making this change.
    AASHTO commends the Administration for their concern with 
the solvency of the mass transit account but does not support 
the proposed program restructuring. SAFETEA proposes that New 
Starts be funded entirely with General Funds rather than 
through the Highway Trust Fund. Since General Funds would not 
be guaranteed under the Administration proposal, New Starts 
would be vulnerable to funding reductions or elimination even 
during the annual appropriations process.
    Also under SAFETEA, the bus discretionary funding would be 
eliminated, and the Rail Modernization Program would be shifted 
to the formula program.
    Other alternatives exist to remedy the budget-scoring 
problems which prompted these proposals, and we would be glad 
to work with the Committee to find solutions.
    There are several aspects of the Administration's proposal 
that AASHTO supports, including the elimination of some 
burdensome Buy America certification requirements for smaller 
transit systems. We do not support an exemption from Buy 
America but simply a streamlining of some of the administrative 
burdens placed on them.
    We support expediting transportation improvements by 
allowing planning studies to establish the basis for an 
environmental assessment or impact statement under NEPA in 
continuation of the TIFIA Program, with a threshold of $50 
million, although we would actually recommend that that be 
reduced to $25 million.
    AASHTO also supports the continuation of the State 
Infrastructure Bank Program and recommends that it be open to 
all 50 States.
    Rural transit needs have been discussed here today, and I 
would note that AASHTO's ``Bottom Line'' report documents the 
need to double Federal rural transit assistance from the 
current levels, and we support SAFETEA's recommendation for 
increased funding. As the Nation's elderly population increases 
in the coming years, citizens in rural areas will need access 
to shopping, medical, and other services.
    With regard to the transit bonding proposal that has been 
discussed, AASHTO has joined APTA and other organizations in 
expressing support of maintaining the existing structure, and I 
too want to join in thanking both you, Mr. Chairman, and the 
Ranking Member for taking a leadership role and raising 
concerns about this and pushing to continue their current 
growth.
    One of the most important advances of both ISTEA and TEA-21 
was the integration of the modes, and this reauthorization 
should continue that trend and not reverse it. The challenge 
before you is obviously how to meet the growing transit needs 
in this Nation as we go forward. AASHTO has identified a menu 
of options that would grow the program to the levels that we 
have proposed. We believe that through these mechanisms, 
program levels of at least $55 billion for transit and $300 
billion overall for the program are achievable and would 
certainly be consistent with the Senate Bud-
get Resolution in this area.
    Mr. Chairman, we look forward to working with you as this 
process goes forward.
    Thank you.
    Chairman Shelby. Thank you.
    Mr. Molofsky.

                  STATEMENT OF ROBERT MOLOFSKY
           GENERAL COUNSEL, AMALGAMATED TRANSIT UNION

    Mr. Molofsky. Thank you very much, Mr. Chairman and Senator 
Sarbanes.
    For more than 40 years, the Amalgamated Transit Union, now 
numbering over 180,000 members in 46 States, has been a partner 
along with the transit industry and others who are appearing 
before you today in helping to design and shape America's 
transportation program.
    Since 1964, with the first bill, this Congress--every 
Congress--and, we believe, this Administration, has understood 
properly that sound national transportation policy requires 
with it a sound national transportation labor policy. It is 
that partnership between transportation, labor, and industry in 
the communities in which our members live and serve that we 
believe have been the cornerstone for the development of 
strong, well-funded, well-implemented, and well-operated 
transit services from the start of the program back in the 
early 1960's to the present.
    We have previously submitted to the Committee a very 
comprehensive proposal regarding TEA-21 reauthorization. It is 
entitled, ``Next Stop--Real Choices: Moving America Safely.'' 
And it is those principles captured in the title of our 
proposal that we brought our review of the Administration's 
proposal to make sure that at every step in our review, funding 
was appropriate to make sure that the Nation's services were 
maintained and expanded as needed, that the service was secure, 
and that it was safe.
    In looking at the Administration's bill, we too share, like 
others before you, concerns with the funding levels. Simply 
stated, there is not enough money in this bill to provide for 
the necessary transit services and to do it the right way in 
all communities, rural and urban alike, and to make sure it is 
safe and secure.
    We share the concerns of yourselves and others on the 
Committee with respect to the funding levels, the focus on 
guarantees as opposed to the proposed numbers without 
guarantees, which is an artificial way of describing the bill 
by not pointing out the real dollars that would ultimately 
flow. The changes that have been proposed in the Bus Capital 
Program and the JARC Program to formularize it as opposed to 
allocate it, we disagree with, and also the restructuring, 
which includes the JARC Program.
    Looking at the Administration's bill, we do believe it is a 
sound platform upon which to go forward. It recognizes that we 
are well beyond the debate of linking highways and transit in 
both the planning and operating programs, and it does seek to 
address some of our pressing security needs.
    I would like to mention and highlight several program 
issues that we have set forth in our proposal that can enhance 
the concerns, both funding and safety and security, which have 
come up today.
    I might say, Mr. Chairman, that when I joined the ATU in 
the early 1980's, one of my first trips was to Alabama to see 
if the State legislature could approve and extend the beer tax, 
which at that time was funding transit in Birmingham. We did 
not get it, but it does underscore ATU's interest, transit, 
labor, and the communities in which we live, the need to have a 
strong opportunity to lobby and secure State funding along with 
the Federal dollars that are put forth. And for that reason, we 
have proposed a so-called FIG Program, or Federal Incentive 
Grant Program, that would seek to provide incentives to States 
based on their ability to secure increases in State dollars for 
transit, and we have a menu of incentive grant dollars that 
would flow depending on whether they increased funding, created 
new sources of funding or, most significantly, opened up their 
existing trust funds which dating back to the 1930's, were 
dedicated for highway projects only, without an ability to be 
used for transit projects.
    We believe there should be a strong voice and a dedicated
representative serving on the State and local MPOs, involving 
all constituent groups that benefit from transit services.
    In the security area, we have identified a number of 
initiatives that we think are vital and critical to making sure 
our systems are safe. It is not enough to do surveys and 
develop best practices; there needs to be money, and there 
needs to be a requirement that every, single transit property 
develop safety and security plans and provide training--and, 
with all due respect, not just to first-line supervisors but to 
those who are on the street when problems arise, and that is 
the operating personnel and those who operate and maintain the 
services.
    We support the Parks Expansion Program and the proposals by 
CTA, APTA, and others for expansion in the rural areas.
    I would like to just close with several comments on three 
additional programs. One, we think there should be a targeted 
program for workforce training. Technology has brought this 
industry far along, from the horsedrawn cars to the kinds of 
equipment in place today. There needs to be a dedicated 
targeted program to provide transit systems with funds to train 
the workforce. It is a security issue, it is a service issue, 
it is a safety issue.
    Two, if ridership is of concern, as it is to everybody, we 
think there should be an increase in the commuter benefit tax 
from 100 to 190. S. 661 has been offered, and we support it.
    Third, we think the charter regulations which have been in 
place since the mid-1980's make no sense. They are burdensome 
and complex. I do not think they continue today to address the 
real-world issues that confront us today in our communities. In 
effect, they limit almost to the point of absurdity the ability 
of public systems to provide limited services to the nonprofits 
and government agencies who might need those services on a 
limited basis. We know the private sector has some real 
concerns about it, and I believe that with this Committee's 
support, we can, through discussions with those 
representatives, develop a better system that is less 
adversarial and provides more certainty to all parties, 
enabling them to provide the services that are needed.
    Finally, we will be prepared as always to answer any 
questions you may have.
    Thank you very much.
    Chairman Shelby. Thank you.
    Mr. Blunt.

            STATEMENT OF HARRY W. (WOODY) BLUNT, JR.
                 PRESIDENT, CONCORD COACH LINES
                     CONCORD, NEW HAMPSHIRE
           ON BEHALF OF THE AMERICAN BUS ASSOCIATION

    Mr. Blunt. Thank you, Senator Shelby, Senator Sarbanes.
    Intercity buses carry 774 million passengers each year and, 
unlike other modes, we do it with minimal Government subsidy. 
We transport more people in 2 weeks than Amtrak carries in an 
entire year. Scheduled intercity buses serve 5,000 communities 
daily, compared to 521 served by Amtrak and 536 served by the 
airlines.
    Chairman Shelby. Say that again, please.
    Mr. Blunt. Intercity buses serve 5,000 communities across 
America on a daily basis. Amtrak services 521 cities, and the 
commercial airline industry services 536.
    Chairman Shelby. And what about the number of passengers 
relative to all those?
    Mr. Blunt. Seven hundred seventy-four million passengers; I 
believe Amtrak carries about 30 million passengers, and the 
airline industry, in the range of 600 million passengers 
annually. It was 600 million and growing, but obviously, it is 
pretty stable now.
    A Nathan Associates report* shows that from 1960 to 2001, 
Amtrak received a total net Federal subsidy of $57.96 per 
passenger carried. Commercial airlines received $6.07 per 
passenger carried. But intercity, regular-route, scheduled 
passengers received only 8 cents per passenger in Federal 
subsidies.
---------------------------------------------------------------------------
    * Held in Committee files.
---------------------------------------------------------------------------
    We applaud the Administration's SAFETEA proposal. It is a 
great first start, and the proposal begins to recognize the 
potential of intercity bus. But we do have a couple of 
recommendations.
    SAFETEA continues the ADA Wheelchair Lift Program for 
intercity buses, providing $7 million in funding for private 
operators. But with the annual cost estimated by the TRB to be 
closer to $40 million, $7 million just is not enough.
    SAFETEA includes a first-ever Intermodal Passenger 
Facilities Grant Program that helps to build facilities and 
ensure coordination between intercity bus and other modes. This 
is an essential. People should not have to go to another part 
of town, or the wrong part of town, to get on a Greyhound or 
Trailways bus.
    Our industry at times has been given a bad reputation 
because of cities not providing good terminals. This city, 
Washington, DC, is a classic example of that, with a beautiful 
train station, and the bus terminal relegated to a poorer part 
of town.
    SAFETEA also provides more funding for rural, over-the-road 
bus programs, which help to restore service to rural 
communities that often have no other form of public 
transportation. However, we are concerned that States could 
choose to divert those funds. DOT failed to propose in its 
reauthorization program an essential bus service system for 
service between nonurbanized areas and hub airports and 
secondary airports. We believe that this would be a good 
alternative in some cases to essential air service.
    However, on the top of our list in reauthorization is the 
subject of transit competition. It simply does not make sense 
to use transit buses subsidized by Federal tax dollars to 
conduct a sightseeing service or to ferry people to golf 
outings. There are thousands of private intercity operators to 
perform that service. It is akin to asking the local fire 
department workers to paint houses because they already own 
ladders and have ladder trucks that are quite often not being 
used.
    In a nutshell, these are our concerns. FTA refuses to fine 
transit agencies in violation of the present law. The FTA is 
conflicted to both fund and also regulate transit 
organizations.
    DOT proposed a new loophole under SAFETEA that will allow 
transit charters if they provide service to the elderly. The 
elderly are 50 percent of the private sector charter market, 
and transits now want to, as my colleague has mentioned, gut 
the regulation entirely. We cannot compete with these heavily 
subsidized agencies when the deck is stacked against us.
    In closing, Mr. Chairman, I would like to take a moment to 
tell you about a letter that I have had on my desk for 17 
years, a wonderfully simplistic letter from a third grade class 
that went on a bus ride to connect to a plane ride. This was a 
very special plane and bus ride, because the mom of one of the 
children on this bus had arranged the trip to go to Florida and 
the Kennedy Space Center so that the class could watch that 
mom, Christa McAuliffe, become the first teacher in space on 
the Challenger shuttle.
    Tragically, this letter was written in the days that 
followed the Challenger disaster, but it brings to total 
clarity what we talk about here today. This Nation is about 
discovery and exploration and human experience, good and bad. 
Our mobility allows us to discover and explore all facets of 
our transportation system, from a bus to a plane to a rocket, 
and represents an important link in that transportation and 
that mobility. The links of the chain make us strong as a 
Nation, but we need all of those links, and none can be 
ignored.
    Thank you, and I will be glad to answer questions.
    Chairman Shelby. Mr. Seal, we have another vote and what 
after that, we are not sure, on the floor. Can you sum up in a 
couple minutes?

                     STATEMENT OF JIM SEAL
       FORMER CONSULTANT, FEDERAL TRANSIT ADMINISTRATION

    Mr. Seal. Sure. Thank you, Mr. Chairman.
    I was a consultant to FTA in the 1980's on public-private 
partnerships. I am not representing FTA today.
    I wanted to point out that the proposed SAFETEA legislation 
does move forward by putting the emphasis on the individual 
customer, and this will go a long way toward an outcome-based 
Government. It recognizes that nonincentive-based Government 
cannot always achieve policy outcomes.
    The proposed legislation recognizes that we can achieve 
congestion relief with the scarce use of resources proposed, 
and we understand that budget growth is important but not only 
relying on budget growth. And I think the centerpiece of that 
is certainly the incentive program, which can go a long way 
toward reducing congestion and providing cost-effective 
services.
    We also applaud including other parties and other providers 
as grant recipients in the new planning stage, and this will 
bring forward new, innovative transportation programs.
    In California, we have a contrast of those who rely on 
competition and those who are more centrally oriented. In San 
Diego, I would like to report that from 1979 to 2001, in 
inflation-adjusted costs, San Diego Transit has reduced its 
costs by 34 percent. In Santa Clara County, the opposite has 
taken place, where costs have increased by 18 percent after 
adjusting for inflation--and this does have an impact on 
transit. The more cost-effective it is, the more service can be 
provided.
    We believe that as many barriers as can be eliminated to 
provide service cost-effectively is the way to go, one area 
being the labor protection, 13(c). Certainly, it was called for 
when there were no State labor bargaining rights. Today, to use 
that to expand into the JARC and the Administration's New 
Freedom Initiative would stifle innovation, and by definition, 
this is new service, and new service has no impact on existing 
employees. This should be taken into consideration in the 
legislation.
    Thank you very much.
    Chairman Shelby. Gentlemen, we appreciate all of your 
testimony, and we hate to hurry like this. I have a number of 
questions for the record for all of you, and I am sure Senator 
Sarbanes and others might have questions as well. We will get 
those to you as soon as possible.
    We appreciate your participation. I think we are hearing 
you loud and clear today, and we thank you very much for 
appearing.
    The hearing is adjourned.
    [Whereupon, at 12:35 p.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
              PREPARED STATEMENT OF SENATOR JON S. CORZINE
    Mr. Chairman, thank you for calling this hearing to discuss the 
Administration's proposal for the reauthorization of TEA-21 known as 
the Safe, Accountable, Flexible, and Efficient Transportation Equity 
Act, or SAFETEA. I welcome Secretary Mineta as well as the other 
witnesses appearing before the Committee today and look forward to 
their testimony.
    Mr. Chairman, I have strong doubts that SAFETEA will be sufficient 
to meet the needs facing our Nation's mass transit infrastructure. The 
challenges posed by increased ridership and an aging rail and bridge 
network require a strong level of financial commitment from the Federal 
Government. Unfortunately, I cannot find that level of commitment in 
this proposal.
    SAFETEA proposes $45.7 billion in mass transit spending over the 
next 6 years. I believe that this is an inadequate amount. It 
represents a 1.2 percent cut from the amounts authorized under TEA-21, 
when adjusted for inflation. And it falls well below the $56.5 billion 
that the Senate included in its budget resolution that passed Congress 
in the spring.
    Mr. Chairman, in the 2002 ``Conditions and Performance Report,'' 
the Department of Transportation reported that we need an annual total 
investment from Federal, State, and local governments of $14.84 billion 
in transit to maintain conditions and performance at current levels and 
$20.62 billion to improve both conditions and performance. The only way 
to do this, under the Administration's proposal, is to pass the costs 
on to our cash-strapped States and municipalities. I do not believe 
that we should do this.
    In addition, I am concerned about the Administration's proposal to 
eliminate the minimum guarantee of mass transit funding that comes from 
general revenue. This proposal would remove the guarantee that protects 
the General Fund portion of the transit program and leave this amount 
subject to the appropriations process. In today's tight appropriations 
environment, I am concerned Congress will be unwilling or unable to 
make up the difference between the authorized and guaranteed levels.
    Finally, I would like to address the Administration's proposal as 
it relates to the New Starts Program. First of all, I do not believe 
that we should eliminate the Bus Discretionary program in order to help 
pay for the New Starts Program. If we do so, we are robbing Peter to 
pay Paul. But I am also deeply opposed to any proposal that would cap 
New Starts Federal funding at 50 percent, instead of the current 80-20 
Federal-State split. We do not make the same requirement of highway 
funding and I believe that if we enact this proposal, we will encourage 
States to choose highway projects over mass transit projects.
    Mr. Chairman, my own State of New Jersey is the second largest 
recipient of New Starts money in the Nation. The New Starts Program 
funds the ongoing Newark-Elizabeth and Hudson-Bergen light rail 
projects. These projects will need funding during the life of the next 
TEA-21 legislation. In addition, I will be seeking funding to help 
construct a new rail tunnel under the Hudson River. I can tell the 
Committee that changing the Federal/State split will place a huge 
burden on New Jersey to find additional funding for these worthy 
projects.
    Mr. Chairman, I look forward to working with the Committee and the 
Administration to create better legislation that will meet our Nation's 
transit needs. Thank you very much.

                               ----------

             PREPARED STATEMENT OF SENATOR DEBBIE STABENOW

    Mr. Chairman, thank you for holding this hearing on the 
Administration's SAFETEA proposal.
    Ensuring safe and efficient public transportation is one of the 
most critical issues that we face as Members of this Committee. I look 
forward to working with the Chairman, and all Members of this 
Committee, as we craft a strong mass transit title to the upcoming TEA-
21 reauthorization this year.
    Michigan is known as an automobile State. We take pride in 
producing and driving our cars. However, Michigan also has tremendous 
mass transit needs. In the year 2002 alone, Michigan buses carried over 
88 million passengers.
    There are bus systems operating in every one of Michigan's 83 
counties, from the urban Wayne County to rural counties in the Upper 
Peninsula. Despite covering all counties, service in many areas is 
minimal, creating a real hardship for working families who cannot 
afford to own a car.
    Last month, a Detroit News series chronicled how underfunded 
transit systems impact working famities. The article followed Detroiter 
Karen Gholston, who stands at the bus stop every morning at 3:30 a.m. 
with her two-year-old daughter in one hand and a can of pepper spray in 
the other, waiting to catch a bus for her 6 a.m. class.
    Despite the fact that her class is only 12 miles away, it takes 
Karen two and a half hours to get there because the bus only runs once 
an hour, and is often late or does not come at all.
    Being late too often could cost Karen a spot in the pre-engineering 
program at Focus:HOPE, ending her dream of escaping from her $400-a-
month Government assistance by becoming a mechanical engineer for an 
auto company. How can we expect working mothers to become independent 
from Government assistance programs when we do not provide adequate 
public transportation to get them to their jobs and classes?
    Mass transit plays a critical role in Michigan's economy, not only 
by creating thousands of jobs, but also by providing critical services 
for Michiganders who cannot afford to own a car. For example, 78 
percent of jobs in metro Detroit are 10 miles or more from downtown, 
more than twice the national average, making public transit critical 
for working families.
    Given Michigan's and the Nation's growing transit needs, I have 
serious concerns about the Administration's SAFETEA proposal.
    First, SAFETEA not only fails to grow the transit program, but it 
also in effect cuts funding from the prior TEA-21 authorization bill. 
TEA-21 provided $36 billion in guaranteed funding over a 6-year period, 
which was a 50 percent increase over the $24 billion actually 
appropriated under the prior ISTEA authorization.
    However, the Administration's proposal only provides $37.6 billion 
in guaranteed funding, which is a 7.6 percent cut from TEA-21's 
guaranteed funding level when adjusted for inflation.
    The SAFETEA proposal also eliminates the guaranteed funding for the 
General Fund portion of the transit program. Currently, 20 percent of 
the mass transit program is funded from the General Fund and this 
entire amount is guaranteed for transit funding. SAFETEA eliminates 
this funding guarantee, forcing transit to compete for 20 percent of 
its funding in a very tight and difficult budget.
    Finally, the Administration's proposal eliminates the 5309 Bus 
Discretionary program. As a representative of a State that relies 
solely on bus systems for its public transit needs, I find this 
particularly alarming.
    According to the Michigan Department of Transportation (MDOT), 
Michigan's estimated transit capital and operating needs total nearly 
$1.5 billion over the next 6 years, and much of this capital investment 
is needed to simply keep up existing service even though ridership is 
increasing.
    Under TEA-21, Michigan received over $124 million under the 5309 
Bus Discretionary program, but our capital needs for buses, facilities, 
and equipment exceeded $600 million for that same time period.
    This shortfall exists despite the significant contribution by 
Michigan taxpayers. Michigan ranks 6th, behind five States with rail, 
in direct support for its public transit systems.
    Eliminating the Bus Discretionary program, will assure that 
Michigan will fall further and further behind in meeting its public 
transit needs. Michigan, already ranks last in Federal transit funding 
among the Great Lakes States, and only receives 43 cents back on every 
transit dollar it contributes to the highway trust fund.
    I am pleased to be here today as we begin our work on improving our 
mass transit programs. I hope to be able to work with my colleagues on 
this Committee to help States like Michigan, increase access to public 
transportation, which will improve our economy and our quality of life.
    Thank you.

                               ----------

               PREPARED STATEMENT OF SENATOR ZELL MILLER

    I appreciate Chairman Shelby and Senator Sarbanes for organizing 
today's hearing to discuss the public transit aspects of the 
Administration's proposal SAFETEA--Safe, Accountable, Flexible, and 
Efficient Transportation Equity Act. The current highway and transit 
legislation, TEA-21, expires September 30 of this year. Today's hearing 
is timely and the issues are important to the people of Georgia and 
this Nation.
    During TEA-21, Georgia received about $777 million for transit over 
the past 6 years. The Administration proposal provides $45.76 billion 
for transit over the next 6 years and $37.6 billion in guaranteed 
funding. But the ridership has outpaced the available resources and the 
need for the efficient transportation is still unmet.
    As a former Governor during the inception of the Intermodal Surface 
Transportation Efficiency Act (ISTEA) in 1991 and TEA-21 in 1998, I 
know well the benefits and importance of a long-term, holistic approach 
to addressing the numerous transportation challenges of large 
metropolitan, nonattainment areas as well as rural areas in need of 
alternatives to safely and efficiently transport people to and from 
work, school, grocery stores, and medical centers. With the need 
outpacing the current resources, I look forward to Secretary Mineta's 
and the other witnesses' testimony about the funding levels in SAFETEA 
and retaining important flexibility, minimum guarantees, and firewalls 
that State transportation planning organizations currently enjoy.

                               ----------

              PREPARED STATEMENT OF SENATOR RICK SANTORUM

    Thank you, Mr. Chairman, for holding this hearing on the 
reauthorization of the Transportation Equity Act for the 21st Century 
and hearing testimony on the Administration's proposed Safe, 
Accountable, Flexible, and Efficient Transportation Equity Act 
(SAFETEA).
    When it comes to transit, I come from a State that has it all. 
Pennsylvania has small transit operators running bus service in rural 
north central Pennsylvania as well as the large systems in Pittsburgh 
and Philadelphia that include existing rail and New Start proposals. I 
have medium-size operators in at least one small urban area that is 
considered high-intensity for transit. My State also has a large 
population of seniors.
    As one of those responsible for the creation of the Job Access and 
Reverse Commute program in TEA-21, I am interested in the impact of 
proposed changes to the administration of the program contained in the 
Administration's SAFETEA proposal. I am skeptical about the proposed 
formularization of the program and take very seriously concerns that 
formularization will spread the program's resources too thinly and 
undermine JARC's effectiveness. During my tenure in Congress, I have 
been active in Congressional efforts to reform welfare and assist 
recipients in transi-
tioning from welfare to work. The JARC program has been a critical tool 
in assisting families in that transition. I will work to ensure that 
JARC remains an effective program that complements other Federal 
efforts to help build independence for more of our citizens.
    I am also interested in how the Administration proposes to provide 
better transit service to our constituents by improving coordination 
among different providers of transit and other social services as well 
as proposed incentive programs.
    I note with particular concern the Administration's proposal to 
reduce the New Starts Federal match from the current ratio of 80 
percent Federal, 20 percent nonFederal to 50/50. Not only does this 
recreate the gap that was intentionally closed in previous Federal 
transportation laws between highway and transit matching fund levels, I 
fear that the proposed 50/50 match will discourage large and 
potentially beneficial projects. You could well have a situation where 
larger projects that have the ability to really transform communities 
will take a back seat to minimalist projects that require less non-
Federal share money. The 50/50 proposal would also have a negative 
impact on my State.
    As Congress and the Administration work to provide an adequate 
level of funding to our transportation needs, I have also been made 
aware of concerns regarding a proposal circulating in Congress for 
changing the financing system for transit. The proposal currently being 
referred to as Grassley-Baucus would in many ways shift the financing 
for transit to a bonding system. There is a real concern about breaking 
with the current system that funds transit and highways for the most 
part from Federal gas taxes. As a Member of both the Finance and 
Banking Committees, I intend to work to ensure that any system used to 
finance our transportation projects preserves the best aspects of, 
current transportation law, including equitable treatment for transit 
and the multiyear reliability of funding so crucial to effective long-
term planning.
    I look forward to hearing the testimony of today's witnesses.

                               ----------

                PREPARED STATEMENT OF SENATOR JACK REED

    Mr. Chairman, I want to join you in welcoming Secretary Mineta and 
our other witnesses to today's hearing on the reauthorization of TEA-
21.
    I am pleased to have a chance to discuss the Bush Administration's 
TEA-21 proposal and get the input of transit operators, employees, and 
riders.
    This hearing is proof that transit is a mainstream issue because 
transit is the fastest growing mode of transportation, and, in no small 
measure, transit is now vital to cities like Denver, Salt Lake City, 
Dallas, Atlanta, Miami, and Charlotte that previously never cared about 
buses or light rail.
    While I have some strong disagreements with the SAFETEA proposal 
put forth by the Administration, I want to thank the Secretary for his 
leadership in preserving the four-to-one balance between highways and 
transit, maintaining transit is share of the Federal gas tax and 
preserving the flexibility of TEA-21. Indeed, this bill continues his 
longstanding support for a balanced, national, intermodal 
transportation policy.
    However, I continue to have three major concerns with the 
Administration's bill: (1) the failure to provide new resources for 
transit, and even highway improvements for that matter, (2) the failure 
of SAFETEA to guarantee transit funding, and (3) the failure of SAFETEA 
to offer specific funding for transit security needs. On this last 
point, I am particularly concerned that OMB chose to ignore these 
needs, particularly in light of the Sarbanes-Reed GAO report which 
found that just 8 transit properties estimated they needed $700 million 
to protect themselves from terrorism. I recognize the White House's 
view that terrorism is the Department of Homeland Security's job, but 
the provision of $65 million to the Nation's top 20 transit properties, 
while welcome, is insufficient and must be addressed if we are truly to 
call the reauthorization of TEA-21 ``SAFETEA.''
    It is my hope that working with Chairman Shelby, Senators Sarbanes, 
and Allard we will be able to craft a bipartisan bill that recognizes 
that TEA-21 works as long as there are sufficient resources available 
to meet the Nation's growing needs. However, the clock is running, and 
I am concerned that the OMB's decision to severely limit needed 
investments in our transit and highway systems as well as the 
Administration's delay in getting its bill to the Congress makes the 
job of enacting a reauthorization bill less, rather than more, likely.
    Thank you, Mr. Chairman.

