[Senate Hearing 111-1198]
[From the U.S. Government Publishing Office]





                                                       S. Hrg. 111-1198
 
           IMPACTS OF EXPECTED HIGHWAY TRUST FUND INSOLVENCY

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 25, 2009

                               __________

  Printed for the use of the Committee on Environment and Public Works
  
  
  
  
  
  
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
  
  
  
  
  



       Available via the World Wide Web: http://www.gpo.gov/fdsys
                  
                              __________
                              
                              
                              
                              
                              
                         U.S. GOVERNMENT PUBLISHING OFFICE
95-156 PDF                        WASHINGTON : 2015             


_________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
      Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800
     Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001                            
                              
                              
                              
                              
                              

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                        

                     ONE HUNDRED ELEVENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             MIKE CRAPO, Idaho
AMY KLOBUCHAR, Minnesota             CHRISTOPHER S. BOND, Missouri
SHELDON WHITEHOUSE, Rhode Island     LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico
JEFF MERKLEY, Oregon
KIRSTEN GILLIBRAND, New York
ARLEN SPECTER, Pennsylvania

                    Bettina Poirier, Staff Director
                 Ruth Van Mark, Minority Staff Director
                 
                 
                 
                 
                 
                 
                            C O N T E N T S

                              ----------                              
                                                                   Page

                             JUNE 25, 2009
                           OPENING STATEMENTS

Boxer, Hon. Barbara, U.S. Senator from the State of California...     1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    31
Udall, Hon. Tom, U.S. Senator from the State of New Mexico.......    33
Vitter, Hon. David, U.S. Senator from the State of Louisiana.....    33
Lautenberg, Hon. Frank R., U.S. Senator from the State of New 
  Jersey.........................................................    35
Barrasso, Hon. John, U.S. Senator from the State of Wyoming......    36
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland    37
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..    39
Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........    40

                               WITNESSES

LaHood, Hon. Ray, Secretary, U.S. Department of Transportation...    41
    Prepared statement...........................................    43
    Responses to additional questions from Senator Boxer.........    49
    Response to an additional question from Senator Voinovich....    51
Ruffalo, Kathy, President, Ruffalo and Associates................    65
    Prepared statement...........................................    68
    Responses to additional questions from Senator Boxer.........    74
    Response to an additional question from Senator Voinovich....    76
James, Don, Chief Executive Officer, Vulcan Materials Company....    77
    Prepared statement...........................................    79
    Response to an additional question from Senator Voinovich....    87
    Responses to additional questions from Senator Boxer.........    87
Basso, Jack, Director of Program Finance and Management, American 
  Association of State Highway and Transportation Officials......    89
    Prepared statement...........................................    91


           IMPACTS OF EXPECTED HIGHWAY TRUST FUND INSOLVENCY

                              ----------                              


                        THURSDAY, JUNE 25, 2009

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The full committee met, pursuant to notice, at 10 a.m. in 
room 406, Dirksen Senate Office Building, Hon. Barbara Boxer 
(chairman of the full Committee) presiding.
    Present: Senators Carper, Inhofe, Lautenberg, Cardin, 
Klobuchar, Udall, Merkley, Voinovich, Vitter, and Barrasso.

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

    Senator Boxer. The hearing will come to order.
    Thank you so much, Secretary LaHood and the rest of today's 
witnesses for being here today to discuss such as important 
issue, the solvency of the Highway Trust Fund.
    I ask unanimous consent to place in the record a document 
that shows the 24 entities that are calling upon us to fix this 
Trust Fund before August. I will just read a couple of them: 
Alaska Department of Transportation, Arizona Department of 
Transportation, California, the Rural Transportation Advisory 
Council of Arizona, Kent County, Delaware, a lot of agencies in 
Florida, Georgia, Illinois, Missouri, Oregon, Indiana, 
Pennsylvania, Tennessee, Texas, Virginia, Washington State, 
Wisconsin, the American Highway Users Alliance, the American 
Society of Highway Engineers and the National Governors 
Association.
    [The referenced information follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
    
           
    
    
    Senator Boxer. So, I think we all understand that the job 
before us is urgent. The good news is, I think we all do agree 
on that across party lines. I certainly know that Secretary 
LaHood made himself available to come to the Hill with a team 
from the Administration to discuss this matter, and I know that 
he is very bound and determined to work with us across party 
lines to solve this problem.
    Look, this is about jobs, it is about our economy. For 
every billion dollars in Federal funds invested in 
transportation and matched by State and locals, there are 
34,779 jobs created and $6.1 billion of economic activity. I 
know all of us are focused on economic recovery. We cannot come 
forward with a plan that is a year. That does not do it. I like 
what the Administration did on an 18-month timeframe because 
that gives certainty to our people.
    I am open, personally, to many ways of filling the gap. I 
had suggested to the Administration using some of the unused 
stimulus funds. It is something that I know Senator Vitter has 
written a bill on. But, unfortunately, from my standpoint, it 
is a very short term. It expires right before the election, 
which may or may not have been his intent. I am not saying it 
is. But the fact is, we know where we are right before an 
election. It is hard to get the permanent fix done.
    I would prefer to see 18 months because it gets us past the 
politics and, in addition to that, and this is very, very key, 
it gives certainty to the people. And that is very, very 
important.
    We have a lot of issues on the table in terms of a long-
term solution to our funding. So, I am going to ask for 
unanimous consent that my entire statement be placed in the 
record, and I will continue to read part of it.
    We know that we expect to encounter the sharp shortfall in 
the Highway Trust Fund as early as August. The Mass Transit 
Account of the Highway Trust Fund is also expected to run out 
of funds soon. The Highway Trust Fund provides Federal funding 
for highway, bridge and transit systems.
    I think that it is important to remember that the Federal 
Government provides about 40 percent of the capital 
expenditures for highway transportation nationwide. That spurs 
the States and locals to act. We then, putting all of our 
funding together, really stimulate this economy and do what we 
have to do to move people, to move products. It is very, very 
important.
    I am proud that the American Recovery Reinvestment Act 
provided $48 billion for transportation improvements. I have to 
say I stood shoulder to shoulder with my Ranking Member trying 
to get more funds in that particular----
    Senator Inhofe. Yes, three times more.
    Senator Boxer. I will repeat. I stood shoulder to shoulder 
with my colleague trying to get three times more funding into 
the Stimulus Bill for highways and transportation. When we 
stand together, I think it sends a powerful signal. That is why 
some of us think that it would be good to go to the unused 
stimulus funds from other areas because we think that this 
particular use puts people to work, keep them working and keeps 
our economy moving.
    Let me just say that transportation investments have a 
positive impact on our communities, regardless of where we are 
from. We must have continued investment. We must have continued 
job creation.
    Again, I want to thank Secretary LaHood. I think this is 
key. He answered our call. We sent a letter to him. He said we 
are going to fix this problem together. He said 18 months is 
what we want to do. I think that is an intelligent number of 
months to give the certainty to our people at home, and to give 
us enough time to really reform the way we do transportation.
    So, the time is short. I know that Secretary LaHood has 
offered to work with us, give us the technical assistance we 
need. But we intend to do this job and I think our date is 
what? To mark up a bill? The middle of July. We will get our 
work done.
    I thank you very much and I turn to my Ranking Member.
    [The prepared statement of Senator Boxer follows:]

             Statement of Hon. Barbara Boxer, U.S. Senator 
                      from the State of California

    Thank you, Secretary LaHood and the rest of today's 
witnesses for being here today to discuss such an important 
issue--the solvency of the Highway Trust Fund.
    This is about jobs and our economy. According to the U.S. 
Department of Transportation, for every $1 billion in Federal 
funds invested in transportation (and matched by States or 
locals), there are 34,779 jobs created and $6.1 billion in 
economic activity. That is why immediately addressing the 
anticipated insolvency of the Highway Trust Fund must be a top 
priority.
    We are facing a possible reduction in transportation 
spending because the Highway Trust Fund is expected to 
encounter a shortfall as early as August. According to 
Department of Transportation estimates, an additional $5 
billion to $7 billion will be needed to keep the Federal-aid 
Highway Program running through the end of fiscal year 2009 and 
an additional $8 billion to $10 billion will be needed in 
fiscal year 2010.
    The Mass Transit Account of the Highway Trust Fund is also 
expected to run out of funds soon.
    The Highway Trust Fund provides Federal funding for our 
Nation's highway, bridge and transit systems. Traditionally, 
the Federal Government provides about 40 percent of the capital 
expenditures for highway transportation nationwide. Without 
this critical funding, State and local governments would be 
forced to dramatically cut spending on transportation.
    Earlier this year, Congress passed and the President signed 
into law the American Recovery and Reinvestment Act of 2009 
(H.R. 1), which provided a total of $48 billion for 
transportation improvements.
    Of that $48 billion about $27.5 billion was included for 
the highway program. These dollars are already putting people 
back to work, while at the same time making improvements to the 
transportation system that will help move people and goods more 
efficiently in the future.
    According to DOT data and an analysis by the American Road 
and Transportation Builders, by the end of May, State and local 
transportation agencies had invested more than $13 billion, 
almost half of the $26.8 billion in ARRA funds that had been 
apportioned or allocated, and much more than the $9.3 billion 
that was required to be obligated within 120 days of 
apportionment.
    These transportation investments provided in ARRA are 
having a positive impact today in communities nationwide.
    We must have continued investment from the highway trust 
fund to maintain these jobs, and to make additional, needed 
improvements to our transportation infrastructure.
    I recently sent a letter with several of my Senate 
colleagues who serve as Chairs and Ranking Members of the 
relevant authorizing committees requesting that the 
Administration come forward and work with us to find a solution 
to the immediate problem. I am pleased that the Administration 
is working with Congress to address this pending problem.
    Just last week, Secretary LaHood proposed that Congress 
pass an immediate 18-month extension of the current highway, 
transit and highway safety authorization, and that Congress 
immediately replenish the Highway Trust Fund to avoid a 
shortfall.
    As I am sure Secretary LaHood will mention today, the 
Department of Transportation now estimates the Highway Trust 
Fund will require a cash infusion of about $20 billion to 
support both highway and transit programs for the next 18 
months.
    I look forward to working with the Administration on this 
proposal, which would keep the recovery and job creation moving 
forward and give us the necessary time to pass a more 
comprehensive and transformational multi-year transportation 
authorization bill with stable and reliable funding sources.
    As we work our way out of this recession, the last thing we 
want to do is to drastically cut back on necessary 
transportation priorities. Spending on transportation means 
jobs and more efficient movement of people and goods, all of 
which benefit our economy.
    In order to help make sure transportation priorities are 
not cut, I ask the Secretary to ensure his department provides 
expedited technical assistance as we work to craft this 
extension. The time is short and we need the Department's input 
to help ensure the legislation works as intended.
    Thanks again to the witnesses for appearing today. I look 
forward to your testimony.

