[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
   STATUS OF THE HIGHWAY TRUST FUND: HOW THE FISCAL YEAR 2007 BUDGET 
                           IMPACTS SAFETEA LU

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

                                (109-46)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                    HIGHWAYS, TRANSIT AND PIPELINES

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 15, 2006

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure




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30-252 PDF                  WASHINGTON : 2006
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                      DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-    JAMES L. OBERSTAR, Minnesota
Chair                                NICK J. RAHALL, II, West Virginia
SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
WAYNE T. GILCHREST, Maryland         Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
PETER HOEKSTRA, Michigan             CORRINE BROWN, Florida
VERNON J. EHLERS, Michigan           BOB FILNER, California
SPENCER BACHUS, Alabama              EDDIE BERNICE JOHNSON, Texas
STEVEN C. LaTOURETTE, Ohio           GENE TAYLOR, Mississippi
SUE W. KELLY, New York               JUANITA MILLENDER-McDONALD, 
RICHARD H. BAKER, Louisiana          California
ROBERT W. NEY, Ohio                  ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        EARL BLUMENAUER, Oregon
JERRY MORAN, Kansas                  ELLEN O. TAUSCHER, California
GARY G. MILLER, California           BILL PASCRELL, Jr., New Jersey
ROBIN HAYES, North Carolina          LEONARD L. BOSWELL, Iowa
ROB SIMMONS, Connecticut             TIM HOLDEN, Pennsylvania
HENRY E. BROWN, Jr., South Carolina  BRIAN BAIRD, Washington
TIMOTHY V. JOHNSON, Illinois         SHELLEY BERKLEY, Nevada
TODD RUSSELL PLATTS, Pennsylvania    JIM MATHESON, Utah
SAM GRAVES, Missouri                 MICHAEL M. HONDA, California
MARK R. KENNEDY, Minnesota           RICK LARSEN, Washington
BILL SHUSTER, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
JOHN BOOZMAN, Arkansas               ANTHONY D. WEINER, New York
JIM GERLACH, Pennsylvania            JULIA CARSON, Indiana
MARIO DIAZ-BALART, Florida           TIMOTHY H. BISHOP, New York
JON C. PORTER, Nevada                MICHAEL H. MICHAUD, Maine
TOM OSBORNE, Nebraska                LINCOLN DAVIS, Tennessee
KENNY MARCHANT, Texas                BEN CHANDLER, Kentucky
MICHAEL E. SODREL, Indiana           BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania        RUSS CARNAHAN, Missouri
TED POE, Texas                       ALLYSON Y. SCHWARTZ, Pennsylvania
DAVID G. REICHERT, Washington        JOHN T. SALAZAR, Colorado
CONNIE MACK, Florida                 JOHN BARROW, Georgia
JOHN R. `RANDY' KUHL, Jr., New York
LUIS G. FORTUNO, Puerto Rico
LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, Jr., Louisiana
JEAN SCHMIDT, Ohio

                                  (ii)



            SUBCOMMITTEE ON HIGHWAYS, TRANSIT AND PIPELINES

                  THOMAS E. PETRI, Wisconsin, Chairman

SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         NICK J. RAHALL II, West Virginia
JOHN J. DUNCAN, Jr., Tennessee       JERROLD NADLER, New York
JOHN L. MICA, Florida                GENE TAYLOR, Mississippi
PETER HOEKSTRA, Michigan             JUANITA MILLENDER-McDONALD, 
SPENCER BACHUS, Alabama              California
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
SUE W. KELLY, New York               EARL BLUMENAUER, Oregon
RICHARD H. BAKER, Louisiana          ELLEN O. TAUSCHER, California
ROBERT W. NEY, Ohio                  BILL PASCRELL, JR., New Jersey
FRANK A. LoBIONDO, New Jersey        TIM HOLDEN, Pennsylvania
JERRY MORAN, Kansas                  BRIAN BAIRD, Washington
GARY G. MILLER, California, Vice-    SHELLEY BERKLEY, Nevada
Chair                                JIM MATHESON, Utah
ROBIN HAYES, North Carolina          MICHAEL M. HONDA, California
ROB SIMMONS, Connecticut             RICK LARSEN, Washington
HENRY E. BROWN, Jr., South Carolina  MICHAEL E. CAPUANO, Massachusetts
TIMOTHY V. JOHNSON, Illinois         ANTHONY D. WEINER, New York
TODD RUSSELL PLATTS, Pennsylvania    JULIA CARSON, Indiana
SAM GRAVES, Missouri                 TIMOTHY H. BISHOP, New York
MARK R. KENNEDY, Minnesota           MICHAEL H. MICHAUD, Maine
BILL SHUSTER, Pennsylvania           LINCOLN DAVIS, Tennessee
JOHN BOOZMAN, Arkansas               BEN CHANDLER, Kentucky
MARIO DIAZ-BALART, Florida           BRIAN HIGGINS, New York
JON C. PORTER, Nevada                RUSS CARNAHAN, Missouri
TOM OSBORNE, Nebraska                ALLYSON Y. SCHWARTZ, Pennsylvania
KENNY MARCHANT, Texas                JAMES L. OBERSTAR, Minnesota
MICHAEL E. SODREL, Indiana             (Ex Officio)
DAVID G. REICHERT, Washington
JEAN SCHMIDT, Ohio
DON YOUNG, Alaska
  (Ex Officio)

                                 (iii)

                                CONTENTS

                               TESTIMONY

                                                                   Page
 Scheinberg, Phyllis F., Assistant Secretary for Budget and 
  Programs and Chief Financial Officer, U.S. Department of 
  Transportation, accompanied by J. Richard Capka, Acting 
  Administrator, Federal Highway Administration..................     5

         PREPARED STATEMENTS SUBMITTED BY A MEMBER OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    31

              PREPARED STATEMENTS SUBMITTED BY THE WITNESS

 Scheinberg, Phyllis F...........................................    32

                       SUBMISSIONS FOR THE RECORD

Scheinberg, Phyllis F., Assistant Secretary for Budget and 
  Programs:

  Response to a question from Rep. Sodrel........................    22
  Response to a question from Rep Baird..........................    28