                               ----------

                 PREPARED STATEMENT OF NORMAN Y. MINETA

              Secretary, U.S. Department of Transportation
                             June 10, 2003

    Chairman Shelby, Senator Sarbanes, and Members of the Committee, 
thank you for the opportunity to appear before you today to discuss the 
Administration's proposal to reauthorize our surface transportation 
programs--the Safe, Accountable, Flexible, and Efficient Transportation 
Equity Act of 2003, or ``SAFETEA.''
    Nothing has as great an impact on our economic development, growth 
patterns, and quality of life as transportation. This is equally true 
at the national, State, and local levels. A safe and efficient 
transportation system is critical to keeping people and goods moving 
and cities and communities prosperous. Reauthorization will supply the 
funds and the framework for investments needed to maintain and grow our 
vital transportation infrastructure. In addition to improving the 
quality of our lives and enhancing the productivity of our economy, our 
proposed legislation seeks to place a central focus on transportation 
safety.
    Under SAFETEA, States would receive more resources to address their 
own, unique transportation safety issues; would be strongly encouraged 
to increase their overall safety belt usage rates; and would be 
rewarded for performance with increased funds and greater flexibility 
to spend those funds on either infrastructure safety or behavioral 
safety programs. With the increased funding, States would be encouraged 
and assisted in their efforts to formulate comprehensive safety plans.
    Our Nation's transportation system obviously faces significant 
challenges in other areas as well. Our proposal will create a safer, 
simpler, and smarter Federal surface transportation program by 
addressing transportation problems of national significance, while 
giving State and local transportation decisionmakers more flexibility 
to solve transportation problems in their communities.
    SAFETEA calls for a record Federal investment in surface 
transportation, spending over $201 billion on highway and safety 
programs, and nearly $46 billion on public transportation programs, 
from fiscal year 2004 through fiscal year 2009.

Building on the Legacies of ISTEA and TEA-21
    Thanks in large part to the hard work of many of you and your 
predecessors, SAFETEA builds on the tremendous successes of the prior 
two surface transportation reauthorization acts. Both the Intermodal 
Surface Transportation Efficiency Act of 1991 (ISTEA), with which I am 
proud to have played a role, and the Transportation Equity Act of the 
21st Century (TEA-21), provided an excellent framework to tackle the 
surface transportation challenges that lie ahead.
    ISTEA set forth a new vision for the implementation of the Nation's 
surface transportation programs. Among other things, ISTEA gave State 
and local officials unprecedented flexibility to advance their own goals 
for transportation capital investment. Instead of directing outcomes from Washington, DC, the Department shifted more of its focus to giving State 
and local partners the necessary tools to solve their unique problems while still pursuing important national goals. SAFETEA not only maintains this 
fundamental ISTEA principle, but it also goes further by giving States 
and localities even more discretion in key program areas.
    TEA-21's financial reforms have proven equally significant. By 
providing certainty, predictability, and of course, increased funding, 
TEA-21 paved the way for State and local transportation officials to 
undertake strategic transportation improvements on a record scale.
    TEA-21 achieved this by reforming the treatment of the Highway 
Trust Fund to ensure that, for the first time, spending from the 
Highway Trust Fund for infrastructure improvements would be linked to 
tax revenue. The financial mechanisms of TEA-21--firewalls, Revenue 
Aligned Budget Authority (RABA), and minimum guarantees--provided 
greater equity among States in Federal funding and record levels of 
transportation investment. SAFETEA maintains the core TEA-21 financial 
structure, while moderating the wide swings in program levels that 
resulted from the RABA mechanism. In addition, we are proposing that 
RABA apply to public transportation programs, as well as highway 
programs.

Funding for Public Transportation Programs
    SAFETEA is the largest proposed Federal commitment in the history 
of public transportation, representing a 28 percent increase over the 
funding levels of TEA-21. SAFETEA continues to fund transit programs 
through both General Fund appropriations and funds available from the 
Mass Transit Account of the Highway Trust Fund. Historically, 
approximately 80 percent of the funding for transit programs has been 
provided from the Mass Transit Account, with the remaining 20 percent 
coming from the General Fund. Under current accounting practice, the 
Federal Transit Administration's (FTA) split-funded accounts are drawn-
down (or outlayed immediately) and placed in the General Fund. This 
results in the premature depletion of the Mass Transit Account, and 
would bankrupt the account by 2007 if not corrected.
    SAFETEA addresses this issue by funding as many programs as 
possible from a single source, while maintaining the overall 
approximate proportion (80/20 percent) of funding between the Mass 
Transit Account and the General Fund. In particular, we propose to fund 
formula programs and research activities entirely from the Mass Transit 
Account; to fund the FTA Administrative account entirely from the 
General Fund; and to split-fund only the New Starts Program. By 
minimizing the number of split-funded accounts, we significantly reduce 
the draw-down rate of the Mass Transit Account, thus avoiding the 
depletion of that account.
    In addition, funds from the Mass Transit Account would be 
guaranteed by budgetary firewalls. Beginning in fiscal year 2006, 
authorizations for public transportation funding from the Mass Transit 
Account of the Highway Trust Fund will be adjusted (increased or 
decreased) whenever the mass transit firewall amount is adjusted to 
reflect actual receipts or more recent estimates of Mass Transit 
Account revenue. That is to say, the budget authority will be aligned 
with the revenue. The adjustment would be applied proportionately to 
all Federal transit programs receiving funding from the Mass Transit 
Account. Adjusting public transportation program funding levels each 
year to reflect the latest information on receipts into the Mass 
Transit Account is critical to ensuring that all of the dollars 
actually collected will be spent on transit programs.
    We are well aware that funding issues are and will continue to be a 
matter of debate. As that debate progresses, it should not be permitted 
to cloud a meaningful and necessary discussion of the many programmatic 
reforms contained in SAFETEA, especially reforms of public 
transportation programs.

Commonsense Transit Solutions
    SAFETEA promotes commonsense transit solutions by reducing the 
number of different program ``silos'' and formularizing all programs 
except New Starts. This will give States and localities the flexibility 
they need to fund local priorities. We want States to maximize mobility 
and create a seamless community transportation network, not try to 
match projects to specific pots of money.
    Stable formula funds help agencies do more with limited resources 
because they give financial markets the confidence to support transit 
investments; give communities an incentive to commit long-term 
resources; and give community developers the confidence that the 
transit commitments necessary to support new development will be 
honored.
    In light of these important benefits, SAFETEA proposes a shift to 
dependable formula and capital funding and a larger New Starts Program 
by restructuring FTA programs into three major categories:

 Urbanized Area Public Transportation Formula Grants Program;
 Major Capital Investment Program;
 State Administered Formula Grant Programs, which include Other 
    than Urbanized (rural) Areas; Special Needs of Elderly Individuals 
    and Individuals with Disabilities; Job Access and Reverse Commute; 
    and the New Freedom Initiative.

Urbanized Area Public Transportation Formula Grants Program
    Under SAFETEA, urbanized areas will have increased flexibility and 
more predictable funding. By folding a portion of the former bus 
discretionary program into the formula program, we propose to ensure 
that every community can count on a share of these funds each year, 
improving their ability to make longer-term investment plans and to 
acquire financing for these plans, if necessary.
    We also propose to move the Fixed Guideway Modernization Program 
from the Capital Investment Grant Account to this formula program. In 
doing so, we do not propose to change either the funding level for this 
program or the formula used to distribute these funds. However, we will 
accomplish the important goal of increasing local flexibility and 
administrative ease in the use of these funds from year to year. As you 
may be aware, some communities find that their need for Fixed Guideway 
Modernization Funds can vary substantially from year to year, and the 
priority they give to other investments also varies.
    Communities should have the flexibility to merge Fixed Guideway 
Modernization Funds with their regular urbanized area formula grant, so 
that they can make more prudent, cost-effective investment decisions. 
In one year, for example, they may choose to invest more in buses; 
while the following year, they may require a larger expenditure on rail 
modernization projects. We believe that local decisionmakers should 
have the flexibility to make long-term investment plans that are not 
driven by the old programmatic silos. Furthermore, by funding these 
programs from the same account, a grantee would submit just a single 
application for bus or rail ongoing capital needs and preventive 
maintenance.

Major Capital Investment Program
    Under SAFETEA, the Major Capital Investments Program would be 
limited to the New Starts Program, but would expand that program to 
provide capital assistance for new nonfixed guideway corridor systems 
and extensions that meet the New Starts criteria, as well as new fixed 
guideway systems and extensions. Under the 6-year SAFETEA 
authorization, $9.5 billion would be made available for the New Starts 
Program, an increase of 55 percent over the TEA-21 funding level of 
$6.1 billion. This increase is necessary to ensure that there is 
adequate funding to meet existing Full Funding Grant Agreements (FFGA) 
and other meritorious projects in the pipeline. Approximately 20 
percent of the funds for this program would be available from the Mass 
Transit Account of the Highway Trust Fund with the remaining 80 percent 
appropriated from the General Fund.
    Projects seeking $25 million or less in New Starts funding would no 
longer be exempt from the evaluation and rating process. Unfortunately, 
experience has demonstrated that early project estimates can be 
inaccurate. On numerous occasions, project sponsors who intend to seek 
funds without participating in the project evaluation process suffer 
serious set backs when they determine that they do, in fact, require 
more than $25 million in funding from New Starts. Moreover, small 
projects that proceed without adequate attention to ridership and 
financial projections may find themselves in financial difficulty. In 
addition, elimination of this exemption will deter project sponsors 
from dividing corridor transportation systems into artificially small 
segments in order to avoid the New Starts evaluation process. Under our 
proposal, any project that seeks Federal New Starts funds will be 
required to participate in the New Starts evaluation and rating 
process.
    At the same time, we recognize that the complexity of New Starts 
projects can vary considerably. Therefore, we are proposing that 
projects requesting less than $75 million be subject to a simplified 
New Starts process. We would utilize the same evaluation criteria 
established by Congress for projects seeking more than $75 million in 
funding from New Starts, but reduce the number of New Starts hurdles 
and simplify the evaluation process for these projects.
    FTA has, for a number of years, encouraged project sponsors to 
lower their Federal share requests in order to be competitive with 
other projects in the New Starts pipeline. Over the last 10 years, the 
overall New Starts share for projects with FFGAs has averaged 
approximately 50 percent. SAFETEA would statutorily set the maximum 
Section 5309 share for a New Starts project at 50 percent. However, 30 
percent of the project cost could be from other Federal funds that are 
eligible to be expended for transportation. This requirement would 
encourage New Starts sponsors to develop projects with the highest 
feasible local share and allow us to fund a greater number of 
meritorious projects in the future. In addition, it gives communities 
an even greater stake in ensuring that the return on investment in 
these projects is as high as possible.
    Finally, the Administration has proposed to expand New Starts 
eligibility to permit the funding of cost-effective, nonfixed guideway 
corridor transit systems. FTA has always funded meritorious public 
transit projects, but the current statute restricts New Starts funds to 
projects that utilize a fixed guideway. Fixed guideway projects are 
critical to public transportation, and they will continue to be 
eligible for funding, but worthy projects that propose lower-cost 
nonfixed guideway solutions also deserve consideration. With today's 
technology--particularly bus rapid transit--a fixed guideway is often 
not the most cost-effective method of providing new or expanded 
corridor systems. The current rules encourage communities to choose a 
more expensive fixed guideway system in order to qualify for a New 
Starts grant.
    Moreover, some small and medium-sized communities that would 
benefit enormously from the creation of some new transit options simply 
cannot generate enough riders or travel-time savings to justify a more 
expensive fixed guideway system. We will work closely with Congress and 
with all of our stakeholders to ensure that, as we make room for these 
cost-effective, nonfixed guideway transit solutions, we do not 
compromise the intent of the New Starts Program.
State-Administered Formula Grant Programs
    SAFETEA also seeks to promote common sense transit solutions by 
giving States and communities the opportunity to determine how they can 
best serve populations that rely heavily on public transportation, 
including many rural residents, older adults, persons with 
disabilities, and low-income riders.
    Currently, an estimated 40 percent of rural counties have no public 
transportation, and in many other rural areas, only limited service can 
be provided. Yet, rural residents rely heavily on public transit when 
it is available. Therefore, like the urbanized area program, we are 
proposing to allocate the nonurbanized area share of the bus program by 
formula instead of unpredictable discretionary grants. We believe the 
increased stability and predictability of funding that this change 
produces will make it easier for States to plan for public 
transportation investments and to leverage Federal dollars. Almost $2.3 
billion will be provided over the life of SAFETEA for the nonurbanized 
formula program, an 87 percent increase over the TEA-21 level.
    The absence of predictable funding has frustrated many States that 
want to leverage other transportation resources provided at the State 
level through such health and human service programs as Medicaid. In 
one northeastern State, for example, the State Department of 
Transportation knew it had a solution to helping thousands of welfare 
recipients who could work, but were not able to get to work. The State 
could make its program funds go twice as far if they could get a Job 
Access grant from FTA, matching it with State Temporary Assistance to 
Needy Family (TANF) funds for transportation services. But there was no 
assurance that the Job Access funds were really coming. In fiscal year 
2002, Job Access and Reverse Commute (JARC) projects were earmarked in 
law, and this particular State project was not among them. As a result, 
the State Department of Human Services obligated its funds to other 
services.
    To address these problems, SAFETEA proposes to allocate by formula 
to States all of the funds for transit programs that should be closely 
coordinated with human service programs in a State. We believe that, if 
States and communities are to effectively meet public transportation 
needs, we must provide dependable resources and eliminate the barriers 
to effective coordination. Our proposal will continue the Elderly and 
Persons with Disabilities Program that is currently administered as a 
formula program to States, and it will create a similar formula 
allocation of funding for the President's New Freedom Initiative.
    The New Freedom Initiative will provide new transportation services 
for persons with disabilities that go beyond the requirements of the 
Americans with Disabilities Act. In addition, SAFETEA will make the 
JARC program a State-level formula program. Currently, JARC is 
administered as a national competitive discretionary grant program, 
and, typically, many projects are designated in appropriations 
conference committee reports. The JARC program has proven its 
effectiveness; it should be made more widely available and provided 
through a stable, predictable funding mechanism.
    Even with predictable funding for these important services, we know 
that finding solutions that work is not always easy. To help ensure 
that communities can make informed decisions about priorities and 
needs, we are also increasing the funds available for planning, 
administration, and technical assistance. We want the coordinated 
health, human service, and transportation planning that have been so 
successful in the Job Access program to become a common practice in 
every community. As a result, we are asking communities to establish 
community-wide funding priorities and a coordinated plan for services 
to the elderly, persons with disabilities, and low-income populations. 
These plans will give each community more control over its transit 
planning and make it easier to avoid the creation of costly, duplicate 
transportation systems. And, as long as the funds are used to serve the 
intended populations, we intend to ensure that the flexibility to 
leverage the funding for all of these programs exists.
    We look forward to more success stories like that of the Virginia's 
Northern Shenandoah Valley Public Mobility Project, which formed a 
coalition of 15 human service and nonprofit organizations to coordinate 
transportation services for their clients. These clients include 
individuals with mental or physical disabilities, elderly individuals, 
and individuals participating in back-to-work programs. Through a 
coordinated transportation service delivery plan, the number of monthly 
trips increased by 58 percent, and the costs dropped by almost 18 
percent per trip. The bottom line is that we want to let communities 
implement common sense solutions that will promote independence and 
economic opportunity--solutions that will save money, and result in 
more and better service to more riders.

Performance Incentives
    Consistent with the President's call for customer-focused, outcome-
oriented Government, SAFETEA includes a new ridership-based performance 
incentive program to encourage A+ performance in transit. The program 
will be relatively small for the first year--$35 million in urbanized 
areas and approximately $3 million in rural areas. Over the course of 
SAFETEA, however, the program will provide nearly $1.3 billion in 
incentive awards to top performing transit systems.
    The many benefits of public transportation cannot be measured in 
terms of miles of track, number of buses, or the capacity of rail cars. 
If the buses and trolleys and rail cars are empty, we will not have 
achieved increased mobility, reduced air pollution, or improved our 
economy. The benefits of transit depend on riders. Participation in 
this program would be voluntary.
    Providers that receive urbanized area or rural formula funds and 
prove their success by increasing ridership will be eligible for 
incentive grants. This program will encourage States and urban areas to 
institute the data collection necessary to measure performance, but 
more importantly, focus their attention on the issues that matter most 
to riders and potential riders.
    To ensure that services are not shifted away from transit-dependent 
populations that are somewhat more costly to serve, urbanized areas 
that experience a significant decline in public transportation 
patronage by individuals with disabilities, the elderly, or low-income 
persons would not be eligible for a performance incentive award.
    The Department recognizes that rural transit operators have not 
been required to report on overall ridership, and urban transit systems 
are not required to report ridership by population group. During the 
first three fiscal years of this initiative, a portion of the funds 
would be available to assist States and urban areas to institute the 
data collection necessary to measure performance, so that they can 
participate in the incentive award program.

Simplified Program Requirements
    SAFETEA includes a number of important changes to ease the 
regulatory burden on all transit grantees, but especially on small, 
rural, and nonprofit grantees whose administrative capacity can be 
strained by burdensome rules and program requirements. Among the 
specific requirements affected are Buy America, labor certifications, 
and drug and alcohol testing. SAFETEA in no way undermines the intent 
of the current regulations, but rather is intended to ease the burden 
of compliance, particularly for small grantees.

Buy America
    We propose to ease the paperwork and regulatory burden on all 
grantees by excluding all manufactured products except rolling stock 
(buses and railcars) from the Buy America requirements. This change 
comports with the current Buy America rules under the Federal aid 
highway program. SAFETEA will further help smaller grantees by 
eliminating the requirement for pre-award and post-delivery audits of 
Buy America compliance for private nonprofit operators and grantees 
serving urbanized areas of less than one million people. These grantees 
will still be required purchase rolling stock under Buy America rules.

Labor Certifications for Rural Operators and Non-Profit Operators
    We propose to enact into law the Department of Labor's (DOL) 
current practice of using a Special Warranty to ensure fair and 
equitable arrangements protecting the interests of employees of rural 
operators. Further, in order to provide consistent requirements for 
nonprofits regardless of which source of program funds they receive, 
SAFETEA proposes to extend the Special Warranty provision to recipients 
of Job Access, Elderly and Disabled, and New Freedom Initiative funds. 
The proposal also includes, however, a provision to give the Secretary 
of Transportation the authority to, on a case-by-case basis, waive the 
requirement for a Special Warranty for a private nonprofit operator.

Drug and Alcohol Testing Program
    SAFETEA would give the Secretary of Transportation the authority to 
exempt from FTA testing requirements those public transportation 
providers that are adequately covered under other Federal or 
Departmental testing statutes or regulations, such as the U.S. Coast 
Guard's testing requirements applicable to ferryboat employees.

Fewer Grant Applications
    By combining programs under accounts that reflect the type of grant 
recipient, we have also paved the way for the submission of a single 
grant application for
several grants. Urbanized areas will be required, for example, to 
submit only one application to receive both their regular formula and 
Fixed Guideway Modernization Formula Funds. For both urban and rural 
areas, the formularization of the bus program will eliminate the need 
to make separate grant applications for those funds. In addition, Job 
Access funding requests will be submitted through a single, simplified 
State application. These reductions in ``electronic paperwork'' will 
ease administrative workloads throughout the system.

Other Important Initiatives
The Transportation Planning Process
    Good transportation planning is essential to understanding the 
mobility problems communities face, identifying appropriate solutions, 
and making decisions on the investment of these funds. The resulting 
decisions contribute directly to the efficiency of our national 
transportation system, the accessibility of our people to jobs and 
other activities, the health of our economy, and the quality of our 
environment.
    Over the 6-year authorization of SAFETEA, funds available for State 
and metropolitan planning ($822 million) will more than double the 
amount provided under TEA-21 ($365 million). With 76 new urbanized 
areas designated as a result of the 2000 Census, additional funding 
will be needed to help support at least 40 new Metropolitan Planning 
Organizations (MPOs), as well as a number of existing MPOs whose 
geographic scope was significantly expanded. MPOs are responsible for 
preparing long-range and short-range plans for transportation 
improvements in their metropolitan area.
    This work involves ongoing public involvement, analysis of travel 
trends and forecasts, the assessment of community and environmental 
impacts, and financial planning to ensure that programs are financially 
feasible. In metropolitan areas, only projects that are formally 
adopted by the MPO are eligible for funding under FTA and FHWA 
programs.
    SAFETEA proposes to combine the long-range metropolitan plan and 
the shorter-term Transportation Improvement Program into a single plan. 
Other changes will improve the linkage between the transportation 
planning and project development processes, which will ultimately 
enhance transit project delivery.
    In addition, we are proposing to create a new Planning Capacity 
Building Program, jointly funded by FTA and FHWA, to improve State and 
local planning methods and technical capacity. Over the last several 
years, there have been new and increased demands placed on the planning 
process--more emphasis on freight
planning, land use linkages, security, safety, performance-based 
planning, and operations planning. We want to help all communities take 
advantage of these important advances by highlighting best practices, 
sponsoring peer-to-peer exchanges, providing training, conducting 
special workshops, and other activities.

Federal Lands Transportation
    On May 30, 2001, President Bush announced the National Parks Legacy 
Project, a series of proposals to enhance the protection of America's 
national parks and increase the enjoyment of those visiting the parks. 
Each year, there are over 900 million visits to National parks, 
forests, and wildlife refuges.
    In support of the President's National Parks Legacy Project, a new 
Federal Lands Transit Program would also be established. This new 
transit program will provide $150 million in funding over the life of 
SAFETEA. The proposal would authorize the Secretary of Transportation, 
in consultation with the Secretary of the Interior, to make grants, 
contracts or other agreements to carry out qualified planning or 
capital projects in, or in the vicinity of, a federally owned or 
managed park, refuge, or recreational area that is open to the general 
public.

Project Delivery
    The President and I believe that we can and must protect our 
environment while improving the efficiency of transportation project 
delivery, consistent with the President's Executive Order on 
Environmental Stewardship and Transportation Infrastructure Project 
Reviews. We know that it takes too long to move a transportation 
project from concept to completion, and the Administration is committed 
to streamlining this process. Projects that were cutting edge while in 
the concept stage too often end up turning into ``catch-up'' projects 
after years of delay.
    The Department has made great progress in addressing those delays 
related to environmental review, including better coordination during 
the environmental review process, and other improvements that have 
resulted from implementing the President's Executive Order on 
Environmental Stewardship that was issued last fall. However, certain 
legislative changes are necessary.
    In the environmental review area, SAFETEA provides a menu of 
solutions, all of which should help reduce the time it takes for a 
sponsor to deliver a transportation project. These include: Delegating 
categorical exclusions to States; clarifying the role of States or 
project sponsors in expedited review procedures, particularly regarding 
the establishment of time periods for environmental reviews; limiting 
the filing of court appeals to no more than 6 months following a 
Federal decision; and reforming Section 4(f) of the Department of 
Transportation Act to include consistent and appropriate criteria.

Technology
    While virtually every other industry in the world has gone through 
a technological revolution, transportation still lags behind in the 
area of technology deployment. SAFETEA continues to foster the 
research, development, and implementation of Intelligent Transportation 
Systems (ITS) technologies but places a much greater emphasis on using 
these technologies to improve the performance and operation of 
transportation systems in a way that directly benefits transportation 
customers. SAFETEA mainstreams the ITS deployment program and offers 
performance incentives to States and localities that successfully 
implement technology to improve the overall management of their 
transportation systems, including their public transportation systems.

Intermodal Facilities
    Despite their critical role in the surface transportation system, 
intercity buses have been largely a ``forgotten mode.'' SAFETEA 
addresses this anomaly by establishing requirements to improve 
intercity bus access to significant intermodal facilities. Our proposal 
also authorizes a $425 million grant program to fund capital
improvements related to such access.

Fuel Tax Evasion
    Evasion of Federal fuel taxes is a serious and growing problem that 
requires an equally serious Federal response. This has been, I know, a 
major concern of Congress. SAFETEA reduces legal loopholes and 
dedicates more resources to a collaborative Government-wide enforcement 
effort. If we are successful in curbing fuel tax evasion, it has the 
potential to increase resources for investment in the entire 
transportation system.

Conclusion
    Mr. Chairman, this legislative proposal builds upon the principles, 
values, and achievements of ISTEA and TEA-21, yet recognizes that there 
are new challenges to address. We urge Congress to reauthorize the 
surface transportation programs before they expire on September 30, 
2003. Any delay would cause uncertainty and likely reduce 
infrastructure investment at the State and local levels at a time when 
such investment is particularly critical.
    With stable formula funding, streamlined programs, performance 
incentives, and simplified administrative requirements, our communities 
will be in a better position to leverage the Federal investment in 
public transportation and provide Americans with common sense solutions 
to meet their transportation needs.
    Thank you, Mr. Chairman, for giving me the opportunity to testify, 
and I look forward to working with Congress to pass this legislation. I 
would be happy to answer any questions you or other Members of the 
Committee may have.

                               ----------

                  PREPARED STATEMENT OF WILLIAM MILLAR

         President, American Public Transportation Association
                             June 10, 2003

    APTA is a nonprofit international association of over 1,500 public 
and private member organizations including transit systems and commuter 
rail operators; planning, design, construction, and finance firms; 
product and service providers; academic institutions; transit 
associations and State departments of transportation. APTA members 
serve the public interest by providing safe, efficient and economical 
transit services and products. Over ninety percent of persons using 
public transportation in the United States and Canada are served by 
APTA members.

Introduction
    The American Public Transportation Association (APTA) appreciates 
the opportunity to testify on issues related to the reauthorization of 
the transit title of the Transportation Equity Act of the 21st Century 
(TEA-21), and specifically on the Administration's reauthorization 
proposal, called the Safe, Accountable, Flexible, and Efficient 
Transportation Equity Act (SAFETEA).
    APTA's 1,500 public and private member organizations serve the 
public by providing safe, efficient, and economical public 
transportation service, and by working to ensure that those services 
and products support national energy, environmental, community, and 
economic goals. APTA member organizations include transit systems and 
commuter railroads; design, construction, and finance firms; product 
and service providers; academic institutions; and State associations 
and departments of transportation. More than 90 percent of the people 
who use public transportation in the United States and Canada are 
served by APTA member systems.
    Mr. Chairman and Members of the Committee, we want to thank you for 
the critical role you played in crafting TEA-21. TEA-21 has been an 
enormous success for the Nation and transit riders in communities of 
all sizes. Since its enactment, transit ridership has grown by more 
than 21 percent, the FTA has entered into 18 Full Funding Grant 
Agreements for rail projects, and millions of the Nation's citizens 
were given the option to use public transportation.