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you very much, Madam Chairman.
    I am going to go ahead and submit my statement for the 
record. I will just highlight a couple of things.
    First of all, we did try. We made an effort back during the 
$789 billion Stimulus Bill to get a much larger percentage of 
that, Mr. Secretary, into something that really is stimulus, 
and that is road construction. We had a lot of things that were 
ready to go and that would have worked very well.
    Now I know that in my State of Oklahoma, Gary Ridley, our 
Transportation Secretary, we would have to de-program somewhere 
between $50 million and $80 million worth of projects. These 
are programs that have already been let, contracts that have 
already been let. It is a very serious thing that we are 
facing.
    I can remember when we went through the crisis in 
September. At that time, I reminded everyone that we had a 
problem 10 years prior to that when then-President Clinton took 
$8 billion out of the Highway Trust Fund and put it into the 
General Fund in an attempt to balance the budget. I objected to 
it then and, for every year since then I have been trying to 
get it back. Well, we successfully did that. In fact, that was 
over a threatened veto by the President that we successfully 
did that last September.
    Now, we are going to have to have more money. One of the 
sources I want to look at is, if it is logical to have undone a 
wrong that was 10 years old last September, what is wrong with 
going back now and saying we need also to transfer the interest 
that has been earned over that 10-year period. That amounts to 
about $13 billion.
    The other thing that we have been trying to go after, and I 
am sure that Senator Vitter is going to get into this, and I 
agree with his efforts that he is trying to do, to do it 
through some of the stimulus money that came originally out of 
the $700 billion plan.
    I regret that I was not able to talk to my Chairman about 
this earlier, but what I would attempt to do would be to not 
have projects included in this for the White House, the 
Executive Department, or us. I know this is right. When we were 
starting in to see if we could make this thing work.
    We need to have an extension. To me, the 18-month extension 
makes sense. What I do not want to do is find ourselves in a 
position where we have to, the same position which we found 
ourselves in last September, but now, finding ourselves in that 
same position, where we have to renege on contracts, where we 
have to stop construction. I just do not want that to happen.
    So, I am still open to all possibilities here. Hopefully, 
perhaps Senator Vitter and some of the others have some ideas 
that might work, Mr. Secretary.
    [The prepared statement of Senator Inhofe follows:]

            Statement of Hon. James M. Inhofe, U.S. Senator 
                       from the State of Oklahoma

    I'm very pleased we are having this hearing today. This is 
a critical issue. We recently learned that the Highway Trust 
Fund will run out of money sometime before August of this year, 
and will require an infusion of $5 billion to $7 billion to get 
through the rest of fiscal year 2009. In addition to the funds 
required for 2009, $8 billion to $10 billion will be required 
for 2010. This amount will be higher if an extension longer 
than 12 months is enacted.
    It is critical to fix this shortfall. Failing to do so will 
delay planned and ongoing road projects and result in people 
being laid off. This would be unacceptable anytime, but more so 
during today's economic downturn.
    Oklahoma's Secretary of Transportation, Gary Ridley, has 
notified me that if we fail to fix the Trust Fund Oklahoma and 
most other States will not have the cash to honor 
infrastructure projects that have already reached agreement. As 
a result, my State will be forced to deprogram between $50 
million and $80 million in projects. This will be done by 
canceling new projects and existing contracts that have already 
been signed, in addition to slowing down projects that have 
already broken ground. Clearly this would have a detrimental 
effect on the economy and will negate any gains made by the 
stimulus which as I've said before, dramatically underinvested 
in infrastructure.
    This must be prevented. The good news is the Administration 
announced yesterday they were committed to fixing this within 
the next 6 weeks. They also proposed an 18-month extension. I 
think the reality is that since we don't have a way to pay for 
a long-term bill, an extension is probably in order.
    This Monday there was a meeting between the bipartisan 
leadership of the 3 authorizing committees in the Senate (EPW, 
Banking, and Commerce) and the Administration. The Senators at 
the meeting were unanimous in their desire to have a clean, 
long-term extension, which would include a Trust Fund fix. This 
is good news, because it cuts down the likelihood of it getting 
bogged down in policy fights.
    There are a number of ways to fix the Trust Fund shortfall. 
We fixed a similar shortfall last year by remedying a wrong 
that was done in 1998 when $8 billion paid by road users was 
transferred from the Trust Fund to the General Fund.
    But TEA-21 actually made 2 negative changes to the Trust 
Fund in 1998: the first being the $8 billion transfer from the 
Trust Fund to the general fund that was restored last September 
and the second ended the long-standing practice of crediting 
the Trust Fund with interest on its cash balances.
    Repaying the Trust Fund for lost interest would result in 
about $13 billion in cash. If interest were also paid on the $8 
billion that should have been sitting in the Trust Fund, the 
lost interest would amount to about $17 billion.
    According to the Congressional Research Service, every 
other major trust fund is credited with interest on cash 
balances: from Social Security to the Airports and Airways 
Trust Fund. In fact, I am not aware of any other trust fund 
that is not credited with interest on cash balances.
    It was wrong to stop crediting the Trust Fund with 
interest. Correcting this wrong would be sufficient to prevent 
Trust Fund insolvency.
    The bottom line is that I'm confident that Congress will 
fix the Highway Trust Fund shortfall. How we do it is yet to be 
determined--the interest approach is just my preference.

    Senator Boxer. Senator Udall.

             OPENING STATEMENT OF HON. TOM UDALL, 
           U.S. SENATOR FROM THE STATE OF NEW MEXICO

    Senator Udall. Thank you very much, Chairman Boxer.
    Secretary LaHood, it is great to have you here today.
    I am not going to put any statement in the record, but I 
would just like to briefly say that I think the Highway Trust 
Fund is very important to our transportation system and we know 
that it needs additional revenue.
    There are a number of proposals that are on the table. 
Raising the gas tax, which I understand the Administration does 
not want to do. Create some kind of new fee or tax or something 
along the line based on vehicle miles traveled, which would be 
another way to look at that. Toll roads and congestion pricing.
    I know that the National Surface Transportation 
Infrastructure Financing Commission has talked about increasing 
fees on freight movers. I think at a time of reform that what 
we should be looking at are the folks that are using the roads. 
Are they using them and paying their fair share? I think we 
have heard for years and years and years that freight movers do 
not necessarily pay their fair share, so I think we need to 
look at that.
    So, I am happy to have you here today, Secretary LaHood, 
and I look forward to your and the Administration's suggestion 
to us as to how we move forward. I know one of your suggestions 
is that we delay the Transportation Bill and I think that is 
something that we need to discuss and take a look at.
    So, thank you for being here. And Chairman Boxer, it is 
great to be here with you today.
    Senator Boxer. Thank you so much. We will go to Senator----
    Senator Inhofe. Before we move on, let me mention that I 
have the same problem that we always have. We are making up the 
Defense Authorization Bill, so I am going to have to be going 
in and out of this thing right now.
    Senator Boxer. Well, we will miss you for sure.
    [Laughter.]
    Senator Boxer. I mean it. I am not kidding. I mean it. This 
is my ally on this.
    So, we are going to go to Senator Vitter, then we are going 
to go to Senator Lautenberg.

            OPENING STATEMENT OF HON. DAVID VITTER, 
            U.S. SENATOR FROM THE STATE OF LOUISIANA

    Senator Vitter. Thank you, Madam Chair.
    Thank you, Mr. Secretary, for being here and, more 
importantly, for all of your leadership and all of your work. I 
really appreciate it.
    I feel strongly with regard to this issue in support of two 
principles. No. 1, we need to continue the highway program and 
continue that vital work. No. 2, we should not borrow more 
money on top of everything we have borrowed over the last 
several months and the last several years to do it.
    Because of that, I have introduced a bill that Chair Boxer 
has referred to, and it would extend the Highway Trust Fund and 
backfill the program exactly as the Administration has talked 
about for the same time period, but do it from already 
appropriated stimulus funds. Let me make some important points 
in that regard.
    First of all, we would adopt exactly the same timeframe and 
the same extension as the Administration, I believe, has talked 
about, which is 18 months. So, whatever timeframe you all would 
envision, it would be the same timeframe.
    No. 2, it would backfill the fund with stimulus funds and, 
in doing so, give maximum flexibility to the White House and 
the Administration in determining how best to do that. We would 
not micromanage where to take it, or how to move the money 
around. We would suggest maximum flexibility to the President 
and the White House. And I think that is important, to give the 
Administration all of those options.
    No. 3, under language actually contained in the bill, if we 
were to come up with a new highway bill, a more permanent fix, 
a more permanent extension, this legislation would immediately 
sunset and would be replaced with the provisions of that 
highway bill.
    So, if we can come together and pass a highway bill next 
year, and it would take effect before those 18 months are 
passed, then my bill would sunset, that would end, and whatever 
provisions of the new highway bill that are applicable, those 
would apply.
    I think this is the right way to go for three reasons. No. 
1, we have enormous exploding debt and we should not add to it. 
No. 2, this is exactly the sort of shovel-ready infrastructure 
spending for which there is a broad bipartisan consensus in the 
Congress and, in fact, a lot of us wanted a heck of a lot more 
of this than the 3.5 percent in the stimulus bill. And No. 3, 
this does give maximum flexibility to the Administration in 
order to figure out how to do it.
    At the end of the day, by the time the stimulus bill is 
completely worked through, I am personally confident that we 
are going to have more than that $20 billion that cannot be 
spent for various reasons, or has not been accepted by the 
States.
    Now, we do not have that identified yet. But I believe that 
at the end of the duration of the stimulus bill, we will have 
more than that. So, let us give the Administration maximum 
flexibility to identify how to do that in the meantime, and 
take these funds from the stimulus.
    In our private conversation before the hearing, you 
mentioned that economic advisors at the White House, including 
Larry Summers, are looking at ways to pay for this backfill 
outside the stimulus. My only comment would be, if those exist 
in the budget, those should be used to pay down debt and pay 
down spending, and we should still use stimulus funds to 
backfill the Highway Trust Fund in this manner for the next 18 
months.
    So, I look forward to working with you, and the 
Administration, and other members. This proposal has got a lot 
of early interest. It has only been circulated a couple of days 
and it has got a lot of early interest, including bipartisan 
interest, so I look forward to following up on that.
    Thank you, Madam Chair. Thank you, Mr. Secretary.
    Senator Boxer. Thank you, Senator Vitter. I am glad you 
talked about 18 months. I think that is really key for me, too, 
because otherwise I think that it is too short an extension.
    OK, we have Senator Lautenberg, Cardin and Carper.

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

    Senator Lautenberg. Thank you, Madam Chairman.
    Welcome, Mr. Secretary. We obviously hope that you bring, 
that you are the bearer of, good news. Now, the only question 
is, how much of news is good news? It has got to be a pretty 
big package, as you know, because we are working against all 
kinds of odds and becoming more impatient, less abusive of the 
environment, and more dependent, relatively speaking, on 
foreign oil.
    We see, by the end of the summer, the Highway Trust Fund is 
likely to run dry, delaying essential repair and construction 
projects from coast to coast and costing hardworking Americans 
their jobs. At a time when we need more investment in our 
transportation infrastructure, we cannot afford to go belly up 
in August. We cannot afford to go belly up anytime. When you 
think of what the needs are and what is being proposed, the two 
do not exactly meet.
    I salute a recommendation that says, look, let us just make 
sure that we keep this traffic moving by having a reasonable 
time extension on the current bill, and give us a chance to 
think through the problems that we have to work through in 
order to make the whole program more efficient.
    It has been more than 2 years, for example, since the 
tragic bridge collapse in Minneapolis. Two years, and still 
more than 25 percent of our Nation's bridges are classified as 
deficient. In my home State of New Jersey, 34 percent of our 
bridges are classified as deficient.
    We look at the funds coming to us from the Federal 
Government. I know how hard the Administration is trying and 
how hard it is on all of us to look at the bumps in the road, 
the delays in traffic, the foul air, all of those things, and 
not be looking at a plan that says we are really going to grab 
hold of this.
    My State, for instance, ends up being a thoroughfare State. 
Our traffic, not just from New Jersey people, but from people 
who are doing their traveling through our State and across our 
State, the load is so heavy it is almost impossible to carry. 
So, we need to invest and expand transit options because they 
are more convenient and more energy efficient and in this 
economy, with today's endless traffic, people are looking to 
both use less time on the road away from their families and 
away from their jobs, and looking to save money as well.
    In 2008, Americans took nearly 11 billion trips on public 
transportation. The highest ridership level in 52 years. And 
this record ridership establishes that people will choose 
transit if the option is there.
    President Obama and Secretary LaHood have offered a plan to 
keep the Highway Trust Fund solvent on a short-term basis. I 
commend you for it. But I cannot believe that we can do 
anything that is less than a single year extension to the 
current law and be able to give us the time necessary to write 
a comprehensive authorization bill that meets all of our 
transportation needs.
    I look forward to working with you and the Administration 
to quickly pass an extension that protects our transportation 
priorities. And, as we finalize this short-term solution, we 
have got to get to work on the longer term solution.
    Senator Rockefeller and I have introduced a bill that would 
take a long-term and large-scale approach to transportation 
planning. It would set a national transportation policy that 
puts on a track to repair, maintain and modernize our Nation's 
infrastructure.
    And I look forward to working with our Chairman, who is 
really energized about this, sees the crisis that we face and 
reality. And with you, Mr. Secretary, and President Obama, as 
we look to improve these important benchmarks in the next 
surface transportation bill.
    Just to summarize, it looks to me like the only option we 
have now is an extension of the current bill long enough to 
give us a chance to catch our breath, catch up to our planning, 
deal with other problems that are of an emergency nature, and 
get on with repairing a system that has been a long time broken 
down.
    Thank you.
    Senator Boxer. Senator Lautenberg, I just want to associate 
myself with what you said about the need for a transformational 
policy. It is essential. And that is why I, too, favor, this 
short-term extension, this 18 months, because we have so much 
work to do across party lines, with the Administration, so that 
we get it right.
    I think that your statement was quite eloquent and I just 
wanted to congratulate you on it.
    Senator Barrasso.

