[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                        SUBCOMMITTEE HEARING ON

                       THE UPCOMING HIGHWAY BILL

                       AND ENSURING IT MEETS THE

                       NEEDS OF SMALL BUSINESSES

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


                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JULY 16, 2009

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

          Small Business Committee Document Number 111-037
Available via the GPO Website: http://www.access.gpo.gov/congress/house




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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                        PARKER GRIFFITH, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

        .........................................................

                                  (ii)



                         STANDING SUBCOMMITTEE

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma, Ranking
BRAD ELLSWORTH, Indiana              LOUIE GOHMERT, Texas
PARKER GRIFFITH, Alabama

                                 (iii)




                            C O N T E N T S

                               __________

                           OPENING STATEMENTS

                                                                   Page

Altmire, Hon. Jason..............................................     1
Fallin, Hon. Mary................................................     2

                               WITNESSES

Mills, Mr. John M., President & Treasurer, Plum Contracting, Inc. 
  Greensburg, PA. On behalf of Associated General Contractors....     5
Kirchhoff, Mr. Tom, Executive Vice President & COO, Cleveland 
  Brothers Equipment Co., Inc., Harrisburg, PA. On behalf of 
  Associated Equipment Distributors..............................     7
Robinson, Mr. Rob, Chairman, Urban Design Associates, Pittsburgh, 
  PA. On behalf of the American Institute of Architects..........    10
Martin, Mr. Rod, Vice President, Martin Stone Quarries, Inc., 
  Bechtelsville, PA. On behalf of National Stone, Sand & Gravel 
  Association....................................................    12
Ross, Mr. Henry A., Director of Sales and Marketing, USA-SIGN, 
  Chairman, American Traffic Safety Services Association, Elmira, 
  NY.............................................................    13
Filipczak, Mr. Michael, President, Midasco LLC, Elkridge, MD. On 
  behalf of the American Road & Transportation Builders 
  Association....................................................    15

                                APPENDIX


Prepared Statements:
Altmire, Hon. Jason..............................................    27
Fallin, Hon. Mary................................................    29
Mills, Mr. John M., President & Treasurer, Plum Contracting, Inc. 
  Greensburg, PA. On behalf of Associated General Contractors....    31
Kirchhoff, Mr. Tom, Executive Vice President & COO, Cleveland 
  Brothers Equipment Co., Inc., Harrisburg, PA. On behalf of 
  Associated Equipment Distributors..............................    40
Robinson, Mr. Rob, Chairman, Urban Design Associates, Pittsburgh, 
  PA. On behalf of the American Institute of Architects..........    50
Martin, Mr. Rod, Vice President, Martin Stone Quarries, Inc., 
  Bechtelsville, PA. On behalf of National Stone, Sand & Gravel 
  Association....................................................    59
Ross, Mr. Henry A., Director of Sales and Marketing, USA-SIGN, 
  Chairman, American Traffic Safety Services Association, Elmira, 
  NY.............................................................    66
Filipczak, Mr. Michael, President, Midasco LLC, Elkridge, MD. On 
  behalf of the American Road & Transportation Builders 
  Association....................................................    71

Statements for the Record:
"Traffic Congestion Slows Down Small Business and Adds Cost" by 
  Arnie Consdorf.................................................    83
American Council of Engineering Companies........................    85

                                  (v)