APTA'S Reauthorization Proposal
    APTA worked with its membership over the past several years to 
develop the transit industry's recommendations for reauthorization of 
the Federal transit program. To guarantee maximum participation of 
APTA's diverse membership, APTA developed a reauthorization task force 
which met more than 20 times in some 14 cities throughout the Nation, 
many in conjunction with major association meetings.
    As a result of that process, APTA developed a proposal that 
reflects an industry consensus and builds on the extraordinary success 
of TEA-21. APTA's proposal retains most of the current program 
structure. It calls for a reauthorization of TEA-21 that is 
evolutionary, rather than revolutionary. It is based on the idea that a 
good national transportation system serves as the foundation for a 
strong and growing economy and that balanced investment in all modes 
should be encouraged under the Federal program that supports our 
surface transportation infrastructure.
    APTA's proposal is based on identified capital needs. The AASHTO 
Bottom Line report and a Cambridge Systematics, Inc. study both 
conclude that to maintain and improve public transportation some $43 
billion annually would be required from all sources. APTA proposes to 
grow the Federal transit program from $7.2 billion in fiscal year 2003 
to $14.3 billion in fiscal year 2009. We call for the continuation of 
funding guarantees for both the trust fund and General Fund components 
of the transit program that are critical to long-term capital planning 
conducted by transit operators. And we make a number of proposals to 
improve program delivery.
    Mr. Chairman, our proposal would make no change to the structure of 
the Federal transit program below the current $7.2 billion funding 
level. Programmatic changes are made only with funding increases. Over 
the course of the proposal, some 55 percent of increases would go right 
back into the existing program. Our proposal calls for extra growth for 
some programs, particularly for rural and smaller urban areas. It also 
establishes a rule that would ensure that transit formula funding never 
falls below $1.15 for every $1 in funding for the major capital 
investment programs.
    Finally, APTA has made recommendations on ways to fund its 
proposal. It calls for maintaining the longstanding principle under 
which 80 percent of the transit program is funded from the Mass Transit 
Account (MTA) and 20 percent of the program is funded with General 
Funds. We also support a range of ways to increase
program revenue, including indexing current motor fuel user fees for 
inflation--to restore the purchasing power of the user fee; scoring 
outlays from the Mass Transit Account in same ways as Highway Account 
outlays are scored; and restoring the payment of interest on trust fund 
balances.
    APTA strongly opposes any reduction in current motor fuels user fee 
support for transit and recommends an 80/20 split between highways and 
transit for any increase in the existing motor fuels user fee. We are 
pleased that our transportation colleagues at AASHTO and ARTBA have 
also expressed their support maintaining this current structure. We 
particularly want to thank the leadership of this Committee for its 
strong, bipartisan support on this issue. We agree with the Committee 
that these dedicated revenues are essential to the long-term viability 
of the transit program and we do not want to lose a funding source that 
has worked so well for more than 20 years.
    Mr. Chairman, in this time of slow growth, it is important to note 
what increased investment in surface transportation infrastructure 
means for jobs and the economy. Each $1 billion in Federal 
transportation investment creates 47,500 jobs. In terms of economic 
impact, we were pleased to sponsor, along with the Transportation 
Construction Coalition, a study of a proposal to provide significant 
increases in highway and transit funding over the next 6 years. That 
study, by Global Insight, Inc.,* clearly demonstrates that increased 
investment in transit and highways has a significant impact on GDP and 
is critical to improving business productivity and strengthening the 
American economy.
---------------------------------------------------------------------------
    * Held in Committee files.
---------------------------------------------------------------------------
Administration Proposal
Overall Funding Levels
    On May 14, the Administration submitted to Congress its proposal 
for TEA-21 authorization, called SAFETEA. APTA commends the overall 
proposal for its goals of reducing fatalities by improving highway 
safety, and striving for efficiency. But we are disappointed about 
several aspects of the proposal.
    SAFETEA authorizes funding for the 6-year life of the bill at $247 
billion, with $45.7 billion authorized for transit, of which only $37.6 
billion would be guaranteed. In our view, the proposal fails to 
adequately address either transit or highway needs that have been 
identified by the U.S. Department of Transportation and independent 
analyses. As noted earlier, The American Association of State Highway 
and Transportation Officials and Cambridge Systematics, Inc., both 
estimated that transit capital needs to maintain and improve public 
transportation are more than $43 billion annually. This Committee's 
investigations have confirmed that needs exceed current resources and 
continue to grow.
    Under TEA-21, Congress generally funded only the guaranteed portion 
of the transit program, and this is likely to be the case during the 
next authorization as well. This is where the Administration proposal 
is very disappointing: Under it, guaranteed funding for the transit 
program is limited to resources from the Mass Transit Account and would 
rise from $5.9 billion in fiscal year 2004 to only $6.6 billion in 
fiscal year 2009--a significant reduction from the guaranteed level of 
funding under TEA-21. TEA-21 provided guaranteed funding of $36 
billion; the Administration's proposal would provide $37.6 billion. 
After inflation, this represents a real reduction. In the face of large 
and growing transit needs, and with the significant ridership growth 
brought about by TEA-21, clearly greater investment in public 
transportation is necessary, not less. And just as clearly, the 
guarantee must include the General Fund portion of the program, as it 
does under TEA-21. This concept was established by this Committee, and 
it has been an essential element of TEA-21's success.

Program Changes
    At the outset, Mr. Chairman, we do want to note there are a number 
of provisions in SAFETEA that would streamline Federal transit program 
delivery and eliminate red tape. We appreciate those proposals to make 
the program work more effectively, and will work with the Committee 
staff on them. We appreciate the proposal to coordinate drug and 
alcohol testing that would eliminate duplicative testing and 
unnecessary costs associated with redundant testing. We agree with the 
Administration effort on small starts. We also want to thank, in 
particular, Department of Transportation Secretary Mineta and FTA 
Administrator Dorn for their efforts in recent years to improve the 
delivery of program resources and eliminate regulatory red tape.
    At the same time, however, the Administration proposal calls for 
major changes in the Federal transit program structure and the creation 
of a number of new programs without any commensurate growth in new 
funding. Mr. Chairman, one of our key themes is not only that TEA-21 
works, but also that it works extremely well. Transit ridership is up 
in large cities and small, and States and localities rely on the 
predictability of funding under the existing TEA-21 structure. That 
balanced structure has been in place for more than 20 years, and it has 
served the transit industry well. In short, we believe it is better to 
build on the success of the existing program and the results that that 
program has produced.
    The Administration proposal would significantly restructure the 
Federal transit program. It would eliminate the bus and bus facilities 
capital discretionary program and use funds that now go to that program 
for other programs. APTA supports retention of this important capital 
program. Transit agencies have periodic bus replacement and facility 
needs that cannot be met from the formula program. The role of the 
discretionary bus program is to address those needs. Our proposal calls 
for substantial growth in the bus and bus facility program to address 
growing needs.
    The Administration proposal also would reduce the Federal match 
under the New Starts Program; permit the use of New Starts funds for 
new purposes; distribute Fixed Guideway Modernization Funds with urban 
formula funds; and expand the eligible use of Fixed Guideway 
Modernization Funds. APTA questions the need for all four proposed 
changes.
    APTA strongly opposes any effort to reduce the Federal match on New 
Start funds. TEA-21 and ISTEA, both emphasized a planning process 
designed to encourage transportation decisions based on project merit 
and local needs. Both ISTEA and TEA-21 leveled the playing field for 
transit and highway investment in so far as the matching ratio is 
concerned. Reducing the Federal share on New Starts projects to a 
maximum of 50 percent, while keeping most other surface transportation 
Federal matches at 80 percent, will simply bias the local 
decisionmaking process. Transportation planners at the State and local 
level, with excess demand for both transit and highway projects and 
dwindling State and local resources, will be far, far more likely to 
choose projects with the higher Federal match. APTA believes that it 
makes more sense to address excess demand with increased funding for 
New Start projects than it does to reduce the Federal match.
    The Administration proposal also would permit the use of New Starts 
funds for ``nonfixed guideway improvements to encourage, among other 
things, consideration of bus rapid transit options.'' APTA believes 
that Bus Rapid Transit (BRT) projects can be an effective option for 
communities considering fixed guideway systems. BRT systems already are 
eligible for New Start funding, if they have ``exclusive rights of way 
or other fixed guideway design,'' and APTA supports continuation of 
that BRT eligibility under the New Starts Program. APTA and the 
Administration have both proposed increases in the ``small starts'' 
threshhold--the funding level under which less expensive fixed guideway 
projects qualify for a simplified rating process. We believe that this 
would encourage BRT projects, where Federal funding often stays under 
$75 million to $100 million. We also believe that less expensive 
nonfixed guideway bus systems can be funded in good measure under the 
existing bus discretionary program.
    APTA questions the Administration proposals to distribute Fixed 
Guideway Modernization Funds under the urban formula program and to 
permit the use of Fixed Guideway Modernization Funds for nonfixed 
guideway modernization purposes. The Fixed Guideway Modernization 
Program was originally designed to ensure the proper modernization of 
the Nation's older rail transit systems, and it helps ensure that as 
Federal New Start investment projects age they can be modernized. Rail 
systems in large metropolitan areas carry millions of passengers each 
year and their ridership has grown substantially in recent years. Many 
of these systems are approaching capacity constraints. These funds also 
help systems address this growth in ridership and ensure that 
passengers can use these systems safely and efficiently. The 
Administration proposal would allow these funds to go to an urbanized 
area and be used for any transit purposes, not just modernization. We 
are concerned that diverting these funds from fixed guideway 
modernization, where needs far exceed available resources, would only 
exacerbate unmet modernization needs and potentially result in the 
deterioration of some of the Nation's most valuable capital assets. 
Again, the fixed guideway modernization program has been a critical 
component of the Federal transit program structure since 1982, and is a 
great success.
    APTA agrees with the Administration that rural formula funding 
should be increased. APTA's proposal recommends a 110 percent increase 
in rural formula funding by 2009. Under APTA's proposal the rural 
formula program would grow to over $504 million by 2009. Under the 
Administration proposal, rural formula funding would be $102 million 
less than under APTA's proposal. While we fully support increased 
funding for rural public transportation, we believe that the 
Administration proposal to increase the program by $229 million in 
fiscal year 2004--at the same time that the total transit authorization 
is frozen and guaranteed funding is cut by more than $1.2 billion--is 
inappropriate.
    The Administration bill would distribute Job Access and Reverse 
Commute (JARC) grants under a formula to the States. APTA believes that 
the JARC program has been successful at helping get workers to jobs and 
training, but with the extremely minimal growth envisioned under the 
Administration proposal, we are concerned that formulizing the JARC 
program would only mean that too little funding would be spread to 
thinly to provide effective new programs at the local level.

New Programs
    APTA commends the Administration for attempting to better address 
the transportation needs of people with disabilities, for improved 
intercity bus facilities, and public transportation in and around 
national parks. In particular, not only have we expressed support for 
transit in parks and the New Freedoms Initiative in the past, but we 
have also indicated that such programs should not be funded at the 
expense of existing transit programs or needs.
    While APTA recognizes the need to address unmet transit needs, we 
also believe that current funding levels do not address needs under 
existing programs, and that new programs should be funded with 
increased funding and not by reducing funding for current programs. 
With that principle in mind, we question the Administration's proposal 
to create both the New Freedoms Initiative and the Intermodal Passenger 
Facilities programs. Both programs address important issues, but 
arguably at the expense of current transit needs.
    The Administration proposes to fund the New Freedoms Initiative at 
$145 million in fiscal year 2004, increasing to $162 million in fiscal 
year 2009. The program is intended to provide grants for ``new 
transportation services and transportation alternatives beyond those 
required by the Americans with Disabilities Act.'' Certainly, this is a 
worthy use of Federal funds, but transit agencies are struggling now to 
keep up with ADA required services and need additional funding to meet 
the requirements of ADA.
    Similarly, while APTA appreciates the effort to fund intermodal 
facilities that are related to intercity bus service, this program is 
unlikely to provide substantial benefits to users of intracity or local 
public transportation bus service. The fact that it would take $75 
million each year from a transit program that does not grow in fiscal 
year 2004 and grows very little in subsequent years, means that it 
would be funded largely at the expense of already existing public 
transportation capital needs.
    The Administration proposes to create a new ``incentive tier'' 
within both the urban and rural formula programs. In both cases, this 
would be a takedown from formula funding, which would be distributed to 
transit systems based on ridership growth. The takedown would be small 
in the early years and used mainly for data collection. Funding for 
both would, however, grow to almost $420 million by 2009 and grants are 
intended to provide incentives for increased ridership. APTA member 
transit systems are always striving to increase ridership and improve 
efficiency. This proposal is a ``rob Peter to pay Paul'' situation 
under a proposal that provides little growth and a cut in guaranteed 
funding.
    APTA is not convinced that the incentive tier would actually 
promote increased ridership, and feels that it could hurt transit 
operators who have already achieved or are approaching capacity 
limitations. We note also that Congress has already addressed this 
issue: Current law contains incentive tiers under both the bus and 
fixed guideway factors of the existing formula program, and that those 
funds are awarded to systems which have high rates of ridership 
relative to operating costs. And we note further that APTA's proposal 
calls for a ``high intensity small urbanized area formula program'' 
that would provide formula bonuses to transit systems in small urban 
areas that provide above average levels of service.

Increased Demand
    Growing demand nationwide for transit services shows the 
effectiveness of increased Federal investment under TEA-21 and the need 
to continue that trend. In a recent 5-year period, transit ridership 
grew 22 percent, greater than the growth rate of highways and domestic 
air travel during the same time frame.
    Support for increased transit service remains high. A February 2003 
Wirthlin Worldwide Public Opinion Poll showed 81 percent of Americans 
support the use of public funds for the expansion and improvement of 
public transportation; 56 percent say the need to reduce traffic 
congestion has become more important over the last 5 years. The poll 
also stated 57 percent agree their community needs more public 
transportation options, including 64 percent of urban residents, 59 
percent of suburban residents, 51 percent of rural residents, and 55 
percent of small-town residents. Some 64 percent of respondents said 
they would be more likely to support a Congressional candidate who 
supports improving public transportation options.
    This poll demonstrates that support for public transportation has 
increased dramatically not only in our biggest cities, but also, in 
smaller, urban communities and rural areas as well, where 40 percent of 
America's rural residents have no access to public transportation, and 
another 28 percent have substandard access. It is estimated that rural 
America has 30 million nondrivers, including senior citizens, the 
disabled and low-income families who need transportation options. 
According to a survey of APTA members, bus trips in areas with 
populations less than 100,000 increased from 323 million to 426 million 
in a recent 5-year span.

Conclusion
    Mr. Chairman and Members of the Committee, we thank you for your 
effort to address public transportation needs in the next authorization 
bill and for your leadership in developing the existing law. TEA-21 was 
an enormous success for public transportation. Increased investment in 
our public transportation infrastructure can improve service for 
millions of citizens who use transit, make the existing highway system 
in metropolitan areas work more efficiently and reduce the need to 
build costly new highways in those same areas. It can reduce congestion 
and pollution in and around our cities, get rural residents where they 
need to go, and provide a lifeline to medical services and jobs for 
Americans who do not have access to private automobiles.
    Public transportation is an important component of the Nation's 
transportation system and we need to invest in that entire system if we 
are to keep pace with the growing demand for transit service and 
preservation of the existing Federal investment in the transit 
infrastructure. Mr. Chairman, we look forward to your leadership and to 
working with you and the other Members of the Committee as it crafts 
and advances legislation to reauthorize the Federal transit program. We 
would be pleased to answer questions you may have on APTA's proposal or 
our testimony.

                               ----------

                   PREPARED STATEMENT OF JEFF MORALES
           Director, California Department of Transportation
                on behalf of The American Association of
               State Highway and Transportation Officials
                             June 10, 2003

    Mr. Chairman and Members of the Committee, my name is Jeff Morales, 
and I am the Director of the California Department of Transportation. I 
am here today to testify on behalf of the American Association of State 
Highway and Transportation Officials (AASHTO) in my role as Chairman of 
the AASHTO Standing Committee on Public Transportation. We thank you 
for your leadership in holding this hearing to address key transit 
issues to be considered in the reauthorization of the Transportation 
Equity Act for the 21st Century (TEA-21).
    Let me begin my remarks by saying that there are a number of key 
transit provisions in the TEA-21 legislation that should be continued 
in the reauthorization legislation. With regard to transit issues, 
while we believe that while some of the TEA-21 provisions may need some 
fine tuning, and annual funding levels need to be
significantly increased, for the most part, the transit program 
provisions of
TEA-21 should be continued. We have divided our testimony into three 
major areas,
including:

 AASHTO's reaction to the Administration's reauthorization 
    proposal titled, The Safe, Accountable, Flexible, and Efficient 
    Transportation Equity Act of 2003 (SAFETEA);
 AASHTO recommendations for rural transit in the TEA-21 
    reauthorization legislation; and
 Transit bonding proposal.

AASHTO's Reaction to the Administration's SAFETEA Proposal
    Major Investments and Program Financing--AASHTO members are 
disappointed that the Administration's proposed funding levels for 
highways and transit fall substantially short of the documented need 
for investment in highways and transit. The Administration proposes 
$201 billion for highways and $46 billion for transit, in spite of the 
significant highway and transit needs identified by the U.S. Department 
of Transportation in its report titled Status of the Nation's Highways, 
Bridges, and Transit: 2002 Conditions and Performance Report. Under 
SAFETEA, transit funding growth would be limited over the 
reauthorization period, starting at $7.2 billion in fiscal year 2004 
and rising to only $8.1 billion in fiscal year 2009. In fact, the level 
in constant dollars would be $1.1 billion below the transit funding 
level for fiscal year 2003.
    AASHTO's reauthorization policies call for a total program level of 
$300 billion over 6 years, including $245 billion for highways and $55 
billion for transit. Under the AASHTO proposal, the transit program 
would be funded at $7.5 billion in fiscal year 2004, increasing to a 
minimum level of $11 billion in fiscal year 2009. Further, AASHTO 
supports the higher APTA-proposed funding level that would rise to $14 
billion in fiscal year 2009, provided that such an increase would not 
come from sources upon which highways depend.
    In addition, AASHTO is very concerned that the SAFETEA proposal, 
while ``guaranteeing'' funds from the Mass Transit Account of the 
Highway Trust Fund, contains no similar guarantee for the General Fund 
component of transit funding. One of the key provisions of the TEA-21 
legislation is the guarantee that it provides for both Highway Trust 
Fund and General Fund monies. The framers of the TEA-21 legislation 
recognized that the States and transit agencies need a stable and 
predictable source of transit funds in order to plan, program, and 
construct major transit projects. AASHTO believes that it is critical 
that both Highway Trust Fund and General Funds for transit are 
guaranteed in the TEA-21 reauthorization legislation.
    AASHTO is further concerned that the SAFETEA proposal calls for a 
reduction of the Federal funding share for New Starts projects from 80 
percent to 50 percent. AASHTO believes that in order for State and 
local officials to make balanced decisions between highway and transit 
projects, the Federal share of 80 percent should be retained for both 
highway and transit projects. Otherwise, the decisionmaking process can 
become skewed toward projects with a higher Federal match rate, 
particularly when State and local governments are experiencing tight 
budgets.
    The SAFETEA proposal would shift the FTA program funding structure 
so that the New Starts Program would receive approximately 80 percent 
of its funding through the General Fund while other major FTA programs 
would be funded through the Mass Transit Account of the Highway Trust 
Fund. This approach is being taken in order to deal with the issue of 
the solvency of the Mass Transit Account of the Highway Trust Fund. 
Since SAFETEA does not propose a guarantee for General Funds, a major 
component of the FTA program, New Starts, would be vulnerable to 
significant funding reductions during the annual appropriations 
process. The New Starts Program is a key part of the FTA program, and 
needs to be funded in a way that State and local governments are 
assured of a stable and reliable source of Federal funding as they 
embark upon these more expensive projects. As part of this proposal, 
bus discretionary funding would be eliminated and the Rail 
Modernization program would be shifted to the formula program.
    AASHTO agrees that solvency of the Mass Transit Account can be 
addressed without such major changes to the FTA programs. AASHTO staff 
is available to work with your staff to offer recommendations in this 
area.

Program and Requirements Streamlining
    Existing transit legislation provides that an independent pre-award 
review and a post-delivery review must be conducted when an FTA grantee 
purchases transit rolling stock. This has been a costly and burdensome 
requirement for many smaller transit systems. AASHTO supports the 
provision in SAFETEA that eliminates the requirements for private 
nonprofit organizations and grantees serving areas fewer than one 
million people to have to certify on Buy America requirements. All 
manufacturers and suppliers would continue to have to certify 
compliance with Buy America during the bidding process, and they would 
remain bound by their original certification.
    Planning--AASHTO supports the SAFETEA proposal that would give 
standing in NEPA to studies developed as part of the planning process. 
The results of studies developed as part of the planning process that 
may have standing in the NEPA process include purpose and need; the 
alternatives selected for evaluation in an environmental assessment or 
impact statement; and an assessment of environmental impacts related to 
development growth, including direct and cumulative effects, that is 
consistent with local land use, growth management, or development 
plans.
    This provision is designed to expedite the planning and development 
of transportation improvements presuming that studies developed as part 
of the planning process establish the basis for an environmental 
assessment or impact statement. AASHTO has been working with U.S. DOT 
and Congressional Committees for the past several years to get a number 
of improvements to the project development process and to reduce the 
time needed to deliver a project.
    Innovative Finance--In the area of innovative finance, the 
Administration's bill would continue the Transportation Infrastructure 
Finance and Innovation Act (TIFIA) program. Under this proposal, the 
threshold for requesting credit support is reduced from $100 million to 
$50 million. AASHTO recommends that this threshold be reduced to $25 
million. However, we believe that the Administration is taking an 
important step in the right direction.
    SAFETEA would continue the State Infrastructure Bank (SIB) pilot 
program, although it would be restricted to five States. Currently six 
States are participating in a pilot, and officials indicate that those 
States would have to again compete for participation with other States 
who may now be interested. AASHTO has recommended that the SIB program 
be expanded to all 50 States.

AASHTO Rural Transit Proposals for TEA-21 Reauthorization
    Every State has some level of public transportation service to its 
rural areas. Approximately 1,260 organizations provide public 
transportation in rural areas, and 3,660 organizations provide public 
transportation services to the elderly and people with disabilities. 
Approximately 55 percent of the existing bus and van fleet serving 
rural America has already exceeded the Federally rated service life. 
Within the next reauthorizaiton period, almost all of the Nation's 
rural transit vehicles will need to be replaced. About 9,200 vehicles 
per year will need replacement on an ongoing basis.
    AASHTO, in its ``Bottom Line'' report, documented the need to 
double rural transit assistance. This report stated that $191 million 
will be needed to replace or rehabilitate existing public transit 
vehicles, and $194 million will be needed to replace or rehabilitate 
specialized rural transit vehicles.
    We believe that it is critical to strive to meet current and future 
transit needs in rural America, particularly as the Nation's elderly 
population increases in the coming years with the aging of the Baby 
Boomer generation. Citizens in rural areas will need access to 
shopping, medical, and other activities, particularly when they are no 
longer able to operate an automobile.
    AASHTO supports the SAFETEA proposal to increase funding for rural 
transportation (FTA Section 5311 program).

Transit Bonding Proposal
    AASHTO is aware of a concept being considered in the Senate Finance 
Committee to move most funding under the Mass Transit Account of the 
Highway Trust Fund to the Highway Account, and then fund transit for 
the most part through a bonding program.
    As indicated earlier, AASHTO believes that the current funding 
structure under TEA-21, in which Highway Trust Fund revenues are split 
with 80 percent credited to the Highway Account and 20 percent credited 
to the Mass Transit Account is working well and should be retained. The 
Federal transit program needs a stable source of guaranteed funds from 
the Mass Transit Account of the Highway Trust Fund and the General Fund 
in order for decisionmakers to commit to expensive transit solutions. 
The current arrangement under TEA-21 provides a stable, more 
predictable environment for planning, programming, and constructing 
these key transit projects.
    Mr. Chairman, the State transportation officials across the country 
and the AASHTO staff are available to work with you, the Members of 
your Committee and your staff in the vital work of reauthorizing the 
Nation's highway and transit legislation for the coming 6 years. Thank 
you again for holding this important hearing.

                               ----------

                 PREPARED STATEMENT OF ROBERT MOLOFSKY
               General Counsel, Amalgamated Transit Union
                             June 10, 2003

    Mr. Chairman, Senator Sarbanes, and Members of the Committee, thank 
you for the opportunity to testify today on behalf of the Amalgamated 
Transit Union (ATU). My name is Robert Molofsky. I have been General 
Counsel for the ATU since 1996. Prior to becoming General Counsel, I 
served as ATU's Legislative and Political Director for 15 years. The 
Amalgamated Transit Union is the largest labor organization 
representing public transportation, paratransit, over-the-road, and 
school bus workers in the United States and Canada, with nearly 180,000 
members in over 270 locals throughout 46 States and nine provinces.
    For 111 years, ATU has been proud to serve the mobility needs of 
Americans, playing an important role in most legislative efforts 
affecting the public transportation industry during the past century, 
from requiring closed vestibules for streetcars in the 1890's, to the 
creation of a Federal role for public transportation in
1964, to passing the Intermodal Surface Transportation Efficiency Act 
of 1991 (ISTEA) and the Transportation Equity Act for the 21st Century 
(TEA-21), which recognized that local communities should be primarily 
responsible for the transportation choices that ultimately affect them. 
Our century-long commitment to transit safety and security issues has 
led to many of the innovative improvements within the industry, 
including better bus designs and braking systems, exact fare, and 
Federal penalties for assaulting public transportation workers. And we 
have championed the need for increased funding and expanded service at 
the Federal, State, and local levels.
    We are pleased to offer our views on the Bush Administration's 
surface transportation reauthorization proposal, the Safe, Accountable, 
Flexible, and Efficient Transportation Equity Act of 2003 (SAFETEA), 
while also presenting some of ATU's core principles in connection with 
TEA-21's renewal.

Overview
    SAFETEA is certainly a thoughtful and creative document, which 
generally keeps current Federal transit programs intact. It also 
recognizes that we are well beyond the debate of whether to link the 
transit programs with the Federal highway programs by seeking an 
integrated transportation planning process. The proposal serves as a 
suitable platform from which to launch the discussion of which programs 
should be retained and what other new initiatives should be created.
    Nevertheless, because the legislation is so incredibly underfunded, 
the many laudable goals set forth in the Administration's bill simply 
will not be able to be met. Most significantly, despite its logo--
``SAFE''TEA--the legislation falls well short of providing the 
resources necessary to continue the provision of safe and secure 
transit service for the millions of Americans who rely on public 
transportation each day.
    Finally, the bill would eliminate or consolidate a number of very 
important and successful programs, and curtail some crucial program 
requirements, including
certain labor requirements, without any justification. ATU has major 
concerns regarding the Administration's proposals relating to (1) the 
Bus Capital Program; (2) Federal matching ratios for New Starts; (3) 
the Job Access and Reverse Commute Program (JARC); (4) the structure of 
the New Freedom Initiative; (5) safety and security requirements; and 
(6) certain labor issues. We also offer a number of recommendations to 
improve the planning process, increase State transit funding,
coordinate the delivery of specialized transportation services, and 
train personnel in connection with new technologies and maintenance 
requirements that are associated with keeping the Nation's public 
transportation fleets in working condition.