           OPENING STATEMENT OF HON. JOHN BARRASSO, 
             U.S. SENATOR FROM THE STATE OF WYOMING

    Senator Barrasso. Thank you very much, Madam Chairman. I do 
have a statement that I will include in the record.
    I want to thank the Secretary for being here today to share 
your thoughts and your ideas.
    Wyoming is a State of big geography, long miles and 
Interstate 80 running through the State gets a significant 
amount of truck traffic that does not either originate or end 
in Wyoming. So, we have specific needs.
    I agree with Senator Lautenberg. We do need a short-term 
strategy. We need a long-term strategy. The question is, how 
are we going to pay for it? People talk about either cutting 
spending or increasing revenue. This is not a time when I think 
we should be looking at increasing gasoline taxes for the 
people of America.
    What I would like to see is using money that is already 
part of the stimulus plan for projects that are ready to go and 
use that money to deal with our short-term immediate needs.
    With that, Madam Chairman, I will just submit my statement 
for the record and look forward to hearing from the Secretary.
    [The prepared statement of Senator Barrasso follows:]

                   Statement of Hon. John Barrasso, 
                 U.S. Senator from the State of Wyoming

    Thank you, Madam Chairman and Senator Inhofe, for holding 
this hearing. We would not be here today addressing the Highway 
Trust Fund issue without your leadership.
    Thank you, Secretary LaHood, for taking the time to testify 
this morning.
    Wyoming is a bridge State that allows the flow of commerce 
to move from coast to coast. I-80 captures over 60 percent of 
truck traffic, most of which does not originate or terminate in 
Wyoming.
    Wyoming's short construction season cannot afford to be cut 
short. Our construction contracts cannot afford to be 
suspended.
    Last year we were put in the same position. Fix the trust 
fund or stop highway construction across the Country.
    For months now we have known that the trust fund is going 
to run out of money again. And here we are today. The trust 
fund needs another bailout. But we have not seen a plan yet.
    We all agree that something must be done. But how are we 
going to pay for it? In order to pay for something we either 
need to cut spending or raise the revenue. I can tell you now 
raising the gas tax is a not an option.
    There is plenty of wasteful Washington spending we can cut 
to pay for the trust fund bailout. Or we could use unobligated 
stimulus funding since there is still a lot of that to go 
around.
    There is not a question of available money to fix the 
problem. The question before us is how do accomplish this in a 
responsible manner. We must protect the taxpayer and ensure our 
States can continue to execute their transportation plans.
    The trust fund uncertainty we face today leads to the 
question What happens if we don't have a bill by October 1st?
    If we are going to take up a long-term highway bill 
extension it needs to be clean, reliable and responsible. The 
highway program is already complicated enough.
    As we work through these issues we must keep in mind this 
is not all about congestion. Congress must not lose sight of 
the importance of a national, interconnected system of highways 
that includes access for rural America.
    Thank you, Madam Chairman, for your leadership in holding 
this hearing.

    Senator Boxer. Thank you, Senator, very much.
    Senator Cardin.

         OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 
            U.S. SENATOR FROM THE STATE OF MARYLAND

    Senator Cardin. Madam Chairman, thank you for conducting 
this hearing.
    I want to welcome Secretary LaHood and thank him for his 
continued service. We very much appreciate your leadership 
within the Department of Transportation and the aggressive way 
that you are going after trying to find solutions to our 
Nation's infrastructure needs.
    I think we all understand the practical problems of a 
temporary or short-term extension. It allows for the 
infrastructure improvements to continue to be made and to 
search for long-term solutions that will be adequately funded 
so that we can invest in America's future.
    I think we have to be honest about it. We are going to have 
to take a look, make some hard decisions. I would hope that it 
would be a given that we need to advance the infrastructures of 
America. We know the dire needs that are out there. We 
understand the economic impact of this. So, we need to make 
sure that we get it done right.
    Madam Chair, I just really want to underscore what is at 
stake here by mentioning what happened Monday night in a WMATA 
train that was heading between Maryland and the District and in 
which several people lost their lives, the worst tragedy in 
WMATA's history. Our prayers go out to the families, the 
victims, those whose lives were forever changed as a result of 
that tragedy.
    Now, we do not know what happened. The National 
Transportation Safety Board is conducting an investigation and 
they will have our complete support. It will take at least 
several months before the conclusions from that investigation 
and we need to make sure that goes forward.
    But one thing is clear. The WMATA system is stretched. It 
is strained. It is old. Last year, I visited the Shady Grove 
Station and took a look at the platforms there. They are 
literally being held up by wooden planks. They need help. This 
is an old system. This is America's system. Almost half of the 
ridership on WMATA is individuals going to and from Federal 
facilities as workers. Ten percent is in the Capital Complex 
and the Pentagon alone. So, we have a direct responsibility 
here.
    Last year, I was proud that we did pass, at long last, a 
game plan for adequately funding this transit system, the 
second busiest in America, which does not have a dedicated 
revenue source. And we did pass a framework to get that done 
where the District, Maryland and Virginia have agreed to match 
Federal participation.
    The difficulty here, Madam Chairman, and I just want to 
point this out because the Appropriations Committee will be 
meeting shortly and going over the transportation appropriation 
for next year. They are going to have a lot of conflicting 
needs. I understand that. It is a very tough budget.
    Last year, we authorized $1.5 billion of Federal funds over 
10 years for the WMATA system. That passed this Congress by 
overwhelming support. Now, the first installment is due this 
year of $150 million. It is not in the President's budget.
    I understand that the budget was put together in a 
difficult moment. And I appreciate Secretary LaHood's 
commitment to work with us to try to find adequate funding for 
the WMATA system. We need to do that, working with this 
Committee, working with the Appropriations Committee, because 
literally the safety of the ridership is at stake here. We know 
the trains are too old and need to be replaced. And, by the 
way, Congress came up with over $100 million to help replace 
some of those trains. We need to be more aggressive at it.
    So, Madam Chair, as we are looking for ways of short-term 
extension of our current surface transportation program so that 
we can make sure that our roads and our bridges and our transit 
systems around the Nation are advanced and maintain, I just 
want people to understand how urgent this need is. Look what 
happened Monday night right in this community and know that we 
have to make a stronger commitment toward our Nation's 
infrastructure.
    [The prepared statement of Senator Cardin follows:]

          Statement of Hon. Benjamin L. Cardin, U.S. Senator 
                       from the State of Maryland

    Madam Chairman, thank you for holding this hearing, and I 
very much appreciate Secretary LaHood and our distinguished 
panel taking the time to come before us to talk about this 
other pending financial crisis.
    Before we start, I want to once again extend my sincerest 
condolences to the families, friends and others who suffered 
losses during Monday's tragic Metrorail accident. It is also a 
reminder of how important our transportation infrastructure is 
to the fabric of our lives every day. In that sense, today's 
hearing couldn't be more timely.
    As the causes of this accident continue to unfold I would 
encourage this committee to look into the safety measures that 
can be taken to prevent such tragedies in the future.
    Our Nation's transportation infrastructure is something we 
largely take for granted. We may wonder about how we may get 
some place but we hardly ever worry about if we can get there.
    America's transportation system is incredibly reliable. But 
that reliability relies on adequate funding. It is no 
coincidence that both our transportation and energy systems are 
simultaneously at a crossroads. They are connected to each 
other by what drives them both--fossil fuels.
    It is on the issue of fuel where these intersecting 
infrastructure systems, and the Federal policies on energy and 
transportation, diverge from one another.
    Americans are encouraged to use less energy as a means of 
saving money, reducing our reliance on foreign oil and reducing 
carbon emissions--all of which I support. To many people this 
means driving less, purchasing fuel efficient vehicles and 
using public transportation to get around. Unfortunately, our 
transportation funding system relies on sustained, if not 
increased fuel consumption. Clearly, reconciliation between 
these two policies must be made.
    My State's Department of Transportation has informed me 
that if Congress does not address the projected negative 
balance in the Highway Trust Fund this summer, the Federal 
Highway Administration will not be in a position to reimburse 
Maryland for Federal eligible expenses that FHWA has committed 
to funding.
    That means MDOT will be in a fiscal situation where they 
will have to ``float'' as much as $30 million in expenses if a 
3-week delay occurs--this deficit will only grow as Federal 
funding is further delayed.
    Maryland, like most States, may not have sufficient cash 
balances to float expenses without adversely impacting project 
schedules.
    At MDOT, some contracts would have to be delayed and in 
some cases work under contract will have to be stopped. It is 
important to note that this slow down would be counter to our 
overall stimulus efforts.
    We cannot continue to write checks without the funds to 
back them up. All options must be on the table. The 
Administration has said it would not support an increase in the 
gas tax. Where then will the needed revenues come from? We can 
and should be more efficient, but we also have to be frank that 
we need additional revenues.
    This means considering expansion of the Vehicle Miles 
Travelled pilot program. I have advocated using revenues from 
the Cap and Trade system to support public transportation 
systems--which would free up more funds for roads from the Gas 
Tax funded Trust Fund.
    Others have suggested a fee system based on parking. Still 
other concepts have been advanced. What we need is some candid 
and specific suggestions from the Administration about how it 
intends to meet our funding needs.
    I look forward to hearing your ideas for addressing this 
problem and working with you and your Department to finding 
solutions.

    Senator Boxer. Very well said, Senator.
    Senator Carper followed by Senator Merkley.

          OPENING STATEMENT OF HON. THOMAS R. CARPER, 
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Carper. Thank you, Madam Chair.
    Secretary LaHood, welcome. It is very nice to see you. I 
wonder what it is like sitting on that side of the table as 
opposed to this side. You look pretty comfortable, at least so 
far.
    [Laughter.]
    Senator Carper. This is an important issue, as we all know, 
a rather serious problem. We appreciate very much your thoughts 
as to how we might address this problem.
    I have, we have, a simultaneous meeting going on in the 
Finance Committee on Health Care Reform and I need to slip over 
there, so I will not be able to stay for as long as I would 
like. But we are grateful for this opportunity to have some 
conversation and look forward to more in the months to come.
    I want to applaud the Administration's proposal for an 18-
month extension of SAFETEA-LU. Though we would all prefer a 
full authorization bill now, I do not believe that is practical 
given our current economic environment and our funding 
uncertainties.
    But when we do pass a full authorization though, I believe 
that we must increase our Nation's investment in 
transportation. When the economy begins to improve, and I see 
growing signs that at least we are bottoming out and I am 
encouraged by that, but when the economy improves I think some 
increase in the Federal gasoline tax would be an important 
component of that investment.
    However, we cannot expect the American people to pay more 
until we refocus the existing transportation system that we 
have. The looming insolvency of the Highway Trust Fund and the 
expiration of SAFETEA-LU in September provide this Committee, 
and I think, the Congress and the Administration, with an 
important opportunity to set the stage for transportation 
reforms.
    We can start now by instructing the Department of 
Transportation to study performance objections. And we can 
enhance the data collection and modeling capabilities of the 
Department as well.
    I do appreciate your willingness to serve in this capacity. 
I really appreciate your leadership on this issue and we look 
forward to hearing the Administration's suggestions on how we 
can use this opportunity to set the stage for greater reforms 
to come later.
    Good luck. Thanks again for joining us.
    Senator Boxer. Thank you very much, Senator.
    Senator Merkley.