   STATUS OF THE HIGHWAY TRUST FUND: HOW THE FISCAL YEAR 2007 BUDGET 
                           IMPACTS SAFETEA-LU

                              ----------                              


                      Wednesday, February 15, 2006

        House of Representatives, Committee on 
            Transportation and Infrastructure, Subcommittee 
            on Highways, Transit and Pipelines, Washington, 
            D.C.
    The committee met, pursuant to call, at 2:00 p.m. in room 
2167, Rayburn House Office Building, Hon. Thomas E. Petri 
[chairman of the committee] presiding.
    Mr. Petri. Good afternoon. The Subcommittee hearing will 
come to order. I would like to welcome our witness to today's 
hearing on the status of the Highway Trust Fund: How the Budget 
Year 2007 Proposals Impact SAFETEA- LU.
    The original purpose of the hearing was to provide members 
of the Subcommittee and others with information on the Highway 
Trust Fund revenue estimates released last week in the 
President's 2007 budget and to hear testimony about how the 
President's budget will affect the implementation of SAFETEA-
LU.
    However, our invited witness for the Department of 
Treasury, Mr. Carroll, is unable to attend today's hearing. He 
is overwhelmed with testimony before two other committees on 
another subject and will have to be scheduled for a later date. 
We had invited him to talk about the drastic differences in the 
revenue estimates between 2005 and today.
    The House and Senate conferees use the revenue estimates in 
the President's 2006 mid-session review, which were released 
last July, as the baseline from developing the final SAFETEA-LU 
conference report. However, when the President's budget was 
released on February 6th, it contained a nearly $1.5 billion 
shift in the revenue estimates for budget year 2005 and a half 
million shift in estimates for 2006.
    These drastic changes over just seven months bring into 
question the reliability of the estimating process of the 
Department of the Treasury. It is unfortunate Mr. Carroll is 
unable to be with us today, but as I indicated, we still intend 
to have him testify to explain the factors that influence the 
fluctuations and the revenue estimates between the mid-session 
review and the President's budget.
    We are fortunate, as it turns out, doubly fortunate, to 
have Ms. Phyllis Scheinberg, DOT's Assistant Secretary for 
Budget and Programs, with us today. Ms. Scheinberg was kind 
enough to come up and to brief Mr. DeFazio and myself and staff 
on the Subcommittee this past fall on the status of the Highway 
Trust Fund and how possible changes in the Trust Fund may 
impact SAFETEA-LU. That meeting served as the basis for a 
series of conversations that have led to this hearing.
    The President's budget shows a negative balance, a negative 
balance of $2.3 billion in the highway account of the highway 
trust fund at the end of budget year 2009. The Department of 
Transportation has said in the past they will not allow the 
highway account to run a negative balance.
    When Congress passed SAFETEA-LU last summer, it was done 
with the expectation that the guaranteed funding levels 
prescribed in that bill would be honored for budget year 2005 
through budget year 2009. We have invited Ms. Scheinberg here 
today to address how the Department anticipates dealing with 
this projected negative balance; specifically whether or not 
they will cut spending authorized in SAFETEA-LU, and if so, how 
such cuts will be applied and when they might occur.
    We have also asked Ms. Scheinberg to talk about the 
instances where the President's budget differs from SAFETEA-LU. 
We are very pleased that the budget closely mirrors the 
authorizing statute we passed last July. However, we would like 
to hear why the Administration has decided to deviate from 
SAFETEA-LU in the following areas.
    First, funding an unauthorized Open Roads financing pilot 
program at the expense of State highway formula programs. 
Second, funding National Highway Traffic Safety 
Administration's vehicle safety activities, which are 
traditionally funded from the general fund, from the Highway 
Trust Fund in a time when the Highway Trust Fund may not be 
able to support its traditional activities. Thirdly, providing 
$100 million less than the authorized funding level for the 
Federal Transit Administration's Small Starts program.
    We look forward to hearing your testimony on these issues 
and I suspect members may have several questions.
    I now yield to Mr. DeFazio for his opening statement.
    Mr. DeFazio. Thank you, Mr. Chairman. It is unfortunate 
that someone from Treasury can't be here to address how there 
could have been such an extraordinary change in revenue 
estimates over such a short period of time. And I would hope 
that we can perhaps schedule a future meeting where we do have 
someone from Treasury. I understand that the DOT folks can talk 
about how they might implement changes in the program if such 
projections come true, but they can't shed any light on how 
those projections were reached. I understand that fact.
    I am also concerned that the Administration, and I will be 
asking about this, has proposed to fund the entire National 
Highway Transportation Safety Administration budget out of the 
Highway Trust Fund, when traditionally some of those functions 
have been paid for out of general revenues, particularly if we 
are looking at this problem of a few years down the road in the 
Trust Fund. It seems that we wouldn't want to be adding new 
burdens at a time when we are looking at a potential, possible, 
predicted shortfall.
    So with that, Mr. Chairman, I look forward to the 
testimony.
    Mr. Petri. Thank you. Any other members with any opening 
statements? Mr. Duncan.
    Mr. Duncan. All I want to say, I will be very brief, Mr. 
Chairman, but I think it is certainly good that you are looking 
into this. We need to find out not only about this negative 
$2.3 billion figure that you mentioned, but we need to, I think 
we should find out why this has occurred or come up so soon 
after the passage of the Highway Bill and find out, is it 
expected to continue and at how fast a rate, and is it going to 
get even bigger or is this some sort of aberration or what.
    So I am glad that you are doing this. I thank you very much 
for calling this hearing and allowing us to participate.
    Mr. Petri. Any other opening statements? Mr. Pascrell.
    Mr. Pascrell. Chairman Petri and Ranking Member DeFazio, I 
want to thank you for holding this Highway Trust Fund hearing.
    When we passed SAFETEA-LU last summer, it was done with the 
expectation that the guaranteed funding levels prescribed in 
the bill would be honored from 2005 to 2009 fiscal year. This 
budget does not live up to this expectation. The budget does 
show a negative balance, as the Chairman pointed out, of $2.3 
billion in the highway account.
    Aside from the fact that the Highway Trust Fund will be in 
deficit, this is disturbing for other reasons. How did the 
Administration come to this conclusion? I would like to know 
how they arrived at it. They must have seen something 
conveniently after the fact and maybe you know and we will get 
to the questions hopefully in a little while.
    The Department of Transportation has said they will not 
allow the highway account of the Highway Trust Fund to run a 
negative balance. I am anxious to know how they anticipate 
dealing with this projected negative balance while living up to 
their statutory obligations. Seemingly in contrast with the 
recent deficit projections, the Administration's budget also 
includes new, higher revenue estimates for the highway account 
of the same trust fund.
    And I find it puzzling, and I hope most of us here find it 
puzzling, that the Fund will receive more funding but end up 
with less. I know weird things happen in this town, but I am 
anxious to see how that happened.
    Finally, I am extremely disappointed that at a time when 
funds are scarce, and our Nation's highways are crumbling and 
congested beyond a projected level of capacity, the President's 
budget takes money from the State highway formula of dollars 
and other highway programs. Highway transportation is a vital 
part of our Nation's economy. To underfund at this critical 
juncture in contrast to Congressional intent, and here is the 
problem.
    There are committed capital projects in the budget, Mr. 
Chairman. They are committed. And you know in other parts of 
the transportation budget, what we have problems with right 
now, that many of those capital projects, many of them water 
projects, many of them having to do with damming, many of them 
having to do with water quality, those projects stop if the 
money is not there to continue those projects. Yet the people 
in those areas expect those projects to be committed. In fact, 
certain parts, agencies within the Department of Transportation 
have committed to the public in different parts of the Country 
that these projects would be completed.
    I know my district is just one. It only has to do with a 
dam which could flood out hundreds of thousands of people. That 
is pretty important, regardless of where you live, just as it 
is important to everybody here. None of us are from 
Mississippi, we are concerned about what is going on in the 
Gulf. That is not our district. But that would be very selfish 
of us to say we have no responsibility.
    So I would like to hear some answers, and I have thrown out 
some questions. Does this have anything to do, also, with 
transfer of dollars? And second of all, does this have anything 
to do with the negotiations that occurred at the very end, when 
we were looking for a bottom line in SAFETEA- LU? Remember what 
went back and forth between the Senate and the House and the 
Whit House? And the beat goes on.
    So I would like to hear your answers to that question. 
Thank you.
    Mr. Petri. Thank you. Mr. Coble.
    Mr. Coble. Mr. Chairman, my colleagues have thanked you for 
conducting this hearing, and I did not want my silence to 
convey to you that I did not thank you for doing it. So I want 
to be heard on that.
    I want to just say this, Mr. Chairman. I appreciate what 
the gentlemen from New Jersey and Tennessee said. I know of no 
issue that is more compelling to us than highway 
infrastructure. It deteriorates daily, bridges, unsafe bridges. 
And I think it is a direct link to safety.
    So I think this is an important hearing, Mr. Chairman, I 
thank you for having it. I am going to have to depart for 
another hearing fairly imminently, but again, thank you, sir.
    Mr. Petri. You are welcome. Mr. Mica.
    Mr. Mica. Thank you. I will be very brief. I thank you for 
conducting this hearing, which we must do to review some of 
these budget proposals. It appears the Administration is in 
pretty good compliance as far as authorization under SAFETEA-
LU. There are a couple of questions that will be raised there.
    I think what is most startling about the information that 
has been provided for the Subcommittee is the projections, 
looking out beyond this budget year. They foretell some very 
serious problems in funding our Nation's highway and 
transportation infrastructure, the negative cash balances in 
the highway account, in particular, should alarm everyone. It 
does point out that we have the challenge of finding a better 
mechanism, both to finance the system and then also to maintain 
the integrity and stability of available funds.
    And then as Mr. Coble said, we have tremendous needs in 
every district, every State across the Nation for highway 
infrastructure. So this hearing does highlight some of the 
challenges we face. I yield back.
    Mr. Petri. Thank you.
    Are there any other opening statements? If not, Ms. 
Scheinberg.