Bush Administration Proposal
Funding
    Mr. Chairman, in examining the Administration's transit proposal, 
there are two levels of funding to keep in mind: The proposed 
guaranteed levels for transit, and the proposed fully authorized levels 
(combined guaranteed and nonguaranteed authorization levels). Since 
fiscal year 1998, the Federal transit program under TEA-21 has been 
funded only at the guaranteed level on an annual basis (except in
fiscal year 1999 when the actual appropriation exceeded the guarantee 
by $25 million). For example, for the current fiscal year, the program 
was funded at $7.2 billion, the guaranteed level under TEA-21, rather 
than the fully authorized level of $8.2 billion. If this practice 
continues, which is likely in the current fiscal climate, appropriators 
will continue to fund the program at the guaranteed level during the 
next 6 years.
    Therefore, with regard to SAFETEA, it is only necessary to look at 
the Administration's proposed guaranteed levels for transit. We have 
included a chart at the back of our full written testimony which 
indicates that for fiscal year 2004, the Administration is proposing a 
guaranteed level of $5.9 billion for the transit program, which is a 
$1.3 billion cut from the current fiscal year. The guaranteed funding 
level in SAFETEA for fiscal year 2004 is 17.9 percent less than the 
guaranteed funding level in TEA-21 for fiscal year 2003. In fact, under 
SAFETEA, the Administration would not even reach the current level of 
spending by the end of the reauthorization period. Guaranteed public 
transit funding would be 8 percent less in fiscal year 2009 than it is 
in fiscal year 2003!
    During the past 2 years, this Committee has conducted numerous 
hearings on the success of TEA-21's guaranteed, increased funding 
levels, and the impact the program has had on transit ridership, 
planning, and the overall growth of the Nation's transit systems. The 
Administration's funding proposal, if enacted, would not only reverse 
these trends but also cripple our transportation system.
    Ironically, because of its proposed devastating funding cuts for 
transit, the legislation which is called ``SAFE''TEA would negatively 
impact the ability of transit systems to upgrade rolling stock and 
safety and security measures, causing the public transportation 
industry to jeopardize its reputation as the safest mode of surface 
transportation in the United States.

SAFETEA Eliminates Successful Programs; Creates Unnecessary
New Programs
    Under SAFETEA, the Bus Capital Program would be eliminated, and the 
JARC Program would be distributed by a formula. It is not clear why the 
Administration is recommending the elimination and consolidation of two 
of the most successful programs under FTA's jurisdiction. Under current 
practice, Congress selects specific projects for funding from requests 
submitted by eligible recipients. This process is the best way to 
ensure that large, medium, and small transit systems can replace 
equipment and provide much needed service in their communities. ATU 
supports maintaining the Bus Capital Program and JARC as allocated 
programs.
    SAFETEA would also create a New Freedom Program to provide grants 
to recipients for new transportation services and transportation 
alternatives beyond those required by the Americans with Disabilities 
Act (ADA) of 1990, including motor vehicle programs that assist persons 
with disabilities with transportation to and from jobs and employment 
support services.
    ATU fully supports the principles set forth under this proposed 
program. However, the best way to achieve these goals is by expanding 
fixed route and paratransit services in coordination with the already 
existing JARC Program. Through the FTA, the Federal Government has 
already invested in ADA paratransit and JARC, and it would be more 
efficient to expand the JARC Program with an emphasis on people with 
disabilities than to allow separate special purpose systems to be 
subsidized.
    In addition, the reauthorization of TEA-21 offers a real 
opportunity to tap into already available funds from other Federal 
agencies. Public transportation can make a difference in how people get 
to jobs, health care, training, and other social services. Every dollar 
dedicated to human services transportation by transit agencies can be 
stretched further if coordination is implemented at the Federal level 
and encouraged at the State and local levels.
    In addition to 10 DOT programs, there are at least 12 Department of 
Health and Human Services (HHS) programs that together are providing 
approximately $10 billion annually to assist transportation systems to 
provide access for persons with special transportation needs. Moreover, 
the two major Department of Labor (DOL) programs, Welfare-to-Work and 
Temporary Assistance for Needy Families (TANF), may also be tapped for 
transportation purposes. The potential benefits from coordinating 
transportation services can be significant. Benefits include increased 
service levels, better quality of service for riders, cost savings, 
upgraded maintenance programs, more professional delivery of 
transportation services, and safer transportation services.

Transit Security Issues
    ATU applauds the Administration's proposal in SAFETEA to expand the 
definition of ``capital project'' to include not only capital security 
needs, but also noncapital, security-related training, and drilling, 
thereby authorizing formula grant expenditures for these purposes. 
While expanding the definition of ``capital project'' is a step in the 
right direction, there absolutely must be a separate, dedicated source 
of funds available to transit systems solely for security purposes, 
frontline transit employee training in particular.
    According to a recent report by the General Accounting Office 
(GAO), issued in response to a request from this Committee, the most 
significant challenge in making transit systems as safe and secure as 
possible is the difficulty financially strapped transit agencies are 
having in obtaining sufficient funding. The American Public 
Transportation Association (APTA) estimates this funding need to be 
over $6 billion. As I will discuss later in my testimony, Congress must 
call on the Department of Homeland Security to dedicate the necessary 
resources to assist transit agencies in their security efforts.
    SAFETEA further proposes to authorize FTA to investigate security 
concerns and to withhold funding if necessary to compel a transit 
system to make necessary security improvements. While this proposal 
addresses an obvious need for FTA oversight and direction of security 
matters at transit agencies, it does not go nearly far enough to ensure 
that systems are taking all the necessary steps.
    As we have stated to this Committee before, there must be specific 
legislative and regulatory requirements with respect to the equipment, 
technology, training, and personnel needed to prepare, prevent, and 
respond to any terrorist attacks or threats. The GAO recognized this 
need in its report, stating that ``goals, performance indicators, and 
funding criteria need to be established to ensure accountability and 
results for the Government's efforts'' (GAO-03-263). Failure to meet 
these minimum requirements should result in the withholding of FTA 
funds in an amount determined by the Secretary.

Equity Issues
Federal Matching Ratios
    SAFETEA would statutorily set the maximum Section 5309 share for a 
New Starts project at 50 percent. The current maximum is 80 percent. 
Deputy Secretary Jackson has justified this recommendation by noting 
that ``all forms of transportation must face the hard reality that 
Federal financial resources are not boundless and cannot fully fund 
every meritorious transportation need.'' Yet, under SAFETEA, the 
maximum share for highway projects would remain at 80 percent.
    Having identical matching requirements between the highway program 
and the transit program provides communities with the opportunity to 
decide on future transportation projects without having to consider the 
issue of the Federal contribution. The Administration's proposal 
violates the spirit of both ISTEA and TEA-21, which were structured to 
finally give communities an unbiased choice by placing highways and 
transit on a more equal playing field. The policy of allowing for an 80 
percent Federal match for highways while cutting the Federal limit for 
transit New Starts to 50 percent is backward thinking. A recent GAO 
report confirms that ``officials from several MPOs stated that a cap on 
New Starts funds could influence their selection of highway over 
transit projects since the decisions are often affected by the 
availability of funds from various Federal programs and which projects 
will receive the highest Federal share'' (GAO-02-603).
    Congress should reject this approach. ATU supports preserving the 
Federal-State/local funding matching ratio for transit New Starts at 
the TEA-21 level of 80 percent/20 percent, the same level that 
currently exists for highway construction, to ensure that communities 
can make their own choices about their future transportation plans.

Commuter Benefits
    Under current tax laws, the monthly cap on employer provided tax-
free parking benefits is $190, but the monthly limit on employer 
provided tax-free transit passes is only $100. SAFETEA would do nothing 
to change this imbalance, which encourages people to continue to drive 
to work alone. This especially affects people who ride the Nation's 
oldest and far reaching transit systems, where monthly fares to travel 
between suburban and urban areas reach well over $100. Suburban bus, 
heavy rail, and commuter rail riders should be rewarded--not 
penalized--under the tax code for choosing to ride transit rather than 
driving to work.
    Under the transit pass program, everyone wins. Employees do not pay 
Federal income tax on transit commuter benefits, and employers can 
deduct their costs for providing such benefits, and avoid payroll taxes 
on such benefits, regardless of who pays. TEA-21 proved that when you 
pay people to ride transit, they will indeed leave their cars at home.
    ATU supports raising the monthly cap on employer provided tax-free 
transit benefits to the level allowed for parking benefits to encourage 
more people to ride public transportation.

Labor Issues
    The U.S. public transportation industry has experienced remarkable 
labor relations stability during the 40 years of the Federal transit 
program. This has allowed transit employees to go about the business of 
their most important role: Moving America Safely. The basis for five 
decades of this labor-management partnership is Section 5333 (b) of 
Title 49 of the United States Code (formerly Section 13(c) of the 
Federal Transit Act), which states that when Federal funds, most 
recently authorized under TEA-21, are used to acquire, improve, or 
operate a transit system, there must be arrangements to protect the 
rights of affected transit employees.
    Every surface transportation reauthorization bill enacted since 
1964 has been linked to a strong labor policy that provides employee 
protections for public transit workers. Today, as in the past, ATU's 
support for reauthorization will be contingent on the continuation of 
those policies and their application to any new programs or innovative 
finance mechanisms created through the new bill. The value of this 
historic link between a strong transportation bill and sensible labor 
policy has been clearly recognized by the Administration, which has 
recommended the retention of the crucial Section 13(c) labor 
protections for the major formula (49 U.S.C. 5307) and Capital 
Investment Grant (49 U.S.C. 5309) Programs.
    SAFETEA would also apply Section 13(c) to the majority of the small 
and medium size programs under the current legislation as well as the 
proposed new FTA Programs. However, SAFETEA raises serious questions on 
the mechanisms chosen to apply (and potentially waive) 13(c) in 
connection with such programs. By proposing a new waiver process for 
labor protections in certain programs, the Administration's bill would 
create inconsistencies and gaps in 13(c) coverage throughout the 
Federal transit program.
    In 2000, this Committee requested an in-depth study of the Section 
13(c) Program, embodied in a November 2001, GAO report entitled Transit 
Labor Arrangements: Most Transit Agencies Report Impacts Are Minimal 
(GAO-02-78), which supports the ATU's long-held notion that the provision 
does not substantially delay the flow of capital for transit projects.
    GAO surveyed more than 100 transit agencies in the United States, 
who overwhelmingly reported that Section 13(c) has had only a minimal 
impact on (1) labor costs, (2) the ability to adopt new technologies, 
and (3) the ability to modify transit operations. In fact, more than 70 
percent of transit agencies indicated that certain other Federal 
requirements, such as compliance with the ADA, were far more burdensome 
than Section 13(c). Most significantly, the report notes that an 
overwhelming majority of the transit agencies have been satisfied with 
the timeliness of FTA's grant processing, confirming a 2000 GAO report 
which found that 98 percent of the DOL's applications were processed 
well within the 2-month period required by the Agency's new guidelines.
    Given the overwhelming conclusions of the GAO reports, we do not 
see the FTA's justification for proposing to curtail the labor 
protection requirements of the Federal Transit Act for certain existing 
and proposed new programs.
    The Administration calls for the implementation of the DOL 
specially designed warranty arrangement (in which grants are labor 
certified without a referral) and possible waiver options in connection 
with 13(c) for certain existing programs, such as the JARC Program, the 
5311 Rural Program and the Over the Road Accessibility Program. In 
addition, the bill calls for a possible waiver of 13(c) for the entire 
5310 (Elderly and Disabled) Program. SAFETEA would also create a 
possible waiver of 13(c) for new programs, such as the Indian 
Reservation Rural Transit Program, and the above mentioned New Freedom 
Program.
    With regard to the JARC Program, under current law, entities 
receiving JARC grants must comply with the full transit-labor 
certification process under 13(c), with the exception of JARC grants to 
applicants serving populations under 200,000, which are labor certified 
by using the warranty. There is no support or justification for 
changing the grant procedures under this program. Since the 1999 
regulations were released, and the separate procedures were set for 
applicants based on population, there have been no problems regarding 
this program. The new time limits are working perfectly, and no JARC 
grants have gone unfunded because of 13(c). The current coverage should 
be maintained without a new waiver option.
    Similarly, the warranty has worked well under the 5311 Rural 
Program, and could be just as easily applied under the proposed Indian 
Reservation Rural Transit Program proposed as part of 5311. There is no 
reason for statutory language calling for a waiver regarding this 
program.

Other Labor Issues
    Also, SAFETEA would create a new Intermodal Passenger Facilities 
Program which perhaps inadvertently does not include 13(c) coverage. 
The program, if enacted, should of course include 13(c) coverage. 
Moreover, without a properly funded bill, we do not support funding for 
this program from the Mass Transit Account.
    Finally, the bill would allow DOT to waive 13(c) requirements for 
certain demonstration projects and projects involving new technology. 
There is no evidence of any demonstration projects or other projects 
involving new technology having been negatively affected by Section 
13(c). In fact, the opposite is true. Section 13(c) is the basis for 
five decades of labor-management cooperation in the transit industry, 
allowing for major technological advances.

Charter Bus Service
    SAFETEA maintains the current restrictions on public transit 
agencies that permit them to provide only a limited amount of charter 
service within their service areas and proposes to enforce these rules 
by allowing the Secretary to withhold Federal funds in the event of a 
violation.
    It is important that any revisions of the charter service 
regulations take into account the increasing concerns of those in both 
the transit and intercity bus industries that the existing rules are 
not only cumbersome and confusing, but are also serving to create an 
adversarial method of decisionmaking that is harmful to those seeking 
charter service. In addition, it must be recognized that while the 
current regulations grew out of concern that without restrictions, the 
allocation of Federal funds to public agencies would create unfair 
competition with the private charter bus industry, private operators 
today are receiving significant amounts of Federal funding as well.
    Certain minimal exceptions have been established by FTA to respond 
to transit agency requests to serve elderly persons and individuals 
with disabilities. We support further efforts to reform the charter bus 
regulations to permit public agencies to provide, upon request, a 
limited range of charter bus service to nonprofit and governmental 
organizations within their service areas.
    Based on our discussions with public transit agencies and 
representatives from the private bus industry, we believe a new, more 
effective, streamlined set of regulations can be crafted which protect 
the economic interests of the private bus industry while at the same 
time allow public agencies to respond to community-based charter 
service requests.
    Congressional support for this ongoing effort would greatly enhance 
the likelihood of an agreement between the parties and provide a basis 
for establishing sensible revisions.

ATU Proposal
    Mr. Chairman, the ATU's entire TEA-21 reauthorization proposal is 
included in this book, entitled Next Stop: Real Choices.* I will 
summarize the most important aspects of the proposal.
---------------------------------------------------------------------------
    *Held in Committee files.
---------------------------------------------------------------------------
    The proposal is a comprehensive plan which contains the ATU's 
recommendations on major policy, fiscal, and structural issues in 
connection with the Federal transit program for the first decade of the 
21st Century. ATU's reauthorization plan calls for the continuation of 
a strong Federal role in connection with providing the resources 
necessary to maintain and improve the quality of America's public 
transportation systems.
    While we consider all parts of the proposal extremely important, 
the following are the seven core principles and ideas that we believe 
should be an essential part of the reauthorization bill:

Increased, Guaranteed Transit Funding
    ATU has joined APTA in its recommendation for increasing Federal 
transit funding by 12 percent annually, so that by fiscal year 2009, 
the program would be funded at a guaranteed level of $14.3 billion. In 
order to reach this level, ATU supports raising and indexing the 
Federal gas tax as recommended by leadership of the House 
Transportation and Infrastructure Committee. ATU also supports 
bipartisan proposals to draw down reserves in the highway trust fund, 
and collect the interest on fund reserves.
    In addition, we call for the preservation of the firewalls (for the 
entire Federal transit program) that ensure guaranteed funding for the 
program on an annual basis. Moreover, we support maintaining the needs-
based formulas which determine transit funding. Congress should reject 
any so-called ``equity'' proposals that would cap transit funding for 
any one State at a certain level or percentage. We also
support increased funding for flexible transportation programs, such as 
the Congestion Mitigation and Air Quality Program (CMAQ), which have 
allowed communities to meet expanded transit needs where traditional 
funding sources have not been adequate.
    Finally, Congress should oppose any transit funding proposals that 
would break the historic link between highway and transit funding and 
decrease transit's share of the Federal motor fuel tax. For example, a 
draft proposal under consideration at the Senate Finance Committee 
would redirect gas tax funds currently earmarked for transit to pay for 
highway construction by decreasing transit's share of the gas tax to a 
half-cent. The rest of the Federal transit program would be financed 
through an unproven bond scheme. Financing public transportation with 
bonds is a proposal to make an essential element of our transportation 
system dependent on an untested, destabilizing funding source.
    This approach will require ever-increasing borrowing, at a greater 
cost to taxpayers, and destabilize future transit investments. Removing 
dedicated funds for transit undermines the long-term viability of our 
public transportation systems, ultimately placing the economy, 
metropolitan areas, transit-dependent populations, and air quality at 
risk. Further, separating the funding sources could erode the linked 
planning process, which addresses environmental issues affecting both 
the highway and transit programs.
    The guaranteed funding provisions of TEA-21, which link transit 
funding to the Federal motor fuel tax, have provided an unprecedented 
degree of stability within the public transportation industry since 
1998. Ridership levels are at their highest point since 1960, and ATU 
membership has grown to more than 180,000, the highest in the 111-year 
history of our union. ATU certainly supports increased highway funding 
and the equitable resolution of the donor-donee issue, but placing 
transit funding at risk is not the best solution.

Flexibility Incentive Grant (FIG) Program
    ATU is proposing a new transportation initiative in connection with 
the reauthorization of TEA-21. The idea behind the program named--the 
Flexibility Incentive Grant (FIG) Pilot Program--is to provide 
incentives that would encourage States to establish new sources of 
revenue for transit projects and services and to reward States for 
creating more flexibility in the use of their existing transportation 
funds.
    The FIG Program is also designed to encourage States to think twice 
before cutting transit funding in the face of rising fiscal pressures by 
providing ``bonus'' Federal transportation dollars to those States that 
increase public transportation funding or take steps to increase 
funding. Significantly, States could use funds derived under the FIG 
Program for any highway or transit projects eligible for assistance 
under Title 23 or Chapter 53 of Title 49.
    Under the proposed FIG Program, the Secretary of Transportation 
would be authorized to allocate $5 million annually to each State that 
increases transit expenditures by at least 10 percent as compared to 
the previous fiscal year. If a State is already expending more than $1 
billion on public transportation, the Secretary would be authorized to 
allocate $10 million to such State if it increases transit expenditures 
by at least 1 percent.
    In addition, States would be eligible for grants on the condition 
that they create new dedicated sources of revenue for public 
transportation. Such sources may include the dedication of new State 
motor fuel taxes, sales taxes, interest on existing highway funds, 
motor vehicle excise taxes, tolls, loans to be made out of highway 
funds, or other sources of funding.
    Finally, in order to encourage flexibility in the spirit of ISTEA, 
as continued under TEA-21, the FIG Program would authorize the 
Secretary of Transportation to reward States for amending their 
existing statutes or constitutions to allow funds that are currently 
restricted for highway purposes only to be eligible for transit 
projects and services as well as highway purposes.
    The FIG Program would not affect existing formulas under which 
States receive transportation funds through Title 23 or Chapter 53 of 
Title 49; it would be a ``bonus'' program to be awarded in addition to 
any funds received through those sources. Also, the Program would be 
funded out of General Funds and therefore would not put further 
pressure on the Federal Highway Trust Fund.
    The FIG idea is, of course, just one very small initiative in the 
context of the massive highway/transit bill. Nevertheless, ATU believes 
the idea has a great deal of merit because it seeks to unlock billions 
of dollars in State resources, each year, for public transportation, 
community and rural transportation, and ADA services. A draft 
legislative proposal is available for your review.

Transit Safety and Security
    This Committee knows the severity of the security threat facing our 
Nation's transit systems today. Given that one-third of terrorist 
attacks worldwide target transportation systems and that transit 
systems are the mode most commonly attacked, it is imperative that the 
Federal Government expand its role in securing transit systems--through 
the establishment of national standards for transit security and the 
provision of Federal funds to assist agencies in meeting these 
standards.
    Currently, only rail fixed guideway transit systems are required, 
as a condition of FTA funding, to adopt a safety and security plan. 
There is no similar requirement for transit bus systems. At a minimum, 
all transit systems, bus and rail, should adopt a security plan to be 
overseen and implemented by a system security committee, including both 
management and employee representatives, and all systems must provide 
security and emergency management training for frontline transit 
employees, including vehicle operators and maintenance employees.
    Security training for frontline transit employees is not only 
necessary in today's environment, but is one of the most cost-effective 
measures that an agency can take to better protect the nine billion 
passengers riding transit each year, as well as more than 350,000 
transit employees. Despite this, a recent survey of ATU members showed 
that 80 percent of respondents reported that they had not received any 
security training from the employer.
    It must be recognized that frontline transit employees, including 
bus and rail operators and maintenance employees, are the eyes and ears 
of every transit system. These employees, with the appropriate 
training, can be crucial in deterring, diffusing, and responding to 
serious security incidents that occur aboard their vehicles and within 
transit stations or facilities. In addition, transit employees are 
often the first line of defense in a terrorist incident, offering 
protection and much needed transportation away from terrorist targets 
and disaster sites. For these reasons, FTA should require all transit 
systems to provide comprehensive training for their employees on a 
regular basis. Training programs developed by the National Transit 
Institute in conjunction with FTA, APTA, and the ATU are a good model 
of the type of training necessary.
    As I noted in my comments on the Administration's proposal, 
financially strapped transit systems across the United States have been 
unable to gather the resources to fund necessary security training and 
improvements. It is imperative that the Department of Homeland Security 
(DHS) and its Transportation Security Administration dedicate 
sufficient resources for such purposes.
    Given the extensive expertise of the FTA and the countless 
security-related initiatives undertaken by the Agency in the past few 
years, it is important that funding from DHS be distributed only after 
appropriate consultation and coordination with FTA, including analysis 
of FTA readiness assessments. In order to facilitate such coordination, 
Congress must call on DHS and FTA to enter into a Memorandum of 
Understanding expeditiously so that any available funds can be 
distributed effectively and efficiently.

A Real Voice In Transportation Planning
    Unfortunately, transit riders, environmentalists, pedestrian and 
bicycle groups, businesses, transit workforce and industry 
representatives, and other individuals with a direct stake in 
transportation planning in reality have no real voice with regard to 
the metropolitan planning organizations (MPOs) that control their 
future. Under current law, MPOs, serving as the transportation planners 
for every U.S. urbanized area with a population of more than 50,000, 
and determining the future of our communities for decades, are composed 
of only local elected officials, officials of public agencies that 
administer major modes of transportation, and appropriate State 
officials, often with competing political and transportation interests.
    Although representatives of mass transportation authority 
employees, along with the general public, are given a reasonable 
opportunity to comment on long-range plans, they are not afforded a 
seat on the board, and they certainly have no voting rights. In fact, 
by the time riders, workers, and residents are permitted to submit 
comments at all in connection with long-range transportation plans, 
extensive research, and consultation with State representatives has 
taken place, and plans are already in their final stages. No 
opportunity to submit comments, or any other public procedure, is 
required during the drafting stages.
    This is an outdated process. These constituency groups would, as 
intended in the original process, bring a real world and informed 
perspective to the MPO boards, with a real ability to be heard and 
effect the decisionmaking process.
    Public transportation workers in particular would be helpful on 
issues involving transit operations and the implementation of new 
technology. ATU supports the diversification of MPO boards, requiring 
MPOs to appoint transit workforce representatives, minority groups, 
transit riders, bicycle and pedestrian advocates, businesses, and 
others with a direct stake in the provision of public transportation 
services to sit on such panels, with the right to vote. We also support 
requiring the governors to appoint these representatives for statewide 
planning. Finally, we support the ability of the general public to view 
long-range plans and submit comments during the early research and 
development of such plans, rather than after a draft has been 
completed.

Transit In National Parks (TRIP)
    Congestion in our national parks has reached massive proportions. 
The 384 units of the National Park System drew approximately 300 million 
visitors in 2001, and the National Park Service expects demand to increase 
by 500 percent over the next 40 years. The millions of Americans who escape 
urban congestion by visiting national parks each year are greeted by 
dim, hazy vistas and unhealthy air instead of the expansive views and 
scenery that have made these areas our national treasures.
    The piecemeal approach to solving the serious congestion issues in 
our parks is simply not working. ATU supports the adoption of S. 1032, 
the Transit in Parks Act (TRIP), which would provide increased funding 
for mass transportation in certain federally owned parks, as part of 
TEA-21's reauthorization. Without question, this legislation begins to 
address the major congestion and environmental issues that currently 
exist in U.S. National Parks from coast to coast.

Public Transportation Workforce Development Programs
    While the transit industry has effectively focused on the 
development of rail infrastructure and rolling stock, there has been a 
lack of attention directed toward training personnel in connection with 
new technologies and maintenance requirements that are associated with 
keeping the Nation's public transportation fleets in working condition. 
The public transportation industry desperately needs job training and 
career ladder programs to provide workers skills necessary to carry out 
maintenance tasks in a cost effective manner. It also needs to provide 
training and technical assistance to individuals who are interested in 
commercial driving careers.
    The Transit Technology Career Ladder Partnership (TTCLP) was 
launched in 2001 with a seed grant from the DOT and the FTA. Working 
through the nonprofit Community Transportation Development Center, the 
program has assisted local transit systems and unions to jointly 
develop transit training partnerships in five pilot locations. These 
locally sponsored partnerships have already raised eight times more 
State and local funding than originally invested by DOT in the pilot 
program. ATU and the Transport Workers Union call for the program to be 
funded at a level of $1.76 million in fiscal year 2004, to increase to 
$2.5 million by 2009, as the program expands to more States. ATU 
supports TTCLP as an integral part of the reauthorization of TEA-21 to 
provide training and technical assistance to individuals who are 
interested in commercial vehicle driving, maintenance, or other careers 
within the transit industry.