            OPENING STATEMENT OF HON. JEFF MERKLEY, 
             U.S. SENATOR FROM THE STATE OF OREGON

    Senator Merkley. Thank you very much, Madam Chair.
    Thank you, Mr. Secretary, for being here to watch this 
process of wrestling with our transportation bill. I am very 
glad to see that you are going to be out in Oregon next week. I 
believe that I am going to have a chance to meet with you, 
briefly, on the morning of July 1st. It looks like I will not 
be able to escort you on the streetcar ride, which I had hoped 
to do, but I know you are going to be well taken care of out 
there.
    This bill, obviously, is going to be very important to 
Oregon as to the other 50 States. I know you are engaged in 
dialog with my colleague on the House side from Oregon, 
Congressman DeFazio, about structure and strategy. I will 
certainly be engaged in the substance of the issues and 
appreciate the challenges that come to bear on meeting this 
shortfall in the Trust Fund and continuing the development of 
multitudinous goals within our transportation system.
    So, thank you. And, like my colleague, I have to go to the 
Health Committee, so I also apologize. I cannot be here for the 
duration of the hearing.
    Thank you.
    Senator Boxer. Thank you, Senator.
    Senator Voinovich. No?
    Senator Voinovich. During the question period?
    Senator Boxer. Excellent.
    Senator Voinovich. OK.
    Senator Boxer. Well, it looks as if we are--yes?
    Senator Inhofe. We have not heard his opening statement 
yet.
    Senator Voinovich. Oh, we have not?
    Senator Boxer. No, we have not.
    Senator Voinovich. Well, I will hold my powder until the 
questions. How is that?
    Senator Boxer. Sounds very fair.
    Well, Secretary LaHood, welcome, and the floor is yours. I 
think we should say 7 minutes for a secretary. Seven minutes, 
yes.

  STATEMENT OF HON. RAY LaHOOD, SECRETARY, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Secretary LaHood. Thank you.
    Before I begin my formal testimony, I want the Committee to 
know that the thoughts and prayers of all of us at DOT are with 
the families who lost loved ones in the Metro crash on Monday. 
I met this morning with the General Manager of WMATA, John 
Catoe, and he and I had a lengthy discussion about what we can 
do to assist with the way forward. There are opportunities to 
improve safety in the Metro system and we will continue to work 
with Mr. Catoe's staff along the way.
    I know this is not under the jurisdiction of this 
Committee, but as the Secretary of Transportation, I agree with 
Senator Cardin that this is America's metro system. And when 
you look at the enormous number of people who were delivered 
around this region during the Inauguration, and so many 
tourists who use this system, I felt it important that I 
express these thoughts.
    I appreciate the opportunity to discuss the state of the 
Highway Trust Fund and its impact on Federal surface 
transportation programs. I want to begin by updating the 
Committee on the department's progress in implementing the 
American Recovery and Reinvestment Act. As of today, we have 
obligated $19 billion, roughly 40 percent of the total 
appropriated to the Department of Transportation. We have made 
these funds available for more than 5,300 approved 
transportation projects in all 50 States and 3 Territories, and 
over 1,900 projects are underway.
    I am proud to report that the department has met every 
statutory deadline imposed by Congress and that every State has 
obligated 50 percent of its highway related recovery funds 
within the first 120 days as the law required.
    Traveling around the Country with the Vice President, I 
have seen firsthand the positive impact this program has had on 
workers and their communities. Through the Recovery Act, we are 
putting people back to work while revitalizing our roads, 
bridges, rails, airports, transit systems and seaports.
    We must solve our long-term infrastructure financing 
challenges so we can show the American people that we will 
build on this momentum and continue to invest in our 
transportation needs for the future.
    As you know, we anticipate that the Highway Trust Fund will 
be unable to sustain current spending levels into 2010. We have 
shared with appropriate committees in the House and Senate our 
estimate that an additional $5 billion to $7 billion will be 
needed through the end of this fiscal year, and another $8 
billion to $10 billion through fiscal year 2010.
    Clearly, this situation cannot continue. We have inherited 
a system that can no longer pay for itself. Let me assure the 
Committee that we are monitoring the situation very closely. We 
are ready to take proactive steps to manage the cash-flow 
balance in the account.
    Last week, I proposed an immediate 18-month highway 
reauthorization that calls for a $20 billion cash infusion into 
the Highway Trust Fund to cover our needs through March 2011. 
We look forward to working with Congress on a full 
reauthorization measure for surface transportation programs, 
but we do not believe this important legislation should be 
rushed. In the interim, we must keep the Trust Fund solvent, 
and we will work closely with the White House and Congress to 
identify appropriate funding and offsets.
    Critical reforms are needed as a part of this effort to 
help us better make investment decisions focused on smarter 
investments in metropolitan areas and promote the concept of 
livability to more closely link home and work.
    As we move forward, several key principles and priorities 
should be our guide. First, we need transportation funding 
mechanisms that are both sustainable and flexible. Tying 
revenues to an unpredictable source like the fuel tax is simply 
inadequate to our needs. We need access to resources that will 
enable us to plan for and execute far-reaching transportation 
programs that meet our goals for safety, mobility, economic 
competitiveness, environmental stewardship and livability. 
Therefore, we must diversify sources for transportation 
funding.
    The Treasury's General Fund, the national infrastructure 
bank, public-private partnerships, and, in some instances, user 
fees, are just some of the mechanisms we must consider over and 
above our current financing approach. In addition to ensuring 
we must invest adequately in new transportation needs for the 
future, we must also bring our current transportation system 
into a state of good repair. We must get a much better handle 
on this issue and step up efforts to assess the capital needs 
across all modes.
    Other priorities that require sustainable funding include 
reducing energy consumption all across modes, investing in 
intelligent transportation technologies, and making public 
transportation even more accessible to suburban, rural and 
transit-dependent populations.
    The new Surface Authorization Program offers all of us an 
opportunity to refocus our investments so that all Americans 
have access to the safe and efficient transportation systems 
they need and deserve. We must approach this task with a 
renewed sense of accountability and discipline by ensuring that 
we invest our limited resources wisely so that we can measure 
the results.
    I will be happy to answer any questions. Thank you for the 
opportunity, Madam Chair.
    [The prepared statement of Secretary LaHood follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
      