                     SUBCOMMITTEE ON INVESTIGATIONS



                      AND OVERSIGHT HEARING ON THE



                   UPCOMING HIGHWAY BILL AND ENSURING



                 IT MEETS THE NEEDS OF SMALL BUSINESSES

                              ----------                              


                        Thursday, July 16, 2009

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:06 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Jason Altmire 
[chairman of the Subcommittee] presiding.
    Present: Representatives Altmire and Fallin.
    Also Present: Representative Shuster.
    Chairman Altmire. I now call this hearing to order.
    I would like to begin by asking unanimous consent that we 
allow Congressman Shuster and any other members outside the 
Committee who would like to sit in. So, without objection, 
welcome back, Congressman Shuster. And thank you for being 
here.
    In the decades since the first interstate was poured in the 
1950s, our highways and bridges have become crucial arteries of 
commerce. Much of this infrastructure was built through the 
ingenuity and hard work of our Nation's small businesses. Given 
the role that entrepreneurs have played in the creation of our 
highway system, it only makes sense that as Congress begins 
work to reauthorize the Federal highway bill, we take small 
business priorities into account.
    Today's hearing will examine whether our transportation 
system is meeting the needs of our entrepreneurs. We are also 
going to look for ways to ensure small businesses continue to 
be the cornerstones of America's infrastructure. The 
reauthorization of the highway bill is not just a matter of 
building roads and bridges; it gives us an opportunity to 
revive our economy with new job creations. The benefits of this 
growth would be felt both immediately, but also for decades to 
come.
    There are several infrastructure challenges which, if 
properly addressed, will help our economy to grow and thrive. 
Traffic congestion, for example, is an issue which touches our 
lives on a daily basis. Easing congestion would lead to lower 
shipping costs and improve productivity. Every year, gridlock 
eats up 4.2 billion hours and wastes 2.8 billion gallons of 
fuel. These costs are taking $87.2 billion out of our economy 
each year. Just think what a powerful boost we could give 
entrepreneurs if we were able to recapture those dollars and 
invest them back into small firms.
    No other sector of the economy is more uniquely positioned 
to tackle infrastructure challenges than our Nation's 
entrepreneurs. The American Recovery and Reinvestment Act, with 
nearly 5,500 projects already authorized, is a big step that 
will go a long way in helping small firms grow. We need to make 
sure that the highway bill builds off of that important 
initiative and that it does so in a way that benefits both 
entrepreneurs who use our roads and the small contractors who 
construct them.
    Today, as in the era when our highway system was first 
created, it will be entrepreneurs in the fields like 
architecture, engineering, and construction who lead the charge 
in rebuilding and modernizing our infrastructure. But these 
projects are not easy solutions. They will require long-term 
planning and investment in a myriad of different areas. Without 
adequate funding and fair competition, small firms won't be 
able to offer the innovative systems and cost-efficient 
technologies that would otherwise benefit every community in 
this Nation.
    A long-term surface transportation reauthorization has the 
potential to provide that long-term vision and foundation. It 
holds the promise of creating jobs that put people back to work 
improving our Nation's infrastructure. In fact, the Federal 
Highway Administration estimates that every $1 billion in 
highway capital leads to 30,000 jobs and $1.1 billion in 
employment and wages. This multiplies the benefit of each 
Federal dollar spent, growing our economy and leaving our 
country with lasting economic gains. We need a transportation 
system that increases both our economic strength and our 
competitive edge in the global marketplace.
    In my district in western Pennsylvania, and all across the 
country, we have roads and bridges that are in critical need of 
repair. Going forward, the highway reauthorization bill will be 
a critical vehicle for our entrepreneurs as they work to 
improve our infrastructure and rebuild our economy.
    [The statement of Chairman Altmire is included in the 
appendix.]
    Chairman Altmire. I would like to thank all of our 
witnesses today in advance for their informed testimony. And, 
with that, I yield to Ranking Member Fallin from Oklahoma for 
her opening statement.
    Ms. Fallin. Thank you, Mr. Chairman. And may I just say 
thank you for holding this hearing today. We appreciate all of 
our witnesses that have joined us. Thank you for taking time 
away from your busy schedules to be with us to share your 
knowledge and interests and solutions and even concerns about 
our highway infrastructure and how we are going to pay for this 
highway reauthorization bill.
    And as has been mentioned already, a Federal requirement 
for all modern economies is a safe and efficient transportation 
system. Many businesses depend upon a transportation system to 
obtain needed materials and labor to send goods and services to 
market and to consumers. Every household depends upon 
transportation systems for access to work, shopping, medical 
care, food, family, and entertainment. According to the Bureau 
of Transportation Statistics, the average household spends more 
on transportation-related expenses than health care and food.
    The Federal Highway Administration, when we look at the 
delivery of products and services, also estimates the volume of 
freight shipments will triple by 2035 to almost $42 million in 
constant dollars, with 24 trillion of that carried by truck, 
and 9 billion intermodal combinations that include trucks. That 
growth will put an enormous pressure on every element of our 
transportation system.
    And I want to just address real quickly, knowing that all 
of you are small business owners, that I think there is great 
concern here in Congress about how are we going to pay for our 
next highway reauthorization bill. What impact will it have 
upon small businesses, upon your profits, upon your margins, 
upon just the cost of delivering your products and your 
services?
    And I think all of you are aware that this year we face 
some economic challenges within our economy. We have been 
talking about how to best address our recession. How can we 
best jump-start our national economy? How can we work with 
putting our money wisely where it needs to go here in Congress? 
We have had several different types of initiatives that we have 
taken here in Congress. There has been the bailout package 
which cost the taxpayers more than $7 billion. We passed the 
stimulus package which pumped in another $780 billion. We have 
had an omnibus appropriation bill which cost our taxpayers $410 
billion. And, of course, now we are talking about a national 
climate change bill and also health care reform.
    So when you take all of this spending that has been going 
on here in Washington, D.C., and now we are talking about 
infrastructure and its importance to our economy and to small 
businesses, the question is: How are we going to fund that? And 
of course we know that our highway reauthorization trust fund 
has run into deficits, and we have had to take general revenue 
funds to shore up that money so that when the money goes back 
to the States they can pay their contractors and suppliers.
    So I guess the question we want to hear from you today is: 
What are your concerns as we look forth in our economy, as we 
look forth in small businesses, to help you be successful? And 
how can we best use our taxpayer dollars to build upon an 
infrastructure system that is so critical to our small 
businesses and so critical to our economy?
    The Chairman mentioned some of the concerns that affect our 
small businesses, whether it is congestion, whether it is 
looking at ways of funding our next highway reauthorization 
bill, and how are we going to do that. The draft highway bill 
that we are going to be seeing soon does have different ways of 
paying for the next highway reauthorization package, but it 
also expands into several different areas that I personally 
have concern about. It creates a National Infrastructure Bank, 
an Office of Public Benefit, an Office of Livability, just to 
name a few.
    And when we are talking about new elements that we are 
adding into our highway reauthorization bill at a time when 
money is scarce and when we need to invest in our 
infrastructure--which I am all for--I think we have the 
obligation as Members of Congress to be very good stewards with 
our taxpayer dollars to put that money exactly where it needs 
to go, where it will benefit our economy first and foremost so 
we can get this economy moving again and create those jobs and 
create an atmosphere to where you want to invest your money 
back into your businesses and create those jobs.
    So I am looking forward to hearing your testimony. I will 
tell you that as we consider our next highway reauthorization 
bill--and Chairman Altmire and I are both on the Transportation 
Committee--that I am concerned about the effect of any type of 
taxes that may be increased, especially on small businesses 
with fuel charges. It would affect your delivery of products 
and services, because those costs have to be passed on down to 
the consumers and to the other suppliers that you work with.
    We have talked about raising the gas tax, the mileage tax. 
We have talked about Davis-Bacon, prevailing wages. All those 
things have been mentioned as we talk about how are we going to 
fund our next highway transportation bill and what will be in 
the bill itself.
    So thank you all for coming today. I hope that we can all 
work together here in Congress to build a responsible and cost-
efficient way to sustain our national transportation needs and 
promote measures that will allow our transportation projects to 
be completed and, hopefully, in a way that doesn't overburden 
the construction of those services with too much red tape from 
our government. So I appreciate you coming here today.
    Mr. Chairman, I yield back my time.
    [The statement of Ranking Member Fallin is included in the 
appendix.]
    Chairman Altmire. Congressman Shuster.
    Mr. Shuster. Thank you, Mr. Chairman, for allowing me to 
sit in on the Committee today. I was on the Small Business 
Committee for four terms. This is the first term I haven't 
been. They were able to find my old name tag so they didn't 
have to make one up. I appreciate that. I am sure it was in the 
bottom of the box with a little dust on it. So thank you for 
letting me sit in.
    I want to welcome all of the people here testifying today, 
especially Tom Kirchhoff, who is Executive Vice President and 
COO of Cleveland Brothers Equipment, in the Ninth District and 
sells a lot of equipment into the Ninth District. We appreciate 
that greatly and what you do.
    I want to echo what my colleagues have said about the 
importance of the highway authorization bill. It is important 
to the economy of the United States, it is important to small 
businesses to be able to get some consistency, to be able to 
plan over the next 6 years what they are going to do in their 
businesses to expand them, contract. And what are you going to 
do with employees? I have heard story after story how companies 
in this economy don't really want to lay off people, because 
when the economy turns or when we pass a highway bill we want 
to have the people in place, whether it is people in the 
quarries or on road crews or in places like Cleveland Brothers, 
mechanics being able to fix the equipment.
    So I know it is a struggle not knowing what is going to 
happen. I think an 18-month extension is not the best thing for 
the economy or businesses, especially small businesses.
    I do have to say the stimulus bill that I was not in favor 
of has not got the money out as fast as we thought it would or 
hoped it would or were told it would. Although in Pennsylvania, 
it is the one shining example of where money seems to be 
flowing out. I know Secretary LaHood uses Pennsylvania. When 
they ask about the stimulus bill, he points to Pennsylvania. So 
we are doing something right in Pennsylvania when it comes to 
getting the money out to infrastructure jobs.
    And as my colleague from Oklahoma said, the $450 billion 
question is: Where are we going to get the money? And I think 
you have to look at it in all places, whether it is the public-
private partnerships, tolling, looking at the user fees. 
Somebody has got to pay for it. It is not magic. Sometimes as 
politicians we get out there and say we want to do this and do 
that, but at the end of the day somebody has to pay. And who 
always pays is the American people. So we want to go about it 
in a fair and equitable way that we get the best bang for our 
buck.
    So again I thank all of you for being here and taking your 
time to come to Washington. And, again, Mr. Chairman, thank you 
for allowing me to sit in on this. Thank you.
    Chairman. Altmire. We will now move into the testimony. For 
those who have not testified before, we have a light system 
there. You will each have 5 minutes to give your remarks. It is 
right in the middle of that table there. The green light means 
you are good. The yellow light means you have 1 minute 
remaining. And the red light means you are done; start to 
summarize and wrap up. And then we are going to get into the 
questions.
    So we are going to begin by introducing Mr. John M. Mills. 
Mr. Mills is President and Treasurer of Plum Contracting, 
Incorporated, located in Greensburg, Pennsylvania. Plum 
Contracting is in highway groups and a utility contractor. Mr. 
Mills is here to testify on behalf of Associated General 
Contractors of America. Founded in 1918, AGC represents more 
than 32,000 firms in the contracting industry.
    Chairman Altmire. Welcome, Mr. Mills.