Meeting Community Transportation Needs
    As recommended by the Community Transportation Association of 
America (CTAA), the Committee should recognize that an increase in 
capital investment is long overdue for rural and small-urban transit 
organizations, which provide critical mobility services outside of 
America's largest regions. More than one-third of America's population 
lives outside of urbanized areas. The agencies involved in Section 5311 
services enjoy strong community support, providing more than 340 
million passenger trips per year. However, more funds are needed to 
keep up with expanding services. The existing fleet is far older than 
typical useful life projections, and agencies are falling behind 
vehicle replacement suggestions. Moreover, the reauthorization bill 
should address the serious lack of services in rural America, which 
impacts disproportionately on persons with disabilities and low-income 
people, who are particularly transit dependent. Thirty-two percent of 
all rural residents are classified as transit dependent, including 36 
percent of all rural Americans living in nonmetropolitan areas. 
Guaranteeing access for America's most transit dependent population 
should be a priority in the next reauthorization.

Conclusions and Observations
    In summary, ATU's message to the Committee is simple: TEA-21 has 
been an enormous success. Let us build off the progress of ISTEA and 
TEA-21 by maintaining and increasing the Federal investment in the 
existing transit programs and policies that have forever changed the 
travel patterns of America's communities, both large and small.
    Additionally, Congress should properly fund required security and 
employee training programs and adopt appropriate new programs, 
especially those that have the potential to encourage more transit 
investment from nonfederal sources, so that we may finally narrow the 
ever-widening gap between transit needs and transit investment. 
Finally, let us provide those with a direct interest in transportation 
services with a real voice and an expanded role in connection with 
transportation planning so that the ideals that were set out in ISTEA 
and TEA-21 may finally be realized.
    We realize of course, Mr. Chairman, that without adequate 
resources, none of the reforms proposed by the Administration, the 
Members of this Committee, or any of the organizations represented on 
this panel can be fully reached. And, whether Members of Congress agree 
on the concept of a gas tax increase or not, it should at least be 
clear to lawmakers on both sides of the aisle and in both Chambers that 
increasing the gas tax is the best possible way to meet the extensive 
highway and transit needs of this Nation. Congress will not be able to 
solve the issues of donor/donee distribution, training, safety, 
research and development, or underwrite service expansion unless the 
gas tax is increased. Otherwise, as is the case with the 
Administration's proposal, we will end up with a situation in which 
crucial programs will be eliminated or consolidated so that limited 
resources may be shifted elsewhere.
    It is for these reasons that ATU supports raising the Federal gas 
tax as recommended by leadership of the House Transportation and 
Infrastructure Committee. Each penny of the motor fuels excise taxes 
currently yields over $1.7 billion per year, generating more than 
80,000 jobs in the transportation industry, with about $1.4 billion 
being deposited into the Highway Account of the Highway Trust Fund and 
$350 million deposited into the Mass Transit Account. The Federal motor 
fuels tax is currently 18.4 cents, and has not been raised since 1993.
    With unemployment at an 8-year high and 1.7 million workers 
unemployed for more than 6 months, President Bush and the Congress 
should approve a plan that will create jobs in our communities and 
ensure that our future transportation needs are met. As a bipartisan 
group of 43 U.S. Senators recently stated in a letter to the President, 
``a robust public transportation infrastructure is vital to continuing 
America's economic growth.''
    We believe it is time for a frank debate on this matter. It is not 
a contradiction to support the President's tax cuts while calling for 
an increase in gas tax revenues. Whether an individual earns more than 
$300,000 or less than $30,000 annually, each person gets the same seat 
on the bus or the train. Moreover, just as the new tax bill is a 
balance of tax cuts and loophole fixes, a transportation bill with a 
gas tax increase will net out as a gain for all taxpayers. Supporters 
of the tax cuts have said that eventually the money people save will 
wind up back in the economy. Similarly, a gas tax increase will put 
more cash in everyone's pockets--money saved from reducing the 
overwhelming burdens of traffic congestion. According to the Texas 
Transportation Institute, in 2000, congestion (based on wasted time and 
fuel) cost about $68 billion in 75 urban areas. The average cost for 
each of the 75 urban areas was $900 million. By providing for even just 
a nominal two-cent gas tax increase, which would cost the average 
driver a mere $12 per year, or 6-cents per day, we could begin the 
process of redirecting at least a portion of that $68 billion back into 
the economy.
    We know that one mechanism alone cannot provide the necessary 
resources to maintain and improve the conditions of the Nation's 
highway and transit systems. ATU has and will continue to support 
innovative finance mechanisms in addition to (but not in lieu of) the 
gas tax, such as State Infrastructure Banks, TIFIA, and bonds with 
labor protections, including Section 13(c) and Davis Bacon, attached to 
directly funded projects as well as those funded in subsequent 
generations. However, just as Congress is striving for simplicity in 
the tax code, there is no substitute for the basic, time-tested method 
of meeting our transportation needs with funds generated directly out 
of the transportation system.
    Without question, these are enormous challenges, and we are 
undoubtedly living in extraordinary times. Yet, ATU firmly believes 
that Congress has the means, the will, and the experience to achieve 
these crucial mobility goals. The transit industry, in cooperation with 
ATU, has certainly come a long way since the 1964 Federal Transit Act. 
However, the success of our efforts has produced new challenges that 
must be immediately addressed in order for us to sustain the progress 
that has been made. ATU looks forward to working with this Committee in 
meeting these challenges, so that we may continue to Move America 
Safely during the period of the next reauthorization bill, and beyond.
                            *      *      *

                                        Fact Sheet: TEA-21 versus SAFETEA
----------------------------------------------------------------------------------------------------------------
               TEA-21                 FY 1998    FY 1999    FY 2000    FY 2001    FY 2002    FY 2003     TOTAL
----------------------------------------------------------------------------------------------------------------
Fully Authorized Level.............      $4.6       $6.3       $6.8       $7.2       $7.7       $8.2      $41
Guarantee..........................      $4.8       $5.3       $5.8       $6.3       $6.7       $7.2      $36
----------------------------------------------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
              SAFETEA                 FY 2004    FY 2005    FY 2006    FY 2007    FY 2008    FY 2009     TOTAL
----------------------------------------------------------------------------------------------------------------
Fully Authorized Level.............      $7.2       $7.4       $7.5       $7.7       $7.8       $8.0      $46
Guarantee..........................      $5.9       $6.0       $6.2       $6.3       $6.5       $6.6      $37.6
----------------------------------------------------------------------------------------------------------------
(Billions of Dollars)

    Since fiscal year 1998, the Federal transit program has been funded 
only at the guaranteed level on an annual basis (except in fiscal year 
1999 when the actual appropriation exceeded the guarantee by $25 
million). For example, for the current
fiscal year, the program was funded at $7.2 billion, the guaranteed 
level under TEA-21. If current practice continues, appropriators will 
continue to fund the program at the guaranteed level during the next 6 
years.
    Therefore, in examining the Administration's proposal (SAFETEA), it 
is only necessary to look at the proposed guaranteed levels for 
transit. As the charts indicate, for fiscal year 2004, the 
Administration is proposing $5.9 billion for the transit program, which 
is a $1.3 billion cut from the current fiscal year. In fact, under 
SAFETEA, the Administration would not even reach the current level of 
spending by the end of the reauthorization period. Guaranteed public 
transit funding would be 8 percent less in fiscal year 2009 than it is 
in fiscal year 2003!

                               ----------

           PREPARED STATEMENT OF HARRY W. (WOODY) BLUNT, JR.

                     President, Concord Coach Lines
                         Concord, New Hampshire
               on behalf of the American Bus Association
                             June 10, 2003

    Good morning, Mr. Chairman and Members of the Committee. My name is 
Harry Blunt and I am President of Concord Coach Lines, a private over-
the-road bus company based in Concord, New Hampshire, that provides 
service in New England. Concord Coach Lines and its affiliate, 
Dartmouth Coach are one of the largest independent motorcoach companies 
in New England. We provide daily intercity service to Boston and Logan 
Airport from 34 cities and towns in Maine and New Hampshire. Thirty-one 
of these cities have no other form of intercity public transportation. 
Concord carried 670,000 passengers in 2002 and employs 134 full and 
part-time personnel.
    I am testifying on behalf of the American Bus Association. The ABA 
is the trade association of the over-the-road bus industry. ABA has 
3,400 members, of which some eight hundred are motorcoach operators and 
200 are tour operators. The
remaining members are hotels, tourist destinations, and attractions. I 
am the immediate past Chairman of the ABA's Board of Directors and 
currently serve as Chairman of the ABA's policy committee. Before I 
begin speaking on our issues with SAFETEA, I would like to present a 
few facts about the over-the-road bus industry.
    The industry that I have served for over 30 years transports 774 
million U.S. passengers each year. We transport more people than the 
airlines, and we transport more passengers in 2 weeks than Amtrak does 
in a year. Further, we serve more than five thousand cities and towns 
in regularly scheduled service, again more than any other mode of 
public transportation. Between fixed route, intercity, commuter 
service, charter and tour, and airport shuttle service the industry is 
involved in the life of virtually all Americans. For example, Eyre Bus 
Service, an ABA member, provides commuter service to DC for over 2,500 Maryland residents every day; in addition, intercity bus companies provide fixed route, scheduled service to 79 communities in Alabama. This is far 
more than the combined number of communities served by air and Amtrak. A 
map detailing this service has been provided to the Committee.* ABA members 
provide these services without any meaningful subsidy from the 
Government. A report by Nathan Associates, Inc.* details the Federal 
subsidies to passenger modes between 1960 and 2001. This report is 
dramatic evidence of the lack of subsidy given to intercity bus 
transportation. The industry buys its own buses, builds its own 
facilities, trains its own personnel and maintains its own equipment. 
And since the attack on America on September 11, we have taken our 
share of losses.
---------------------------------------------------------------------------
    *Held in Committee files.
    *Held in Committee files.
---------------------------------------------------------------------------
    My subject today is the Administration's bill to reauthorize the 
Federal highway bill, the so-called TEA-21. The current bill is called 
SAFETEA. Whatever its name, it is a bill vital to the health and well 
being of the over-the-road bus industry, and we at the ABA no less than 
you on the Banking Committee want to get this right. While there are 
many good provisions in the bill that we support, there are also 
sections of the bill within the jurisdiction of this Committee that are 
largely a disaster for the over-the-road bus industry.
    Our first and most important problem with SAFETEA may be summed up 
in two words: ``transit competition.'' The private bus industry is 
under assault. Today, we face illegal competition from transit agencies 
that ignore Federal rules regarding the provision of transportation 
services provided by the private bus operators; from transit agencies 
that ignore Federal Transit Administration (FTA) cease and desist 
orders and continue to provide illegal transportation; from short 
sighted policies by local governments like that of the District of Columbia which wants to spend over thirty million Federal dollars to operate a tour 
bus service in a city which has three private sightseeing tour operators 
that have seen drastic declines in their own business.
    In short, we face withering competition from transit agencies that 
are provided significant Federal and/or local funding. Agencies that 
then take that money and use it against the private operators and 
ultimately against the public. The most blatant examples of this 
``competition'' are found in the fight to provide ``charter'' service 
to the public. When I speak of ``charters'' I mean groups of people 
seeking to travel to some destination. Charters form a significant 
portion of our business. Indeed, nearly all ABA members provide some 
charter services to the public.
    FTA regulations require federally funded transit agencies to notify 
the local private companies, ABA, and FTA if there is a charter 
opportunity that it wishes to pursue. The ABA notifies its members and 
FTA regulations require that the publicly funded transit agency allow 
the private, unsubsidized operator to provide the service if it is 
``willing and able'' to do so. If there is no private operator 
available or willing to provide the service, the transit agency is free 
to do so.
    As ABA has documented, transit agencies often do not follow these 
rules. Some transit organizations fail to follow the notification 
procedures at all; others provide the service before the determination 
of a ``willing and able'' private provider is made. Further, publicly 
funded transit agencies often use their heavily subsidized fleets to 
charge prices well below cost to win charter work. Most egregiously, as 
I referred to earlier, at least one transit agency has ignored two FTA 
orders to stop operating its charter service. Not only has it continued 
to operate this service, but also the transit agency's only penalty so 
far has been FTA's willingness to overlook the continuing violation 
while working with it to find a way to allow it to continue to operate. 
Reportedly, FTA is accomplishing this by determining that transit 
agency's charter service to an annual golf tournament event is a 
``regularly scheduled'' service and therefore not charter service. In 
the meantime, ABA member Kemp's Bus Service loses revenue from the 
event to an outlaw public transit agency and struggles to survive. A 
situation the charter rules are intended to prevent.
    Where this issue is relevant to SAFETEA is embodied in Section 3020 
of the bill. That section would give the Secretary of Transportation 
the authority to suspend the charter rules if the transit could say 
that it was providing service to the elderly or the disabled. This 
section is a dagger in the heart of the charter rules. The essence of 
private charters in the United States is the provision of service to 
the ``elderly.'' To allow anyone to abrogate the ``willing and able'' 
test in this circumstance would be to throw out the charter rules. 
Creating an exception for ``disabled'' transportation from the charter 
rules is no less pernicious. ABA is aware of no instance where disabled 
citizens have been denied the use of public transportation. Indeed, the 
Americans with Disabilities Act (ADA) spurred Congress in TEA-21 to 
establish a fund for private operators to equip their coaches with 
wheelchair lifts. The fund has been oversubscribed each year and 
currently provides seven million dollars for this purpose. The public 
transit agencies cannot say that the private bus operators are failing 
to provide transportation to the disabled and the only remedy is to 
dispense with the rules.
    On the contrary, the charter rules clearly provide that if there is 
no ``willing and able'' private operator the business opportunity is 
open to all bus operators public as well as private. Any suggestion 
that the charter rules are preventing the publicly funded transit 
agencies from meeting unmet needs is nonsense.
    ABA has three remedies to correct the transit competition 
imbalance. First, SAFETEA's Section 3020 must obviously not be enacted. 
Second, there must be penalties that make sense when a transit agency 
violates the charter regulations. At present, FTA says that its only 
remedy for such a violation is to bar the transit from receiving any of 
its Federal funding. Not surprisingly, this penalty has never, and in 
my opinion, will never be used. In place of this nonexistent penalty, 
we suggest a penalty of a percentage of the transit is funding for the 
first violation of the charter rules, a greater percentage for a second 
violation, and so on. And third, the industry needs clear definitions 
of ``charter service'' and ``sightseeing service.'' It cannot be that a 
once a year charter (for example, the Alabama-Mississippi football 
game) is a regularly scheduled event. If any agency can sustain such a 
definition than there are no charter rules.
    At the end of my testimony, I have appended ABA proposals to change 
SAFETEA's Section 3004 and amend 49 U.S.C. 5302 and SAFETEA's Section 
3020 and revise 49 U.S.C. 5323(d). These proposals define charter bus 
and sightseeing bus transportation and add a complaint process and 
workable penalties to the FTA tool kit in addressing this problem. The 
``bright line'' definitions are designed to eliminate the confusion 
that seems to overcome the public transit agencies when charter bus 
operations are offered, the complaint process and penalty provision 
will give parties a forum within which problems arising out of charter 
opportunities can be resolved.
    An important problem for the bus industry and the Nation is 
SAFETEA's halfhearted solution to equipping buses with wheelchair 
lifts. This problem is embodied in Section 3036 of the bill. TEA-21 
authorized funding to meet the Federal mandate requiring wheelchair 
lifts on all fixed route over-the-road and charter motorcoaches. The 
Transportation Research Board (TRB) has put the annual cost of the 
mandate at forty million dollars. However, the wheelchair lift program 
over the life of TEA-21 has been funded at approximately 15 percent of 
its annual cost. To put one wheelchair lift on a new or used bus costs 
between $35,000 and $40,000. In our industry, where the majority of our 
operators have 10 or fewer motorcoaches, the cost of this mandate is 
prohibitive. As I noted previously, the wheelchair lift program is 
oversubscribed each year. An increase to at least 50 percent of the 
mandate's cost is warranted and necessary.
    A second problem with SAFETEA is found in Section 3011, the ``New 
Freedom'' program. This program establishes a competitive grant program 
which will provide funds for ``new transportation services and 
transportation alternatives beyond those required by the Americans with 
Disabilities Act of 1990 (42 U.S.C. 12101 et seq.), including motor 
vehicle programs that assist persons with disabilities with 
transportation to and from jobs and employment support services.''
    While we obviously applaud more funds for transportation for the 
disabled, we believe the initiative is wrong in its insistence on ``new 
transportation services and alternatives.'' As drafted, it excludes the ability of any grant recipient to fund wheelchair lifts on buses, even 
while allowing the purchase of motor vehicles. Wheelchair lifts are the 
method by which the overwhelming majority of physically disabled citizens 
get to work; to not fund this tried and true method would, I believe, disadvantage many of our citizens in the service of this ``new freedom.'' 
In sum, ABA believes that funding for wheelchair lifts should be allowed 
under this section.
    Also regarding the New Freedom Initiative, Section 3034 of SAFETEA 
allows the grants to be increased depending on increases in the 
efficiency of the transportation service offered. We suggest that the 
program be modified to allow the Secretary to consider cost reductions 
in determining efficiency.
    In Section 3002 of SAFETEA the term ``mass transportation'' is 
replaced with ``public transportation.'' We are concerned that the 
change could destroy the primary purpose of Federal transit subsidies, 
which is to provide for local transportation services, and expand 
funding for those programs beyond that core focus to a broader array of 
services in direct competition with the intercity bus industry.
    Our concern is due to the fact that ``public transportation,'' as 
that term is commonly understood, means ``transportation to the 
public.'' Thus, we believe it is possible to interpret the change as 
allowing transit funds to be spent, for example, on Amtrak, since the 
rail carrier provides public transportation; or to allow transit funds 
to be spent to compete with Greyhound Bus Lines in intercity service. 
By contrast, the term ``mass transportation'' has a 30-year history of 
usage as denoting ``local'' transportation services with no opportunity 
to expand range of services a transit agency can provide.
    There is a solution. Insert the word ``local'' before ``public 
transportation'' in Section 3002. This change would ensure the revised 
Section 3002 would not broaden the range of allowed transit services 
into providing intercity bus or rail services but rather to concentrate 
on the transits' core mission: ``local transit service.''
    Less this Committee believe that ABA has nothing good to say about 
SAFETEA, one provision we strongly support is Section 6002 and the bus 
industry's counterpart H.R. 1394, the Intermodal Transportation Act. 
Both H.R. 1394 and SAFETEA propose the creation of a new competitive 
grant program for intermodal transportation centers. All modes of 
public transportation--intercity bus, intercity rail, urban mass 
transit, and rural transit should be linked by intermodal 
transportation centers so that seamless public transportation becomes a 
reality.
    The intermodal transportation center fund, $100 million annually 
under H.R. 1394 and $85 million annually under SAFETEA, solves this 
problem by providing sufficient seed money to States and communities to 
make these intermodal projects happen. Some States, such as my home 
State of New Hampshire, have taken the lead in developing intermodal 
transportation centers, in cooperation with the private sector. Those 
centers, such as the ones in Concord and Portsmouth, have been 
tremendously beneficial in enhancing the attractiveness of public 
transportation. The proposed transportation center program would enable 
other States to do the same.
    Another major component of creating a seamless, comprehensive 
public transportation system is the need to link rural communities with 
the Nation's aviation and rail systems. Thousands of rural communities 
need connections to the national air and rail system, yet only a 
handful receive such connecting service from the Essential Air Service 
program. Buses now provide unsubsidized service to thousands of rural 
communities; with relatively little Federal support, existing or new 
bus service could link these communities to air and rail hubs.
    H.R. 1394 creates a $35 million per year essential bus service 
program, which would provide States with funds to contract for public 
surface transportation services to link rural communities to airports 
and train stations. This program would provide a potential link to the 
air and rail systems for the thousands of communities without EAS 
service.
    Integrating public transportation information systems is another 
important part of creating a seamless public transportation network. 
Such a system is needed so that with one call or Internet visit, 
consumers can access fare, schedule, and location information for all 
public transportation modes. This is particularly important for people 
with disabilities. Some States and service providers are working toward 
this goal, but a coordinated Federal effort is needed. Both H.R. 1394 
and SAFETEA have such a program. Frankly, we prefer the H.R. 1394 model 
because it separates the information system program from the intermodal 
terminal program which we believe would promote administrative 
simplicity.
    ABA strongly supports the SAFETEA proposal to increase the Section 
5311 rural transportation funding by roughly 50 percent. This means a 
comparable increase in the Section 5311(f) rural intercity bus program. 
Overall, rural transportation providers have been very effective in 
providing a great deal of essential transportation with relatively 
little funding; the rural intercity bus providers particularly stand 
out in this regard. For example, in 2002, Greyhound provided at least 
daily, fixed route service to 332 communities with $4.7 million in 
Section 5311(f) operating subsidies. This is an exceptionally 
productive use of Federal funds. Expansion of 5311(f) will enable 
States to do more contracting with intercity bus operators to connect 
many more of the thousands of rural communities that are not connected 
to the Nation's public transportation network.
    A matter related to the intermodal terminal development issue 
detailed above is FTA's insistence that FTA intermodal funds can be 
used for the transit and intercity rail portions of intermodal but not 
the intercity bus portions of such terminals. This is contrary to good 
intermodal policy and discriminates against rural communities that rely 
on intercity bus service. Indeed, this interpretation is inconsistent 
with one of the stated purposes of Section 5309 of the Federal Transit 
Act, which is to cover the capital costs of coordinating all forms of 
public transportation. H.R. 1394 provides language that clarifies that 
FTA funds can be used for all transportation portions of intermodal 
transportation centers.
    SAFETEA proposes a variety of innovative financing mechanisms in 
order to enhance funding sources for new transportation investments, and 
there have been various Congressional innovative financing proposals. We 
agree that innovative financing can play a role in providing additional 
sources of revenue for transportation projects in these tight budgetary 
times. One of the Administration's proposals is to broaden the 
eligibility for private activity bonds to include highway projects and 
surface freight facilities. We believe that intermodal passenger 
transportation centers and intercity bus facilities should also be 
included as eligible projects, given the important role that they play 
in our Nation's passenger transportation network.
    There are two final changes to SAFETEA that we urge on the 
Committee. First, we suggest that Section 3012, which reauthorizes the 
major capital investment program, be amended. The Administration 
proposes that the program be limited to a ``New Starts'' program to 
provide grants for capital costs incurred when coordinating public 
transportation with other transportation, the costs of introducing new 
technology though innovative and improved products into public 
transportation, and the development of corridors to support public 
transportation. However, it is not certain as written that the capital 
investment funds can be applied to the intercity portion of intermodal 
facilities. Again, at the end of my testimony, I have appended 
legislative language taken from H.R. 1394 that would eliminate this 
problem.
    Second, Section 3010 provides additional ``incentive'' funding for 
rural transit agencies that are increasing ridership. The problem here 
is that private bus operators that also provide rural transportation 
services are not included in the incentive funding. Rural 
transportation by private operators is provided under the 5311(f) 
program. Simple fairness would seem to insist that if, in providing 
service under the 5311(f) program, an operator shows increasing 
ridership, that operator should be eligible for such incentive funding. 
Moreover, not to do it the ``fair'' way could lead to transit agencies 
using their cost advantage to increase ridership at the expense of the 
private operators. Thus, private operators would be at a double 
disadvantage. First, by the transit's use of its cost advantage to 
undercut the private operators, and then its receipt of an incentive 
payment for increasing ridership at our expense.
    It is fair to say that what has been presented here is a short list 
of the problems that SAFETEA presents for the private bus industry. 
However short the list, each problem is of enormous significance to the 
private bus industry. Like other modes of transportation, the private 
operators have lost jobs, operators, and revenue due to the effects of 
September 11, the downturn in the economy, and the failure of the 
American people to travel as they have in the past. Unlike other modes 
there is no significant private bus subsidy and no Congressional 
bailout of the industry. We seek none here.
    However, we do seek to level the ``playing field'' that we share 
with the public transit agencies. We do seek to have FTA treat us in 
law and regulation as they do the public agencies. We do seek to 
provide the most service to the most people for the least cost. All of 
these can be achieved by the changes to the SAFETEA bill we outline 
here.
    Thank you for your time and attention. I will be happy to answer 
any questions.

                               ----------

                     PREPARED STATEMENT OF JIM SEAL

            Former Consultant, Federal Transit Administrator
                    U.S. Department of Transporation
                             June 10, 2003

Achieving Better Outcomes--Incentive-Based Performance
    There should be broad support for SAFETEA's explicit recognition 
that the mission of Government should be congestion mitigation and 
relief, for example,
maximizing mobility with available funds. The proposed new performance-
based incentive program, which could be greatly expanded by Congress, 
is an initial first step in realizing the President's call for a more 
customer-oriented and outcome-based Government.
    Congress has understood the importance of maximizing mobility 
(Sec. 5301) over several decades by embedding ``efficiency'' as one of 
its guiding principles. In fact,
Congress found that the welfare of an urbanized society depended on an 
``efficient'' and ``economical'' transportation systems in and between 
urban areas [Sec. 5301 (3)]. Regrettably, local agencies do not pay 
enough attention to improving efficiency.
This has resulted in decreased mobility. For example, in Santa Clara 
County, 29 percent of bus service will be cut by next January in 
comparison to service levels 2 years ago.
    When competition is injected into the delivery of public transit as 
it has in some urban areas across the country, but more extensively 
throughout the world, private transportation providers have assisted 
transit agencies to achieve efficient customer-oriented service as 
called for by the President. All of these initiatives are consistent 
with several Federal statutes designed to ensure that private 
enterprise is involved ``to the maximum extent feasible'' (Sec. 5306).
    Consistent with this goal, SAFETEA preserves and reinforces 
existing private enterprise provisions in one important way; SAFETEA does 
not discriminate against private transportation providers when ensuring 
that MPOs are in compliance with Federal laws. Specifically, SAFETEA 
does not preempt the Secretary from making a finding of MPO compliance 
with private enterprise participation requirements during the 
Secretary's certification process (Sec. 5203 Metropolitan Transportation
Planning).
    Additionally, including private sector entities in Sec. 5305 as a 
grant recipient in a new planning program for the development of 
transportation plans and programs to plan, engineer, design, and 
evaluate a public transportation project will result in the creation of 
more cost-effective solutions that increase mobility and reduce air 
pollution.
    The new Planning Capacity Building Program in Sec. 5305, allowing 
the private sector to be involved in innovative practices and 
enhancements in transportation planning, has the potential to 
facilitate more public/private cooperative ventures at the early 
planning stage of project development.
    Reinforcing these private enterprise involvement requirements in 
SAFETEA and expanding private sector involvement in the planning 
process as stated above are consistent with the President's recent 
Federal procurement announcement expanding competition in delivering 
Federal services by, in part, broadening the definition of what is 
inherently the work of the private sector.
    Pursuant to this new Federal policy and to fully achieve the high 
performance goals of SAFETEA, local barriers to the provision of new 
service by the private sector should be eliminated as a condition of 
Federal funding.
    Private transportation carriers provide fixed route, handicapped-
accessible and charter services nationwide in urban and rural areas and 
therefore private sector participation in federally funded activities 
should be greatly expanded.
    To allow federally funded agencies to provide new service presently 
operated by the private sector or potentially operated by private 
enterprise in the future,
whether these services are subsidized or not, or whether these services 
are public transit or not would be inconsistent with existing Federal 
statutes, regulation, and Administration policy.