  TESTIMONY OF PHYLLIS F. SCHEINBERG, ASSISTANT SECRETARY FOR 
BUDGET AND PROGRAMS AND CHIEF FINANCIAL OFFICER, UNITED STATES 
DEPARTMENT OF TRANSPORTATION, ACCOMPANIED BY J. RICHARD CAPKA, 
      ACTING ADMINISTRATOR, FEDERAL HIGHWAY ADMINISTRATION

    Ms. Scheinberg. Good morning, Mr. Chairman. I want to thank 
you for the opportunity to appear before you today to discuss 
the President's fiscal year 2007 budget plan for the Department 
of Transportation's surface transportation programs. I am happy 
to have with me today my colleague, Rick Capka, the Acting 
Administrator of the Federal Highway Administration.
    Last summer, the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users, also known as 
SAFETEA-LU, authorized funding for the Federal Highway 
Administration, the Federal Transit Administration, the 
National Highway Traffic Safety Administration and the Federal 
Motor Carrier Safety Administration through fiscal year 2009. I 
am very pleased to report to you today that the President's 
fiscal year 2007 budget generally proposes surface 
transportation funding as envisioned in SAFETEA-LU.
    The President's request for highways, transit and highway 
safety is $50 billion. That is $3.9 billion more than enacted 
in fiscal year 2006. The President's request includes $842 
million associated with a revenue aligned budget authority, or 
RABA, adjustment. This RABA calculation, as provided in 
SAFETEA-LU, adjusts highway funding up or down depending on gas 
tax receipts and ensures that revenues collected into the 
Highway Trust Fund are directed to fund surface transportation 
program needs.
    The President's 2007 request, including the RABA 
adjustment, will provide historically high levels of investment 
in our highway, transit and highway safety programs. The 
Administration's 2007 proposed funding levels for these 
transportation programs are especially significant, given the 
overall context of the President's budget.
    At a time when most non-security related domestic programs 
are experiencing reductions in their funding levels, and when 
the Department of Transportation's total budget level is 
holding steady, the President's 2007 budget request would 
increase highway, transit and highway safety funding by nearly 
10 percent above last year's levels. Actually it is this year's 
levels. This shows the high priority the Administration has 
placed on continuing to fully fund SAFETEA-LU programs among 
many competing national priorities.
    At the same time, the President's 2007 budget projections 
reflect a continuing downward trend in the cash balances in the 
Highway Trust Fund. I call your attention to the fact sheet 
that is attached to my statement, which will be helpful in 
reviewing the current status of the Highway Trust Fund. The 
Trust Fund has two parts: a highway account, which funds 
Federal highways, NHTSA, and motor carrier programs; and a 
separate mass transit account that funds Federal transit 
programs. By the end of the authorization period in 2009, the 
Trust Fund balances are estimated to be a negative $2.3 billion 
in the highway account and a positive $6.9 billion in the mass 
transit account.
    A review of the history of the Highway Trust Fund shows 
that projections of the cash balances in this fund typically 
vary from year to year, and become less reliable as you look 
further into the future. The Department of Treasury model used 
to calculate the Highway Trust Fund resources is dependent on 
macroeconomic projections that are subject to a large number of 
variables.
    In addition, expenditures from the Highway Trust Fund are 
estimates and based largely on approximations of each State's 
obligations for highway projects and programs. Thus, factors 
affecting the cash balances can be difficult to predict.
    One way to identify new ways of expanding highway 
investment levels is through the proposed $100 million Open 
Roads Financing pilot program. This new program would make it 
possible for up to five States to explore innovative mechanisms 
that can augment existing sources of State highway funding, as 
well as improve highway performance and reduce congestion. The 
pilot States will report their progress and provide lessons 
learned that would be helpful as we explore new ways to support 
surface transportation in the future.
    In addition, SAFETEA-LU establishes two commissions charged 
with reviewing and making recommendations on issues affecting 
the Highway Trust Fund. These two commissions will provide 
information on potential alternatives to the current gasoline 
tax approach that may prove more effective in supporting 
highway and transit funding.
    In summation, the President's budget for 2007 proposes 
surface transportation funding generally consistent with 
SAFETEA-LU guaranteed levels. At the same time, the 
Administration's revenue and spending projections for future 
years indicate a shortfall in resources. We want to work 
closely with the Congress to find solutions for this projected 
imbalance. We must begin serious consideration of the post-
SAFETEA-LU era to ensure that these programs are fully financed 
to meet our Nation's transportation needs.
    Thank you for the opportunity to appear before you. Rick 
and I would be happy to answer any questions you may have.
    Mr. Petri. Thank you. I wonder if you could spend a little 
time exploring with us the practical impacts of the projected 
$2.3 billion shortfall. In particular, how would you propose to 
handle that? Do you have history to look back to or is this new 
territory? Would you be doing an across the board cut or 
cutting back on certain programs? How would you, when would you 
have to start making adjustments in order to preserve as much 
integrity of the program as possible, given the time lags and 
all that?
    Ms. Scheinberg. Mr. Chairman, we are optimistic that we 
will not have to get to the point where we will have to make 
cuts in the program. We are optimistic that the receipts coming 
into the Highway Trust Fund will cover the funding levels 
through SAFETEA-LU. This $2.3 billion shortfall in 2009 is 
relatively small and it is at the end of the authorization 
period, by which time we expect that the receipts will increase 
and be able to cover the authorization levels.
    If it were to come to pass that we would have to deal with 
this, we would come to you and to the Congress and discuss this 
issue. We are optimistic at this point that we will not have to 
do that, but if there were some problem, we would definitely 
talk to you before we would make any plans.
    Mr. Petri. I also wonder if you could comment a little bit 
more on the President's program you referred to in your 
testimony about the Open Roads Financing pilot program that 
will be available for up to five States. How does that differ 
from what is already authorized in SAFETEA-LU in this area?
    Ms. Scheinberg. I believe you are referring to our Open 
Roads Pilot test program.
    Mr. Petri. Yes.
    Ms. Scheinberg. With this pilot, we are looking for new 
mechanisms of expanding the revenues that we do have, and 
expanding the way we fund surface transportation programs. This 
pilot is more closely aligned to value pricing programs than it 
is to a capital program. We are looking for innovative ideas 
from States, from metropolitan areas, and from corridors who 
might have some broader way of using alternative financing to 
expand the use of their State monies. We are looking for 
creative uses of transportation funding, so that we can apply 
the lessons learned from these pilots to remove the barriers to 
doing different things in the next reauthorization.
    We are looking for ways to finance the highway and surface 
transportation programs differently in the next reauthorization 
period. I truly believe that what we all need to focus on is 
how to deal with the next reauthorization. We believe that 
there is enough financing in the Highway Trust Fund to cover 
SAFETEA-LU. But there will not be enough financing after 
SAFETEA-LU. And that is where we need to focus.
    Mr. Petri. So there are a number of different innovations 
that are going on around the world, in Singapore, in Britain, I 
think a lot of us are familiar with what is happening in 
downtown London, where you have to pay to drive downtown. I 
think Manhattan is thinking of doing the same thing, and in 
Holland and in Germany. Are those the kinds of things that you 
are asking that States look at? Or are you asking that they do 
something that has not been done anywhere before?
    Ms. Scheinberg. Something like that might be some of the 
ideas. We are trying to do it in this Country in a way that 
makes sense for us. We are looking for ideas at the State 
level--and various States and metropolitan areas have ideas. We 
have been talking to them and we want to make it. We want to 
give them an opportunity to demonstrate their ideas of how to 
relieve congestion and expand financing in their areas.
    Mr. Petri. Thank you.
    Mr. DeFazio.
    Mr. DeFazio. Thanks, Mr. Chairman. I guess since again 
Treasury is not here, we can't talk about the projections. But 
you are saying you feel funding will be adequate, which must 
mean that you feel that perhaps these projections are going to 
be disproved by experience in the interim?
    Ms. Scheinberg. We have found through experience that the 
further you go out into the future, the less reliable the 
Treasury projections are. Evidence of the fact that they are 
less reliable is the fact that we have a positive Revenue 
Aligned Budget Authority (RABA) calculation for this year. That 
tells us that the estimates we had a year ago have been 
exceeded by the actual receipts coming into the Highway Trust 
Fund.
    Mr. DeFazio. Does RABA make--I'm sorry, go ahead. Finish 
your answer.
    Ms. Scheinberg. I just wanted to say, that just shows the 
uncertainty of these projections. You could go out even 
further, say three years into the future and have sufficient 