                   STATEMENT OF JOHN M. MILLS

    Mr. Mills. Good morning, Chairman Altmire, Ranking Member 
Fallin, and Congressman Shuster. Thank you for the opportunity 
to testify on a topic of great importance to the highway and 
bridge construction industry: the upcoming highway bill. My 
name is Jack Mills. I am the owner and president of Plum 
Contracting, located near Delmont in Westmoreland County, 
Pennsylvania. I am a resident of Plum Borough in Allegheny 
County.
    Plum Contracting was incorporated in 1980. We had nine 
employees and we did work as a subcontractor installing edge 
drains and erosion-control features on roads and highways 
throughout Pennsylvania. In 1999 Plum diversified into road and 
bridge building. Today we are a prime contractor for projects 
up to $10 million and annual revenues around $30 million.
    Plum is a member of the Construction Association of Western 
Pennsylvania and the Associated General Contractors of America, 
on whose behalf I am pleased to represent today. AGC is the 
largest and oldest national construction trade association in 
the United States, representing more than 33,000 firms engaged 
in construction of the Nation's public works infrastructure and 
commercial facilities.
    Plum Contracting is a small business in the highway and 
bridge construction industry. We have built projects that have 
had a positive impact on economic opportunities in western 
Pennsylvania. We recently completed an 8.5 million project in 
New Stanton, PA, and are currently working on a $7.5 million 
project in Westmoreland County. We have an office staff of nine 
professionals and 40 full-time field employees. Plum 
Contracting is a union contractor, and our current weekly 
payroll is around 100 employees.
    Plum has been affected by the downturn in the highway and 
bridge funding. Our revenues and weekly payrolls have decreased 
by around 35 percent since 2007. Nationwide, construction 
unemployment is still at 17.4, percent compared to the total 
unemployment rate of 9.7 percent. The Recovery Act is already 
going a long way towards creating and saving these jobs. And in 
fact, Plum Contracting is a subcontractor on a Recovery Act job 
in Pennsylvania.
    Last summer, to address revenues, Plum Contracting expanded 
its bridge division and was successful in being the low bidder 
on six bridge projects in Pennsylvania. Although we currently 
have a backlog, we expect our profit margins to be down this 
year due to the increased competition for the work in this 
industry. That is why we have a vested interest in the upcoming 
highway bill, which we hope will substantially increase Federal 
funding for highway and bridge work as well as the immediate 
crisis facing the balance of the Highway Trust Fund.
    First, let me address the Highway Trust Fund. The U.S. 
Department of Transportation and others have found that the 
balance of funds will fall below the minimum cash level 
necessary to make daily payments by the end of August. When 
this happens, the U.S. DOT will be required to drastically slow 
down State reimbursements for highway and bridge work. Action 
is needed immediately to fix this problem.
    The American Association of State Highway and 
Transportation Officials estimate that the additional 8 billion 
transfer of general funds into the Highway Trust Fund will be 
necessary to accomplish this. The fund also needs an additional 
10 billion in fiscal year 2010, when the program could face a 
35 percent cut in funding.
    In the contracting business, contractors typically do the 
work and incur the costs and then submit payment requests to 
the State. However, in a payment slowdown or stoppage 
situation, your payment is delayed, meaning the contractor is 
the one who suffers the cash flow crunch. This is exceptionally 
problematic for small business contractors who rely more on 
timely repayments to stay afloat.
    Congress must take the steps immediately to bring short- 
and long-term certainty to the program. The construction 
industry makes decisions about investments and new equipment 
and in retaining and training a workforce based on its best 
projection about where the market will be over the long term. 
This is particularly true for small businesses which typically 
have less operating capital to invest.
    To bring long-term certainty to the program, Congress must 
also continue work towards enacting a multiyear surface 
transportation authorization bill to replace SAFETEA-LU, which 
expires on September 30. We ask Congress to reject proposals by 
the administration to delay action on the critical legislation 
until March 2011. Our transportation challenges will not solve 
themselves and will only get worse over the next 18 months.
    Congress must enact a bill that establishes a national 
vision for a transportation system that meets 21st century 
needs. Congress must provide the resources to improve existing 
assets to expand system capacity, both transit and highway, and 
to reduce congestion and prevent highway facilities.
    To fund these national priorities, we urge Congress to 
increase the Federal motor fuels tax to recoup lost purchasing 
power and index it to inflation, while moving towards a non 
fuel-based financing mechanism for the future. We recognize 
that a fuels tax increase is a tough political decision, but 
this user fee, which has not been increased since 1993, is the 
most reliable and efficient method to finance surface 
transportation improvements in the short term.
    We also recommend that Congress take steps to improve work-
zone safety for construction workers and motorists by calling 
for greater use of barriers in highway work zones, despite the 
increased costs. Smaller contractors have a hard time bidding 
for projects that require these measures because of their costs 
and the difficulty including their costs in the overhead.
    Mr. Chairman, the United States has been under-investing in 
our transportation systems for far too long. The under-
investing is costing U.S. businesses, small and large, and the 
traveling public time and money. Congress must address the 
immediate short-term shortfall facing the Highway Trust Fund 
before it breaks for the August recess, and it must continue 
efforts to enact a multiyear bill that increases investment and 
provides construction companies with the continuity that allows 
them to thrive and contribute to the Nation's economic well-
being. Thank you.
    Chairman Altmire. Thank you, Mr. Mills.
    [The statement of Mr. Mills is included in the appendix.]
    Chairman Altmire. For our next witness, Mr. Kirchhoff's 
introduction, I am going to send it over to Congressman 
Shuster.
    Mr. Shuster. Thank you very much, Mr. Chairman.
    Tom, welcome today. Tom Kirchhoff is the Executive Vice 
President and Chief Operating Officer of Cleveland Brothers 
Equipment in Harrisburg, Pennsylvania. Cleveland Brothers 
sells, rents, and services Caterpillar construction equipment 
throughout the State of Pennsylvania and, as I mentioned 
earlier, most importantly, throughout the Ninth Congressional 
District in Pennsylvania.
    Mr. Kirchhoff is here to testify on behalf of the 
Associated Equipment Distributors. AED members provide 
construction equipment and supplies and services in the U.S. 
and in Canada.
    So again, Tom, welcome.

                   STATEMENT OF TOM KIRCHHOFF

    Mr. Kirchhoff. Good morning, Chairman Altmire, Ranking 
Member Fallin, and Congressman Shuster. It is my pleasure to 
come before you today both in my capacity as a small business 
owner and as a spokesman for my industry, to discuss the ways 
in which highway investment affects small companies.
    Cleveland Brothers is the authorized Caterpillar 
construction distributor for 59 Pennsylvania counties, in an 
area that stretches from the northeast corner of the State 
throughout all of central and western Pennsylvania, including 
Pennsylvania's Fourth Congressional District and the Ninth. Our 
territory also includes 17 counties in northern West Virginia 
and two in western Maryland. Our family-owned company has 27 
locations and 1,050 employees.
    I am also testifying on behalf of the Associated Equipment 
Distributors, the national trade association representing 
authorized independent distributors of construction, mining, 
forestry, and agricultural equipment. AED has more than 1,000 
members, the overwhelming majority of which are small 
businesses. Approximately 48 percent of the Association's 
distributor members report revenue of $10 million or less.
    I would like to use my time this morning to highlight three 
key points. First, America's surface transportation 
infrastructure policy is in a state of crisis. Numerous studies 
have concluded that our Nation's crumbling highways threaten 
our economic vitality and public safety, and the transportation 
investment should be increased at all levels of government.
    The Texas Transportation Institute reported just last week 
that traffic congestion, resulting in large part from 
inadequate road capacity, cost the country $87.2 billion per 
year in wasted time and fuel. A study released earlier this 
month by the Transportation Construction Coalition found that 
more than half of all highway fatalities are related to 
deficient road connections, and that poor roads are the single-
most lethal contributing factor to motor vehicle crashes.
    And the Surface Transportation Revenue and Study 
Commission, which was established by Congress to examine the 
infrastructure crisis, said last year that the United States 
should be investing at least $225 billion annually from all 
sources to upgrade our existing surface transportation system. 
We are spending less than 40 percent of that amount today.
    The current highway reauthorization presents an ideal 
opportunity to tackle this crisis. However, at the same time 
that Americans are waking up to problems with our highways, the 
Highway Trust Fund, the primary vehicle for surface 
transportation investment, is on the verge of bankruptcy. 
Congress must therefore take immediate action both to shore up 
the HTF and to enact a long-term plan to address the Nation's 
infrastructure investment shortfall.
    My second point is that highway investment has a 
significant market impact on the small business-dominated 
equipment distribution industry, which is why my colleagues and 
I are so attuned to the problems facing the highway program. A 
study conducted by George Mason University economist Steven 
Fuller last year determined that, on average, 6.4 cents of each 
dollar spent on highway construction is spent to buy and lease 
new equipment and on major repair and maintenance outlays. Dr. 
Fuller also found that every dollar of direct spending for the 
purchase of heavy construction equipment generates a total of 
$3.19 in economic impact. This represents $1 of direct spending 
and $2.19 in indirect and induced economic activity as the 
money spent at equipment dealerships like Cleveland Brothers is 
re-spent by AED members and their employees in other sectors of 
the economy.
    Dr. Fuller's research confirms that highway spending at all 
levels of government has a major impact on equipment 
distributors. It also shows that in addition to the long-term 
societal benefits of infrastructure investment, the related 
spending on construction equipment and services has significant 
economic impact in communities throughout the Nation where AED 
members do business and their employees live and work.
    My third point is that the uncertainties surrounding the 
near-term health of the Highway Trust Fund and the status of 
reauthorization are adding to the historic instability in 
construction markets and negatively affecting equipment 
distributors and their contractor customers.
    AED members around the country report market conditions 
similar to those that I face in Pennsylvania. Contractors lack 
confidence in the long-term demand for their services and are 
therefore refraining from purchasing new equipment. As a 
result, equipment distributors like Cleveland Brothers have 
seen sharp declines in sales. Equipment inventory is piling up 
and putting a strain on distributors who must finance the 
machines in their yards at a time when credit has tightened 
dramatically.
    The problems are compounded by the fact that State 
governments have been forced to slash their transportation 
budgets, and uncertainty about the future of the Federal 
program is making it more difficult for State transportation 
departments to plan.
    AED members are, like other small construction industry 
companies, directly affected by the uncertainties facing the 
Federal Highway Program. However, AED members are also 
affected, along with other businesses and the public at large, 
by inadequate infrastructure investment at all levels of 
government. In urban areas, our members and their employees 
confront traffic congestion which drives up costs of doing 
business and wastes precious time and fuel. In rural areas, 
inadequate investment means unsafe roads and diminished access 
to jobs, customers, and public services.
    Mr. Chairman, I see that my time is about to expire, and I 
wonder if I might have 1 minute to conclude my remarks.
    In conclusion, the United States is confronting an 
unparalleled infrastructure crisis which threatens our ability 
to compete globally in the 21st century and which threatens the 
safety of our citizens. At the same time, the uncertainty 
surrounding Federal infrastructure programs is contributing to 
historic volatility in equipment markets and compounding the 
challenges facing the construction industry at large.
    Congress can address these two issues simultaneously by 
quickly resolving the near-term solvency of the Highway Trust 
Fund and by enacting a long-term highway reauthorization bill 
that dramatically increases highway capacities and creates new 
revenue streams to support infrastructure investment.
    We look forward to working with the members of this 
Subcommittee and with all your House and Senate colleagues in a 
bipartisan manner to achieve these goals. Thank you again for 
the opportunity to participate in this hearing, and I look 
forward to answering any questions you may have.
    Chairman Altmire. Thank you.
    [The statement of Mr. Kirchhoff is included in the 
appendix.]
    Chairman Altmire. We will turn now to Mr. Rob Robinson. Mr. 
Robinson is Chairman of Urban Design Associates based in 
Pittsburgh, Pennsylvania. His firm offers is urban design and 
architectural services. Mr. Robinson is here to testify on 
behalf of the American Institute of Architects. Founded in 
1857, the AIA is the leading professional membership 
association for licensed architects. Welcome, Mr. Robinson.