    
    Senator Boxer. Thank you, Mr. Secretary.
    We will have 5-minute rounds and go around to people until 
they feel they have asked enough questions.
    Mr. Secretary, after we solve this current funding crisis, 
and I do want to thank you for stepping up to the plate instead 
of just walking away and saying it is your problem, Congress, 
you came forward and we appreciate that. I certainly want to 
work with you on a comprehensive and transformational multi-
year authorization that will improve all the modes of our 
Nation's transportation system and their impacts on our 
environment.
    I know you have been doing some thinking on this and, as a 
matter fact, I have some view into it, but if you could, for 
the record, tell us some of the things that you would like to 
tackle in the long term to really transform our transportation 
system.
    Secretary LaHood. My priorities are priorities that I 
really have worked on in collaboration with President Obama. 
There is no question that, when you look at $8 billion for 
high-speed rail, that is the President's priority.
    We do not have high-speed rail in America. Folks from your 
State, Madam Chair, have been working, as you know, decades to 
get to high-speed rail. They are in a very good position, and 
we are going to be helpful, and we are going to work with them. 
But where are other regions in the Country on high-speed rail? 
That is a new initiative. That is President Obama's initiative.
    We also believe that people are tired of being in traffic 
jams for 90 minutes trying to get to a grocery store or get to 
work. We believe in the concept of livable communities where 
you create modes of transportation, whether it is transit, bus, 
streetcars or light rail, so that people do not have to drive 
an automobile everywhere they go.
    You can do this in urbanized areas by creating livable 
neighborhoods, or you can do it in communities. Portland, 
Oregon is a very good model for this. So, the concept of 
livable communities is part of what we believe should be the 
transformational aspect of this, placing more emphasis on 
transit.
    I met with a number of port officials from your State 
yesterday, Madam Chair. We believe that ports can be the 
economic engine now for many parts of the Country, not only in 
creating jobs. So we will put a good deal of emphasis on the 
marine highway.
    We have $1.5 billion in discretionary money. We are looking 
at some very strong applications from ports around the Country 
to enhance their ability to create more capacity. We are being 
out-competed by our friends north and south of our Country. So, 
we want to work on opportunities to really enhance our ports.
    We believe in enhancing transit and other modes, and we are 
always going to sustain our highways. We have a state-of-the-
art interstate system. It is second to none anywhere in the 
world. We are not going to give up on that. We have to have the 
resources to make sure we take care of it. We know that it is 
the lifeline for many rural parts of the Country. It is the 
only way that many people can get around.
    But we need to think also outside of the box on how we pay 
for these things. And that is why we have talked about tolling, 
public-private partnerships, and an infrastructure bank, which 
I know some people on this committee like and others do not. 
But we need to think outside the box. The Highway Trust Fund is 
insufficient right now to meet all the things that we want to 
do.
    So, those are probably three or four things that we 
thinking about out of the ordinary traditional way of thinking 
about an authorization bill. Some of this comes from people 
that we have met with in the Senate and House that want to 
implement these things, and some of it comes from people in our 
department, too.
    Senator Boxer. Well, thank you. I met with my port people. 
I think it was right before they met with you. I am glad that 
you had a good meeting with them.
    I think there is no question, I guess a few of us here have 
ports, and we know what engines they are for growth, moving the 
goods in and out. In Los Angeles, we bring in 40 percent of the 
imports and then we move them across, through Senator 
Barrasso's State, and he has impacts from that as all my 
colleagues do, as the goods move through on these heavy trucks. 
So, we all are bound together on with what happens at our 
ports.
    I would say that I really agree with you because, at this 
point in time, my ports cannot expand because the air is so 
polluted. The trucks sit there and they are belching out all of 
these terrible toxins into the air. We still have, 
unfortunately, these big ships that are still using bunker 
fuel. We are making progress on getting rid of this. And if you 
look, and we have had hearings on this, at the incidences of 
cancer, they are clustered around our ports.
    So, for reasons of health and reasons of economic growth, 
we need to figure this out. So, I am very glad you raised the 
issue of our ports.
    My State bonded itself. The people voted to bond themselves 
up to $9 billion for high-speed rail. So I am glad you 
mentioned that. We see it as a way to be able to jump on a 
train and go between San Francisco and Los Angeles, instead of 
taking your car or even a bus or even a metro to the airport. 
It just saves time. It is a cleaner way to go and a very 
pleasant way to go.
    That is why I very much want to get to the 5-year bill. I 
want to get to that transformational bill. But I recognize, and 
again Senator Lautenberg spoke for me with the very words he 
used, that at the moment, with the Trust Fund so depleted, we 
have to figure out a way to replenish it. I will tell you that 
there is a lot of push back on an infrastructure bank. I do not 
need to get into that with you.
    A lot of us on this Committee want to find a way to fill 
the Highway Trust Fund and do it in a way that makes sense. 
That the users pay. We already see truckers stepping up to the 
plate to help us. We want you to keep your mind open, in the 
Administration, because we think that the Highway Trust Fund 
works.
    And with that, I will turn it over to my friend and 
partner.
    Senator Inhofe. Thank you, Madam Chairman.
    I know the title of this meeting goes beyond just the 18-
month extension, but that is, frankly, all I am concerned about 
right now because that is the immediate problem that we have. I 
alluded to this, Mr. Secretary, in my opening statement.
    Last September, and I do not recall the exact date, when 
the crisis hit us, and at that time you were not in the 
position that you are in now but I was, we had what I felt was 
an equitable solution. My own President, President Bush at that 
time, objected to it. I went to him, and he even said if you 
try to do that, I will veto it.
    Well, the idea was, and it was back in 1998, then-President 
Clinton took $8 billion out of the Trust Fund and put it in the 
General Fund. There was a reason for doing that at the time, it 
was to make the deficit look smaller and all that. I objected 
to it at the time. In fact, I think that everyone on this panel 
who was serving at that time objected to it, because there was 
an honesty issue there.
    I know I am taking too long on this, but I think it is 
important because I am coming up with a solution that I would 
like to have you give serious consideration to.
    The moral issue there was that we have a Trust Fund, people 
put money into that as they are using it. It is a user fee. 
They do not really object to that. It is a popular tax, if 
there is such a thing. But then, that is under the assumption 
that the money they put in goes to fixing roads, highways and 
its intended purpose.
    Now, when they took $8 billion out, that was a violation of 
that confidence in that tax. So, I went to them, at that time, 
and they said that if we would take that back out and undo the 
damage that was done 10 years before and put it back into the 
Trust Fund, it would, No. 1, fix the crisis we had at that 
time, and No. 2, it would correct something that should not 
happened 10 years before So that happened and the President did 
not veto it. In fact, it was scored at zero, as budget neutral.
    Now, I would only say that, if that was the right thing to 
do then, and I think it was the right thing to do then and we 
did it then, what is wrong with going back and then recouping 
the interest, which is about $13 billion? If it was right to 
recoup the principal, then it would be right, equally, to 
recoup the interest.
    So that is my first question. Where are you going to be on 
that when we try to propose that?
    Secretary LaHood. Well, Senator, I need to really see if 
there is any interest that has accrued on this money and look 
at that.
    Senator Inhofe. OK. Let us just go under the assumption 
that I am right, because I have already checked into it.
    [Laughter.]
    Secretary LaHood. My feeling, Senator, is that you all need 
to know that I had a meeting with Larry Summers yesterday, and 
we talked about this issue. And I want you to know, and I want 
the entire Committee to know, that the folks at OMB are trying 
to find the money to get us to $20 billion through March 2011. 
That is our goal. There are a lot of people working on this.
    I will be happy to take your suggestion back to these 
folks. I had a discussion with Senator Vitter about his bill, 
as well as the suggestion that he is making in the bill.
    Senator Inhofe. Which I agree with. I want to say that I 
agree with Senator Vitter. Well, he is not here now. I am just 
saying that we have some choices here.
    Secretary LaHood. The thing that I want you to know, and I 
want every Committee member to know, there are a lot of people 
putting their heads together right now to figure out how to, 
where to get $20 billion and how to pay for it. I will take 
your suggestions back to them.
    Senator Inhofe. Well, first of all, we are talking about on 
an 18-month extension. What figure would you like to use for 
the 18-month extension, forgetting about----
    Secretary LaHood. Twenty billion.
    Senator Inhofe. Well, it is my understanding that it is not 
that great. But we can go back and look at other----
    Secretary LaHood. Well, Senator, I mean we have some very 
smart people in the department. And they----
    Senator Inhofe. Well, I know we are not very smart up here, 
but we, I have heard----
    Secretary LaHood. My statement did not imply that you were 
not smart because I know you are. I am just saying, all of the 
smart people at the department put their heads together, and we 
figured out that it is about $20 billion through March 2011.
    Senator Inhofe. OK, I am just asking, in a very friendly 
way, and you and I have been friends for a very long time, that 
there are ways of doing this, and that was something that was 
done to everyone. Then, afterwards, even though they were 
opposed to it in the beginning, thought it was the right thing 
to do.
    The second question I want to ask you, because I think this 
is very important, if we do an extension, an 18-month 
extension, that will take us out of this crisis in time. But, 
in my opinion, and the initial understanding that I had, not 
from you directly to me but just from things that I heard, was 
that it would be a clean extension. I know a clean extension is 
something that the Republicans want. I think that I would like 
to know where you are and where the Administration will come 
down on a clean extension. I mean, none of the reforms, none of 
the other stuff.
    Secretary LaHood. I was in the same meeting that you were, 
and it was pretty clear in that meeting that the folks around 
here are not very keen about talking about anything other than 
a clean extension. I got the message on that and I delivered 
the message yesterday to our friends at the White House about 
it. They would still like to have, as part of the discussion 
and the debate on this, some of these reforms. But I know where 
you are on this. You want a clean bill.
    Senator Inhofe. OK, that is good. By the way, my time has 
expired, but I had a nice evening last night with your old 
boss. I enjoyed it.
    Secretary LaHood. Oh, thank you. He is doing well.
    Senator Boxer. Senator Lautenberg.
    Senator Lautenberg. Thank you, Madam Chairman.
    I look at the situation that we are in, and I think that 
what we see is a house on fire. We hear now that an upgrade is 
critical for WMATA. That it should have been done. What future 
disasters might fall upon us? How much more wear and tear is 
going to take place before we start seeing serious improvements 
in our transportation system?
    We need more of national leadership. I do not know why this 
is not seen as a crisis of major proportion, described that 
way. I do not diminish other things. I do not diminish the war 
efforts that we are involved with, making sure those troops are 
amply taken care of. But this is a crisis. And we are facing 
several of these.
    We have the crisis with foul air and the declining quality 
in our environmental condition. Why are not things like some of 
those used in the past identified as emergency actions to be 
taken now? Maybe we ought to just, say, go back a little bit. I 
do not want to use a time line because mine goes further than 
anybody else in this room. But the fact of the matter is, that 
maybe things like an analysis of whether slower driving is 
going to reduce the amount of pollution in the air, or is going 
to reduce the amount of fuel that we have to import. Perhaps 
other things that are not obvious.
    We cannot grow money. That is the problem. And we need it 
desperately because of neglect. We did not take care of the 
functions of our transportation system, the functioning parts. 
When you described, and I read carefully, Mr. Secretary, with 
respect to what you said, 53 percent of our highway miles 
traveled are on roads less than in good condition, 30 percent 
of our bridges are structurally deficient, 22 percent of our 
transit buses and 32 percent of our transit rail cars, are all 
over age. I know, personally, that things over age can be 
effective----
    [Laughter.]
    Senator Lautenberg. But why are not these things in 
emergency conditions? Mr. Secretary, would it not be wise to 
put more money immediately into transit programs to make sure 
that the places there are shovel and pick ready to go in lots 
of places throughout the Country? You get people back to work. 
That is one of the critical issues that the Country is facing 
and that President Obama is committed to reducing.
    And yet, I would like to see more clean air for my 
asthmatic grandchild and, therefore cleaner air for all 
asthmatic grandchildren. We can do those things if we invest in 
mass transit and reduce the pollution that is thrown at us 
because of our consumption of fossil fuel.
    So, Mr. Secretary, does that strike a note with you that 
says, yes, this is some place where we have got to go?
    Secretary LaHood. Senator, we at the department are 
committed to all modes of transportation. I will tell you this. 
The $8 billion that was in the Recovery Act for transit is 
being well spent. It truly is. On some very, very important----
    Senator Lautenberg. Is being immediately spent?
    Secretary LaHood. Yes, sir. We have complied with every 
provision that Congress put in the bill for spending this 
money. And this money is going to be going out the door here 
very quickly. We are committed to transit. There is no question 
about it. If Congress decides they want to step up more funding 
for transit, we will find plenty of ways to spend it.
    Senator Lautenberg. Well, the thing that I am really 
pleading for here is, I am pleading for a message that says the 
transportation system is one of the critical parts of our 
functioning as a society. And that leadership in our Country 
says, look, do the things that you can do. Use cars, buy cars 
that have more efficient mileage. Drive less if you can do it. 
Drive slower. Ask the States to look at what are the 
consequences of higher and higher speeds on the highways.
    It is an emergency condition, as I said earlier. The fire 
is in the cellar. Do we want to wait until the fire is up to 
the second floor before pouring lots of water on it?
    Thank you.
    Senator Boxer. Thank you, Senator.
    Senator Barrasso. We are going in order of arrival.
    Senator Barrasso. Thank you, Madam Chairman. Thank you, Mr. 
Secretary.
    In your written testimony, you had mentioned that you would 
like to reform the highway program using kind of a long-term 
extension to make better use of what you called cost benefit 
analysis.
    About 70 percent of the entire Federal aid highway network 
is located outside of metro areas. And I express the same 
concerns that Senator Boxer did when she talks about the ports 
and the goods coming in to those communities and then getting 
sent across the States to get to a place like Chicago and how 
we use this cost benefit analysis.
    Could you talk a little bit about what your plan is for 
using cost benefit analysis to reform the highway program and 
how that is going to impact on rural areas? Because, if you do 
something along the lines of the number of cars per hour or 
cars per mile, there are clearly areas that are getting 
overused in terms of our highway system and with repairs and 
expenses, across Wyoming, Nebraska, Utah and similar states, 
where the actual total volume is down but the one truck equals 
that of 4,000 cars.
    Secretary LaHood. We want to make sure that every dollar 
that we spend, that we can say to the taxpayers, this is the 
best use of this money. All of you have been around long enough 
to know that people are tired of reading about transportation 
projects that are funded because of some sweetheart deal or 
some earmark or something like that.
    We want to get to a place where we can say to Congress, 
this is the best use of these dollars, and develop metrics to 
show that the infrastructure dollars are being spent as wisely 
as possible. There are metrics there for us to judge a transit 
project or a highway project so that, when somebody says, this 
was done because so and so wanted it done, we can say, no, the 
answer is it was done because the cost-effective metrics that 
we put in place said it was so. And it was needed.
    That is the place that we want to be, so we can justify 
every project using metrics that everybody understands.
    Senator Barrasso. Well, I appreciate your comments, 
specifically about the sweetheart deals and the earmarks. We 
read now, in the last week, about the airport that nobody uses 
that is getting all of this money. So, I am encouraged by your 
comments that you are actually going to use cost benefit and 
point out and hold the people accountable for the sort of 
things that are being listed, that do not seem to be the best 
use of it.
    Secretary LaHood. Yes, Senator, that is where we need to 
get. That is what we want to do in working with Congress on an 
authorization bill so that there can be no criticism of 
Congress and no criticism of DOT, that we are all on the same 
page. These projects are worth funding, whether at an airport 
or somewhere else, because of the metrics that we use that 
prove that it has a cost benefit to the taxpayer.
    Senator Barrasso. It also talked a little bit about livable 
communities, if I could visit about that. Certainly, in 
Wyoming, we could have significant reservations about 
Washington, with its wisdom, coming in and telling the people 
of Wyoming what is a livable community and what is not a 
livable community in terms of how the Federal Government in 
Washington decides to spend its money, the one size fits all 
approach. I do not know if you wanted to comment a little on 
that.
    Secretary LaHood. Yes. No, this is not Washington speaking. 
This is people like Earl Blumenauer and Peter DeFazio, who come 
from Portland, OR, and who have, over a period of time, worked 
with their local elected officials, developed a streetcar 
system, and worked to develop housing along the streetcar 
system, so everybody in Portland does not have to get in 
automobiles in order to go where they want to go.
    This is not something that Ray LaHood dreamed up. This is 
the dream of Members of Congress who have seen it by working 
with their mayors, and their Governors, and their city councils 
for communities where people do not have to use an automobile 
to go everywhere. You do not have to have a three-car garage. 
You might have a car, but you might also have an opportunity to 
get on a streetcar, a light rail, a walking path, a bike path 
in order to get to work or get to the drug store. Look, 
Senator, I got this idea from being around here.
    Secretary Barrasso. Thank you, Mr. Secretary. Thank you, 
Madam Chairman.
    Senator Boxer. Thank you.
    Senator Voinovich.
    Senator Voinovich. Hello? Does anybody hear us? Does this 
Administration hear from the folks out there that are in the 
business, that have all come together and said, we need a 