funds. We think that given the positive RABA the estimates are 
going in the right direction. The actuals are going up as 
compared to the projections. By three years, we will have 
enough to get through the authorization period.
    The other issue is that Congressional Budget Office's (CBO) 
estimates for the Highway Trust Fund are even higher than the 
Administration's estimates. Traditionally, CBO and the 
Administration have had some differences in their estimates. 
CBO is more optimistic that we will have enough money. Their 
estimates show that we will make it through the authorization 
period without a problem.
    Mr. DeFazio. With RABA adjustments in the interim?
    Ms. Scheinberg. Yes. We would do RABA year by year.
    Mr. DeFazio. Right. But they are projecting that out into 
the future, too.
    Given this projection for 2009, let's say a year from today 
they are still projecting that kind of a shortage. At what 
point would DOT feel that it needed to come to the Congress and 
begin to seriously discuss outlay adjustments in the future, I 
mean, if it was projected for next year, two years from now?
    Ms. Scheinberg. Well, if a year from now, we are having 
this same meeting, we will be discussing the 2008 budget. We 
would definitely need to look at what is being projected for 
the remainder of SAFETEA-LU at that point. Whether we will need 
to adjust spending will depend on the magnitude of the 
estimates at that time.
    Mr. DeFazio. Should the policy, should we be looking at, I 
know we want to maximize our investment as we go. We have 
tremendous unmet needs across the Country.
    But on the other and, would it be prudent for Congress to 
be looking at some sort of minor adjustment to RABA, 
establishing some more capability of carry-forward for the 
trust fund?
    Ms. Scheinberg. Mr. DeFazio, I think the expression of the 
Administration's support for SAFETEA-LU is such that we agree 
with this Committee, and with the Congress as a whole, that 
fully funding for SAFETEA-LU is the right thing to do. We want 
to give it a chance. It is not time yet to give up on the 
calculations that are in the legislation.
    Mr. DeFazio. Right, but last year we didn't anticipate this 
additional funding and the RABA upward adjustment this year.
    Ms. Scheinberg. Well, except that the law provided for it.
    Mr. DeFazio. We allowed yes, but we didn't estimate it.
    Ms. Scheinberg. Well, this is related to the volatility of 
these projections. We provide for RABA because we expect that 
there will be changes in the estimates. I think we saw through 
TEA-21 that almost every year there was a RABA adjustment. So 
we have a history that the funding is adjusted as we compare, 
the actuals to the estimates. I think we need to let this 
process work and see how it goes before we make any adjustments 
to the authorization language.
    Mr. DeFazio. I think you were discussing with the Chairman 
the Open Roads financing pilot program, or at least alluding to 
it in terms of allowing States or local jurisdictions to 
innovate in terms of looking at different ways of assessing 
costs of the system to users.
    Ms. Scheinberg. Yes.
    Mr. DeFazio. And I am just curious whether you are familiar 
with what my State is proposing and whether you think that is 
consistent with what you are looking at here.
    Ms. Scheinberg. I am going to ask Rick to respond.
    Mr. DeFazio. Sure.
    Mr. Capka. Mr. DeFazio, the pilot that you have going on in 
Oregon is a great example of what we are trying to encourage 
with the Open Roads pilot program. We are trying to stimulate 
great ideas to allow us to look at mechanisms and opportunities 
to shift away from the traditional methods of collecting the 
revenues.
    So the program that you have in Oregon is a good example. 
And we know there are other good examples out there as well, 
and we need to be doing something now so that we can inform the 
decision makers a few years down the road on which way we need 
to be heading in the period after SAFETEA-LU.
    Mr. DeFazio. Thank you. Thank you, Mr. Chairman.
    Mr. Petri. Mr. Duncan, any questions?
    Mr. Duncan. Thank you very much, Mr. Chairman.
    Ms. Scheinberg, this is my 18th year on this Committee, and 
I have been through several highway bills. Over that time, I 
have seen all sorts of figures about the increases in vehicle 
miles traveled. I saw figures for the 1980s, the 1990s and so 
forth. Over a 10 year period, vehicle miles traveled have been 
going up, in some States three times, in some States four or 
five times.
    I have mentioned before than when I was growing up, most 
families had one car, some families had two. But now the 
mother, the dad, both the teenagers, many families have four or 
five vehicles now. These cars and the number of vehicles and 
the vehicle miles traveled just seem to keep on going, just 
almost exploding.
    In your projections and your discussions at the Department 
of Transportation, do you see that continuing, or do you think 
that is going to slow down or taper off? What can you tell us 
about that, if anything?
    Ms. Scheinberg. We see the same trends that you are seeing. 
The numbers validate the trends. We see this trend continuing, 
for the near future at least, although at some point there 
probably will be a leveling off. But at this point the trend of 
increased vehicle miles traveled is continuing.
    Mr. Duncan. At least in the foreseeable future, it keeps 
going way up.
    Ms. Scheinberg. Yes.
    Mr. Duncan. I assume, too, that highway construction costs 
keep just ballooning or going way up. Is that what you also 
see?
    Ms. Scheinberg. Yes.
    Mr. Duncan. So these needs, thinking of that, this $2.3 
billion, we have a report here that says these drastic changes 
between estimates over just seven months bring into question 
the reliability of the estimating process at the Department of 
Treasury. What I am wondering about, you say that you think 
there is enough money there over the next three years. But do 
you feel pretty certain about that, with all these figures 
continuing to go way up, and the needs continuing to grow?
    Then when you talk about needing to do something for the 
future, do you think these figures are just going to go really 
explode in five or ten years down the road?
    Ms. Scheinberg. Mr. Duncan, I think there are a couple of 
things going on here. One is exactly what you are talking 
about, that there is, the needs are growing. The other thing 
that is happening is that the Highway Trust Fund is not growing 
as fast as the needs.
    Mr. Duncan. Right. That is what I was going to get at next.
    Ms. Scheinberg. The Highway Trust Fund is growing, but it 
is not meeting the expanding needs, and it is not expanding as 
quickly as the needs are. So that is where the shortfall is 
coming from. It is not from the fact that we are not generating 
gasoline revenues. It is the fact that the needs are growing 
faster.
    Mr. Duncan. Right.
    Ms. Scheinberg. We believe that now is the time to consider 
other forms of financing highway programs. That is one of the 
reasons we have proposed the Open Roads program. It is also one 
of the reasons that you included in SAFETEA-LU two commissions 
to look at other ways of financing the post SAFETEA-LU era. We 
need to find more money for highway programs because the needs 
are growing exponentially.
    Mr. Duncan. Well, when you say that the CBO is even more 
optimistic than the Treasury Department or the Administration, 
are you, is your Department having discussions with the 
Treasury Department and the CBO about this at this time?
    Ms. Scheinberg. Traditionally there have been differences. 
This is not a new phenomenon. CBO has traditionally had higher 
receipt levels, and higher estimated levels than Treasury. The 
actuals usually come out somewhere in between. That says to me 
is that this estimation process is not a science. It is 
dependent on the economy. It is dependent on some larger issues 
that are very hard to predict. I think this Committee and the 
Congress in general has recognized that is why we have RABA in 
SAFETEA-LU.
    Mr. Duncan. Well, we are going to need to get, the Chairman 
mentioned some innovative ideas or things that they are doing 
in other countries. We are going to have to get these 
commissions that you mentioned and the top talents at the 
Department of Transportation to come up with some pretty good 
recommendations for us to take a look at, I think. It looks 
like to me like you are talking about a problem that is going 
to grow pretty big, just a few short years down the road.
    Thank you very much, Mr. Chairman.
    Mr. Petri. Thank you.
    Mr. Pascrell?
    Mr. Pascrell. I am looking at the fact sheet that you 
supplied to us. The bottom of that fact sheet is a cash balance 
during the program up to 2009, including 2009. Is that correct?
    Ms. Scheinberg. Yes.
    Mr. Pascrell. You show that beginning in 2004, there is a 
continual decline in the balances within the highway account.
    Ms. Scheinberg. Yes.
    Mr. Pascrell. That didn't just happen yesterday, it didn't 
happen seven months ago. This happened beginning in 2004. I 
will get back to that in a second.
    Ms. Scheinberg. Yes, sir.
    Mr. Pascrell. Then you show that in the mass transit 
account, except for 2005, there has been a steady increase, 
maybe not to the greatest proportion in 2009, projected for the 
mass transit account, correct?
    Ms. Scheinberg. Yes, I can explain that if you would like.
    Mr. Pascrell. Okay. That was not my question, but go ahead.
    Ms. Scheinberg. SAFETEA-LU changed the method for 
accounting for the mass transit outlays. The change more 
accurately reflects program outcomes when compared to the way 
it was calculated before. Because of the technical adjustment 
that was made in SAFETEA-LU, the 2006 number is a big jump over 
2005. The mass transit account holds its own through 2008 and 
then it starts following the direction of the highway account.