                   STATEMENT OF ROB ROBINSON

    Mr. Robinson. Thank you very much, Chairman Altmire, 
Ranking Member Fallin, and Congressman Shuster. I appreciate 
the opportunity to appear before you to discuss the 
transportation policy and its impact on small businesses.
    At Urban Design Associates--and we were founded in 1964--we 
have spent our lives designing cities, towns, and neighborhoods 
as vibrant places for people to live, work, and play. Through 
our projects, we see how transportation systems connect people 
to jobs, connect people to opportunities, and to each other to 
create liveable, sustainable, and prosperous places.
    I am also pleased to represent the American Institute of 
Architects, because the AIA is comprised of more than 83,000 
licensed architects, architects in training, and allied 
professionals who are committed to the planning and design of 
safe and sustainable buildings and communities. Today, 
thousands of AIA architects are involved in designing 
transportation systems, transit facilities, roadway amenities, 
and master plans that don't just foster mobility and access but 
also create sustainable, smart communities. Many of those 
architects work for small firms like my own and many are sole 
practitioners.
    In fact, 96 percent of U.S. architecture firms have 50 or 
fewer employees, and those firms account for nearly six in ten 
of the workers who are employed by architectural companies 
nationwide.
    It is small-design firms like ours that drive prosperity in 
our communities. We are in multiple places, almost always 
locally, working for communities we know well. However, the 
current economic crisis has devastated much of the architecture 
profession. There is no secret about that. Every architect I 
know has seen layoffs and cutbacks in his or her firms. Smaller 
firms are particularly harder hit.
    The challenges our Nation faces are not just confined to 
the economy. The fragile state of infrastructure in many of our 
communities is challenging our ability to recover and prosper. 
This is why we think it is vital for Congress to pass the 
comprehensive legislation this year rather than waiting for 
some in the future.
    The Surface Transportation Authorization Act couldn't come 
at a better time. It recognizes what we know as architects so 
well: that well-planned and -designed transportation projects 
create prosperous, sustainable, and liveable communities. This 
legislation will rebuild our infrastructure, it will reduce 
congestion and lower greenhouse gas emissions. Most 
importantly, it will create jobs; jobs for architects and 
planners, engineers, builders, operators, maintenance 
personnel, suppliers. It is a huge and interrelated network 
dependent on the transportation improvements.
    At a time when unemployment is nearing 10 percent, it makes 
no sense for us to delay legislation that will create so many 
well-paying jobs across many spectrums of the economy. The 
impact of the bill on job creation is not limited to direct 
employment either. Its benefits to the small business community 
will be significant.
    First, well-designed transportation projects create 
attractive and accessible business districts where small 
businesses can flourish. And this is particularly true in older 
historic Main Streets and central business districts. And in 
Pennsylvania we have got many of those conditions all linked 
together to make for a stronger regional economy.
    Second, a 21st century transportation system will help 
people live near where they work, and that will grow the talent 
pool for small businesses and reduce dependency on fossil fuels 
and long commutes.
    Third, a 21st century transportation system will reduce 
congestion, pollution, and improve the safety and reliability 
of the transportation network. As you mentioned earlier, every 
minute stuck in traffic, every axle damaged by potholes, is 
money off the bottom line. Small businesses with thinner profit 
margins and tighter cash flows can't really depend on an 
unreliable transportation system.
    For those reasons, we think that Congress simply cannot 
wait another 18 months or longer to pass a transportation bill. 
It must act now.
    In my written statement to you, I have made recommendations 
to ensure the bill will help small architecture firms plan and 
design transportation that will strengthen our country, and I 
will summarize those briefly.
    The legislation should provide ample opportunities for 
small businesses to take part in the design and construction of 
new transportation infrastructure, including the design of 
transit and intermodal facilities which has really a direct 
impact on multipliers within towns and cities. The legislation 
should ensure that small firms have a chance to compete for and 
win contracts. And the legislation should preserve provisions 
in current law that require funds to be awarded to architecture 
and engineering firms through qualifications-based selection. 
QBS ensures that architects and engineers who design public 
projects are the most qualified to do the work.
    We appreciate the opportunity to provide testimony on this 
important issue, and I am happy to answer any questions after 
the testimony here. Thanks.
    Chairman Altmire. Thank you, Mr. Robinson.
    [The statement of Mr. Robinson is included in the 
appendix.]
    Chairman Altmire. We now move to Mr. Rod Martin. Mr. Martin 
is the Vice President of Martin Stone Quarries, Inc., in 
Bechtelsville, Pennsylvania. Martin Stone Quarries has been 
serving southeastern Pennsylvania and surrounding States with 
stone and gravel since 1953. Mr. Martin is here to testify on 
behalf of the National Stone, Sand, and Gravel Association 
which represents the crushed stone, sand, and gravel industries 
in the U.S. Welcome, Mr. Martin.

                    STATEMENT OF ROD MARTIN

    Mr. Martin. Thank you, Chairman Altmire, Ranking Member 
Fallin, and Congressman Shuster for inviting me to testify 
today on behalf of the National Stone, Sand, and Gravel 
Association on the importance of the reauthorization of our 
Nation's surface transportation law to the aggregates industry, 
particularly its small business members.
    The National Stone, Sand, and Gravel Association represents 
the crushed stone, sand, and gravel or construction aggregates 
industry. Its member companies produce more than 90 percent of 
crushed stone and 70 percent of the sand and gravel consumed 
annually in the United States. There are more than 10,000 
aggregate operations nationwide, and almost every congressional 
district is home to a crushed stone, sand, or gravel operation.
    Proximity to market is critical to high transportation 
costs, so 70 percent of our Nation's counties include an 
aggregate operation. Of particular relevance, 70 percent of the 
NSSGA's members are considered small businesses.
    As you said, Martin Stone Quarries was founded in 1953 by 
my grandfather, Henry Martin. We operate two granite quarries 
in Bechtelsville, Pennsylvania, and people have actually 
quarried at our one site since the late 1800s. Right now, I run 
the business with two other third-generation owners, and we 
currently employ 58 people, which is down 20 percent from 2006 
levels.
    In addition to providing quality materials and services to 
our customers, we are committed to being a responsible 
corporate member of our surrounding community. Our time, 
materials, and financial resources have been routinely donated 
to the construction and restoration of local parks, recreation 
areas, and churches. Educational field trips are offered to any 
interested school districts to inform the local students about 
the unique nature of the mining industry. We have also opened 
our gates to local fire companies, allowing them to perform 
mock rescue drills inside the quarry.
    Nearly two-thirds of the nonfuel minerals mined each year 
in the United States are aggregates. Construction aggregates 
are used primarily in asphalt and concrete; 94 percent of 
asphalt pavement is aggregate and 80 percent of concrete is 
aggregate, and every mile of interstate contains 38,000 tons of 
aggregate.
    The business of successfully building and maintaining our 
national surface transportation infrastructure depends in large 
measure on funding stability and year-over-year predictability 
provided by the Surface Transportation Act. The current law, 
SAFETEA-LU, does expire on September 30, and it is imperative 
that Congress act to reauthorize the law now or lose many of 
the benefits of the economic stimulus package that are just 
beginning to be felt by the construction sector.
    Reauthorization is critical to NSSGA's many small aggregate 
producers. Sixty percent of our business comes directly from 
road construction and sales to asphalt plants, concrete plants, 
and other highway contractors. We are no different than the 
majority of the small business producers in the NSSGA. 
Multiyear reauthorization provides an important continuity that 
my company, our employees, and our customers rely on in order 
to meet significant needs of the local, State, and Federal 
transportation systems.
    In the absence of a long-term plan, our customers are 
telling me that they are not sure what the next years are going 
to bring them; therefore, causing me to withhold investing in 
plants and new machinery for the foreseeable future.
    It is also increasingly difficult for us to do workforce 
planning due to the uncertain demand. We are looking at 
possibly another round of layoffs that will take our workforce 
down again if there is no improvement in marketing conditions 
and Congress fails to pass a multiyear reauthorization plan.
    I would like to thank you for allowing me to testify today 
on the importance of this action on a multiyear surface 
transportation bill. Martin Stone and the members of the 
National Stone, Sand, and Gravel Association look forward to 
working with Congress in developing a reauthorization bill that 
will spur economic revitalization by creating jobs, as small 
businesses generate 60 to 80 percent, while simultaneously 
building the surface transportation network of the 21st 
century.
    Thank you again for allowing me to testify today, and I 
will be happy to take any questions later.
    Chairman Altmire. Thank you, Mr. Martin.
    [The information is included in the appendix.]
    Chairman Altmire. And for the introduction of our final two 
witnesses, I will turn it over to Ranking Member Fallin.
    Ms. Fallin. Thank you, Mr. Chairman. I would like to 
introduce Mr. Henry Ross from Elmira, New York. Mr. Ross is 
chairman of the board of the American Traffic Safety Services 
Association, and employed by the USA-SIGN, a small sign 
manufacturing company, where he serves as director of sales and 
marketing. And we want to thank you for coming to Washington, 
D.C. to help us with this Committee hearing. Mr. Ross.