Competition vs. Monopoly--A Case for Enforcing Private Sector
Participation
    California provides an excellent example of two different models of 
transit delivery. In Santa Clara County (Silicon Valley), the VTA has a 
monopoly of over 95
percent of fixed route transit service, while in San Diego County a 
substantial portion of transit service is subjected to competition. It 
should be noted that while the Silicon Valley is in the forefront of 
competition in high-tech and software development, its transit system 
embraces an anticompetitive model. The advantages of transit 
competition were highlighted in a recent San Jose Mercury News Op-Ed 
article authored by the San Jose Chamber of Commerce (included at the 
end of my statement).

San Diego County in Comparison to Santa Clara County
    In San Diego County over 36 percent of bus service is subjected to 
competition totaling $44 million annually, and from 1979 to 2001 San 
Diego's inflation adjusted costs to produce an hour of service have 
decreased by 34 percent, while over the same period inflation adjusted 
costs at VTA have increased 18 percent.
    Other performance indicators under a competitive vs. monopoly 
environment have produced the following results from 1979 to 2001:

 Bus and light rail cost per passenger mile have decreased an 
    inflation adjusted 32 percent in San Diego while bus and light rail 
    cost per passenger mile at VTA increased 13 percent;
 From 1979 when gross budget levels were roughly similar, total 
    inflation adjusted bus expenditures increased 36 percent at San 
    Diego in comparison to total inflation adjusted bus expenditures 
    increasing 150 percent at VTA;
 In 2001, San Diego's total bus budget was just under $100 
    million, while VTA's bus budget was slightly under $200 million--a 
    $100 million difference in favor of competition;
 In 2001, total bus boardings in San Diego were approximately 
    10 million higher than VTA;
 In 2001, bus operating ratio in San Diego was 42 percent in 
    comparison to 13 percent at VTA; and
 In 2001, light rail operating ratio in San Diego was 58 
    percent in comparison to 12 percent at VTA. Both systems operating 
    budgets are of similar size.

    In 2001, San Diego's contract services cost per revenue mile 
($3.76) was 42 percent of VTA's in-house cost per revenue mile ($8.89). 
Labor costs as a percent of total operating budgets represent 
approximately 70 percent for both entities. Even when adjusting for 
differences in ``mean hourly'' wage estimates between San Diego and San 
Jose (U.S. Department of Labor Bureau of Labor Statistics 2001 State
Occupational Employment and Wage Estimates--California), San Diego's 
unit cost of $4.12 per revenue hour is still less than 50 percent of 
VTA's unit cost per revenue mile.
    There are several other successful competitive models in 
California, notably Foothill Transit in the San Gabriel Valley of Los 
Angeles County. From 1986 to 2001, Foothill Transit increased service 
hours over 100 percent and boarding over 120 percent over what would 
have been provided under in-house operation of the dominate regional 
operator, LACMTA.
    Internationally, center-left and center-right countries in Europe 
have embraced competition much more extensively then in the United 
States. For example:

 In London, 6,500 buses almost three times LACMTA and double 
    NYCMTA are competitively tendered;
 Five LRT systems in greater London are competitively tendered; 
    and
 The Stockholm, Sweden transit system comprising metro rail, 
    light rail, and bus and commuter rail is under a competitive 
    tender. 

    
    
    There are no consequences if a noncompetitive transit system fails 
to control costs or fails to meet the highest standards of service. 
Services that are competitively procured must meet numerous service 
quality standards and performance failures can lead to liquidated 
damages including cancellation of a contract.

Unnecessary Expansion of Special Labor Protection Provisions 
        Sec. 5333(b)
    The Job Access and Reverse Commute (JARC), through a more 
predictable funding source, and the President's New Freedom Initiative, 
have the potential to provide more mobility for those that need access 
to jobs and serve those that go beyond ADA service requirements.
    However, these programs should not be subjected to outdated labor 
protection
provisions ostensibly to protect collective bargaining rights. State 
laws and the National Labor Relations Act now provide full collective 
bargaining rights for employees. The original intent of ``13(c)'' in 
the 1960's was to provide employees collective bargaining rights in the 
absence of State laws protecting such activities. This is no longer the 
case.
    First, there is a great need to reform this section to correct past 
abuses. Historically, the certification process under 13(c) has been 
misused to favor one side in management employee relations. Local 
transit managers were forced to accept certain provisions favorable to 
national union interests that would not have been agreed to if critical 
Federal funding had not been unacceptably delayed. These actions 
violated not only NLRA, but also the private sector participation 
statutes in Title 49 CHAPTER 53. Although some minor reforms have been 
instituted like time constraints, there are ways to frustrate the 
process. Further, the number of years of protections should be reduced 
in line with labor protect reforms achieved by small railroad carriers.

Competitive Contracts Could Help Avoid Big VTA Service Cuts
By Jim Cunneen and Dave Fadness
    Service cuts proposed by the Valley Transportation Authority would 
unfairly punish those who desperately rely on public transit the most: 
working families. VTA's budget predicament is not their fault.
    Falling sales tax receipts are blamed. But VTA's costs are equally 
at fault; they are spiraling out of control.
    From 2001 through 2004, 29 percent of transit service will be cut, 
but the cost per hour of service over the same period will increase 47 
percent. Meanwhile, VTA's farebox revenue, in part due to heavily 
subsidized fares, compares poorly to similar operators in other 
metropolitan areas.
    To solve the problem, however, decision makers are focusing too 
narrowly on the revenue side, proposing new taxes and higher fares as 
the first order of business. Instead, they should place first emphasis 
on cutting any and all costs that do not directly produce transit 
service. Why? Because VTA can control costs to a far greater degree 
than it can revenue. Before going to the voters to ask for more 
revenue, VTA must do everything possible to assure the community that 
it has done all it can to improve efficiency and control spending.
    Is there a way to stem the red ink in VTA's budget while retaining 
(or improving) services, before raising fares or taxes?
    Competition, may provide an important part of the answer. 
Experience in the Bay Area and throughout California proves that 
public/private transit partnerships work in the public's best interest, 
delivering more transit service at less cost. It is time for VTA to 
give it a try. Here are a few examples:

 The City of Los Angeles and 21 San Gabriel Valley cities 
    operate more than 475 buses under competitive contracts. The San 
    Gabriel cities' joint powers agency, Foothill Transit, cut 
    operating costs 30 percent while increasing bus service hours 100 
    percent;
 San Diego competitively contracts more than 36 percent of its 
    bus service--totaling $44 million annually. Since 1979, its 
    inflation-adjusted cost per hour of service has decreased 34 
    percent. VTA's has increased more than 18 percent; and
 In the San Francisco Bay Area, five major transit agencies 
    contract out all of their transit systems; SamTrans contracts out 
    part. Even Caltrain is a competitively contracted system.

    VTA is cutting service 29 percent. If VTA reduced its per-hour bus 
costs by the same percentage, its costs would still be high, but its 
projected 2006 deficit of $50 million would evaporate.
    How would competitive contracting work? California transit agencies 
that outsource typically provide some or all of the equipment. They 
require contractors to provide the labor force to pay local competitive 
wages and benefits and to maintain high standards already demanded by 
VTA.
    Although contractors use a smaller workforce to perform the same 
amount of service, they usually use organized labor and are subject to 
damage payments for poor or missed service.
    In most cases, the public agency also bids for the service 
contracts, encouraging cost efficiencies and improved service by both 
public and private sectors.
    VTA's goal should be to minimize proposed service cuts and job 
losses. We suggest that it start now, boldly taking advantage of this 
opportunity to competitively contract high-subsidy bus routes, 
requiring contractors to give preference in hiring to VTA employees. We 
believe the resulting savings would protect jobs and diminish service 
cuts.
    Competitive contracting should also be considered for the 
management of VTA. The 1984 Measure A Traffic Authority is a local 
example of how effective this approach can be: a $1.2 billion multiyear 
project was successfully managed by only five people. Huge savings 
could result from improvements in management efficiency, effectively 
making more of existing revenue available to serve transit riders.
    That should be VTA's goal. We can avoid dramatic tax increases and 
fare increases by embracing new approaches. Other California transit 
operators are doing it with great success, relying on the same powerful 
model that makes our economy the world's strongest: competition.
    Jim Cunneen is president and CEO of the San Jose Silicon Valley 
Chamber of Commerce and a member of the VTA's Ad-Hoc Financial 
Stability Committee; Dave Fadness is the former vice chair of the 
Measure B Citizen's Watchdog Committee.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED

                     FROM NORMAN Y. MINETA

Security and Terrorism

Q.1. If the Department of Homeland Security is the appropriate 
agency to address this issue, do you think the fiscal year 2004 
budget request provides sufficient funding to address the 
significant threats facing our transit systems?

A.1. The Transportation Security Administration in the 
Department of Homeland Security (DHS) has primary 
responsibility for transportation security. The Department of 
Transportation plays a supporting role to assist DHS in meeting 
its mandates. Since September 11, the Federal Transit 
Administration (FTA) has continued to provide technical 
assistance, training, and research. Just as it has done with 
safety and crime prevention, FTA's homeland security activities 
work to integrate security into all aspects of transit 
operations, from planning, design, and construction to 
operations and maintenance. FTA activities are coordinated with 
TSA, to ensure that they augment and compliment DHS strategies 
as this new agency comes fully online. Through close 
cooperation and coordination of DOT and DHS programs and 
activities, we are working to ensure that resource allocation 
reflects the risks and the requirements of each mode of 
transportation.

Q.2. What was the Department of Transportation's rationale for 
not signing the expected memorandum of understanding on transit 
security with the Department of Homeland Security?

A.2. The Department of Homeland Security's (DHS) Transportation 
Security Administration (TSA) has primary responsibility for 
transportation security policy. The Department of 
Transportation (DOT) plays a supporting role, assisting DHS 
with implementation of its security policies. As DHS forms 
Federal transportation security policy, both TSA and DOT have 
committed to broad and routine consultations through numerous 
formal and informal mechanisms operating at all levels within 
the two organizations. These consultative mechanisms are 
working, and both departments will continuously evaluate how to 
promote effective cooperation.
    The principles of this cooperation are laid out in several 
interagency memoranda of understanding signed by TSA and DOT, 
and most importantly, by the exchange of letters between 
Secretary Mineta and TSA Administrator Jim Loy in February 
2003. At Secretary Mineta's request, Deputy Secretary Michael 
Jackson has served since March 1 as DOT's liaison to 
Administrator Loy for the coordination of all nonroutine policy 
issues, intelligence analysis, public and transportation 
industry communication, and operational planning. In addition, 
Secretary Mineta has designated the Office of Intelligence and 
Security as the official point of contact between DOT and TSA. 
At this time, DOT does not see an immediate need for additional 
legal mechanisms to coordinate responsibilities between the two 
agencies. As TSA works to strengthen its capabilities beyond 
aviation, and after consultation with Administrator Loy, DOT 
has continued for now a few of our preexisting programmatic 
efforts. For example, we continue to work with transit 
operators and State transportation executives to inform and
educate them regarding security awareness and best practices to 
enhance security. These efforts are not policymaking 
activities. Instead, they are intended during the transition to 
augment and complement TSA's work, as the new agency continues 
to grow its staff, programs, and experience in working with 
diverse transportation sectors. In the months ahead, DOT's role 
in such security educational efforts will likely decrease.
``One DoT'' Policy
Q.3. Mr. Secretary, you have often espoused a ``One DoT'' 
policy to describe your view that DoT is truly intermodal and 
does not favor one mode over another. Could you reconcile this 
``One DoT'' policy with the decision to flat line the FTA's 
budget, end the guarantee of the transit's General Fund 
resources, and increase the State match required for new 
transit systems?

A.3. Our reauthorization proposal does not favor one mode of 
transportation over another mode. In fact, under the Safe, 
Accountable, Flexible, and Efficient Transportation Equity Act 
of 2003 (SAFETEA), transit funding would increase to $46 
billion over the 6-year authorization period--a 28 percent 
increase over the $36 billion authorized in TEA-21. Highway 
funding under SAFETEA grows 18 percent compared to its funding 
under TEA-21. So we do not believe we shortchanged transit at 
the expense of highways.
    Our SAFETEA proposal continues the policy established in 
TEA-21 to ``firewall'' or ``guarantee'' spending from the Mass 
Transit Account of the Highway Trust Fund, just as funds for 
highways from the Trust Fund are guaranteed. Approximately, 80 
percent of FTA's funding comes from the Mass Transit Account. 
In fact, transit has been the only Federal program to enjoy 
``guaranteed'' General Funds.
    With regard to the proposed maximum Federal New Starts 
share of 50 percent, there is no evidence to suggest that a 50-
50 share requirement will deter transit project development. In 
fact, the overall Federal New Starts share today is 49 percent, 
so we are, to a certain extent, simply codifying existing 
practice. Furthermore, an additional 30 percent of project 
costs can be funded with other Federal funds, such as from the 
Congestion Mitigation Air Quality program or the Surface 
Transportation program. States and communities already take 
advantage of this flexibility as seen by the more than $9 
billion transferred from these two highways programs to support 
transit projects. In fact, we believe that imposing a 50 
percent Federal New Starts share maximum will help level the 
playing field among communities seeking New Starts funding. 
Combined with other SAFETEA changes, such as making nonfixed 
guideway projects eligible for New Starts funds, this proposal 
will give more communities the opportunity to pursue major 
capital transit projects.
Elderly and Disabled Riders
Q.4. The Administration has proposed a ``New Freedom 
Initiative'' for disabled riders. What is the rationale for 
this new program and why wouldn't it be more appropriate to 
simply increase funding for the existing and successful Elderly 
and Disabled transit program?

A.4. The Department of Transportation's program is part of the 
President's broader New Freedom Initiative (NFI), which is 
intended to help Americans with disabilities by increasing 
access to assistive technologies, expanding educational 
opportunities, increasing the ability of Americans with 
disabilities to integrate into the workforce, and promoting 
increased access into daily community life.
    The NFI is also building on the Supreme Court's 1999 
Olmstead decision in order to promote maximum independence and 
facilitates integrating individuals with disabilities into 
community life. Transportation can be a particularly difficult 
barrier to work and other community activities for Americans 
with disabilities. The lack of adequate transportation remains 
a primary barrier for people with disabilities, as evidenced by 
the fact that one-third of people with disabilities report that 
inadequate transportation is a significant problem.
    The New Freedom program for transportation addresses these 
significant remaining transportation barriers not addressed by 
the Americans with Disabilities Act (ADA). The ADA addresses 
the accessibility of existing transportation services and 
facilities. It does not address the service gaps that continue 
to exist for persons with disabilities who experience a seventy 
percent unemployment rate.
    The New Freedom funding is directed at providing additional 
transportation services that can provide persons with 
disabilities new transportation connections to jobs and 
essential community services and activities needed to foster 
independence and integration into the community.
    The existing Section 5310 Elderly and Disability Program 
provides funding to assist primarily nonprofit entities in 
acquiring
vehicles to provide special transportation services. This 
transportation is frequently associated with the delivery of a 
particular human service program for the elderly or individuals 
with disabilities. Section 5310 funding is often used for 
replacement vehicles to continue existing special human service 
transportation services. The proposed New Freedom program moves 
beyond existing specialty human service programs to address a 
broader range of transportation service gaps that exist for 
persons with disabilities. Therefore, under the NFI, services 
may be provided by public transportation, private 
transportation, and/or nonprofit organizations. The program 
funds will be used for activities identified in a local 
coordinated plan developed by stakeholders in the local 
community served.
    The program will provide operating, as well as capital, 
funding to achieve these purposes. For example, the New Freedom 
funding could be used by a community to deliver additional 
paratransit services to persons with disabilities living beyond 
the three quarter mile limit covered by the ADA complementary 
services, or to provide funding to help purchase accessible 
taxicab vehicles, so that persons with disabilities can more 
easily avail themselves of this travel option. In many 
communities, accessible taxis provide a quick-response, real-
time service to places and during times not served by existing 
transit and special human service transportation operators.

Q.5. In discussing SAFETEA with advocates for the disabled, 
they have voiced concerns with the New Freedom Initiative. 
While the disabled community supports resources that would 
allow the development of innovative transportation services for 
people with
disabilities, these advocates are concerned because the 
Administration's reauthorization proposal is woefully 
underfunded, and there is no additional money to pay for this 
new initiative. It also appears that the proposal would allow a 
State to transfer funds from this initiative to other 
transportation programs. Given the fiscal crises most States 
face, the lack of adequate funding in the Administration's 
proposal, and the chance a State could transfer ``New Freedom'' 
dollars to other transportation programs, where is the 
assurance that funds will actually be used to provide 
transportation services to people with disabilities?

A.5. While the SAFETEA proposal includes the ability to 
transfer funds for the purpose of reducing the administrative 
burden on grantees, it also ensures that, if funds are 
transferred to other programs, the funds must continue to be 
used for the originally identified purpose. Therefore, if New 
Freedom funds are transferred, for example, to the FTA Section 
5311 nonurbanized area program, these transferred funds must be 
used to support New Freedom transportation purposes. The 
transfer of these funds to other FTA programs affords grantees 
the opportunity to file a consolidated application, rather than 
multiple applications for New Freedom, JARC, Section 5310 
funding. In addition, SAFETEA provides for further assurance 
that the transportation needs of persons with disabilities are 
met by requiring communities to address the needs of persons 
with disabilities, in addition to the elderly and low-income 
individuals, through a locally developed, coordinated public 
transit-human services transportation plan.

 RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES FROM NORMAN 
                           Y. MINETA

Q.1. I understand that the Administration is proposing an 
incentive tier in the formula programs, to be awarded to 
transit agencies that increase ridership. Why does the 
Administration believe such an incentive is necessary for large 
urbanized areas, given that the formula for these areas already 
includes passenger miles traveled as a factor in its 
distribution of funds, rewarding areas with higher ridership? 
Also, there are some transit agencies which already carry a 
large percentage of local residents and have limited ability to 
increase ridership without significant additional funding to 
increase their carrying capacity. How does the Administration 
respond to their concerns that they will, in effect, be 
precluded from participating in this incentive program?

A.1. The performance incentive funds in the urbanized area 
formula program (Section 5307) would be apportioned using an 
administrative formula based on the percentage increase in 
ridership and accounting for the size of the community. The 
formula may also take into consideration efficiency of service 
in the urbanized area. In order to qualify for the incentive, 
transit systems would have to ensure that levels of ridership 
among elderly individuals, individuals with disabilities, or 
low-income persons are not negatively affected. Because not all 
systems currently collect data on ridership among these 
specific populations, a portion of the incentive funds will be 
made available for enhanced data collection in the initial 
years of the authorization period.
    Performance incentive funds will also be available to 
nonurbanized areas. Since nonurbanized or rural transit systems 
tend to focus their services largely on ``transit dependent'' 
populations (the elderly, individuals with disabilities, and 
low-income persons), the incentive funds for rural areas will 
be distributed based on increases in overall ridership. The 
incentive formula may also take into consideration efficiency 
of service in rural areas. The entire amount available for 
incentives in fiscal year 2004, and a portion of the funds 
available during the subsequent 2 years, will be made available 
to the States to establish data collection systems, since 
States are not currently required to report ridership data for 
nonurbanized areas to FTA's National Transit Database.
    FTA plans to consult broadly and seek public comment on 
options and plans to implement the performance incentive 
program, so that concerns about such issues as capacity can be 
appropriately considered.

Q.2. Mr. Secretary, in your testimony you state that 40 percent 
of counties in this country have no public transportation. On 
what do you base that figure?

A.2. In the mid-1990's, the Community Transportation 
Association of America (CTAA) compiled an inventory of rural 
transit systems funded by the Federal Transit Administration. 
This study found that approximately 40 percent of the 
nonmetropolitan counties in the United States had no public 
transit system. This figure has been widely used as an 
indicator of the unmet need for rural transit services. A 
subsequent update of the inventory, published in 2000, did not 
provide comprehensive county data, but did indicate that the 
significant increases reported in rural transit ridership and 
vehicle revenue miles were primarily a result of improved 
levels of service offered by existing transit providers, rather 
than an expansion of the network of providers.

Q.3. Mr. Secretary, in your testimony you state that SAFETEA, 
``projects requesting less than $75 million (would) be subject 
to a simplified New Starts process. We would utilize the same 
evaluation criteria established by Congress for projects 
seeking more than $75 million in funding from New Starts, but 
reduce the number of New Starts hurdles and simplify the 
evaluation process for these projects.'' How do you plan to 
simplify the evaluation process? What hurdles are you referring 
to, and how would you reduce their number?

A.3. FTA has not fully defined its development and evaluation 
process for projects seeking less than $75 million in New 
Starts funds, and will not do so without close consultation 
with the transit community. However, we believe that there are 
a number of areas with potential for simplification. For 
example, FTA will explore ways to speed its project approval 
process for these projects. Currently, proposed New Starts 
investments must be approved by FTA to enter into the 
preliminary engineering and approved again in order to enter 
into the final design phase of project development. Projects 
requesting less than $75 million in New Starts funds could be 
subject to a single approval and/or reduced requirements. In
developing any simplified evaluation process, FTA will take a 
common sense approach to speed project delivery, while ensuring 
continued stewardship of Federal tax dollars.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR DOLE
                     FROM NORMAN Y. MINETA

Q.1. Mr. Secretary, I am concerned that applications for Full 
Funding Grant Agreements (FFGAs) under the New Starts process 
originating from the same State may be subjected to a prejudice 
in awarding multiple FFGAs within the same State and same 
fiscal year that would delay the progress of these projects. 
Can you please confirm this is not the case?

A.1. The number of Full Funding Grant Agreements (FFGAs) in a 
State is not a factor in evaluating proposed New Start projects 
for new FFGAs. In 2001, FTA awarded four FFGAs in a single year 
to grantees in Illinois: One to the Chicago Transit Authority 
for its Douglas Branch reconstruction, and three to the 
commuter rail
operator in suburban Chicago (the Regional Transportation 
Authority, Metra) for construction of its extensions in the 
North Central, Southwest, and Union Pacific West corridors. 
In 2000, FTA awarded two FFGAs to the New Jersey Transit 
Corporation: One for the second minimum operating segment of 
the Hudson-Bergen light rail, the other for the first minimum 
operating segment of the Newark-Elizabeth light rail. In 1997, 
FTA awarded three FFGAs to grantees in California: One to the Los 
Angeles County Metropolitan Transportation Authority for the North 
Hollywood branch of the Metro Rail Red Line, one to the Bay Area 
Rapid Transit District for its rapid rail extension to San Francisco 
International Airport, and one to the Sacramento Regional 
Transit District for its light rail extension in the South 
corridor.

Q.2. Mr. Secretary, I am also concerned that the Federal 
Railroad Administration (FRA) is attempting to assert 
jurisdiction over rail transit systems that share a corridor, 
but not tracks, with operating freight railroads. I do not 
believe that this has ever been done before for any other mass 
transit project and would greatly add costs to the operation of 
a transit project. Can you describe the Department of 
Transportation policy as to this question of what projects 
would and would not be subject to FRA jurisdiction?

A.2. Under the Federal railroad safety statutes, as amended in 
1988, FRA's safety jurisdiction extends to rapid transit 
operations that are connected to the general railroad system. 
Those laws define ``railroad'' very broadly to include ``any 
form of nonhighway ground transportation that runs on rails or 
electromagnetic guideways.'' 49 U.S.C. 20102. Specifically 
included within the definition are high-speed rail systems that 
connect metropolitan areas and ``commuter or other short-haul 
railroad passenger service in a metropolitan or suburban area.'' The 
only railroads excepted from FRA's jurisdiction are ``rapid transit 
operations in an urban area that are not connected to the general 
railroad system of transportation.'' Congress was referring here to 
subways and street railways.
    In recent years, many communities around the Nation have 
begun to use, or consider using, conventional railroad tracks 
or corridors to provide commuter or rapid transit service using 
light rail vehicles. FRA and the Federal Transit Administration 
(FTA) issued a joint policy statement in July 2000, explaining 
how they would apply their respective safety jurisdictions in 
these situations. 65 Fed. Reg. 42526. FTA has residual safety 
jurisdiction, which it
implements through its State safety oversight program, over 
rail fixed guideway mass transportation operations that are 
``not subject to regulation by the Federal Railroad 
Administration.'' 49 U.S.C. 5330.
    On the day the joint FRA/FTA policy statement was issued, 
FRA issued its own statement of agency policy on the shared use 
of the general system by light rail and conventional rail 
operations. 65 Fed. Reg. 42529. In that statement, FRA stated 
its interpretation and policy with regard to rapid transit 
connections to the general system sufficient to warrant 
exercise of its jurisdiction. FRA made clear that rapid transit 
operations that share track with conventional operations are 
fully subject to FRA's safety regulations, but explained that 
waivers of many rules would be likely if the transit operations 
are conducted at separate times of day from the conventional 
operations. This ``temporal separation'' addresses the enormous 
risk inherent in shared use, for example, that a light rail
vehicle and conventional vehicle could collide. The transit 
vehicles are simply not designed to withstand such a collision 
with the much more heavily constructed conventional rail 
vehicles, and such a collision would likely be catastrophic. 
FRA's willingness to grant necessary waivers of rules not 
designed for application to rapid transit will help ensure that 
the rapid transit systems face no unnecessary costs.
    With regard to rapid transit operations that do not share 
track with conventional railroads but do have other connections 
to the general system, FRA noted that three types of 
connections posed sufficient safety hazards to warrant FRA's 
exercise of jurisdiction over the transit line to the extent it 
is connected: Railroad crossings at grade, joint control of 
trains in the same corridor (for example, a shared movable 
bridge), and highway-rail grade crossings in a shared corridor. 
All of these types of connections pose significant dangers and 
call for uniform regulation of the connected operations. For 
example, FRA noted that the safety of highway users can best be 
protected if they receive the same signals warning of the 
presence of a rail vehicle at a crossing regardless of the type 
of rail vehicle. We believe the safety of employees and the 
public depends on a consistent regulatory approach with regard 
to operations at these points of connection. Please note that 
FRA does not regulate the entire rapid transit system that has 
such limited connections; FRA regulates the rapid transit 
system only as necessary to ensure safety at the points of 
connection. This very limited regulation will have minimal 
costs, which could possibly be further reduced where a waiver 
is appropriate.
    Under the railroad safety statute, of course, a commuter 
railroad is fully subject to FRA's jurisdiction regardless of 
its connections to other railroads. However, Congress did not 
define ``rapid transit operations in an urban area'' or 
``commuter or other short-haul railroad passenger service in a 
metropolitan or suburban area,'' the terms used in the statute. 
Therefore, FRA has attempted to provide guidance on how it will 
make the distinction between these types of operations in its 
July 2000 policy statement. FRA looks at factors such as a 
system's primary purpose, the area that it serves, the 
equipment that it uses, and the frequency of its service. 
Railroads that have doubts about their proper categorization 
can seek FRA's opinion, as the Triangle Transit Authority (TTA) 
in North Carolina's Research Triangle area recently did 
concerning the regional railroad planned for that area. FRA 
provided TTA a legal opinion in January 2003, concluding that 
the regional system will be a commuter railroad or other short-
haul railroad passenger service, but will not be rapid transit. 
TTA has challenged that decision in the U.S. Court of Appeals 
for the Fourth Circuit, where the case is being briefed.