robust highway bill now? There is an urgency to it. It is good 
for our environment, good for our competitive position in terms 
of our economy, good for jobs. Good for jobs.
    You are talking about finding some money to keep us going 
at the level we are at. The $285 million we passed in 2005 was 
inadequate. It is way below what that is today. We are going to 
continue that? We have a $2 trillion deficit and you are going 
to have to find some money so that you can take care of us 
during the next year or 18 months? The way to get the job done 
is to pass a bill now. Urgent. Get it done.
    Madam Chairman, I would like you to know that this bill we 
passed in 1985 did not get the job done. No. 2, we have got 
stimulus money out on the street and that is going to 
evaporate. What the Country needs is to know that within the 
next 5-year period we are going to make a comprehensive 
commitment to the infrastructure, including high-speed rail, 
highways, ports and the rest of it, to get it done to the tune 
of about $450 billion. Can you imagine what that will mean in 
terms of our economy and giving some people confidence in where 
we are going?
    Is anybody listening when you have got every group in this 
Country that says we want this done now, we need it? I am going 
to be doing some studies, Madam Chairman, about the impact that 
this is going to have on the reduction of jobs. It is going to 
take a balloon that has a little air it and looking forward to 
having a whole lot more air, and the balloon is just going to 
subside and there will not be anything there. And that would be 
awful for our economy.
    Does anybody know how bad it is out on the street? Does 
anybody know how many businesses have gone out? Do you know how 
many businesses are on the fringe, right now? They have got to 
have some kind of confidence that we are going someplace, at 
least one part of our economy.
    And by the way, we do not have to have an emergency 
spending. We do not have to borrow the money. We are going to 
pay for it. And the American people will pay for it if they 
know they have got a product.
    Now, Madam Chairman, I would to say to you that there is a 
man over on the House side named Jim Oberstar that has had over 
50 hearings and spent over 2 years on this. The stuff that has 
been talked about, livability and performance, it is a terrific 
piece of legislation. They are going to mark it up in the 
House.
    And, Madam Chairman, I think we should look at it. And I 
think that we ought to get it, and understand that this is 
important. The Chairman is always talking about the 
environment. We get this bill passed and get going, this is 
going to have a dramatic impact on reducing greenhouse 
emissions.
    You talk about how our highways are second to none. Give me 
a break. Have you been to Europe lately? We are way behind 
Asia, China, and India. We are behind. We have fallen behind. 
If we want to compete, we need to have these corridors working. 
We need to get rid of congestion. And we need the jobs badly. 
We need them.
    I would say to you, and I thank you very much, sir, for the 
job that you are trying to do and you are representing the 
Administration, but I do not think they get it right now about 
what this is. There is going to be a bunch of us, in the next 
couple of months, that are going to the American people and we 
are going to talk about the situation as it is and the impact 
that not going forward with this bill is going to have on our 
economy and our environment and our competitiveness in the 
global marketplace.
    It is time to do it. We should not wait for 18 months and 
try to fiddle-faddle it around and try to figure out how to rob 
Peter to pay Paul. You know there is no money here. You either 
have to make an emergency and borrow the money, or figure 
another way to borrow the money, or go through Jim Inhofe's 
suggestion about the interest. The interest? We will calculate 
the interest. There is no money there. Where are you going to 
get the money for the interest? It is just not there.
    So, my message to you is to go back to the President and 
start talking about where we are. Because I am going to tell 
you something. There is going to be one large crescendo in this 
Country during the next couple of months to let the people of 
America know just exactly where we are today and what we need 
to do.
    Senator Boxer. Well, Senator, I share your passion for 
doing a transformational bill. I have been here for a very long 
time in Congress and I have always pushed hard for change and 
transformation. And sometimes I have won it, and sometimes I 
have not.
    In this case, I feel that, as the Chairman of this 
Committee, until I know how I can tell the American people we 
are going to pay for this major change and major need, I am not 
ready to find that solution.
    I know that Chairman Oberstar and you and others have 
talked about a big increase in the gas tax. I will tell you, if 
you go out to the people of America and you tell them that is 
the solution, I do not think they will buy it. They are 
struggling right now. I think we have to come up with other 
ways.
    I have talked to Secretary LaHood, and he has responded 
that the day after we pass this extension, and my goodness, we 
have done that before. There are moments when you need to have 
the time. If the Highway Trust Fund was not going broke, that 
would make this a very different conversation.
    So, we will have this debate in this Committee. I do not 
know of any others on the Committee who share your view at this 
particular time. I know James Oberstar does. He is a great man 
with a great vision and I share a lot of his vision. But it is 
timing. It is the timing.
    Secretary LaHood has stated that, in fact, we are going to 
work day in and day out. I hope that you will, despite your, I 
would say, extreme dismay and disappointment that most of us 
are moving toward this 18-month extension, in that period of 
time we are going to be meeting, probably daily, on how to pay 
for the kind of vision that you have exhibited. That is the 
fact. That is where it is. And I look forward to that debate.
    Senator Voinovich. Madam Chairman.
    Senator Boxer. Go ahead.
    Senator Voinovich. My theory is that if you put a package 
together that addresses the concerns of the American people, 
and they can see that they are going to get something out of it 
in terms of, as I mentioned, dramatic decreases in the release 
of greenhouse gases, a major improvement in the elimination of 
congestion in traffic corridors, and livability performance 
planning, and also the impact that it is going to have on the 
economy and the jobs, that I believe that they will support it. 
We know that we have to find other sources, but I believe they 
will support a gas tax.
    I was a mayor. I was a Governor. I have supported tax 
increases. I have gone to the people and I have explained to 
them what we are going to do with the money. And after they 
looked at it, they came out and supported it. It is a sales 
job. They have got to know what the product is.
    And I am saying that Jim Oberstar is going to vote a bill 
out of his committee that does it. It is a terrific piece of 
legislation. It gets at a lot of things that the American 
people are concerned about and I think there is going to be a 
tremendous receptivity to it. And I think if you have a 
product, Madam Chairman, where they can see it is going to 
really make a difference for our Country, that they will be 
supportive of it.
    I mean, when the truckers tell me that they are willing to 
have an increase, a big increase in taxes, and every group that 
is out there that in the past, Madam Chairman, we were only 
taking a walk, they are there, and they understand how 
important it is. I just think, I want you to know that I am 
going to work my you know what off in the next couple of months 
with everybody out there to convince the American people that 
we do need to get this done now and that it is going to take 
some money and it means that we are going to have to pay more 
for our gas tax initially.
    That would take care of your problem in the next 18 months. 
You are going to be working right now, are you not, to try to 
find the money, to try to get us through this the first time? 
Then you have got to find the money for the next time, $20 
billion. If we got the bill done on time, you would not have to 
do that because we would have increased the gas tax and it 
takes care of your problem.
    With all due respect, I would urge you to look at this 
again.
    Senator Boxer. Senator, if I could just say, this is a very 
important moment for us to send a strong signal that we are 
going to work together to, at the minimum, extend the highway 
bill so that it is seamless, and nobody is threatened, because 
all the programs will be going forward. We do have stimulus 
money out there. I do not think that should be overlooked, and 
which is also increasing, actually, the projects on the ground.
    So, by extending, you keep everything at the same level, 
plus the influx of the stimulus money, you are moving forward. 
There is no reason to frighten people that in the short term 
anything bad is going to happen. We are agreed, across this 
Committee, with maybe one or two exceptions, and I only know of 
one exception, that the short term, 18-month extension is the 
way to go.
    Now, my colleague is absolutely right. In the House, it is 
a different modus operandi. The Chairman, who I deeply respect 
and hold in high regard, has decided that it is his committee's 
role to put this out there and then the Ways and Means is going 
to figure it out. But I want you to know that the level of 
spending in the Oberstar bill, there is only half the money in 
the Trust Fund to pay for it. In other words, it only pays for 
half of the Oberstar bill.
    I, in good conscience, as the Chairman of this Committee, 
do not feel that I can move forward at this time of fiscal 
stress and strain with that type of a bill without being able 
to pay for it. I have some really good ideas on how to pay for 
it. I want you to know I have been working constantly on that.
    And by the way, our Ranking Member and I have been talking 
about it because we, although we have not agreed upon a full 
package of funding, we are beginning to make some progress on 
things that we agree with.
    It is true that the truckers have stepped up, and I think 
you are right to single them out. They are the only ones who 
have stepped up. All of the others who have spoken to me have 
not put on the table what they will do. They want to do more, 
but they have not been specific.
    We need time. This is the moment, now, in the next year or 
two, that we have to transform the way we do this. I could not 
agree more with you on that point, and with Senator Lautenberg.
    I also wanted to say to my friend that greenhouse gas 
emissions, that is a major problem. And the Obama 
administration has taken moves which are fantastic to increase 
fuel economy. Tremendous strides. We looked at some modeling 
and it is extraordinary the amount of greenhouse gases that 
will be taken out. And we will be working on a greenhouse gas 
reduction bill, which I hope my friend will help me on, to do 
even more. So, on that front, we have tremendous possibilities.
    I do not like to have a split with my friend from Ohio on 
this because he is on the right track of what we need to do. It 
is a question of timing. It is a question of pay forward. It is 
a question of sending a signal out today that we going to move 
quickly because the Highway Trust Fund is going broke and we 
need to replenish it. That adds another layer of uncertainty. I 
think the most certain way to proceed is this 18-month 
extension.
    I will tell my friend, we could write a bill, he and I, and 
it would be a tremendous bill. And I would guarantee my friend 
that it would have tremendous change in it. As he said, he has 
talked about many of the things that Secretary LaHood has 
spoken about.
    But let us be honest here. When it comes to going to the 
Senate floor, when you have that type of bill, this cannot be 
done quickly. It has to take time. And time is not on our side 
in terms of a Trust Fund that could be out of funds as early as 
August. We are hoping not July. That will put hundreds and 
thousands of jobs at risk and for me, the most important thing 
I think we can do is to do this extension as clean as it can 
be. Clean as a whistle. So we do not delay it, we do not run 
into trouble. And Senator Inhofe and his staff and mine are 
working to that end.
    So, we have a division. But I have to say, and I believe I 
speak for almost all the members of this Committee, I cannot 
say to a person, but I have discussed this with most of them 
and they have supported the 18-month extension.
    Secretary LaHood, I am sorry that you had to sit through a 
debate here within the Committee, but I am glad you did in a 
way. Because I think you can take back the message that while 
we, in the Senate, the majority of us here across party lines, 
agree to a clean 18-month extension, not with these policy 
changes because it will in fact jeopardize a quick passage of 
this extension.
    We also believe, as Senator Voinovich does, the difference 
I have with him is strictly on the timing, it is not on what he 
said. His passion, his concern, the issues he lays out, I have 
not got one bit of a quarrel with. So maybe if you could tell 
the President that we do have the short-term strategy in this 
Committee, and we have a long-term strategy that we want to 
begin as soon as we have taken care of our short-term problem.
    You have been so helpful and understanding. You know what 
it is to work around here. I just appreciate your leadership, 
your straightforward comments, and your patience.
    So, we thank you very much. I do not know if you want to--
--
    Secretary LaHood. I appreciate your leadership, Madam 
Chair, and I would say to Senator Voinovich that, sir, I have 
been out around the Country. I just met with your Governor. I 
just met with your other colleague that serves in the Senate 
here. He came to my office and we talked about a lot of issues.
    I have had three meetings with the Governor of 
Pennsylvania, three meetings with the Governor of Michigan. 
These are States, your State, Michigan, Pennsylvania, Illinois, 
these are all States that are hurting really badly. We know the 
pain out there.
    We think our portion of economic recovery is doing many, 
many good things. When I get out around the Country, I see a 
lot of people working as a result of the fact that our portion 
of the stimulus is working. We are getting the money out of the 
door the way Congress asked us to do.
    And I will tell you this. President Obama does have a 
vision for transportation. I tried to express it here in my 
statement. It is not something that he is going to ignore or 
turn a blind eye to at all. I just want you to know that we 
have listened, not only to you, sir, but to many other people 
around the Country as we get around. I have been to many States 
and I have talked to a lot of elected officials, including some 
who are serving in this body, and we will work with you.
    Your vision of transportation is very similar to President 
Obama's vision of transportation. As the Chairwoman said, the 
timing is, I guess, where we part company.
    Senator Boxer. Senator, if you want to respond?
    Senator Voinovich. This will continue, I think that we 
pretty well all know that.
    All I can say to you is that if people that you have met 
with, probably when we get back from the break, you are going 
to see a tremendous number of people who you say are not 
willing to step to the table, who are willing to step to the 
table. I have met with them and they are a strong, united 
group. I am going to join with them and others and Jim Oberstar 
to try and convince you and others that we need to get on with 
this and we cannot wait 18 months to do it.
    One bullet that we are going to have to bite in order to 
pay for this and not have to borrow the money or do all the 
other things that we always do around here when we don't have 
the money, we finagle it, that one way that we are going to do 
that is that we are going to pay for it. The American people 
will understand that.
    The second thing they are most concerned about today, 
beyond jobs, is the fact that they know that where we are 
going, the way we are going, in terms of our deficit and 
national debt is not sustainable. They get it. The Europeans 
get it. The world gets it. We do not get it.
    We talk about, Secretary, you are going to try to find a 
little money someplace. It will be rob Peter to pay Paul. 
Something to get you through it. Then you have to find some 
more money.
    A much cleaner way would be to say to the American people, 
this is a really good highway bill, it is needed for our 
Country, and we know that, with the facts, you are going to be 
supportive of this because it is going to make a difference. 
And by the way, it is not emergency spending, it is not some of 
the other Mickey Mouse stuff that we do around here. We are 
going to pay for it. OK? We are going to pay for it. Would that 
not be wonderful for once?
    Senator Boxer. Yes, and I am very glad you are going to 
meet with the players, because I have met with all of them, and 
the only one of the group that has put forward a proposal has 
been the truckers. And I can tell you, I am very grateful to 
them.
    I want to say this. I could not agree with your more. The 
deficit and the national debt have got to be brought down. We 
had that under Bill Clinton, and we did it. We inherited from 
the first President Bush an enormous debt and an enormous 
deficit. And we did it. Under Bill Clinton, we got a balanced 
budget, we got a surplus, and we got that debt going down. We 
are going to do it.
    That is the reason why I want the extension. I do not feel 
comfortable bringing forward the bill until I know how I am 
going to recommend paying for it. I cannot imagine why I would 
ever do that. I do not see it, in my view, as being fiscally 
responsible, just to put together a giant bill and send it off 
to some other committee and have them figure it out.
    I want to work with you, Senator Voinovich, so we can have 
the people at the ports say, this is what we are willing to do 
to pay for it. The railroads, this is what we are going to do 
to pay for it. I am not going to keep going back to the 
American people and a gas tax. Let the heavy users, like the 
truckers, step up to the plate. And we can work together.
    I have stated before, I am willing to see the gas tax 
indexed to inflation. I think that is a fair thing to do. So 
there are ways we can do that in a fair way.
    But again, it is chicken and egg. The theory of Chairman 
Oberstar seems to be, I am going to write this great bill, 
which he has done, and now it is going to force the way to pay 
for it.
    My view is, when I do the bill, I want to make sure we have 
that done. It is just my thinking. But is also Senator Inhofe's 
thinking, it is also the vast majority of my colleagues, 
Senator Baucus and others, including the fact that I do not 
know of any other Republican that does not agree with that.
    Having said all of that, I hope that we can work together 
as you meet with these various groups, Senator, because if we 
have a breakthrough, nothing is going to stop us from writing 
our bill the minute we have our break through. For example, if 
we had a breakthrough in 3 months, I would sit with you, we are 
going to get a bill out there and we are going to move.
    So, this is a question of immediacy versus the long-term 
solution. That long-term solution is going to come. It could 
come in 3 months. I think with your driving force, it could 
come in 2 months. I am very much open to that.
    So here is where we are. We are going to continue to work 
with you on this 18-month extension. Senator Voinovich is going 
to work hard to change our minds. I always am willing to hear 
his ideas on how we are going to pay for this big vision that I 
support at this time. We will get there. I do not know that we 
can get there in 3 weeks when the Trust Fund is out of money. I 
should say maybe it is a little more than that, maybe 6 weeks 
or 8 weeks.
    I want to thank you, Mr. Secretary. This is tough. This 
hard. But we are getting there. Thank you very much.
    It is my privilege to call up our second panel: Kathy 
Ruffalo, President, Ruffalo and Associates, and she was a 
member of the National Surface Transportation Infrastructure 
Financing Commission; Dawn James, Chief Executive Officer, 
Vulcan Materials; and Jack Basso, Director of Program Finance 
and Management, American Association of State Highway and 
Transportation Officials. We welcome you and we look forward to 
your words of wisdom.
    So, if people could leave the room quietly, that would be 
very good.
    We will start with you, Kathy Ruffalo.