                   STATEMENT OF HENRY A. ROSS

    Mr. Ross. Thank you, Congresswoman Fallin. Mr. Chairman and 
Congressman Shuster, thank you for being here. Thank you all 
very much for giving me the opportunity today to discuss the 
transportation authorization and its effects on small 
businesses and on the Nation as a whole.
    As the Ranking Member said, my name is Henry Ross. I am 
chairman of the board of directors of American Traffic Safety 
Services Association, and I am employed by USA-SIGN, a traffic 
sign manufacturing company in Elmira, New York.
    American Traffic Safety Services Association, an 
international trade association, is located in Fredericksburg, 
Virginia. And since 1969 it has represented companies and 
individuals in the traffic control and roadway safety industry.
    Over 1,600 ATSSA members provide the majority of features, 
services, and devices used to make our Nation's roadways safer. 
These include pavement markings, road signs, work-zone traffic 
control devices, guard rail, and other safety features.
    Many of ATSSA's members who focus on roadway safety 
infrastructure are small business owners. For example, 
temporary traffic control operations are more often than not 
performed by small businesses that act as subcontractors in 
work zones.
    Late last month, House Transportation and Infrastructure 
Chairman James Oberstar and Ranking Member John Mica introduced 
the Surface Transportation Authorization Act of 2009, a 775-
page draft, for a new, comprehensive, 6-year transportation 
bill. This draft truly highlights the Nation's needs for 
increased roadway safety.
    Last year, a little more than 37,000 men, women, and 
children perished on America's roadways. ATSSA, through its 
Toward Zero Deaths Vision Plan, is committed to reducing these 
tragically high numbers through a targeted investment in 
roadway safety infrastructure. The House Transportation and 
Infrastructure Committee's bill is committed to reducing these 
deaths through new performance measures, and ATSSA commends 
them for that.
    One concern of our members is timely payment. Small 
businesses rely on timely payment due to limited cash flow. 
While subcontractors are often first on and last off the work 
site, they may be the last to be paid. These small businesses 
rely on projects created through the transportation 
authorization to keep their businesses running, to hire and 
maintain existing employees, and to buy new equipment.
    For example, one of our California members who owns a 
pavement marking company mentioned his frustration to ATSSA 
staff just yesterday regarding timely payment to 
subcontractors.
    California prompt pay statutes require all payments to be 
made to subcontractors within ten days. The reality is that 
sometimes the payments don't get doled out for 30 days. 
Sometimes it is over 6 months. Even public agencies have been 
known not to pay within the 10-day required period.
    ATSSA would like to recommend that the Committee consider 
directing the Secretary of Transportation to undertake a study 
of payment practices to small businesses that are receiving 
funds for Federal aid highway projects, and report back to 
Congress their findings on these payment practices within a 
year of passage of the transportation authorization. It is 
unfair for small businesses to struggle to stay afloat due to 
delayed payments. The results from such a study could be 
utilized as a basis for further action.
    There truly is a ripple effect throughout the construction 
industry with each new authorization bill that is enacted. 
Unfortunately, without a timely new transportation 
authorization focused on expanding investment in our Nation's 
transportation safety infrastructure, these small businesses 
will indeed suffer.
    Many argue that the recent passage of the American Recovery 
and Reinvestment Act, that with the passage of that there is no 
need for a reauthorized transportation bill. In our opinion, 
this is exactly the right time to continue to invest in our 
Nation's transportation infrastructure. These small businesses 
are beginning to feel the positive effects of the stimulus 
package and have started to rehire previously laid off 
employees. To halt any forward momentum at this time would be 
devastating. If the transportation authorization is delayed 
past the September 30 expiration of SAFETEA-LU, then many of 
these small businesses will have to begin to cut back on 
employees, new hires, equipment, and material purchases.
    Federal highway programs authorized under the 
transportation authorization account for 40 to 45 percent of 
the total roadway dollars spent annually in the United States. 
In addition, many of the contracts that our member companies 
work on stem from the Highway Safety Improvement Program, HSIP. 
ATSSA continues to advocate that these HSIP funds not be 
transferrable out of HSIP to other programs. According to the 
Federal Highway Administration, seven States have transferred 
their dollars out of their HSIP funds. With these transfers, 
funding flows away from the safety-specific subcontractors and 
our small businesses that work on these vital safety projects 
and save lives. There should be an end to transferring 
infrastructure safety dollars out of HSIP due to the continuing 
death toll on our Nation's highways.
    Chairman Altmire, Ranking Member Fallin, Congressman 
Shuster, there is great urgency and anxiety throughout our 
member companies, especially within those which are small 
businesses that rely on the authorization projects to continue 
their day-to-day operations and their prosperity.
    America truly is the land of opportunity. ATSSA's small 
business members bring needed services, safety devices, and 
jobs to communities throughout the country. Many of us can 
agree that the United States is still facing troubling economic 
times.
    Let's all work together, small businesses, local, State, 
and Federal governments, the hardworking men and women, to 
better our roads and make them safer, boost our economy, and, 
most importantly, save lives on our roadways. ATSSA's small 
business member companies are eager, willing, and capable, and 
with an authorized transportation bill we can all work together 
over the next 6 years to do just that. There is no time for a 
12-month, or an 18-month extension, for that matter. Our small 
businesses across the country can't afford this kind of delay.
    Thank you very much for the opportunity to testify, and I 
will take your questions. Thank you.
    Chairman Altmire. Thank you, Mr. Ross.
    [The statement of Mr. Ross is included in the appendix.]
    Chairman Altmire. For our final witness, to introduce Mr. 
Filipczak, I will turn it over to Ranking Member Fallin.
    Ms. Fallin. Thank you, Mr. Chairman. We are pleased today 
to have Michael Filipczak from Elkridge, Maryland. Mr. 
Filipczak is the president of a company called Midasco, which 
is a specialty infrastructure contractor. And we appreciate you 
coming today to talk about our infrastructure problems.