    Mr. Pascrell. And you have already said we can't trust 
those numbers.
    Ms. Scheinberg. The trend would be that the mass transit 
account would be going down, similar to the trend for the 
highway account.
    Mr. Pascrell. Why is there such a huge swing from 2008 to 
2009? That is a swing of $4 billion. We are in the plus area in 
2008, we wind up in the minus area in 2009. That is a $4 
billion swing. Why is that? How did that happen?
    Ms. Scheinberg. If you look at 2006 to 2007, there is a $4 
billion decline in the trust fund balance. Then in 2008 there 
is another $4 billion decline, and in 2009 there is another $4 
billion. This is a continuous trend. The authorized levels in 
SAFETEA-LU are such that the Highway Trust Fund cannot keep up. 
We are authorizing programs at the same time that Trust Fund 
balances are declining.
    Mr. Pascrell. That brings me to my next question. What 
needs to be done to the Highway Trust Fund in order for it to 
keep up, particularly in the area of highway construction?
    Ms. Scheinberg. We need to find new sources of revenue.
    Mr. Pascrell. Well, we have been talking about this for a 
long time. And the Administration has been talking about it for 
a short time and with no suggestions. What would you suggest? 
What are the options open to us? Let's get down to the real 
nitty-gritty, besides these numbers.
    Ms. Scheinberg. Yes, sir. We are looking for realistic 
ideas. One of the things that the Open Roads program does is 
look for real ideas that are going on on the ground.
    Mr. Pascrell. Good. Let's talk about real ideas.
    Ms. Scheinberg. In Mr. DeFazio's district, there are actual 
things going on. What we are trying to do with our $100 million 
program is encourage States and localities to take the risk of 
trying out something different, take the risk of doing 
something--
    Mr. Pascrell. But aren't you really saying, Ms. Scheinberg, 
that you want whatever shortfall we are looking at and whatever 
downturn we are looking up to be made up in the States of the 
Union? Let's look at those States, let's see if those States 
can refinance in a different way so that they will come up with 
more money, having, well, many of those States of course have 
their own trust funds, don't they?
    Ms. Scheinberg. Yes.
    Mr. Pascrell. And are struggling to deal with them. My 
State, New Jersey, is a good example. One administration shifts 
into the next administration, nobody wants to touch it. It is 
the hot rail here.
    So I am asking you to address the hot rail. What is your 
answer?
    Ms. Scheinberg. Well, sir, we have three years to come up 
with the answer. I don't have the answer today. But we have 
three years and then we have to have the answer. When we have 
the next reauthorization in 2010, the Highway Trust Fund will 
not be able to support growth in the program.
    Mr. Pascrell. You anticipated my final question. It will 
not be there. The money will definitely not be there.
    Ms. Scheinberg. No, sir.
    Mr. Pascrell. And that is only three years away.
    Ms. Scheinberg. Exactly.
    Mr. Pascrell. So we have to deal with something pretty soon 
within the next 18 months, it would seem to me--
    Ms. Scheinberg. Yes.
    Mr. Pascrell.--in order to be realistic and honest with the 
American people. If we do not want to raise Federal taxes on 
gasoline, then we need to look for another way to put money--I 
mean, let's talk to the American people facts instead of 
talking about what needs to be done, what can't be done. 
Because otherwise you're going to be, we are talking around the 
issue here. We don't have enough money to finish this, what we 
set out to do.
    And I like what you said that the projects are for five 
years. How do you do that? We have been doing it for the last 
five years, talking about seven years under the former 
Administration, ten years of budgeting, five years of 
budgeting, I mean, it is a joke, you know it is a joke, I know 
it is a joke. It sounds good. You don't know what the 
circumstances are ten months from now
    But we continue to do that, and the American people seem to 
wonder, well, where is all this money going to, and what about 
these trust funds? We have to address this. The Administration 
has to address it. What is the Administration recommending? 
Since you came up with the shortfall.
    Ms. Scheinberg. The Administration is saying that we need 
to think about this right now--
    Mr. Pascrell. We need to think about it.
    Ms. Scheinberg. We need to come up with something. We 
recommended this pilot program. We are also fully endorsing the 
commission.
    Mr. Pascrell. They need to think about it, Mr. Chairman.
    Mr. Petri. Yes, sir.
    Mr. Pascrell. Okay. We will be thinking about it. Thank 
you, Ms. Scheinberg. I appreciate your thoughts.
    Ms. Scheinberg. You are welcome.
    Mr. Petri. Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman.
    The Open Roads project, I guess I really have, I don't 
really understand exactly the sense of what exactly we are 
trying to do. You made the comment that they were trying to get 
innovative financing. I guess what I am wondering is, how you 
spend $100 million doing that. If you go towards project type 
things, if you actually did something, I mean, $20 million 
spread over five States is nothing. That is not enough money to 
do anything.
    Have we already determined the States?
    Ms. Scheinberg. No, sir, and the--
    Mr. Boozman. Have we talked about which States? Have any 
States come up yet?
    Ms. Scheinberg. Some States have come in.
    Mr. Boozman. Which ones?
    Ms. Scheinberg. This is not a capital program to build 
things, but rather a program to implement different ways of 
expanding the revenues that exist.
    Mr. Boozman. I understand. But I guess my thing would be, 
you know, for a lot of this, the $100 million, you could have a 
conference and have all the 50 highway commissioners and their 
staff come up and talk about it for a week. Again, what I would 
like to know specifically, I would like to know what States 
that you are considering. And then specifically, if we are 
already considering specific consultants, who those are.
    I mean, is that what we are going to spend the money on, is 
consultants?
    Mr. Capka. Sir, as Ms. Scheinberg had mentioned, what we 
are trying to do is stimulate some innovation. As Mr. DeFazio 
had pointed out earlier, in Oregon, they have a program right 
now where they are trying to do something other than collect 
the gas tax at the pump. That requires infrastructure to be put 
in place. And it is not building new capacity, it is not 
building better interchanges, but it is putting infrastructure 
in place that will allow a State to explore an innovative idea.
    Mr. Boozman. So are we talking, then, about giving them, 
the State of Oregon, for instance, X million dollars to 
implement the thing that they thought of, or are we just going 
over there and saying, can you think of any more things?
    Mr. Capka. Sir, we are looking for the best value, 
incremental value, for that next dollar we spend. I think what 
we want to do is encourage States to come in with proposals on 
how they would set up an experimental program or a 
demonstration project and describe what they would hope to 
achieve in that project. Then we would look at how that project 
might inform the decision makers later on, on which direction 
we think we might want to make some further investment.
    So we are not going to stymie, we are not going to limit 
the ideas that come forward. In fact, we would like to see a 
wide variety of ideas come froward.
    Mr. Boozman. I understand that, and I don't want to keep 
on, I guess, if you, first of all, what States are we talking 
about, preliminarily?
    Mr. Capka. Sir, we are not in the process of evaluating 
State proposals just yet. In fact, we have to put the meat on 
the bone so we can get that kind of information out to the 
States to begin the solicitation process of bringing that in. 
This right now is just a proposal in the President's budget. If 
we are able to grab onto it, then we will get the specifics 
out. So we really--
    Mr. Boozman. Well, again, with all due respect, and I am a 
friend. I am very supportive of the agency, and you know that. 
But I guess, Mr. Chairman, the President, you all talked about 
earmarks the other night, that we needed some reform and things 
like that, and this hasn't been authorized, this is not by 
anybody's definition an earmark. I tell people that come into 
my office that we don't fund ideas, we fund for-real projects 
that are thought out, that people can look and see exactly 
where it is going.
    So again at this point, I am not saying that we don't need 
to do this, but I am saying, Mr. Chairman, that again, I don't 
think we need to be funding ideas. I think we need to know 
exactly what we are going to do. The idea is great and it needs 
to be done. I just don't see how you spend $100 million in five 
States doing that without just hiring a bunch of consultants. 
Like you said, that is just me, at this point.
    But I do think that that is a problem for you, because one 
of your duties is to educate people like me. At this point, 
like I say, I hadn't gotten that. I hope we can get that, Mr. 
Chairman. Thank you.
    Mr. Petri. Thank you.
    Mr. Sodrel.
    Mr. Sodrel. Thank you.
    It has been my experience in business, you have to analyze 
the problem correctly before you come up with a solution. 
Sometimes you can sit down and solve the wrong problem.
    I just have a couple of questions of things that you have 
looked at. It occurs to me, one of the unintended consequences 
of CAFE, the Corporate Average Fuel Economy standard, was that 
each of us pays less per mile traveled as the miles per gallon 
increases on the vehicle. And the high cost of energy for 
commercial users encourages them as well to consume less fuel 
per mile traveled. That seems to be exacerbated by the problem 