 STATEMENT OF KATHY RUFFALO, PRESIDENT, RUFFALO AND ASSOCIATES

    Ms. Ruffalo. Thank you, Madam Chairman and members of the 
Committee.
    I appreciate the opportunity to address you today regarding 
the impending insolvency of the Highway Trust Fund.
    By way of background, I did spend 11 years as a staff 
member to this Committee and had the privilege to work on 
ISTEA, TEA-21 AND SAFETEA-LU.
    Senator Boxer. And you lived to tell the tale.
    [Laughter.]
    Ms. Ruffalo. And I am not sitting where you are now. So, 
yes, I learned a valuable lesson.
    [Laughter.]
    Ms. Ruffalo. I spent 6 years working in State government 
and I am a member of the Commission, as you mentioned. All that 
experience has certainly shaped my perspective on the situation 
that you find yourself in today and I have a very healthy 
respect for what you and your staff are trying to do in 
developing that multi-year proposal.
    Having said all this, I believe your task will be made more 
difficult if Congress were to allow the Highway Trust Fund to 
become insolvent, allow for a dramatic reduction in 
transportation funding next fiscal year, and possibly allow for 
the loss of contract authority as the basis for our 
transportation programs.
    I would like to briefly cover a couple of areas with you 
today. I was asked to talk about the history of the Highway 
Trust Fund, so that is in my written testimony if folks would 
like to refer to it. But what I would like to focus on is how 
did we get to where today and what are the impacts of the 
insolvency of the Trust Fund?
    As background, there are two major sources of revenue into 
the Trust Fund. It has been talked about a little bit today. 
They are the motor fuel taxes and then, of course, the vehicle 
and tire taxes. The motor fuel taxes account for about 90 
percent of the revenue in the Trust Fund and the non-fuel taxes 
and fees are about 10 percent.
    As we all know, the current economic situation has 
dramatically impacted the revenues collected from the motor 
fuel taxes and while increased fuel efficiency has had an 
impact, the fact that fewer people are choosing to drive and 
purchase fuel is a much larger factor.
    But there are two other issues I would like to bring to 
your attention. First, the non-fuel revenues continue to be 
extremely volatile. These are things like the truck trailer 
sales and tire taxes. It is the volatility in these non-fuel 
revenues that are impacting the balances in the Trust Fund.
    Again, while these non-fuel revenues are only 10 percent of 
the overall revenues in the Trust Fund, wild and dramatic 
swings in these taxes and fees can have a really dramatic 
impact on the balances of the Trust Fund.
    The second issue I would like to bring up is that, in 
SAFETEA-LU, of course, we had to spend down the balances in the 
Trust Fund. We spent down the balances in the Trust Fund 
because we knew that the revenue coming in from the fuel taxes 
was not going to be enough to spend at levels that Congress 
wanted to spend at the time. So, over the life of SAFETEA-LU, 
we did spend down the Trust Fund balances and that is another 
reason why we find ourselves in the situation that we are in 
today.
    So, there are basically two choices facing Congress. You 
all have talked about them this morning. We need to develop a 
solution to either add additional revenues into the Trust Fund 
for this fiscal year, or do nothing and allow States and 
transportation agencies to experience a reduction in funding 
and slower reimbursement rates. We need to decide: are we going 
to break the promises of SAFETEA-LU or at least take care of 
this fiscal year?
    Madam Chairman, I know that you and others on the Committee 
are committed to finding a solution to our current insolvency 
problem, and also to finding intermediate and long-term funding 
solutions. It is my hope that the entire Congress will choose 
the same route and will take action and resolve the insolvency 
issue for fiscal year 2009.
    As has been discussed, Congress did pass the stimulus bill 
in February with the stated purpose of creating and sustaining 
jobs. It would not make sense to not provide additional 
infrastructure spending 6 months after that bill. It just seems 
counter-intuitive.
    So, as has been mentioned, again, the impact from any gap 
in Federal transportation funding will have a ripple effect 
across the transportation sector and certainly through the 
economy. Construction jobs will certainly be lost.
    But we have to keep in mind that, in addition, businesses 
in the transportation sector will continue to be reluctant to 
hire workers if there is no clear signal that Congress is 
committed to these jobs and the investments being made. And, in 
fact, some businesses may begin to slow down production of 
transportation-related features if it appears there will be a 
gap in Federal funding.
    Madam Chairman, I work every day with many of the 
stakeholders in the transportation community, businesses, 
States, local governments and various transportation 
associations. I can you there is real apprehension regarding 
the pending insolvency and the impact of inaction.
    I would like you and the members of the Committee to know 
that many in the transportation community stand ready to assist 
you in resolving this crisis and I hope you will tap these 
resources to help make the case on the importance for 
transportation investment to others in Congress and, just as 
importantly, the public.
    Madam Chairman and members of the Committee, at the end of 
the day, we are all trying to do the right thing for this 
Country. I believe that we all need to remember that there are 
real men and women behind all the numbers and the statistics 
that we tend to use up here. We cannot get caught up in 
national statistics and forget the impacts of the decisions 
being made. Thousands of jobs depend on Federal transportation 
funding and not just the direct jobs.
    So, whether it is to get to work, move goods across this 
Country or maintain our quality of life, the Federal Government 
is, and should be, an important partner in transportation 
investments.
    With your leadership, Madam Chairman, and the leadership of 
this Committee, I hope Congress can quickly resolve this 
crisis.
    Thank you for holding this hearing and I am happy to take 
any questions.
    [The prepared statement of Ms. Ruffalo follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
    
    
    Senator Boxer. Thank you very much.
    And now, Don James, Chief Executive Officer of Vulcan 
Materials. Please proceed, Mr. James.