                 STATEMENT OF MICHAEL FILIPCZAK

    Mr. Filipczak. Chairman Altmire, Ranking Member Fallin, and 
Congressman Shuster, thank you very much. My name is Michael 
Filipczak, and I am the president of Midasco LLC, a specialty 
infrastructure contractor based in Elkridge, Maryland. It is my 
pleasure to appear today on behalf of the American Road and 
Transportation Builders Association.
    ARTBA represents the transportation construction industry 
that builds and preserves the Nation's roads, bridges, transit 
systems, airports, railroads, and waterports.
    Midasco is a signing, lighting, traffic signal, tolling and 
intelligent transportation system contractor. We perform both 
construction and maintenance services, and work both as a prime 
contractor for various State agencies and as a subcontractor to 
other contractors primarily on interchange and major bridge 
projects. We employ about 140 people and operate primarily in 
Maryland, Virginia, and North Carolina.
    According to the latest economic census conducted by the 
U.S. Bureau of the Census, there are just over 11,000 business 
establishments involved in transportation construction. Most of 
these are small businesses. More than 90 percent have less than 
100 employees, and the average has about 40 employees. So my 
industry is largely comprised of small businesses, and the 
improvements we deliver are very important to an even broader 
range of smaller firms throughout our economy.
    Small businesses depend on the Nation's transportation 
network to move people and products around town and throughout 
the country. Highway congestion has become a major drain on the 
energy and vitality of American small businesses. It negatively 
affects small businesses in three significant ways:
    First, when employees are paid by the hour, time lost 
waiting in traffic or waiting for a delivery means higher 
costs.
    Second, when businesses are paid by the job, by the trip, 
or by the call, traffic congestion that reduces the number per 
day means lower income for the businesses.
    Third, and most importantly, when the day is spent dealing 
with the fallout of highway congestion, scheduling, routing, 
late deliveries, missed appointments, or unhappy customers, 
this takes time away from planning and growing the business.
    The reauthorization of the Federal highway and public 
transportation programs has the potential to be a major benefit 
to small businesses. Unfortunately, virtually every State is 
facing budget shortfalls. According to the National Governors 
Association, 15 States have cut transportation investment in 
2009, and 19 States will make similar reductions in 2010.
    At the same time, revenues flowing into the Federal Highway 
Trust Fund will fall short of meeting fiscal year 2009 highway 
investment commitments and not be able to support current 
levels of spending beyond this year.
    The only bright spot is the transportation investment from 
the American Recovery and Reinvestment Act. Due to State budget 
challenges, however, in many cases and many areas, the stimulus 
funds are simply enabling States to maintain current 
activities. It is this confluence of challenges that makes the 
current push by some to delay the reauthorization until march 
of 2011 so mind-boggling. We learned the hard way from 2001 to 
2005 that uncertainty at the Federal level at a time of 
economic and State budget difficulty leads to a stagnated 
national effort to deliver surface transportation improvements.
    Beyond the economic cost of our current system, we are 
paying too great a price in safety. Our recent study by the 
Pacific Institute for Research and Evaluation revealed that 
deficiencies in the Nation's roadway environment contributed to 
more than 22,000 fatalities and cost the Nation more than $217 
billion annually. My company specializes in safety 
improvements, and I agree with the report's conclusion that 
making the roadway environment more protective and forgiving is 
essential to reducing highway fatalities and costs.
    Mr. Chairman, the Nation's transportation's challenges will 
not solve themselves, and postponing the reauthorization is not 
going to make the difficult decisions associated with that bill 
any easier. Absent major initiatives by all levels of 
government and the private sector, traffic congestion will get 
worse, physical conditions will deteriorate, and U.S. 
competitiveness in the global marketplace will be further 
impaired.
    The House Transportation and Infrastructure Committee has 
produced a robust and comprehensive reauthorization bill. The 
bill represents an excellent beginning of the reauthorization 
process and should be a call to action for all Members of 
Congress. We urge you to push for action on a multiyear 
reauthorization bill to address the transportation needs of our 
Nation and its small businesses.
    Thank you for allowing me to speak before you today, and I 
would be happy to respond to any questions.
    Chairman Altmire. Thank you.
    [The statement of Mr. Filipczak is included in the 
appendix.]
    Chairman Altmire. And thank you to all the witnesses. We 
realize that you have each taken a day or two off of your work 
from your business and the impact that that has. You traveled 
here at your own expense, and we really appreciate the effort 
that you put into being here today. It is helping us greatly as 
we work through this very important issue of whether or not to 
delay the highway bill, as we are talking about, which none of 
us support. And it helps us to have a face with this issue, 
with each one of you and your businesses, and how it is going 
to directly impact. So thanks to each one of you.
    We are going to do two rounds of questions. Each of us, 
including myself, will have 5 minutes each, and then we will go 
through twice, just for planning purposes.
    I am going to open it with Mr. Mills. In many respects it 
is advantageous for the government to contract with the smaller 
firms. Small local businesses can get to work quickly, they can 
access the labor market, and are often more innovative. What 
advantages do you feel that small business contractors offer 
the government?
    Mr. Mills. First off, one is that we are a little bit more 
competitive. We have smaller overhead than the large 
corporations. If there is a change in the type of work that the 
DOTs are letting, we can make the change overnight where the 
larger corporations aren't able to do that.
    Chairman Altmire. Thank you.
    For Mr. Ross, deteriorating road conditions are a 
significant cause of motor vehicle accidents, as you pointed 
out. So in the context of what we try to accomplish with the 
highway bill--which many people think is rebuilding our roads 
and bridges, crumbling infrastructure, which is critically 
important, certainly in Pennsylvania and around the country--
but what are the key steps the Congress can take in the highway 
bill specifically to improve road safety?
    Mr. Ross. Mr. Chairman, thank you for that question. As you 
may know, ATSSA has put forward a Toward Zero Deaths, what we 
call a reauthorization or an authorization policy.
    There are significant initiatives laid out in there. One of 
them is to increase funding for high-risk rural roads. An 
inordinate percentage of the highway deaths that occur, occur 
on rural roads, and yet the investment in low-cost safety 
solutions can be increased dramatically and can affect those 
fatalities.
    One of the emerging issues also is the specific funding of 
older-driver programs. The SAFETEA-LU provided for the program 
but didn't fund it. And we need to recognize that a greater and 
greater portion of the driving public is getting a little bit 
older and have needs that maybe go beyond some of the features 
that we are currently providing, such as sign size, the ability 
to see the signs as far as fonts and letter size and reflective 
materials and things of that sort. So those are just two right 
off the top of my head.
    Chairman Altmire. Thank you.
    Mr. Robinson, the American Institute of Architects' Moving 
Communities Forward study found that investing in 
transportation upgrades creates increased commercial activity. 
Can you elaborate from your testimony on the nature of the 
study, and what were the key driving factors in boosting this 
type of business activity?
    Mr. Robinson. Well, there are a number of things that are 
happening, both when that study was authored and continuing 
today, particularly with the investment in multimodal transit 
in urban regions, both in cities and in sort of the first-year 
suburbs.
    When you invest in the sort of multimodal platform for 
bringing buses, light rail, transit, bike, and walking 
together, it is all of the DNA you need to build a great 
integrated community that has amenities, has multiple uses, has 
synergy there where people are attracted to live and work. We 
are in that phase in this country where there is an enormous 
move back to urban mixed-use surface. I mean, the Gen Y-ers 
coming out of school where the opportunities are, it is a huge 
magnet.
    When you invest in the transportation infrastructure that 
hooks, connects people to jobs, as you can see in this region 
particularly, it is like a lightening rod for private sector 
investment around that. And I think it makes it easier on the 
funding side, because then you really do get private--we find 
you get a lot of private activity to complement the public 
investment. So that is a continuing theme. We see it all across 
the country in relatively a large variety of scales, from sort 
of small towns to large cities.
    Chairman Altmire. Thank you.
    I will now conclude and recognize Ranking Member Fallin.
    Ms. Fallin. Thank you, Mr. Chairman. And we appreciate all 
of you coming today, once again. And I appreciate your comments 
about not delaying the highway reauthorization bill and what an 
effect it would have upon your businesses and small businesses 
if we did wait 18 months. And, as the Chairman said, we are not 
for that. We want to get on with our planning and our highway 
reauthorization bill. We know how important it is to our 
infrastructure and safety, and, of course, the jobs.
    I have a question. I guess it is something we debate here 
in Congress quite a bit. With the stimulus package that was 
passed recently, a portion of that money went to highway 
infrastructure, not as much as what I would have liked to have 
seen. It was a very small portion of that bill. But we are 
always debating here in Congress whether that has created jobs 
or whether it has sustained jobs within your businesses.
    So I would just like to ask each of you, with the stimulus 
package that was passed and the portion that went to highway 
infrastructure, have you been able to actually create new jobs 
or are you just sustaining the jobs that you had? Because some 
of you mentioned having to make layoffs with the economy.
    Mr. Mills, I will start with you.
    Mr. Mills. Thank you for that question. In my particular 
business, we have one small subcontract where it is stimulus 
money. The other projects that are out for bid in Pennsylvania 
are smaller projects that I could do with a decreased 
workforce, and I would not replace or buy new equipment or 
lease new equipment to do the work on that. So what I have seen 
in the amount of jobs that are available to me, the stimulus 
package hasn't helped very much at all.
    Mr. Kirchhoff. Likewise, we have seen very little benefit. 
There has been some small paving work out there and some small 
bridge work, which I think has kept some idle equipment busy. 
It has not led to any increased acquisition of products from 
companies like Cleveland Brothers.
    A larger highway construction project would solve that 
issue, but the stimulus bill to this date has done nothing to 