of having a fixed cost, fixed price per gallon for the fuel tax 
while the fuel went up to $60 a barrel, which affects the cost 
of concrete, asphalt, road construction, repairs and everything 
else.
    What we have here is, as consumers, we are paying less per 
mile of travel. Am I correct, or have you even looked at a 
relationship between gallons consumed and miles traveled? Or do 
you have that information available to you?
    I am trying to understand why we are on this glide path to 
$4 billion a year. Do we keep falling off?
    Ms. Scheinberg. The main reason we are on the glide path we 
are on is that we are funding more than we are taking in. Your 
question has to do with why are we not taking in more.
    Mr. Sodrel. That is correct.
    Ms. Scheinberg. I think it is a combination of things. 
Clearly, as gas prices have gone up, the amount of money coming 
into the Highway Trust Fund is not reflective of the price of 
gasoline. We are not getting a percentage, as you said.
    There are a lot of things going on in the economy at the 
same time. I am not sure I can give you an exact answer as to 
why there are not more revenues coming in. But clearly, we are 
funding a larger program than revenues. That is the reason for 
the gap.
    Mr. Boozman. All things being equal, it seems that--I think 
this is the problem, is all things are not equal. The cost of 
road construction is tied to the cost of a barrel of crude. But 
the tax on the motor fuels is not tied to that same barrel of 
crude. It is a fixed price per gallon.
    Ms. Scheinberg. Right.
    Mr. Boozman. I just always like to understand the problem 
before I go to work on a solution. It seems to me that is what 
is creating a gap here.
    Having said that, do you have any way of taking a computer 
model and saying, if for example the Federal fuel tax were a 
percent per gallon, as opposed to a cents per gallon, what 
change would that make for future revenue stream?
    Ms. Scheinberg. I don't think that we at DOThave done that 
modeling. But maybe somebody has. Clearly, with the price going 
up, revenues would have gone up, too, if the gas tax were not a 
fixed amount per gallon.
    Mr. Boozman. For example, you have a State sales tax in 
most States. And it is a percentage of whatever you are paying 
for the product. And when the product price goes up, revenues 
go up with it, as retail sales go up. But what we have here is, 
the cost is going up but the revenue stream to build and 
maintain the roads is not going up with it. Or at least not 
going up on the same flight path.
    I have spent a lot of years in transportation. We have run 
a lot of fuel. I know in our personal case, in 20 years we have 
moved the same number of miles on half the number of gallons. I 
mean, as the, not because of CAFE in the case of a private 
vehicle, but just because of the incentive as the fuel got 
higher, it made more sense to spend your money on capital 
expenditures that would lower the cost of the fuel burn.
    So I know that we were burning a lot less fuel on the same 
miles or were, well, in fact it was the other way around, we 
practically doubled our miles on the same level of fuel. But 
the effect was, we pay half as much to use the roads as we used 
to. That was not our goal, but that was the effect.
    Well, thank you. I would just like to see some data if I 
could, just so that I get an understanding of what the problem 
really is and what solutions might be appropriate. Thank you.
    Mr. Petri. Thank you.
    Mr. Reichert?
    Mr. Reichert. Thank you, Mr. Chairman.
    First of all, I am from the Seattle neighborhood. We all 
can share stories of extreme need in the area of transportation 
and building infrastructure. I thought Seattle was the worst 
place in the world to drive until I moved to Washington, D.C.
    [Laughter.]
    Mr. Reichert. So we could use some help here, too.
    But I know you are aware of all the needs across the 
Country, and the President's budget shows, as you testified, a 
negative balance at the end of fiscal year 2009. However, if I 
heard you correct, you said you don't expect that negative 
balance to really materialize, but you have done the study and 
it is something you will be looking at.
    But have you also taken a look at the other side? And if 
this negative balance does occur, have you looked at programs 
that may need to be cut? Have you gone through that?
    Ms. Scheinberg. We have not done that to date.
    Mr. Reichert. I wouldn't cut any programs in Seattle or 
Washington, D.C. That would just be my recommendation.
    [Laughter.]
    Ms. Scheinberg. We will certainly talk to you before we do 
it.
    Mr. Reichert. Okay, thank you. That is a generous offer, 
isn't it.
    The last real quick question I have is, there is a note 
that the President's budget matches the SAFETEA-LU program 
research request of $429.8 million. That transfers an 
additional $37.8 million. What does the $37.8 million from the 
Federal Highway research, what does that fund? I know it goes 
to unfunded programs. But what would those be?
    Mr. Capka. Sir, I can address that for you, and before I 
do, I would just let you know, my son lives in Seattle. So we 
get a chance to compare notes as to who has the worst 
congestion. He is constantly complaining to somebody who he 
thinks can do something for him in Washington.
    [Laughter.]
    Mr. Capka. We agree with the members of the Committee that 
we need to have a strong and robust research and technology 
program. It is very clear that we need to have something in 
place that will support researching the many problems that we 
do have. And we discovered as we got into SAFETEA-LU that we 
had some structural problems that prevented us from executing 
those programs which SAFETEA-LU and Congress laid out for us to 
execute.
    So we are trying to figure out a way that we can provide 
some additional resources. What we discovered when we looked at 
the program, the year 2005, is that we left some contract 
authority untapped. It was left untapped because we didn't have 
the obligation limitation to tap the full capacity of that 2005 
contract authority.
    So what we are proposing in the Budget is to allow us to 
shift some contract authority into the FY 2007 research and 
technology program equal to the amount of contract authority 
that we had remaining in FY 2005, and match that contract 
authority with obligation limitation.
    Now, this is a one year, 2007 fiscal year, solution only. 
Because we are going to be facing the same problem in 2008 and 
2009. And I think as we all know, trying to address this 
incrementally is a real problem. So we really do need a longer, 
more comprehensive solution to the research and technology 
problem.
    But the specific answer to your question is that we saw 
some extra contract authority available in 2005 and we are 
asking for some obligation limitation to cover it now so we are 
able to spend that money on research and technology.
    Mr. Reichert. Thank you. Thank you, Mr. Chairman.
    Mr. Petri. Thank you. I think we will have a second round 
of questions. I know several members would like to ask some 
additional questions. We have a hearty band of members here, 
but not the whole panel, so we are able to do that within the 
time that is available.
    I had a couple of questions, or at least in the area I 
would like to mention. We passed, as you know, in SAFETEA-LU, 
language that created two commissions to kind of look at 
funding options and make recommendations and also 
infrastructure, how to invest more efficiently in 
infrastructure, that sort of thing. But we did not fund both 
commissions at traditional levels, despite increased costs. 
While the appointments have been made by the various players, 
no appointments have yet been made by the Administration, as I 
understand it.
    Could you discuss that and whether it makes sense to try to 
have one commission rather than two commissions that actually 
work in this area? And can you give us an idea of when the 
appointments will be made, so we can get to work? Because you 
pointed out the urgency of helping. There are some very good 
people who are serving on this commission, and I know they are 
very conscientious. We look forward to their analysis and 
recommendations as we prepare to reauthorize another bill a few 
years down the road.
    Ms. Scheinberg. Yes, sir. The names from the Administration 
have been identified, and those people are going through the 
background security clearance process. They should be announced 
very soon.
    We agree with you that the commission should be up and 
running as soon as possible to address these important issues. 
At one point we discussed with you the idea of having one 
commission versus two, but I think at this point we are on the 
track to have two commissions.
    Mr. Petri. How long do these security clearances typically 
take?
    Ms. Scheinberg. The background checks are underway right 
now. I don't know exactly how long it will be, but it will be 
soon.
    Mr. Petri. Thank you.
    Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    I think at the outset of your remarks you said that 
basically the proposed budget was funding the provisions of 
SAFETEA-LU. But I did notice that Small Starts was reduced by 
$100 million. I guess it is a two-part question. One is, does 
that evidence a lack of commitment or future? Should we have 
ongoing concerns about the support for the Small Starts 
program?
    Secondly, is it coincidental that that $100 million equals 
the Open Roads Financing pilot program, and was the money 
transferred from transit over to Open Roads Financing, which 
would seem to be not the most appropriate? I guess just in 
reflection to my colleague from Arkansas, I would agree, I 
mean, we don't want to bloat up these test programs.
    The proposal in Oregon, which I am not sure I am 
particularly supportive of, but it is innovative and different, 
and it is at this point rather modestly funded at about $2 