Q.3. Mr. Secretary, several communities around the Nation will 
be ready to sign FFGAs and proceed to construction this 
calendar year. In the event that reauthorization of the surface 
transportation law is delayed, will it be possible for 
applicants in the pipeline who are recommended and/or highly 
recommended to receive a contingent commitment from the 
Department of Transportation to enable them to proceed under an 
extension of TEA-21?

A.3. The effects of a delay in the reauthorization of the 
Nation's Surface Transportation Act would depend upon the exact 
nature of any Congressional action taken to extend TEA-21. In 
the absence of specific legislative language, the effect of 
such an extension on applicants in the New Starts pipeline 
would be pure speculation.

 RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM WILLIAM 
                             MILLAR

Q.1. Your testimony indicates your support for continuing the 
funding guarantees which were included in TEA-21, covering both 
Trust Fund and General Fund resources. Can you suggest any way 
in which the program could be made more predictable while still 
giving Congress a way to adjust program levels in the future 
should circumstances require it?

A.1. APTA strongly urges Congress to maintain the funding 
guarantees provided under TEA-21 when it develops the new 
authorizing law for Federal transit and highway programs. 
Funding guarantees included in TEA-21 made Federal funding for 
transit in the annual appropriations far more predictable over 
the last 6 years than had ever been the case in the past. 
Predictable funding for transit over the life of the 6-year 
authorizing law helped to facilitate the long-term capital planning 
and budgeting that is needed for transit agencies to make the most 
efficient use of limited
resources. Since the Federal transit program became primarily a 
capital program under TEA-21, and because transit capital 
programs are multiyear in nature and depend on State and local
funding matches, agencies can do a better job maintaining and 
replacing their capital plant, at less cost, if they know how 
much Federal support to expect from year to year. Guaranteed 
funding also ensures that the Federal Government invests in 
both our transit and highway infrastructure. In the years prior 
to the guarantees in TEA-21, Congress actually funded highway 
programs far closer to the funding levels set in authorization 
bills than it did with transit programs.
    According to a December 2002 study by Jeffrey A. Parker 
entitled The Benefits of TEA-21 Funding Guarantees, the 
guarantees have ``stretched scarce Federal dollars for public 
transit further and produced additional spin-off benefits by 
accelerating construction and leveraging new sources of State 
and local matching funds.'' Regarding funding predictability 
for new rail starts, the report goes on to note that the 
``flexibility to borrow against Full Funding Grant Agreements 
has allowed the total number of projects participating in the 
Section 5309 New Starts Program to increase in recent years.''
    In short, APTA urges Congress to maintain the funding 
guarantees for both the Trust Fund and General Fund portion of 
the Federal transit program when it develops new authorizing 
law. We note, however, that TEA-21 provided Congress with 
funding flexibility by authorizing additional General Fund 
resources in excess of Trust Fund and General Fund guaranteed 
funding, and that Congress used this resource to adjust the 
program above the guaranteed program level in fiscal year 1999.

Q.2. Your testimony opposes elimination of the bus 
discretionary program. The Administration claims that providing 
these funds would make the prograin more predictable, enhancing 
local planning. You have said that predictability is important 
in supporting continuing the funding guarantees, so why isn't 
it just as important in bus funding? What examples can you 
provide about the kinds of discretionary funding makes more 
sense.

A.2. While APTA supports predictable Federal funding that helps 
transit agencies plan multiyear budgets, it did recommend that
the Discretionary Bus and Bus Facilities Program be preserved 
as a separate discretionary program and not folded into the for-
mula program and the New Starts Program as proposed by the
Administration.
    We made these recommendations for a number of reasons. 
First, the existing program structure has worked very well, 
even though funding for each of the individual transit programs 
falls short of addressing identified needs. Although current 
funding does not adequately address the demand for replacement 
of vehicles and bus facilities, APTA believes that increased 
funding for the existing Discretionary Bus and Bus Facilities 
Program, and the creation of a new program to replace overage 
vehicles, is a better way to address these needs.
    Moving half of the existing bus program funding into the 
formula program as proposed by the Administration would simply 
spread too little resources across too many agencies to 
effectively address the existing need for vehicles and 
facilities. Vehicle and facility replacement or purchases at 
transit agencies tends to come in cycles, and not on a regular, 
year-to-year basis. APTA believes that these needs are best met 
with discretionary funding available at the time when equipment 
should be replaced or purchased. Whether an agency is building 
a bus garage, replacing a portion of its bus fleet, or building 
a new rail system, these purchases are essentially long-term, 
one-time major capital investments which have been funded for 
more than 20 years under discretionary programs.

Q.3. Your organization supports continuing the present 
requirement that New Starts projects must have a ``fixed 
guideway'' component while the Administration proposes relaxing this 
requirement to increase the flexibility of the program to 
address certain Bus Rapid Transit projects. Don't the present 
limit[ations] on eligiblity have the potential to bias local 
decisions toward projects which are eligible for funding, even 
when a nonfixed guideway project might be the better choice in 
a community? How can projects like this proceed if they need 
funding from [for] more than 1 year, and the only way to get a 
multiyear commitment is from the New Starts Program? Is it 
really practical to assume that these projects could be funded 
from the Bus program, which typically supports a very large 
number of projects with an average of only about $1 million per 
year per project?

A.3. APTA would like to emphasize that Bus Rapid Transit (BRT) 
systems which have exclusive rights of way or other fixed 
guideway designs are currently eligible for funding under the 
New Starts Program. Indeed, APTA's TEA-21 reauthorization 
recommendations call for statutory language making clear that 
such projects are eligible for New Start funding.
    APTA believes that agencies that want to develop bus 
service without any fixed guideway characteristics should 
continue to be able to do so using a combination of formula 
funds and discretionary bus funds. We note that current demand 
for Federal funds to build fixed guideway New Starts and 
extensions, including BRT projects, far exceeds available 
resources, and we are concerned that funding nonfixed guideway 
BRT systems from New Starts resources would only exacerbate the 
existing shortfall. We would add that many communities seeking 
funds for fixed guideway systems are already exceeding the 
required State and local match, and observe that if communities 
wanting nonfixed guideway BRT systems provided similar local 
matching funds it would be possible to fund even more such 
systems.
    While the average grant award under the Discretionary Bus 
Program may be only about $1 million per year, we note that 
there were a substantial number of projects funded in fiscal 
year 2003 in excess of that amount. In fact, one of the fiscal 
year 2003 bus grants provided almost $8 million for BRT-related 
costs in Hawaii, which was in addition to almost $7 million for 
other bus projects in Hawaii. While there is currently no 
commitment process for multiyear bus projects, multiyear 
funding in the appropriations process can presumably be 
provided if a project is widely supported by a State's 
congressional delegation.

Q.4. The Administration proposes to combine Fixed Guideway 
Modernization Funding with urbanized area formula funds into a 
single allocation to each urbanized area which can then be used 
flexibly for any transit purpose. The funding formulas would 
stay the same. Your testimony opposes this idea. Why does APTA 
believe it is such a bad idea to provide local areas [with the 
ability] to decide how to allocate these funds? If the funding 
levels are the same, why would you recommend not providing this 
flexibility?

A.4. APTA generally supports flexibility in the use of Federal 
transit funds, but we believe it would be a mistake to fold the 
Fixed Guideway Modernization Program into the urban formula 
program and permit the use of such funds for any transit 
purpose. As stated in our written testimony, the program ``was 
designed to ensure the proper modernization of the Nation's 
older rail systems, and it helps ensure that as Federal New 
Start investment projects age they can be modernized.'' Our 
testimony also expresses APTA's concern that diverting these 
funds from Fixed Guideway Modernization, where needs far exceed 
available resources, would only exacerbate unmet modernization 
needs and potentially result in the deterioration of some of 
the Nation's most valuable capital assets.
    The bottom line for APTA is that modernization needs 
cannot, and should not, be deferred. We believe that the 
current system, which provides Fixed Guideway Modernization 
Funds directly to operators of fixed guideway systems, for only 
fixed guideway modernization purposes, makes sense. Since other 
urban formula funds go to a designated recipient in a community 
that may have multiple transit operations in need of capital 
funds for a variety of purposes, it would be quite likely that 
Fixed Guideway Modernization Funds might be directed to other 
purposes. While APTA supports giving localities flexibility in 
how they use transportation funds,
it was the consensus of all of our member organizations to seek 
the preservation of the existing Fixed Guideway Modernization 
Program based on the large and growing need for modernization 
of these facilities.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED
                      FROM WILLIAM MILLAR

APTA's Reauthorization Proposal
Q.1.  Mr. Millar, could you explain in greater detail APTA's 
proposals to address the needs of smaller urban communities?

A.1. APTA's reauthorization proposal includes a number of 
recommendations that address the needs of smaller urban areas. 
Among the recommendations that directly or indirectly benefit 
smaller urban areas are the following:
Increased Formula Funding for Small Urban Areas
    APTA's proposal calls for an 87 percent increase in formula 
funding for small urbanized areas. It would increase funding 
for the program from $334 million in fiscal year 2003 to $626 
million in fiscal year 2009.

High Intensity Small Urbanized Area Formula Program
    APTA's proposal recommends the creation of a new ``High 
Intensity Small Urbanized Area Formula Program'' that would 
provide formula funding--in addition to funding under the 
current small urban formula program--that would be distributed 
among those small urban areas that provide service above the 
average level of service in larger urban areas. The proposed 
program would be funded at $35 million in fiscal year 2004 and 
grow to almost $54 million in 2009.
    This is intended to provide formula funding under the small 
urban program which reflects higher levels of service provided 
by transit agencies in separate communities with similar 
population and density. Under the current small urban formula 
program, funding is provided strictly on the basis of 
population and population density. Unlike the large urban 
formula program, which includes a service level factor, 
agencies in small urban areas that provide higher levels of 
service get the same amount as agencies which provide less 
service in small urban areas with similar population and 
density factors. Under this APTA proposal, agencies in similar 
size communities that run more buses, carry more passengers, or 
provide more frequent service would receive more Federal 
formula funding than those in comparable size communities that 
provide less service. The proposal is modeled on the 
recommendations from a Federal Transit Administration (FTA) 
study of transit formula funding mandated under Section 3033 of 
the Transportation Equity Act for the 21st Century (TEA-21).

Aging Bus Replacement Program
    APTA's proposal recommends the creation of a new Aging Bus 
Replacement program for urban areas of less than one million 
people and in rural areas. Under the program grants would be 
provided to replace vehicles--buses and vans--that exceed 150 
percent of the FTA recommended age for replacement. The 
proposed program would be funded at $100 million in fiscal year 
2004 and grow to almost $156 million in fiscal year 2009.
    This program would benefit rural areas and medium-size 
urban areas, as well as small urban areas. It is intended to 
focus on the need to replace overage vehicles--one of the most 
basic capital needs for public transportation service--in 
communities that have been unable to obtain sufficient funding 
for vehicle replacement under the Discretionary Bus and Bus 
Facilities Program or existing formula programs. It is meant to 
help modernize the fleet of public transportation vehicles in 
every community, reduce maintenance costs associated with 
operating overage vehicles, and attract riders with the newer 
vehicles.

Transitional Authorily for UZA's Going over 200,000 Population
    APTA's proposal would permit urbanized areas that grow from 
less than 200,000 people to more than 200,000 or which were 
added to urbanized areas of more than 200,000 people as a 
result of the 2000 Census, to annually use an amount of Federal 
transit formula funds equal to the amount they were allowed to 
use for operating purposes in fiscal year 2002 for operating 
purposes through fiscal year 2009.
    Current law permits transit providers in urbanized areas of 
less than 200,000 people to use Federal formula funds for 
either capital or operating purposes. Many transit agencies in 
this category use a significant portion of Federal funds for 
operating purposes. This change would provide transit agencies 
that transition from ``less than'' 200,000 population to ``more 
than'' 200,000 with the flexibility to use Federal formula 
funds for operating or capital purposes as needed.

Other Benefits
    In addition to the proposals cited above, APTA's 
recommendations would provide increased flexibility under drug 
and alcohol testing programs and charter bus regulations, both 
of which directly benefit transit operators in small urban 
areas. APTA's proposal also calls for improved coordination or 
combining of Federal reviews and audits to avoid duplication, 
and the establishment of Federal requirements that agencies 
administering TANF and the Job Access and Reverse Commute 
(JARC) programs coordinate with local transit agencies in the 
provision of transportation services. Finally, APTA's proposal 
would allow transit grant recipients to procure vehicles and 
other products from the GSA Schedule, which would help small 
transit agencies which have limited ability to negotiate, to 
save money in the purchase of vehicles and other capital items.

RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES FROM WILLIAM 
                             MILLAR

Q.1. Administrator Dorn testified last year before this 
Committee that, ``The guaranteed funding commitment, in terms 
of the Administration's point of view, has been one of the key 
successes of ISTEA and TEA-21. Most importantly, in our view, 
it has leveraged State and local investments in transit and in 
transportation generally.'' Do you agree with that statement? 
What do you believe would be the practical effect on your 
members if TEA-21's guarantees around the entire transit 
program were not continued in the next bill?

A.1. I agree very strongly with Administrator Dorn's statement 
that guaranteed funding for public transportation has been one 
of the key successes of TEA-21. In fact, maintaining the 
funding guarantees in the reauthorization of TEA-21 is one of 
APTA's three key recommendations for the reauthorization of 
TEA-21. As Administrator Dorn correctly points out, the funding 
guarantees created in TEA-21 enable transit systems to leverage 
Federal investments and lower project costs, develop public/
private partnerships, implement long-range plans, and operate 
in a business-like fashion. It is critical that the funding 
guarantees be retained in the reauthorization effort.
    I should note, however, that ISTEA did not include funding 
guarantees for public transportation. Between fiscal year 1992 
and fiscal year 1997 under ISTEA appropriated funding for the 
Federal transit program equalled only 77 percent of authorized 
funding and varied year to year. This level of transit funding 
under ISTEA and lack of predictable funding under ISTEA only 
confirms the importance of the TEA-21 guarantees. Furthermore, 
appropriated funding under ISTEA probably would have been less 
than 77 percent of authorized levels if not for the fact that 
the 1992 authorization was concluded after the fiscal year 1992 
appropriations bill was completed. The fiscal year 1992 
authorization level was therefore written to conform with the 
previously enacted appropriations level.
    We believe that the guaranteed funding provided by TEA-21 
has stretched scarce Federal dollars for public transportation 
further and produced additional benefits by accelerating 
construction and leveraging new sources of State and local 
matching funds. For example, Congress is now able to spread its 
commitments to New Start fixed guideway projects over a longer 
time frame than the construction period. The flexibility to 
borrow against Full Funding Grant Agreements has allowed the 
total number of projects participating in Section 5309 New 
Starts Program to increase in recent years. In that regard, we 
are pleased to have shared with the Committee and its staff a 
recent report that demonstrates just how important the 
guarantees are, ``The Benefits of TEA-21 Funding Guarantees'' 
by Jeffrey A. Parker.
    Higher levels of guaranteed Federal support under TEA-21 
are attracting even higher levels of stable, reliable 
nonfederal matching funds. During the 1990's Federal outlays 
for transit capital investment grew at an average of 5.0 
percent per year, while local expenditures climbed at an 
average annual rate of 11.7 percent.
    We believe that the practical effect on our transit members 
if guaranteed funding were not continued in the next bill is 
that the long-term viability of the transit program would be 
threatened. Our members and private financial institutions have 
come to rely on the stable and predictable funding provided 
under the guarantees. In the absence of the guarantees, the 
private financial markets would be unlikely to make longer-term 
commitments when faced with the uncertainty of the annual 
appropriation process. The ability to leverage funds and to 
make long-term commitments would be seriously impaired. It is 
for this reason that I strongly urge the Committee to keep 
guaranteed funding as part of the reauthorization of TEA-21 
legislation.

Q.2. The Administration has proposed to merge the Fixed 
Guideway Modernization Program into the Urbanized Area Formula 
Program, and to allow those funds to be used for any purpose 
eligible under the formula program, not just for fixed guideway 
modernization. Given your experience in the transit industry, I 
would like to understand, first, why the Fixed Guideway Program 
was created, and second, whether you believe that its original 
purpose has been fulfilled. In your view, would the 
Administration's proposal further the purpose for which this 
program was created?

A.2. The Fixed Guideway Modernization Program was originally 
created to help modernize aging fixed guideway systems that 
were built without Federal assistance prior to the 
establishment of a Federal transit program. Over the years, it 
has developed into a program to assist with modernization needs 
of fixed guideway systems, built with or without Federal 
assistance, that require upgrading and rehabilitation of aging 
infrastructure, as well as other technology improvements that 
permit the movement of an increasing number of passengers 
through existing systems. In addition to installing equipment 
that did not exist when these systems were built or previously 
modernized, the program helps address mandates and needs not 
envisioned when these systems were built, including state of 
the art security equipment and accommodations for people with 
disabilities.
    In short, modernization, whether it is based on new 
addressing new technology, safety, security, efficiency, and 
increased passenger capacity, or basic infrastructure 
upgrading, is a necessary and ongoing part of running these 
systems.
    APTA questions the Administration proposal to distribute 
Fixed Guideway Modernization Funds under the urban formula 
program and to permit the use of Fixed Guideway Modernization 
Funds for nonfixed guideway modernization purposes. As noted, 
the Fixed Guideway Modernization Program was designed to ensure 
the proper maintenance of the Nation's older rail transit and 
fixed guideway systems, and it helps ensure that as Federal New 
Start investment projects age they can be modernized. Rail 
systems in large metropolitan areas carry millions of 
passengers each year and their ridership has grown 
substantially in recent years. Many of these systems are 
approaching capacity constraints. These funds also help systems 
address this growth in ridership and ensure that passengers can 
use these systems safely and efficiently. The Administration 
proposal would allow these funds to go to an urbanized area and 
be used for any transit purposes, not just modernization. We 
are concerned that diverting these funds from Fixed Guideway 
Modernization, where needs far exceed available resources, 
would only exacerbate unmet modernization needs and potentially 
result in the deterioration of some of the Nation's most 
valuable capital assets. Again, the Fixed Guideway 
Modernization Program has been a critical component of the 
Federal transit program structure since 1982, and it is a great 
success.

   RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM JEFF 
                            MORALES

Q.1. I understand that AASHTO continues to support the funding 
guarantees in TEA-21. How would you reconcile the goals of 
providing predictability for transit agencies while not tying 
the hands of future Congresses to deal with current fiscal 
situations? Can you suggest any way in which the program could 
be made more predictable while still giving Congress a way to 
adjust program levels in the future should circumstances 
require it?

A.1. I believe that the tools for that adjustment already exist 
in the current appropriations process and through obligation 
authority limitations. California is supportive of extending 
RABA provisions to the Mass Transit Account provided that 
Congress can create a mechanism that can dampen the impact of 
financial downturns.

Q.2. What are AASHTO's views with respect to use of various 
Federal bonding proposals to finance the transit program? Do 
you support continued allocation of 2.86 cents to the Mass 
Transit Account as a base from which any program increases 
should be taken?

A.2. AASHTO supports maintainig the existing balanced approach 
to addressing highway and transit needs. It has adopted 
principles for reauthorization that recognize that the current 
funding structure under TEA-21, in which Highway Trust Fund 
revenues are split with 80 percent credited to the Highway 
Account and 20 percent credited to the Mass Transit Account is 
working well and should be retained. The Federal transit 
program needs a stable source of guaranteed funds from the Mass 
Transit Account of the Highway Trust Fund and the General Fund 
in order for decision makers to commit to expensive transit 
solutions. The current arrangement under TEA-21 provides a 
stable, more predictable environment for planning, programming, 
and constructing these key transit projects.

Q.3. As we have heard, 40 percent of rural counties have no 
public transportation at all and many with transit have very, 
very limited service. Do you support the Administration's 
proposal to increase rural funding? What has been the States 
experience managing this
program?

A.3. Certainly more funds are needed for rural transportation 
systems. Rural operators tend to keep vehicles in service 
significantly beyond Federal useful life standards because of 
fund needs. As you point out, there is a large proportion of 
rural America that does not have the benefit of transit 
service. However, over 80 percent of our population lives in 
urban areas and many urban transit systems face similar 
challenges. It is clear that the only way that we can address 
this diversity of needs is to make sure that there are 
sufficient resources available. The goal is not to increase the 
size of one program at the expense of others, which is a zero 
sum game, but to increase the amount of resources to 
accommodate all needs.
    A good example of California's experience with rural 
transit programs is Governor Gray Davis' program to provide 
shuttle services for farm laborers to work sites. Rural areas 
offer few job opportunities and in some counties, available 
jobs are concentrated in the seasonal agricultural sector where 
the demand for labor fluctuates monthly. In the Southern San 
Joaquin Valley, workers were being killed riding to work in 
unsafe vehicles. Governor Davis' rural transit program uses 
Federal funds to augment existing transit services and to add 
safe transit shuttles to move laborers to their work. This 
helps case labor costs for farmers and provides laborers with a 
safe, low-cost transportation option. It is one example of 
where a well designed rural transportation system can link 
labor to jobs.

Q.4. The Administration proposes requiring States to consult 
with intercity bus operators if they wish to certify that all 
intercity bus needs have been met, and that there is no need to 
spend the full 15 percent intercity bus set aside for that 
purpose. What has been your experience with the intercity bus 
program? Don't you agree that intercity bus operators should be 
consulted before a State certifies that it does not need to 
spend all of the funds?

A.4. California uses the full 15 percent set aside for its 
Intercity Bus Program. This program funds public transit 
projects that serve the intercity travel needs of Californians 
in nonurbanized areas. We invite public and private operators 
to propose projects and award funds on a competitive basis. Our 
criteria for selection includes consideration of the proposal's 
ability to meet State and
Federal program objectives, local support and operator 
commitment, and sustainability of the project. In California's 
case, needs outpace funding and the proposal process functions 
as a consultation mechanism.

Q.5. The Administration is proposing to use the current State 
warranty approach to labor protection for all of the State 
managed programs. What has been your experience with the State 
warranty in the 5311 Nonurbanized Program? Currently, the 5310 
Program is exempt from the labor protection provisions because 
subrecipients are private nonprofit organizations which do not 
normally provide transit service. The Administration is instead 
proposing a case-by-case waiver for nonprofit organizations. 
Would this approach be workable?

A.5. State warrantees for the 5311 program work well in 
California. However, we believe that the 5310 program could be 
greatly impacted by the implementation of a case-by-case waiver 
for nonprofit organizations. The 5310 program does contract 
with many private nonprofit agencies, whose operations are very 
reliant on a large volunteer workforce. Case-by-case waivers 
would pose additional administrative burdens that could become 
onerous for recipients and States and could dilute the 
effectiveness of the program.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED
                       FROM JEFF MORALES

Funding Guarantees
Q.1. Would California end certain transit projects, if Congress 
adopts the Administration proposal to guarantee only a portion 
of the Transit Bust Fund?

A.1. That decision would lie with their sponsors and the 
Metropolitan Planning Organizations that are responsible for 
cobbling funding together. There is no question that losing a 
funding guarantee would create uncertainty over the long-term 
financing of a project, and very likely lead to the termination 
of some. That presents a very untenable position for us for 
several reasons. First, because we are increasingly dependent 
on transit as part of our overall transportation system, and 
the inability to move forward would have mobility consequences 
throughout the State. Second, in most cases, transit projects 
are a strong component of achieving air quality conformity. If 
those projects were unable to proceed, conformity could be 
jeopardized, and other Federal transportation funding would be 
at risk.

Finance Committee Bonding Contract
Q.2. Some in the Senate have proposed using the transit share 
of the gas tax to increase highway spending and start a bonding 
program to meet the Nation's transit needs. If the shoe was on 
the other foot, do you think you would support a proposal to 
subject
all highway spending to an untested bonding scheme without
guarantees?

A.2. We do not support that shoe on either foot. One of the 
great advances in the last two reauthorizations was the push, 
not yet complete, to break down the barriers between modes of 
the transportation. The reality is that California, like other 
States, needs both transit and highways, and needs to be able 
to evaluate them without bias. We would oppose any measure that 
moves backward in that area, whether it is the bonding proposal 
you mention, or the Administration proposal to subject New 
Starts to a different cost-sharing formula than every other 
transportation program.

 RESPONSE TO A WRITTEN QUESTION OF SENATOR SARBANES FROM JEFF 
                            MORALES

Q.1. Administrator Dorn testified last year before this 
Committee that, ``The guaranteed funding commitment, in terms 
of the Administration's point of view, has been one of the key 
successes of ISTEA and TEA-21. Most importantly, in our view, 
it has leveraged State and local investments in transit and in 
transportation generally.'' Do you agree with that statement? 
What do you believe would be the practical effect on your 
members if TEA-21's guarantees around the entire transit 
program were not continued in the next bill?
A.1. Yes, I agree with Administrator Dorn's statement. The 
original intent of the very first surface transportation 
program Acts was to encourage States and local communities to 
step forward to leverage their dollars with Federal funds. It 
is an intent that has continued through to TEA-21, and it has 
been successful. In California, Governor Gray Davis made an 
unprecedented $6 billion commitment of State funds to transit 
and highway transportation projects in the first years of his 
administration. Almost all of those projects utilize the State 
funds as match to Federal and local dollars in a partnership 
framework. According to FHWA, nationally, the distribution
of highway user revenues is almost two-to-one local and State 
governments to Federal. Clearly, the intent of the program is 
being realized.
    The latest landmark in the highway and transit programs is 
the guaranteed funding provisions of TEA-21. This funding 
stability provision made possible long-term financial planning 
for both highways and transit and made increased leveraging of 
future program dollars much more feasible. Should these 
provisions be repealed, it would require more funding to be 
devoted to debt service because of greater perceived risk on 
the part of the financial community. This could lead to 
termination or delay for some projects, and
increase costs for others. The unintended consequence of such a 
delay in project delivery would be failure to meet air quality 
attainment and conformity targets (which may jeopardize 
regional transportation improvement programs) and increased 
congestion, which are counterproductive to the goals of the 
national transportation program.

  RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM ROBERT 
                            MOLOFSKY

Q.1. As with other members of the panel, your testimony opposes 
elimination of the Bus Discretionary Program. The 
Administration claims that providing these funds would make the 
program more predictable and would enhance local planning. You 
have said predictability is important in supporting the 
continuation of the funding guarantees, so why isn't it just as 
important in bus funding? What examples can you provide about 
the kinds of projects where discretionary funding makes more 
sense?