allow Cleveland Brothers to remain fully employed. As a matter 
of fact we, 18 months ago, employed about 1,500 people; we are 
now down to a little over 1,000. So, steep declines.
    Mr. Robinson. I think for us in the architecture profession 
this is a little early to really evaluate how that is 
affecting, because it does--even though you say "shovel ready" 
and "things are ready," it takes a while. And we recognize 
that. But on our clients' side and the constituents', I think 
it is very early. You might be sustaining jobs, but we don't 
see any evidence on our client side of job creation yet.
    Mr. Martin. The same goes for our company. We haven't been 
able to create any new jobs with the stimulus package. There 
are a few stimulus projects in our area that are funded by the 
stimulus package, but they were getting ready to begin anytime 
soon anyway. So whether the dollars are actually from the 
stimulus, the signs are up there, but there haven't been any 
jobs created on our side because of the stimulus project.
    Mr. Ross. Anecdotally, we are hearing of some people who 
are hiring people back. I don't know that they are going to 
hire levels that they were, say, a year ago or a year and a 
half ago. We are also hearing, as was said I think earlier, 
that some of the stimulus money projects are just sort of 
replacing State programs. Some of the States are in such 
disarray funding-wise that, except for the stimulus money, I 
don't know that they would have a program at all. So it is just 
basically treading water and trying to keep your nose up above 
a certain level in certain areas, in certain geographic areas.
    So the stimulus money is helping that. But if not for that, 
it would be even a worse situation. But I wouldn't say that 
anybody is really doing well.
    Mr. Filipczak. Thank you, Ranking Member Fallin. It is 
really a great question that you ask, because we have not seen 
any job creation through the stimulus jobs. We have seen, 
really, a tremendous amount of bidding activity primarily in 
what we would consider maintenance, contracts for lighting or 
signals, or signing, which tend to be task order-based 
contracts.
    The downside of the bidding activity, though, is that there 
really has been sort of a feeding frenzy at the bid table as 
contractors sort of race to put this work into their backlogs, 
because they are not sure what is going to come beyond the 
stimulus money and the stimulus jobs without the 
reauthorization. And so it really has created a bit of a 
situation for us in that way. But in terms of job creation, we 
have not seen it.
    Ms. Fallin. Thank you, gentlemen. That is all really 
helpful.
    My other question was because I am very pro-small business, 
so I want you guys to be able to create jobs and opportunity 
and have investment. But we have been talking about a lot of 
policy changes here in Congress, and of course you all 
mentioned about support of raising gasoline taxes to fund the 
next highway reauthorization bill. But on top of that, if that 
is done here in Congress, we also have a new piece of 
legislation going through called cap-and-trade which could 
raise your costs as small businesses, especially your utility 
costs, your fuel costs. And then we, of course, are debating 
health care which can also raise your costs.
    So I guess my question is: As small business people, you 
are talking about possibly raising gasoline taxes to help fund 
the next highway reauthorization bill. And I am not sure what 
the right answer is on that yet. But if your health care costs 
should possibly go up and then cap-and-trade raises your 
utility costs and fuel costs, can you all sustain those cost 
increases to your business and will you still be competitive? 
Anybody? Mr. Mills.
    Mr. Mills. I think that if it is across the board, as far 
as being competitive, and all the contractors would be on the 
same level playing field, I think that that is okay.
    As far as the increased costs, ultimately it will be passed 
on to the owner, which would be in my case--consumer, which 
would be Pennsylvania, which would also be the taxpayers of 
Pennsylvania. I think for the amount of jobs that we create and 
the amount of families that we feed, I think it is well worth 
it.
    Mr. Kirchhoff. Likewise, we refer to it as a user fee at 
our company versus a gas tax. And I think the benefits of it--
decreased congestion, safer roads in the rural part of our 
territories and so forth--far outweigh the increased expense 
that our company would incur.
    And as to the other topics of health care and cap-and-
trade, I think we would be in a position with our current 
expense levels and so forth to be able to withstand--the little 
bit I am understanding of the new bill--be able to withstand 
that with our current levels of funding for that business.
    Ms. Fallin. That is interesting. Even though you have gone 
from 1,500 to 1,000 employees, you could withstand those cost 
increases?
    Mr. Kirchhoff. I would have to see what the final cost 
increases are. But I think--we invest heavily in our people. We 
have a very robust health care plan for our people. And I think 
anything that we are being obligated to do, we are already 
doing. So I am confident that we can handle that.
    Ms. Fallin. Okay.
    Mr. Robinson. I think it is always an interesting argument 
when you pose it as an increase in costs and operations, as if 
the way we are headed is not ultimately taking us to a much 
more expensive end gain. So this idea that you take this slice 
and it is going to cost you more for all of these things, yes. 
But isn't it really costing us a lot more for not doing this in 
the long run? I mean, every one of these are issues that have 
been piling up. So we are at that moment in history where we 
are trying to take care of a lot of stuff, and it happens to be 
all at once.
    I think small businesses are exactly--as has been said, we 
are able to respond to those, and we will survive and we will 
achieve and we will prosper. As long as it is all headed to 
reinvestment and recapitalizing this country, I think we are in 
good shape.
    Mr. Martin. We look at it the same way as Tom said, as a 
user fee. I mean, if you are going to use the road, you might 
as well pay the fee to use the road. And an increase in the 
user fee will give us more transportation work, which will give 
our company more work, which in turn will help us pay for the 
additional costs of the health care and the cap-and-trade. So 
we strongly are in favor of a user fee increase.
    Mr. Ross. Our Association agrees. We in our Toward Zero 
Deaths proposal actually have addressed an increase in the user 
fee. And I think we also have to look at it as a true 
investment, and the payoff is in creating jobs and saving 
lives. And we can get into all sorts of subsets of that, but 
that is the way we approach things.
    Mr. Filipczak. We are in favor of increasing the gas tax 
and in fact indexing that to inflation. And just from a company 
perspective, we look at it really two ways. You know, we pay 
now or we pay later. If we pay more in gas tax and we increase 
our internal fuel costs, that is a cost that I think we can 
absorb. But we are not just building those systems, we are also 
using those systems. We dispatch 35 crews every day, and they 
have got to get to the job site on time to respond to our 
customers.
    And so if we don't make the investment, then we are not 
going to be able to do the job that we have been contracted to 
do. So we are in favor of that.
    Ms. Fallin. Thank you, Mr. Chairman.
    Chairman Altmire. Mr. Shuster.
    Mr. Shuster. Thank you very much.
    Just to follow up on the line of questioning of my 
colleague from Oklahoma, and I would assume all of you are 
going to support an increase in the user fee at the pump. It 
makes sense. That is where the money is. And if you use it, you 
pay for it. I look out there, and everybody but probably Mr. 
Robinson are heavy users of the highways with trucks and 
vehicles, so you all see that increase go up, but you see the 
benefit to that.
    As far as the increase in possibly health care costs, my 
question is a little different. One of the proposals is if you 
don't provide health care to your employees, it is an 8 percent 
penalty to you. And probably many of you in your head know what 
you have in health care costs versus what your payroll is. And 
if you do the math, I had a company that came to me yesterday, 
a small company that employs about 50 people, $128,000 a year 
is what they pay in health care costs. Their payroll is about 
$900,000. So he told me he would rather pay the $72,000 and 
saving $50,000 a year. And I have got to believe your ratios 
are about the same for all of you; health cares costs are one-
tenth or one-seventh, or something like that, of your payroll.
    Would that be the same outcome for you if you had that type 
of--could you respond to that and be thinking about that?
    Yes, Mr. Ross.
    Mr. Ross. Congressman, we have to remember we are in a 
competitive environment for the people that we have working 
with us and for us. We have to go out and recruit, we have to 
train. We are making an investment in them every day. Part of 
that investment are the benefits that we provide. If we take 
away some of those benefits, we could very well lose good, 
trained people, and not get them back.
    Mr. Shuster. I am not saying taken away from you, I am 
saying the government can supply you with that insurance and 
save you, in this case scenario, $50,000 a year. So I am just 
saying, on a business model, if you are paying $200,000 in 
health care costs, and you are paying $2 million in wages, an 8 
percent penalty on that, it would seem to me you would make the 
decision to let the health insurance go to a government-
supplied entity instead of paying out of your pocket if there 
is a savings there. I am not saying take it away, I am saying 
just a different source--as a business person
    Mr. Ross. Looking at absolute numbers, maybe there is an 
argument there, or maybe there is a substantiation for that 
other position. I think that you have to--certainly from a 
business standpoint, you have to look at what are the products 
you are talking about, and what your employees expect, what do 
you want to provide? I mean, we pay lots of things every day 
that we don't want to pay, and I am not just talking about 
employee benefits, I am talking about lots of stuff.
    Mr. Shuster. I was a small business owner, and the case you 
are making to me is you will pay more for the same piece of 
equipment if you can get the same piece of equipment for less? 
Thomas, you are shaking your head.
    Mr. Kirchhoff. Yes. Going back to the logic and how you 
posed the question, when I do the quick math in my head, the 8 
percent is an easy decision for us. I think we invest far more 
in our people, and their health plan is far more robust than 8 
percent of our expense.
    So not knowing too much about the legislation and so forth, 
running the quick math in my head, I would certainly think that 
could be a direction we would go.
    Mr. Shuster. We are all waiting to see what the legislation 
looks like.
    I will yield to my colleague.
    Ms. Fallin. Yes, if you will yield for just a moment.
    I guess the question he is trying to ask--because we have 
been debating this here in Congress, too--would you drop your 
private-sector coverage if you could just pay an 8 percent 
increase than what you are paying right now with the 
government?
    Mr. Kirchhoff. If it could provide the same level or better 
benefits for our employees, sure we would consider it, if it is 
the same level of benefits.
    Mr. Shuster. It takes someone from Oklahoma to make sense 
of what I was trying to say.