million. That is because of the infrastructure required, GPS 
driven and special equipment at fueling stations and that. I 
would hope that any grants we are making under this are not for 
consultants, because we have got a commission. The commission 
can blue sky things or bring in people to testify about ideas.
    I would assume that you are going to restrict the 
expenditure of funds to real life applications to see whether 
or not they work, how they work, what the problems might be or 
not be, whether they could be further expanded.
    Ms. Scheinberg. Yes, sir. We agree on that.
    Mr. DeFazio. All right.
    Ms. Scheinberg. Regarding your question about the Small 
Starts, this is a new transit program that was authorized in 
SAFETEA-LU, and we do support the program. The reason for the 
$100 million funding in 2007 is because it was not authorized 
in 2006. 2007 is the first year. SAFETEA-LU requires that we 
issue regulations to establish the criteria for this program, 
and for selecting projects and new grant agreements.
    We have started this process. An advanced notice of 
proposed rulemaking came out last month. There is, I believe, 
an open meeting today in San Francisco to get comments from 
potential applicants.
    The process of establishing the program will go well into 
2007. So by the time we could actually open it up to 
applicants, review those applications, and make grant 
agreements, it would be late in 2007. We don't believe that we 
can commit a full year of funding in 2007.
    This is without prejudice for future years. The full $200 
million for the program is reflected in our out-year numbers. 
The first year is a transition.
    The second part of your question was whether we used that 
$100 million for Open Roads. The answer is no. The $100 million 
for the Open Roads program is coming off the top of the highway 
program. It is a highway program, and we wouldn't take money 
from transit to fund a highway program.
    Mr. DeFazio. Okay, then I guess the other, since we are 
carrying forward a balance in the Trust Fund for transit's a 
little better off, I guess I would wonder whether or not that 
Small Starts reduction that you could have recommended an 
increase, say, in New Starts, for instance, of that same 
amount.
    Ms. Scheinberg. Well, we didn't.
    Mr. DeFazio. Right. Maybe Congress will do that.
    Okay. Then just the last one, about paying for the NHTSA 
budget out of the Highway Trust Fund, including some things 
that have been traditionally funded out of general revenues. We 
don't have jurisdiction over a lot of issues in that since they 
are considered to be commerce related. I am just curious why 
the Administration is making that request, if it is just 
because the general revenues are otherwise in not very good 
shape and they didn't want to borrow more there.
    Ms. Scheinberg. There is always an issue of how far to go 
with general revenues which are always limited. But the other 
part is that over time, NHTSA has come under the Trust Fund. 
More and more of MHTSA's funding has come under the Trust Fund. 
NHTSA has been appropriated funds by Congress out of the Trust 
Fund in the last several years. The President's budget request 
for fiscal year 2007 would bring the whole agency into the 
Trust Fund. It was more of a way to fund the whole agency from 
the same source rather than continuing the split.
    Mr. DeFazio. Maybe we can clean up our jurisdiction here 
and we will take authority over the safety issues, Mr. 
Chairman.
    And on that point, there was one very artfully worded piece 
to the bill which escaped the notice of the commerce watchdogs, 
which does potentially tread in their area, which I had 
inserted. And that is to look at the potential problems with 
these new high intensity headlights. Consumer Reports and some 
others have covered that.
    And I note that, particularly on two lane rural roads, that 
they are a problem, and the European cars that have them are 
self-leveling, American cars are not. You do sometimes, it is 
like driving at someone with six high beam headlights instead 
of just two in your face. I think that this is something that 
we should be looking at on the safety side. There was some 
language in the bill regarding that which we would be happy to 
point out in case it has escaped your notice.
    Hopefully we are going to take a look at that, and some 
potential rulemaking. Because without putting in the adjusters, 
which the American manufacturers aren't, you are hitting people 
with an extraordinary intensity. Apparently we use a very 
antiquated way to measure light intensity, which is pre-Edison 
or just about Edison. That doesn't go to the impact on the eye, 
and particularly with a lot of people like myself with aging 
eyes, this is going to become more and more of a problem with 
night vision.
    So I think it potentially, and you know, they are 
extraordinarily expensive and in my mind, stupid because of the 
very marginal benefit they provide for the drivers of the car 
that has them, as opposed to the oncoming car. I think, perhaps 
the negative benefit outweighs them, particularly if you don't 
do it with this safety mechanism that the Europeans are using 
and we are not. So hopefully that will get a good look at.
    Thank you, Mr. Chairman.
    Mr. Petri. Mr. Pascrell, anything more?
    Mr. Pascrell. No, thank you, Mr. Chairman.
    Then you have the last word.
    Mr. DeFazio. Oh, thank you, Mr. Chairman.
    Mr. Petri. Oh, Mr. Boozman.
    Mr. Boozman. I was going to say, first of all, I am an 
optometrist, I can visit with you a little bit later, Mr. 
DeFazio, and look at those aging eyes and see what is causing 
your night problems.
    [Laughter.]
    Mr. Boozman. The other thing is that I would just like to 
comment, to me, we almost have the potential of this being kind 
of the perfect storm. You have the, I think Congress finally is 
coming to grips, I think the Nation is coming to grips with the 
fact that we need to be less energy dependent on the Middle 
East. And part of that is going to be conservation, part of it 
is going to be more fuel efficient cars. All of that equation 
is going to further put pressure on the gas tax.
    So that is a real problem. The other problem is that as I 
visit with my folks at home, my highway commissioners and 
stuff, they are telling me that in the last year, since they 
have done their projects and all this, that they have upwards 
to a 30 percent increase in cost. That is a tremendous figure. 
But that is the for-real deal. So we have decrease in revenues, 
we have tremendous increase in costs, and because the economy 
is humming along, not only in our Nation but worldwide, I think 
the potential there is to increase, also.
    So we need to look at, through studies or however we work 
it out, to do the gas tax equation. The other thing is, and if 
you will just comment to me about what we are doing, the other 
side is, we have got to come up with more efficient ways of 
building roads. The old, you know, just however you do it, much 
more efficient way of building roads in a more cost effective 
way, whatever is out there, spread that word. Then also roads 
that hold up and last longer.
    Mr. Capka. Sir, that is an excellent observation. In fact, 
I would have to thank Mr. Petri and all of you on the Committee 
for helping us in SAFETEA-LU with at least one program for that 
purpose. And I will talk about a couple. But we have a Highways 
for Life program that was put into the authorizing language, 
which addresses exactly that point. How do we look at the way 
we deliver the highway infrastructure and how can we deliver 
it, not just more cost effectively, but quicker and safer 
because of what construction congestion means now on the roads? 
That whole program is meant to stimulate that kind of 
innovative thinking.
    We also have on the research and technology side, which is 
another reason why we are very interested in seeing that 
program be very healthy, a good program of technology transfer 
where we are out looking for the good ideas in the research 
environment, trying to stimulate at the Federal level the 
advanced kind of research, so the practical research and 
applied research at the State level can all be working toward 
that same direction. But you have hit on a great point. It is 
not just how we pay for what we have, but how we deliver what 
we need to deliver more efficiently and more effectively.
    Mr. Boozman. Thank you very much.
    Mr. Petri. Mr. Baird, any questions?
    Mr. Baird. Yes, indeed, if I may. I thank the witnesses and 
thank the Chairman. When this body passed last year the 
SAFETEA-LU bill, one of the provisions of it was a sense of the 
Congress language, dealing with the provisions of the Buy 
America Act. We are familiar with internal memos from DOT that 
essentially suggest they don't have to honor that. I just want 
to put the marker down and ask your thoughts on this.
    The Buy America Act, when originally passed, I think was 
intended to do a couple of things: one, identify critical 
infrastructure industries in this Country, and assure that 
those industries remained vibrant. I think two, the general 
principle is if American taxpayer dollars are going to pay for 
a project, it stands to reason that Americans be employed in 
the pursuit of constructing those projects.
    Increasingly, State departments of transportation and 
others are finding ways around not only the intent but the 
letter of the Buy America Act, and I am greatly concerned about 
this, and I will tell you why. We have a steel fabricating 
capacity in this Country that is outstanding presently, but 
that is subject to significant challenges. If we lose our steel 
fabrication capacity, and the same applies for certain other 
industries, and there is a natural disaster, and I live in 
Washington State, on the West Coast, where we have such things 
as earthquakes and volcanoes and hopefully never, but possibly 