A.1. Mr. Chairman, thank you for your question. We indeed 
support the guaranteed funding provisions under TEA-21 because 
of the predictability and stability they have brought to the 
industry. But when we allude to the importance of 
predictability, we are referring to the firewalls that 
guarantee funding for the entire program. Within the program 
itself, however, the current breakdown between formula and 
capital programs has worked well, and there is no reason to 
change it.
    ATU supports retention of the Discretionary Bus Capital 
Program for a number of reasons. Most importantly, transit 
systems have periodic bus replacement and facility needs that 
simply cannot be met from the formula program alone. The role 
of the Discretionary Bus Program is to address those needs. We 
believe that eliminating this crucial program would only mean 
that too little funding would be spread too thinly to provide 
safe and efficient bus service throughout the United States, 
especially with the drastic cuts in overall guaranteed funding 
levels proposed in SAFETEA.
    Therefore, in answer to your question regarding the kinds 
of projects that would be best served by discretionary funding, 
we suggest that the TEA-21 structure has worked well. Under 
TEA-21 Capital Investment Programs, funds are restricted in 
their distribution to transit agencies or government entities 
that meet
specific criteria. Funds are distributed by allocation for New 
Start projects and Bus Capital projects, and by formula to 
qualifying areas for Fixed Guideway Modernization projects. 
Other programs, such as Planning, Research, and Job Access and 
Reverse Commute (JARC) are independent, and they do not come 
under either the Formula or Capital Investment category. Under 
this model, funded at increasing, guaranteed levels, the 
Federal transit program has increased transit ridership in the 
United States to the highest levels in more than 40 years.
    And finally, the earmarking of the Bus Program has been the 
main reason for the expansion of the Federal transit program 
from what was once an urban-only program. Through the 
earmarking process, lawmakers from both sides of the aisle in 
the House and Senate--from rural and small urban areas--have 
sought to introduce public transportation into their 
communities to complement the highway system. This process has 
served to generate a great deal of interest in the transit 
program, and as a result, the largest growing transit areas in 
the United States today are located in the southern and western 
parts of the Nation. Had the discretionary Bus Program not been 
in existence, many of those communities would have never been 
able to experience the benefits of public transportation 
because the formula program alone would not have been adequate 
to steer badly needed funds toward our Nation's rural and small 
urban areas. The bulk of the money would have instead gone 
toward funding general transit needs in the Nation's 
``traditional'' transit areas.
    In summary, TEA- 21's funding structure has worked quite 
well, and we see no reason to change the current system.

Q.2. The Administration proposes a modest new incentive tier in 
the urbanized and nonurbanized programs. You do not support 
this proposal. You indicate that part of your reason for 
opposing this change is that it comes with limited overall 
growth in the program, and thus would reduce basic predictable 
funding in the later years as the incentive takedown increases. 
Would you have supported the concept if the overall program 
grew enough that basic funding was growing?

A.2. ATU supports, and has always supported, efforts to 
increase public transportation ridership. Our locals have 
engaged in numerous initiatives nationwide throughout recent 
years that have focused on this crucial issue. However, it has 
been our experience that such efforts are best performed at the 
local level, where consideration of individual routes and 
travel patterns may be examined in greater detail.
    Therefore, we endorse the principles of the 
Administration's ridership incentive concept. The Federal 
Transit Administration (FTA) should be commended for attempting 
to address this important issue. However, we believe that there 
is little the Federal Government can actually accomplish toward 
this worthy goal in the manner proposed. Specifically, there is 
no direct connection between potential Federal incentive grants and 
public transportation patronage. Transit ridership is determined by 
a number of factors, including quality of service, convenience, 
availability, and especially, the economy. As we have seen in 
recent months, when unemployment is high, fewer people take the 
bus or the train to work. Furthermore, although the FTA has 
stated that urbanized areas that experience a ``significant'' 
decline in public transportation patronage would not be 
eligible for so-called performance awards, it is difficult to 
imagine how any transit system could achieve ridership
increases in a poor economy without cutting or significantly 
reducing service to our most vulnerable citizens.
    TEA-21 has proven that the best way for the Federal 
Government to accomplish its goals in the ridership area is to 
continue to provide record levels of funding to meet transit 
infrastructure needs. Indeed, as indicated by the chart below, 
the annual Federal investment in the transit program, beginning 
with ISTEA and continued by the budgetary firewalls under TEA-
21, has had a direct affect on public transportation ridership.

------------------------------------------------------------------------
                                    Transit Funding    Transit Ridership
                                     (fiscal year)      (Calendar Year)
                                      (Billions)          (Billions)
------------------------------------------------------------------------
1996............................  $4.1..............  7.9
1997............................  $4.4..............  8.4
1998............................  $4.8..............  8.8
1999............................  $5.4..............  9.2
2000............................  $5.8..............  9.4
2001............................  $6.3..............  9.5
------------------------------------------------------------------------

    Therefore, even if the whole program grows enough so that 
takedowns are rendered insignificant, we still believe the best 
way for the Federal Government to increase ridership is to 
provide increased funding under the existing capital and 
formula programs.
    Finally, as mentioned above, the most expedient way to 
increase transit ridership is to get people working again so 
that they have a job to travel to. We hope the Committee 
recognizes that the reauthorization of the highway/transit bill 
is an opportunity to create thousands of good paying jobs. 
Every penny that is deposited into the Highway Trust Fund 
generates approximately $1.5 billion, and creates nearly 50,000 
jobs.

Q.3. The Administration is proposing to adopt in law the 
current State warranty approach to labor protection for all of 
the State managed programs. What has been your experience with 
the State warranty in the 5311 nonurbanized program? Currently, 
the 5310 program is exempt from the labor protection provisions 
because subrecipients are private nonprofit organizations which 
do not normally provide transit service. The Administration is 
instead proposing a case-by-case waiver for private nonprofit 
organizations. This would appear to be an expansion of labor 
protection to a whole class of recipients and to a whole 
program which is now exempt in practice. Why is this 
appropriate? Further, the Administration would apply this to 
the New Freedom and National Parks Legacy Programs. Why is this 
appropriate when these are completely new programs, and new 
services?

A.3. First, with regard to the Section 5311 Program, nonurban 
projects must currently satisfy the employee protection 
requirements of 49 U.S.C. 5333 (b), formerly Section 13(c). 
However, under this section, grants are labor certified without 
a referral using the Department of Labor's (DOL) specially 
designed Warranty arrangement. Although the Secretary may also 
waive application of 13(c), this has never been done, and the 
Warranty has been routinely applied. The Administration 
proposes to allow 5311 grants to be subject to the requirements 
of 5307, but only ``to the extent the Secretary considers 
appropriate.'' Section 13(c) would apply, provided that the DOL 
utilizes the expedited warranty procedure, which as you have 
noted, is current practice. However, DOT could waive the 
applicability of the special warranty for private nonprofit 
subrecipients on a case-by-case basis.
    There is no justification for changing the grant 
requirement language of 5311. In answer to your question, under 
this program, the warranty has worked well, and there is no 
basis for the waiver. In fact, to reflect current practice, the 
current language allowing for the waiver should be deleted.
    The waiver first arose under the Elderly and Disabled 
(5310) Program and was based on an early 1970's Department of 
Transportation (DOT) decision that the waiver should apply to 
private nonprofits. The primary reason for the decision was 
that the program was very small in size, and the role of such 
private nonprofits was quite limited. Clearly, this 
justification no longer applies.
    Your second question asks about the Elderly and Disabled 
Program, but your statement actually misstates the present-day 
application of 13(c) to the 5310 program. Currently, under 
Section 5310, grants to State and local governmental 
authorities are covered by 13(c), but grants to private 
nonprofit corporations (passing through the State) are covered 
by 13(c) only to the extent the Secretary considers 
appropriate. As mentioned above, since 1974, DOT has deemed 
that 13(c) shall not apply to private nonprofit grant 
recipients under 5310. Such decision was based on the limited 
size of the program at the time (approximately $15 million) and 
the limited role of private nonprofits.
    The Administration proposes to apply Section 5310 grant 
requirements to all requirements of a grant under Section 5307, 
but only ``to the extent the Secretary considers appropriate.'' 
This amounts to a possible waiver of 13(c) for the whole 5310 
program--grants to State and local governments and grants to 
nonprofits. Therefore, while your question suggests that there 
would be an expansion of labor protection, the bill would 
actually remove 13(c) coverage because it would repeal current 
5310 subsection (a)(1), which subjects grants to State and 
local governments to all requirements of a grant or loan under 
Section 5309.
    The Section 5310 program is now funded at nearly $100 
million annually. Denying labor protection on the basis of the 
size of the program, therefore, is no longer appropriate. As 
with all 5311 grants, Section 13(c) should now apply to the 
entire 5310 program, whether such grants are allocated to 
States, local governmental authorities, or private nonprofits.
    Next, with regard to 13(c) coverage for the proposed New 
Freedom and National Parks Legacy Programs, as we stated in our 
testimony, every surface transportation reauthorization bill 
enacted since 1964 has been linked to a strong labor policy 
that provides employee protections for public transit workers. 
Today, as in the past, ATU's support for reauthorization will 
be contingent on the continuation of those policies and their 
application to any new programs or innovative finance mechanisms 
created through the new bill.
    There is a strong precedent for attaching labor protections 
to new Federal transit programs. For example, the highly 
successful JARC Program, established in 1998, was enacted on 
the condition that grants would be subject to all of the terms 
and conditions of a grant made under Section 5307. The value of 
this historic link between a strong transportation bill and 
sensible labor policy has been clearly recognized by the 
Administration, which has recommended the application of 13(c) 
to the new programs.
    A grant under the New Freedom Program would be subject to 
the requirements of 5307, but only ``to the extent the 
Secretary considers appropriate.'' Section 13(c) would apply, 
provided that the Secretary of Labor utilizes the special 
warranty. However, DOT would be authorized to waive the 
applicability of the warranty for private nonprofit 
subrecipients on a case-by-case basis as the Secretary deems 
appropriate.
    As we mention in our testimony, the warranty could work 
here if the New Freedom Program was folded into the JARC 
program. (As discussed below, JARC grants to applicants serving 
populations under 200,000 are labor certified without a 
referral using the DOL specially designed warranty 
arrangement). However, again, the waiver option should be 
removed. The Administration would authorize $145 million for 
this program in the first year alone, and $162 million annually 
by the end of the reauthorization. A waiver for a program of 
this size is certainly not appropriate.
    Finally, ATU supports the Administration's proposed 
National Parks Legacy Project. Labor protections are 
appropriate here for a number of reasons. First, the program 
would establish new service in only some instances; there are a 
number of parks that are already running bus service. Second, 
as with all other elements, if there is no impact on existing 
employees, the protections remain dormant. Third, this program 
would be open not only to federally owned or managed parks, but 
also refuges, and recreational areas, which are located in 
urban, suburban, and rural areas. Therefore, the waiver option 
should not be available under this program.

Q.4. Currently, many recipients in the Job Access and Reverse 
Commute program are either small rural transit operators or 
private nonprofit organizations. Yet each JARC grant is treated 
as if it were being made to an urbanized area transit agency. 
Thus a private nonprofit agency providing rural service is 
subject to three different processes for labor protection if 
they get rural, elderly, and disabled persons and JARC funds. 
Why shouldn't a rural transit operator be able to get a JARC 
grant and be covered by the current State warranty? And why 
shouldn't a private nonprofit organization that gets grants 
under the elderly and disabled persons program and thus is 
exempted not also be exempted under the JARC program?

A.4. Your first question asks: Why shouldn't a rural transit 
operator be able to get a JARC grant and be covered by the 
current State warranty? Actually, since the new guidelines were 
established in 1999, that is exactly how DOL has processed JARC 
grants. Under the regulations, grants to rural and small urban
operators serving populations under 200,000 are labor certified 
without a referral using the DOL specially designed warranty 
arrangement. The regular 13(c) process applies to JARC grants 
in areas with a population above 200,000.
    But despite the success of the new 13(c) regulations for 
the JARC Program, SAFETEA would substantially alter the 
application of 13(c) under this program by using the warranty 
and waiver option for all JARC grants (regardless of the size 
of the population served). The Administration proposes to allow 
the Secretary to waive the applicability of the special 
warranty for private non-profit subrecipients on a case-by-case basis 
as the Secretary deems appropriate.
    There is no support or justification for changing the grant 
procedures under this program. Since the 1999 regulations were 
released, and the separate procedures were set for applicants 
based on population, there have been no problems regarding this 
program. The new time limits are working perfectly, and no JARC 
grants have gone unfunded because of 13(c). The current 
coverage should be maintained without a new waiver option.
    Finally, you ask why shouldn't a private nonprofit 
organization that gets grants under the elderly and disabled 
persons program and thus is exempted not also be exempted under 
the JARC program? As we stated in answer to question #3, 
because 5310 has grown substantially since 1974 (when the 13(c) 
waiver was first instituted for nonprofits), labor protections 
should now apply to the entire 5310 program, whether such 
grants are allocated to States, local governmental authorities, 
or private nonprofits. Therefore, we would of course object to 
the possibility of JARC grants being
exempted in the same manner. And, we again note that JARC 
grants to applicants serving populations under 200,000--where 
the majority of nonprofit organizations operate--are labor 
certified without a referral through the warranty arrangement. 
History shows that this process has worked well, and there is 
no reason to change the system.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED

                      FROM ROBERT MOLOFSKY

Funding
Q.1. Mr. Molofsky, I appreciate your willingness to not only 
seek more money for transit but also propose a source for such 
funding, namely the gas tax. Do other nontransportation unions 
support this position?

A.1. Organized labor stands united in the effort to raise the 
Federal gas tax. ATU and the Transport Workers Union (TWU) are 
working closely with the American Federation of State, County, 
and Municipal Employees (AFSCME), the International Association 
of Bridge, Structural, Ornamental, and Reinforcing Ironworkers, 
the International Union of Operating Engineers, the Laborers' 
International Union of North America, and the United 
Brotherhood of Carpenters and Joiners of America to deliver the 
message that investing in America's transportation 
infrastructure through a nominal gas tax increase is the best 
way to stimulate the economy.
    Also, in an effort to secure additional resources, the AFL-
CIO's Transportation Trades Department (TTD), made up of 34 
unions, has endorsed using the interest earned in the Highway 
Trust Fund for trust fund purposes and transferring the 2.5 
cents of the tax on ethanol that currently flows into the 
General Fund to the Highway Trust Fund.
    ATU supports raising and indexing the Federal gas tax as 
recommended by leadership of the House Transportation and 
Infrastructure Committee. This proposal would provide the 
revenue stream necessary to double the annual Federal 
investment in highways--to $60 billion--and public 
transportation--to $14 billion--as called for in ATU's 
comprehensive plan, ``Next Stop, Real Choices,'' released last 
summer. ATU also supports bipartisan proposals to draw down 
reserves in the highway trust fund, and collect the interest on 
fund reserves.
    Each penny of the motor fuels excise taxes currently yields 
over $1.7 billion per year, generating more than 80,000 jobs in 
the transportation industry, with about $1.4 billion being 
deposited into the Highway Account of the Highway Trust Fund 
and $350 million deposited into the Mass Transit Account. A 
two-cent gas tax increase, for example, would cost the average 
driver a mere $12 per year, or six cents per day. The Federal 
motor fuels tax is currently 18.4 cents, and has not been 
raised since 1993.
    With unemployment at an 8-year high and nearly two million 
workers unemployed for more than 6 months, President Bush and 
the Congress should approve a plan that will create jobs in our 
communities and ensure that our future transportation needs are 
met. As a bipartisan group of 43 United States Senators 
recently stated in a letter to President Bush, ``A robust 
public transportation infrastructure is vital to continuing 
America's economic growth.''

Security
Q.2. In reviewing your testimony, I was struck by your comment 
that a recent survey of ATU members showed that 80 percent of 
respondents reported that they had not received any security 
training from their employer. As one who believes this is a 
vital issue that must be addressed in the reauthorization, I 
would be interested to learn if the ATU has any specific 
legislative proposals or funding levels to ensure that transit 
employees, who are our eyes and ears in keeping transit systems 
and riders secure, have the training they need?

A.2. Again, Senator Reed, thank you for your question and for 
your continuing efforts to address the pressing security 
concerns of the transit industry. The ATU firmly believes that 
in order to ensure that all frontline transit employees, 
including vehicle operators and maintenance employees, receive 
the necessary security training, there must be a specific 
legislative and regulatory requirement that all transit systems 
develop and implement, through a security committee composed of 
an equal number of employee representatives and management 
representatives, a comprehensive, system-specific, security 
training program that includes regularly scheduled reviews and 
update sessions and new employee training. Failure to meet the 
training requirement should result in the withholding of FTA 
funds in an amount determined by the Secretary.
    In addition to training, all transit systems should be 
required to adopt a safety and security plan as a condition of 
receiving FTA funding. Currently, only rail fixed guideway 
transit systems are required to have such a plan. There is no similar requirement for transit bus systems. In today's new reality, all 
transit systems, bus and rail, should adopt a security plan, again, 
to be overseen and implemented by a security committee, including 
both management and employee representatives. Minimum standards 
for such plans should be set by the FTA after thorough 
consultation with industry security experts, the Transportation 
Security Administration (TSA), the transit industry and transit 
labor organizations.
    As I mentioned in my testimony, a lack of funding is the 
number one obstacle for transit agencies attempting to address 
security needs right now. In order for these agencies to meet 
the minimum training and planning requirements discussed above, 
Congress must dedicate a source of funding for these purposes. 
At a minimum, $15 million a year should be authorized from the 
general fund to assist transit agencies in meeting these 
requirements.
    In order to address the immediate concern for training, the 
ATU is currently calling on the Department of Homeland Security 
(DHS) and TSA to dedicate funding for frontline transit 
employee security training. Further, in the House, we have 
endorsed and are seeking passage of H.R. 1148, The Public 
Transportation Systems Vulnerability and Reduction Act of 2003, 
introduced by Representatives Juanita Millender-McDonald (D-
37th/CA) and Mike Ferguson (R-7th/NJ). H.R. 1148 would authorize 
$8 million (of the necessary $15 million) solely for frontline transit employee security training. We are currently seeking a sponsor for a 
companion bill in the
Senate.

 RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES FROM ROBERT 
                            MOLOFSKY

Q.1. Administrator Dorn testified last year before this 
Committee that ``The guaranteed funding commitment, in terms of 
the Administration's point of view, has been one of the key 
successes of ISTEA and TEA-21. Most importantly, in our view, 
it has leveraged State and local investments in transit and in 
transportation generally.'' Do you agree with that statement? 
What do you believe would be the practical effect on your 
members if TEA-21's guarantees around the entire transit 
program were not continued in the next bill?

A.1. Senator Sarbanes, thank you for your question. We 
certainly agree with Administrator Dorn's statement on the 
importance of TEA-21's firewalls. Without question, the new 
programs, planning rules, and increased levels of funding for 
transit adopted under ISTEA and TEA-21 have changed the nature 
of America's transportation policies. However, the change in 
United States surface transportation law that has had the 
greatest impact on improving the quality and delivery of 
transit services has been the guaranteed funding levels for 
transit; between fiscal years 1998-2003, $36
billion was set aside for public transportation purposes by a
unique budgetary firewall erected between transit funds and 
other programs funded from the United States domestic 
discretionary budget.
    Under TEA-21's budget structure, funds taken from the 
transit program are not eligible for any other Federal 
discretionary program. This unique transit firewall, designed 
to ensure the funding of FTA programs at specific annual 
guaranteed levels, has worked exactly as designed; since 1998, 
the Congress and two separate Administrations have honored TEA-
21's firewalls by recommending funding of the Federal transit 
program at the guaranteed levels.
    As a result of this predictable, increased funding, transit 
agencies have been able to engage in long-term planning, 
enabling them to expand service through the more than 360,000 
highly skilled transit professionals who provide safe, top 
quality public transportation. The guaranteed funding levels 
have provided a unique sense of stability in the public 
transportation industry, which is reflected in the recent 
ridership surge.
    ATU supports maintaining the funding guarantees included in 
TEA-21, especially given the proven ability of systems to rely 
on the guaranteed funds and leverage future Federal funding via 
the use of grant anticipation financing. Such financing has 
generated a record number of bus and rail projects during the 6 
years of TEA-21, creating thousands of new jobs in the public 
transportation industry. As a result, ATU membership now stands 
at an all-time high of 180,000, up from approximately 155,000 
in the year preceding TEA-21.
    Therefore, given the Administration's past recognition of 
the importance of TEA-21's guaranteed funding provisions, we 
cannot understand why SAFETEA proposes to guarantee only a 
portion of the program, rather than the entire program, as 
carried out under TEA-21. In fact, for fiscal year 2004, the 
Administration is proposing a guaranteed level of only $5.9 
billion for the Federal tran-
sit program, which is a $1.3 billion cut from the current 
fiscal year. The guaranteed funding level in SAFETEA for fiscal 
year 2004 is 17.9 percent less than the guaranteed funding 
level in TEA-21 for fiscal year 2003. In fact, under SAFETEA, the 
Administration would not even reach the current level of spending 
by the end of the reauthorization period. Guaranteed public transit 
funding would be 8 percent less in fiscal year 2009 than it is 
in fiscal year 2003!
    For our members specifically, the discontinuation of the 
firewalls would mean the loss of jobs. In addition to 
leveraging significant investment from the States, the TEA-21 
firewalls have also been the driving force behind many of the 
transit ballot measures that have passed at the local level in 
recent years. ATU has participated in many of the campaigns for 
these local transit initiatives (attached), many of which 
passed only because of the promise of guaranteed Federal funds 
to match local dollars. In many of these local campaigns, a 
loss at the ballot box would have meant a significant reduction 
in fixed route services, loss of man hours, and layoffs.
    The Congress must ensure that the guaranteed Federal 
funding levels under TEA-21 are preserved and that the next 
surface transportation bill maintains these crucial firewalls 
so that we may continue to provide the highest quality, safest 
possible level of transit service.

Q.2. The ATU has proposed an incentive program to encourage 
States to make more resources available for transit. Why did 
you choose this model rather than a direct mandate? What are 
the potential benefits of this proposal? Are there any other 
examples in Federal law of incentive programs like this?

A.2. Thank you for the opportunity to discuss the ATU's 
proposed Flexibility Incentive Grant (FIG) Program, which is 
designed to provide incentives that would encourage States to 
establish new sources of revenue for transit projects and 
services and to reward States for creating more flexibility in 
the use of their existing transportation funds. Attached please 
find draft legislative language creating such a program.
    Despite record levels of Federal investment and the 
undeniable will of local jurisdictions to tax themselves for 
the purposes of increasing the level and quality of public 
transportation services, State funding for public 
transportation has been grossly inadequate in recent years. As 
a result of this and other factors, we are currently 
experiencing widespread fare increases, service cuts, and 
massive layoffs in the transit industry.
    The FIG Program is designed to encourage States to think 
twice before they cut transit funding by providing ``bonus'' 
Federal transportation dollars to those States that increase 
public transportation funding or take steps to increase 
funding. Significantly, States could use funds derived under 
the FIG Program for any highway or transit projects eligible 
for assistance under Title 23 or Chapter 53 of Title 49. 
Moreover, the program would be funded out of General Funds and 
therefore would not put further pressure on the Federal Highway 
Trust Fund.
    Under the proposed FIG Program, the Secretary of 
Transportation would be authorized to allocate $5 million 
annually to each State that increases transit expenditures by 
at least 10 percent as compared to the previous fiscal year. If 
a State is already expending more than $1 billion on public 
transportation, the Secretary would be authorized to allocate 
$10 million to such State if it increases transit expenditures 
by at least 1 percent.
    In addition, States would be eligible for grants on the 
condition that they create new dedicated sources of revenue for 
public transportation. Such sources may include the dedication 
of new State motor fuels taxes, sales taxes, interest on 
existing highway funds, motor vehicle excise taxes, tolls, 
loans to be made out of highway funds, or other sources of 
funding.
    Finally, in order to encourage flexibility in the spirit of 
ISTEA, as continued under TEA-21, the FIG Program would 
authorize the Secretary of Transportation to reward States for 
amending their existing statutes or constitutions to allow 
funds that are currently restricted for highway purposes only 
to be eligible for transit projects and services as well as 
highway purposes.
    We chose the framework of a bonus program rather than a 
direct mandate because the intent of the FIG Program is not to 
penalize States for failing to invest in transit; it is to 
encourage them to use their existing transportation resources 
in a more efficient manner. In today's fiscal climate, State 
legislatures, facing huge deficits, in many cases have little 
choice but to freeze or cut funding for many important 
programs, including transit services. Penalizing States for 
such actions would be not only unfair, but it would also put 
further stress on State budgets and transportation systems. 
Therefore, the FIG Program is modeled as a ``bonus'' program to 
be awarded in addition to any funds States receive through 
Title 23 or Chapter 53 of Title 49, and it would not affect 
existing formulas under which States receive Federal 
transportation funds.
    This proposal has many potential benefits. It seeks to 
unlock billions of dollars in State resources, each year, for 
public transportation, community and rural transportation, and 
ADA services. While some States are heavily investing in public 
transportation, others are struggling to meet their 
transportation needs simply because their archaic laws prevent 
them from using gas tax receipts for any purpose other than 
highway use. Due to State constitutional or statutory 
provisions, in 34 States, all highway user tax distribution 
funds must be used solely for highway purposes. The Federal 
Government realized that such a policy was no longer efficient 
in 1982 when it carved out a small portion of the Federal 
Highway Trust Fund for transit. If the States did the same with 
their own transportation dollars, when combined with Federal 
dollars, perhaps the United States could finally approach the 
more than $40 billion annual level that is needed for our 
Nation's transit systems.
    Of course, the proposal is aimed at much more than changing 
State constitutions. Essentially, it seeks to encourage State 
legislation similar to Arkansas Senate Bill 581, now Act 949 of 
2001, which created a permanent, dedicated source of revenue 
for transit through the establishment of a rental car tax. The 
State's new Public Transit Trust Fund is used to provide 
expanded public and community transportation throughout 
Arkansas. Similarly, Maryland in 2001 approved a $500 million 
transit initiative that has increased public transportation 
services in every corner of the State, from St. Mary's County 
to Baltimore. The FIG Program would reward States such as 
Arkansas and Maryland for dedicating a significant portion of 
their revenue toward public transportation, and it would 
encourage other States to take similar action.
    Finally, with regard to examples of similar incentive 
programs under Federal law, there are currently two incentive 
programs in the transportation sector which served as the model 
for the proposed FIG Program. Both programs attempt to 
encourage certain behavior on the part of the States in 
connection with transportation policies. First, there is the 
TEA-21 created program that provides ``Safety incentive grants 
for use of seat belts'' (23 U.S.C. 157, TEA-21 Section 1403). 
This program requires the Secretary to determine which States 
had, for each of the previous calendar years and the year 
preceding the previous calendar year, a State seat belt use 
rate greater than the national average seat belt use rate for 
that year. The program authorizes DOT to make grants to those 
States that have reached a certain level of seat belt usage and 
States that have implemented innovative projects to promote 
increased seat belt use rates. Similarly, 23 U.S.C. 163 (TEA-21 
Section 1404) authorizes ``Safety incentives to prevent 
operation of motor vehicles by intoxicated persons.'' Under 
this Section, the Secretary is authorized to make a grant to 
any State that has enacted and is enforcing a law that provides 
that any person with a blood alcohol concentration of 0.08 
percent or greater while operating a motor vehicle shall be 
deemed to be driving while intoxicated.