    Mr. Kirchhoff. I guess the answer is yes.
    Mr. Shuster. And the other question I had--and I didn't 
mean to get off on the health care tangent, but it is the issue 
of the day. But also, just to talk a little bit--I just have 30 
seconds--but the competition that is out there, and I see it in 
my area where people are coming from all over, large companies 
are competing. How is the competitive environment out there 
right now for you? Like I said, especially with--I know most of 
you are smaller companies, but the big boys sort of coming in--
    Mr. Filipczak. I can answer from our perspective, it has 
been extremely fierce. And it has gotten more competitive with 
the stimulus dollars out there. And in my mind, it is really 
the stimulus dollars flowing now, but linked with the 
uncertainty of the long-term funding that is causing a more 
competitive than normal environment.
    Mr. Shuster. Anyone else want to take a crack at that?
    Mr. Martin. From our perspective, it is definitely much 
more competitive. We sell directly to the highway contractor, 
the asphalt plants, so when they get a bid opening, there are 
50 people there where there are usually 5 or 10. So they have 
got to sharpen their pencils and get real tight on their 
numbers. Their margins are shrinking, so therefore they are 
starting to hammer us to start shrinking our margins. And now 
is not the time to be shrinking the margins with all of our 
other costs that we are talking about possibly going through 
the roof.
    Mr. Shuster. If I could just ask one more question, Mr. 
Chairman, and I will forgo my second round.
    I think some of you touched on it, but could you be a 
little more specific? What kind of things--we are talking about 
the highway bill and doing an 18-month extension. How much of 
an impact is that going to have on your short-term and long-
term planning if you have an 18-month versus you have a 6-year 
bill?
    I see, Mr. Ross, you put your finger up first.
    Mr. Ross. The thing that concerns me about a 12- or 18-
month extension is the fact that you don't have any 
predictability. Small businesses need to be able to justify 
investments in people and in equipment, and you can't do that 
if you don't know what the funding is a year out or 2 years 
out.
    That is what has been nice about having a 6-year bill--
although SAFETEA-LU was actually a 4-year bill. You just can't 
do it. And that is why this whole issue of those of us who are 
dependent on State programs as well, and we see what has 
happened with the State programs, and then the normal SAFETEA-
LU type of situation, their inability possibly to make their 
match, it throws all that into question. You are going to get 
everybody real nervous if we just do extensions the way we did 
on the last reauthorization, and people are not going to be 
making the long-term investment in equipment and in people.
    Mr. Shuster. And I am going to ask you, Tom, because I know 
we had a discussion about this, what is more difficult, the 
capital or the people, in trying to figure out which to do, 
what you are going to do?
    Mr. Kirchhoff. In regard to our investment in our business?
    Mr. Shuster. Right. In 18 months versus 6 years?
    Mr. Kirchhoff. Well, as you have seen, I have talked to 
probably 10 to 20 large contractors of ours in the last week or 
2 preparing for this statement, and they have all mentioned to 
me their uncertainty about the future is refraining and 
restraining them from making any kind of a large capital 
outlay. They are spending some parts and service revenue to 
keep their equipment going, and they are keeping their idle 
equipment busy, but that is not moving the needle for our 
Cleveland Brothers. We are significantly impacted by that, and 
extending out another 18 months will just further the pain that 
we have been talking about here all day today.
    I think at September 30, we recognize some sort of an 
extension is going to be necessary. I would like to hope it is 
going to be far less than 18 months, maybe the order of 6 
months, again, to put an end to that uncertainty. Our 
contractors just know that there is--something is coming, and 
when I buy this piece of equipment from you, Cleveland 
Brothers, I will have work for it for the next 6 years--or 
there is opportunity for work for the next 6 years. And right 
now they don't have any of that confidence.
    Mr. Shuster. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Altmire. Just one or two more.
    Mr. Robinson, the Brooks Act, also known as qualifications-
based selection, ensures that architects who design public 
buildings are the most qualified to perform the work.
    How does QBS ensure the highest quality of work and result 
in a leveling of the playing field for small businesses?
    Mr. Robinson. What happens with QBS is that you are not 
competing directly on price anymore. And what typically happens 
is that you will get large national and multinational firms 
that bring all their disciplines under one house, so they 
become huge competitors to take these projects. And they are 
not necessarily built for that particular expertise, it is 
included in a whole basket of services.
    So it really allows you to pull out where you have very 
specific expertise and experience and let that become kind of 
building a team to do these projects rather than just taking it 
as a full one big shop. And we have seen a lot of that 
happening over the last few years as consolidation into giant 
firms who go out--and we talk about competition--are competing 
for everything under the sun. So it really knocks the small 
business--it sort of knocks them out of a competitive platform 
to be able to do that both on price and capacity.
    Chairman Altmire. Thank you.
    And my final question, I think, will transition nicely into 
Congresswoman Fallin's final question.
    Specifically for Mr. Martin, without a multiyear highway 
reauthorization, States are unlikely to initiate large transit 
projects, and contract awards for construction projects will 
inevitably slow.
    Can you discuss the percentage that your business revenues 
rely on transportation construction dollars, and have you seen 
this reduced due to the lack of a multiyear highway bill to 
this point?
    Mr. Martin. Yes, great question. Roughly 60 percent of our 
business is directly related to transportation spending, either 
building the roads, the asphalt for the roads, the concrete for 
the roads. So that is a large chunk of our business, and that 
portion has gotten larger as the residential side has dropped. 
So we are directly tied to the transportation spending.
    The customers that we have tell us that they know they have 
work to finish a year out, but next year, the year after, they 
are not sure. So that makes us think twice about, all right, we 
need to upgrade a piece of equipment, we need to buy a new 
loader from Tom, but we don't know; are we going to have the 
work for that load, or is it going to sit all next year? And 
with the uncertainty that contractors are telling us, I mean, 
our contractors have to make big investments in services as 
well, and they are scared to do it, which in turn slows us 
down, which, like I said, we are down 20 percent of our 
manpower from 2 years ago. And for a company my size, that is 
20 percent of people that we know real well, we see them 
walking in the gate every day, saying hi to them, how is your 
family. We don't want to lose any more of those people, so we 
definitely need a long-term plan to give that some stability so 
we can, in turn, have our company's stability and work for our 
employees.
    Chairman Altmire. Thank you.
    I now recognize Congresswoman Fallin.
    Ms. Fallin. Thank you, Mr. Chairman.
    I think that goes right along, as you said, with my line of 
questioning. I was just concerned that if we just do an 
extension only here in Congress--which we don't support--how 
would that affect your hiring and your maintenance of employees 
that you have now, your investment into equipment because you 
have to pay that off over years, and even the financing from 
your bank loans? I would assume that you have lines of credit 
that you have to draw from financial institutions, and you do 
that based upon the work that you may have in the future. And 
if you have uncertainty in the quantity of work that you are 
going to have in the future, then I would assume you would have 
to start looking at your workforce and planning ahead and the 
equipment that you buy.
    Are you even having trouble with the banks per se in 
getting the financing? That has been another big issue we have 
been talking about here is have we actually helped in Congress 
to release that investment flow of capital, or have we actually 
kind of caused the market to contract back to where the capital 
is not even available for you?
    Any of you.
    Mr. Kirchhoff. Two points. First on the employment front. 
It is pretty simple for us, although it is a gut-wrenching 
decision. When you take a look at the revenue that were are 
creating or that is being created for us for our business, 
keeping our shops and our mechanics busy, the parts that we are 
selling to contractors, as that slows, we can only afford to 
keep a level of employment consistent with that level of 
revenue. As I mentioned earlier, we are down about 30 percent 
in our employment. Our business is off greater than 30 percent. 
Our largest expense is employee expense and all the things that 
go into that; health care, salaries, wages, and so forth. So as 
business continues to deteriorate, that is one of the first 
areas where we are forced to look.
    As far as our banking goes, we are in a fairly fortunate 
situation where we do have a source of funding. However, there 
are covenants that come along with that source of funding, and 
as our business underperforms, those covenants get tighter and 
tighter. So we are constantly looking at that to make sure that 
we don't have to go back out there and reapply for more funds 
with our banks. But, again, keeping an eye on the top line and 
the bottom line is where that difference comes in.
    Ms. Fallin. Can I ask you a question; do you do any 
exporting?
    Mr. Kirchhoff. Very little; probably less than 5 percent of 
our business is exporting. We have done more over the years, 
but not so much this year.
    Ms. Fallin. Okay. Anybody else want to respond?
    Mr. Filipczak. I would like to take it just from an 
equipment perspective. I mean, I guess we are fortunate in 
that, from the financial perspective, we haven't seen any 
additional pressure, but we are also not borrowing heavily. So 
they would go hand in hand.
    From an employee perspective, our employee count is more 
project-based, and it is a little hard to connect the dots 
between an extension versus the full authorization. But from a 
capital expenditure perspective, I can say that 12 months or 18 
months doesn't do it for us in terms of capital expenditures. 
The service life of the equipment that we buy is between 5 and 
maybe 12 years, somewhere in that range, and so we are 
definitely not in the mode of buying equipment when we don't 
have a long-term funding plan in place.
    Ms. Fallin. Makes sense to me.
    Mr. Chairman, I also have a request, if I can. I ask 
unanimous consent to leave the record open for 5 days in order 
for other interested parties to have access to putting 
testimony into the record.
    Chairman Altmire. Without objection.
    Chairman Altmire. Again, thank you to each of you. You have 
made a big difference by being here. We appreciate your taking 
the time to join us today.
    Thanks to Congressman Shuster for joining us as well.
    This hearing has now adjourned.
    [Whereupon, at 11:28 a.m., the Subcommittee was adjourned.]
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