a tsunami.
    If we lose our steel fabricating capacity domestically, and 
we are dependent then on foreign sources for fabricated steel, 
someone will look back to this date, and say, how foolish we 
were, in the Congress and in the Administration, if we let that 
happen. So I would appreciate any comments you have about 
whether it is the intent of the Department of Transportation to 
ensure that States and other entities honor the letter and 
intent of the Buy America Act.
    And also, if it is the position of the Department of 
Transportation that it would be prudent to allow fundamental 
domestic industries like steel fabrication to be lost to 
foreign competition.
    Mr. Capka. Sir, I will address that question and your 
comments. I know that you and the Secretary and Mr. Chip 
Nottingham had a great discussion earlier this week on that 
very issue. And it is high on the radar screen.
    So we are aware of the concerns. We are also very 
interested in ensuring that we do comply with the letter of the 
law. That is important for us to do that. And that is what we 
are attempting to do in the way we apply the Buy America Act. 
We understand the sense of Congress and we certainly read that 
in the language. We are trying to deal with that as best we 
can, again, looking at the legal aspects of it.
    But we are sensitive to it. We have had a number of 
representatives of the steel bridging community come by and see 
us on this very issue. We know the issue that is out there. So 
sir, it is a point that is well taken and a point that is well 
understood.
    Mr. Baird. I appreciate that. We did have, indeed, a very 
good meeting with the Secretary and they intend to get back to 
us. So I understand, I am not trying to sort of get at cross 
purposes here. We met with the Secretary just the other day and 
appreciated meeting with his staff.
    I just want to underscore the importance of this. Talk to 
the steel fabricators as you have, we just had one tell me it 
is going to close its doors, 150 jobs, top-flight fabricator. 
At some point, you put yourself vulnerable to foreign 
suppliers, because you just simply can't, when you lose the 
physical infrastructure, the plants, the cranes, the blow 
torches, all the other things that go into one of these, the 
sophisticated cutting and computer equipment. When you lose 
this, you don't get it back. That is it, gone, gone. And you 
lose the work force and you lose the land, because these are 
very land intensive things. You have to have all this space to 
store the steel, to construct the bridges locally before you 
transport them.
    I really, sincerely believe we would make ourselves 
vulnerable from a defense and security perspective, and from an 
infrastructure security perspective. And by golly, I think we 
would be making a huge mistake if we don't put a marker down 
and tell folks like CalTrans and others that, by gosh, the 
Congress of the United States has spoken and the Administration 
is with the Congress of the United States, and if you are going 
to spend American taxpayer dollars on your project in any way, 
then you are going to adhere to Buy America, the intent and the 
letter of the law.
    President Bush, in his State of the Union address, said 
specifically, we want all, this is virtually a quote, we want 
all of the world to buy American. I would hate to have a little 
footnote below that that said, except for California and other 
States that are building federally funded highway 
transportation projects.
    So I would just urge you, for posteriority and for current 
employment in the current infrastructure health of this great 
Country, to insist on the fundamental intent and letter of Buy 
America and put a strong marker down on anybody who intends to 
dodge that, that if they do, they will lose their Federal 
highway funding.
    Mr. Capka. Sir, your point is well understood.
    Mr. Petri. Mr. Sodrel.
    Mr. Sodrel. Thank you, Mr. Chairman. One other issue I 
would like to talk about. You just talked about putting NHTSA 
under the, or taking the funding out of the Highway Trust Fund. 
These numbers I have looked at are pretty broad numbers.
    What do we fund, other than highways and bridges, out of 
the Highway Trust Fund? Originally the Highway Trust Fund was 
designed for highways and bridges and was paid for by highway 
users. What some people may not know here is heavy truck users 
pay a, they used to call it a Federal highway use tax, now they 
call it a heavy vehicle use tax. It is an annual tax that is 
paid for the privilege of using the Nation's highways, and you 
pay a Federal excise tax when you buy a new truck that is 
somewhere between $7,000 and $9,000 on purchase.
    So there is a lot of money that goes into the Fund. And it 
was originally designed for the benefit of those people that 
were using the highways. Now we are siphoning off a lot for 
transit, we siphon it off for rails to trails, we siphon it off 
for who knows how many other purposes. And I would like to know 
what percentage of the budget is non-highway and bridges. What 
percentage of the money that comes out of the Highway Trust 
Fund is spent on something other than highways and bridges?
    And if you don't know, if you could get me the answer, I 
would appreciate it.
    Ms. Scheinberg. We will get that to you for the record.
    [The information received follows:] 
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    Mr. Sodrel. Because that is the other thing that affects 
how much money we have to build and maintain roads, is how much 
are we spending for other purposes, purposes other than what 
the Highway Trust Fund was designed for. And I would appreciate 
it if you have some information on those previous questions as 
well.
    Ms. Scheinberg. Absolutely.
    Mr. Sodrel. I thank both of you for being here today.
    Ms. Scheinberg. Thank you.
    Mr. Sodrel. Thank you, Mr. Chairman.
    Mr. Petri. We have one more. Mr. Baird.
    Mr. Baird. I thank the Chair.
    Another question that was called to my attention by some of 
my local folks who are working on projects. It is my 
understanding, and maybe you can explain it to me, that certain 
numbers were designated to go toward certain projects as part 
of SAFETEA-LU, and when it comes time for actually the local 
entities to receive that money, a quite substantial surcharge 
has been subtracted from the money. I understand it is 
somewhere from 14 to 16 percent, depending on the project and 
the locale.
    I wonder if you can explain that a little bit. Because I 
have to explain it back home, when they say, well, Congressman, 
Congress designated X amount of dollars for a certain project. 
When that check comes, there is quite a discount has been 
applied to that, supposedly for overhead at DOT. I am at a loss 
to fully explain it to my constituents and State transportation 
folks. If you could help me explain it, that would make my job 
a little easier back home.
    I mean really, where does that money go? Under what 
authority do you folks take it off the top?
    Mr. Capka. Sir, I may have to get back to you for the 
record in a little more detail. But there are certain 
requirements that are taken off the top. We have lop-offs, 
which is a term that we use to describe contract authority for 
allocated programs that is in excess of obligation limitation 
available, and is required by law to be withdrawn from the 
original program and distributed to the States. There are 
rescissions that occur. There are obligation limitations that 
are placed on the contract authority, which some folks may be 
concerned about as they do their calculation of what they will 
receive. So it is a combination.
    What I would like to be able to do is to get back to you 
for the record and kind of lay some of that out more 
specifically. Perhaps we can be more specific with some of the 
examples that you have that I can help you with.
    Mr. Baird. That would be great. I can just share with you 
the sense of frustration and surprise, unpleasant surprise, on 
the folks who are to be receiving this. Because they had 
counted on a certain figure, and now that figure is quite a bit 
low. And you know how these work, you are putting together 
State, local, Federal match and occasionally private partners 
as well. And suddenly you are coming into 10 to 14 percent, and 
I understand possibly even more. They just say, where is this 
money going to.
    I mean, is this a back door way of funding DOT? Is it that 
we are not authorizing and appropriating sufficient funds here 
for the base operations of DOT? Anyway, that is the question I 
get asked.
    Mr. Capka. Sir, the percentages are, to us in the 
appropriation process that we go through. But what we will do 
is lay something out for you so that you can be clear and 
articulate with your constituents as well.
    Mr. Baird. That would be great. My guess is I am not alone 
in this. My hunch would be that many other members of Congress 
are hearing from folks, hey, I thought you said $1 million and 
now we are coming in at the $870,000 range or something like 
that. And it depends on the project.
    But that is a healthy chunk. And in some cases I am told it 
is literally freezing projects, because that difference is the 
make or break difference, and we don't have, to the extent that 
States have counted on the portion of the Federal money, 
perhaps erroneously, but counted on that without the discount 
factored in, the discount is substantial. So if you could brief 
us on that, that would be appreciated.
    Mr. Capka. Sir, I will do that.
    [The information received follows:]
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    Mr. Petri. Well, thank you for coming and answering our 
questions. We look forward to working with the Department of 
Transportation as we implement SAFETEA-LU and prepare for 
future decisions. Thank you.
    [Whereupon, at 3:27 p.m., the hearing was adjourned.]
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