    STATEMENT OF DON JAMES, CHIEF EXECUTIVE OFFICER, VULCAN 
                       MATERIALS COMPANY

    Mr. James. Thank you, Chairman Boxer and members of the 
committee for the opportunity to testify here today.
    I am Don James, Chairman and CEO of Vulcan Materials 
Company. My goal is to bring to you the point of view of the 
business I run and our employees and our customers to bear on 
the issues of the importance of the Highway Trust Fund and of 
the sustained and significant funding for America's 
transportation infrastructure that is needed.
    Vulcan is the largest producer of construction aggregates 
in the Nation, primarily crushed stone, sand and gravel. We are 
also a major producer of asphalt and concrete. Our products 
build highways, roads and bridges and other large 
infrastructure projects in America.
    We have been publicly traded on the New York Stock Exchange 
since our founding more than 50 years ago and we are a member 
of the S&P 500. Our employees at more than 350 operations serve 
customers here in the District of Columbia and in 23 States.
    We have been recognized twice in the last 7 years as one of 
the top 10 of all Fortune 1000 companies for social 
responsibility. During the same period, Vulcan has been named 
by Fortune to its Top 10 List in two other categories, 
including use of corporate assets and as a long-term 
investment.
    We strongly supported this Committee's efforts regarding 
the American Recovery and Reinvestment Act. We, and our 
industry association, stand ready to assist the Committee in 
its vital effort to support transportation infrastructure 
investment, investment that needs to be sustained and 
significant to meet the great and ever-growing transportation 
infrastructure needs of the Country.
    The business of successfully building and maintaining our 
national surface transportation infrastructure depends in large 
measure on the funding stability and the year over year 
predictability of the Federal aid highway programs funded by 
the Highway Trust Fund. These authorizations provide an 
important continuity that my company, our employees and our 
customers rely upon in order to meet the significant and 
growing needs of our transportation systems.
    Multi-year bills are particularly vital for the funding 
visibility and the related confidence they instill in State 
departments of transportation. When State DOTs know that the 
Federal aid highway program will apportion to them their 
Federal funding, year-over-year in an amount authorized, they 
have the confidence that their State expenditures will be 
reimbursed. The States then award contracts, and the process of 
building and maintaining our transportation infrastructure can 
proceed smoothly and efficiently. Confidence in the long-term 
stability of the program is a critical factor in ensuring its 
success.
    When there are doubts, as there clearly are today, awards 
for construction projects slow because States are not sure 
there will be funding for reimbursement. As the pipeline for 
project awards slows, this inevitably leads to a loss of jobs 
in the construction and related support industries.
    As a materials supplier to highway contractors, we are the 
first to feel the impact of slowing rates of contract awards. 
The production of our products, and the private sector jobs 
that are created, precede by many months a State's request for 
Federal reimbursement of its State funds used to pay for the 
construction. This means that well in advance of any technical 
definition of insolvency in the Highway Trust Fund, at the 
point when the perception of a lack of future Federal funding 
occurs, that lack of confidence impacts our employees and our 
customers.
    Our slowdown occurs at the first doubts about what Congress 
will do and when it will do it. We are already feeling the 
impact of these doubts. And with the end of the current multi-
year authorization coinciding with a predicted shortfall of $5 
billion to $7 billion in revenue just to cover 2009 budget 
authority, anxiety and doubt about the future of the Trust Fund 
continues to grow.
    When one adds concerns about 2010, there is an even more 
negative speculation, further reinforcing the perception of 
unpredictability for the Highway Trust Fund.
    There is another basic congressional dynamic that 
contributes to the perception of Trust Fund stability--timely, 
bipartisan action. Prolonged delays and disagreements, however, 
feed concerns that Congress is not poised to address either the 
Trust Fund shortfall or a multi-year reauthorization in a 
timely manner.
    From the vantage point of our company, our employees, our 
customers and the State DOTs that we work with, the optimal 
solution includes addressing both the Trust Fund crisis and the 
timely passage of a multi-year bill.
    Meanwhile, and ironically, in the absence of timely 
resolution of these matters, jobs in our industry and the 
construction trades that the stimulus legislation was intended 
to create or save, will continue to be lost.
    Transportation infrastructure investment is an investment 
in American jobs and the American economy. The stimulus was 
intended to save or create jobs in part by putting Americans 
back to work building and maintaining our transportation 
infrastructure, thereby creating a real, tangible value for our 
economy. However, temporary influxes of Federal funding are not 
as helpful in creating and maintaining goods jobs with good 
benefits as are stable multi-year funding streams.
    The best stimulant to the economy is a robust, multi-year 
highway bill which will be most important in putting the United 
States back on the road to infrastructure and economic 
recovery.
    Thank you for the opportunity to share with you today the 
impact on our company, our employees and customers from delay 
and uncertainty in the funding of our Nation's highway 
infrastructure.
    [The prepared statement of Mr. James follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Senator Boxer. OK. Now, Mr. Basso.

   STATEMENT OF JACK BASSO, DIRECTOR OF PROGRAM FINANCE AND 
     MANAGEMENT, AMERICAN ASSOCIATION OF STATE HIGHWAY AND 
                    TRANSPORTATION OFFICIALS

    Mr. Basso. Thank you, Madam Chairman and Members of the 
Committee, for holding this hearing here today. And we 
particularly thank you from AASHTO for giving us an opportunity 
to testify.
    The Highway Trust Fund has been the mainstay of stable, 
predictable funding for the highway and transit programs since 
1956. That has changed. In fact, during the past 12 months, we 
faced two cash crises, one last September and now the latest 
that will occur in August.
    Let me focus on the critical impacts of such a funding 
distribution on the States, the economy, transportation 
infrastructure investment and jobs.
    First, let me address the immediate impact of curtailing 
payments to the States. That change will produce an immediate 
cash-flow distribution issue, impacting negatively the already 
cash-strapped States. The highway program is a reimbursable 
program where the States execute contracts, make payments and 
are reimbursed by the Federal Government. States do not have 
the option to simply delay contractor payments, and thus must 
generate cash and wait for reimbursement.
    Years before modern electronic payment systems, this could 
take as much as a week and cause States to incur borrowing 
costs to make payments. That is not an acceptable, in this 
particular fiscal climate, environment.
    As we turn to fiscal year 2010, the Administration 
estimates that the Highway Account of the Trust Fund will only 
support about $5.7 billion, or an 86 percent reduction in 
program commitments. AASHTO surveyed our State members and also 
has identified at least 1,900 projects that would have to be 
delayed or eliminated, altogether, a combined value of which is 
over $8 billion. That is just based on a survey at a projected 
35 percent reduction. Probably triple that amount would occur 
in this situation.
    Let me cite a few examples. North Carolina reported that 
some 400 projects valued at $300 million would have to be cut 
and could affect adversely their Garvey bond program. New York 
reported an impact of over 100 projects valued at $468 million 
being reduced. Pennsylvania advised 115 projects valued at $528 
million would be reduced, undermining the ARRA economic 
recovery effort. And Michigan, one of the hardest hit states 
economically, reported that it would drop some 215 projects 
valued at $414 million. When combined with the ARRA funding as 
it phases out, the reduction to Michigan would be some 67 
percent.
    As important as the loss of programs is the negative job 
impacts from such a dramatic reduction. States are just hitting 
their stride on the economic recovery funding, and such a 
reduction would nullify the gains from the current investment 
program. The economy cannot afford this loss. Given the value 
of infrastructure investment to support and create jobs, it is 
clear that we must move to address this crisis in the interests 
of the economy job creation supports.
    The Administration has included a placeholder in the 2010 
budget and we certainly agree that we need to fix fiscal years 
2009 and 2010 funding wise. We agree the shortfall must be 
addressed, but do not support taking discretionary budget 
authority in the appropriations process to solve this problem. 
We think that it is more appropriate to continue the practice 
of a transfer to the Highway Trust Fund that will get us 
through this crisis.
    We also understand that the Administration stated it wants 
offsets. To that end, we have identified some areas, including 
interest, which has been mentioned, about a $13 billion amount. 
There is $22 billion that was not put into the Trust Fund from 
1993 to 1997 from the 4.3 cents that was collected for deficit 
reduction. Those are just but a couple of examples.
    The bottom line is, we need to sustain the program and the 
Trust Fund while Congress moves to enact long-term legislation.
    Again, thank you for the opportunity to provide testimony 
and I would be happy to answer any questions, Madam Chairman.
    [The prepared statement of Mr. Basso follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Senator Boxer. I just to make sure, I think your last 
sentence was what I wanted to home in on. I went through Mr. 
James' testimony and I want to make sure that Ms. Ruffalo 
agrees with this.
    I just want to make sure that the three of you have stated 
that your preference is that we, and this is quoting from Mr. 
James' testimony, he said I am hopeful that Congress will pass 
legislation that brings financial stability to the Trust Fund 
for the remainder of fiscal year 2009 and fiscal year 2010, 
while also working on a multi-year bill prior to Highway Trust 
Fund insolvency.
    That is my view. That is Senator Inhofe's view. That is 
Senator Baucus' view. And I believe it is the view of the vast 
majority. And that is the White House view. Is that what I hear 
from you? And I will reiterate it again. That Congress passes 
legislation that brings financial stability to the Trust Fund 
for the remainder of 2009 and 2010 while also working on a 
multi-year bill. Yes or no?
    Mr. Basso. Yes, Madam Chairman, and I add one caveat. We 
support strongly the efforts in the House of Chairman Oberstar 
to move a bill. But we need stability in the Fund at this point 
in time.
    Senator Boxer. So, you support a two-track effort to make 
sure that the short-term problem is taken care of while we 
still work on the long term?
    Mr. Basso. Yes.
    Senator Boxer. Does that speak for you, Mr. James?
    Mr. James. Chairman Boxer, it does. I would emphasize that 
it is urgently important, we believe, that we get on with the 
multi-year reauthorization as soon as possible, because that is 
really the basis of stability.
    Senator Boxer. Well, it is my intent to work with the 
Administration the day after we resolve the short-term crisis. 
And, by the way, we will have many, many hearings starting in 
the fall. So, we will be calling you back for that purpose.
    Yes, Ms. Ruffalo.
    Ms. Ruffalo. Madam Chairman, I would certainly agree that 
we need to focus on fixing fiscal year 2009. As for 2010, if it 
appears that the October 1st deadline is going to come and go 
without the ability to enact a robust, multi-year 
transportation bill, then I would certainly ask Congress to 
take action to keep the programs continuing while Congress 
decides what is the appropriate length of time. I do not know 
what that length of time would necessarily be, but certainly 
seeing that continuity of the programs is very important.
    Senator Boxer. Well, my belief is that an 18-month 
extension shows our commitment to continuity. But a short-term 
extension raises a lot of doubts, at least in my State. They 
are concerned because they know that a lot of what Senator 
Voinovich said, most of it, practically all of it, I agree 
with. But I can tell you that there are people on both sides 
that do not agree with everything he said. So, it is not going 
to be the easiest thing to do. But we are going to do it.
    And then we have, of course, the Banking Committee that 
takes care of the transportation sector, and the Finance 
Committee that has to act. So, I guess my point is that the 18-
month idea, coupled with working on this bigger vision 
immediately, starting in the fall for our Committee, it seems 
to me that sends a very strong signal that we do not have to 
worry about the short-term problem and we are, in fact, 
resolving the longer term.
    How much would you have to raise the gas tax? I know 
Congressman Oberstar wants to raise the gas tax. How much would 
he have to raise it to achieve his $500 billion bill? Do you 
know?
    Ms. Ruffalo. Well, each penny raises about $1.8 billion. 
Each penny of gasoline and diesel tax coupled together is about 
$1.8 billion. So, if he needs roughly $250 billion, you know--
--
    Senator Boxer. Plus the Fund is not making it on the 
current level.
    Ms. Ruffalo. Plus to meet the gap. I do not know the math 
off the top of my head, but it obviously going to be a sizable 
increase----
    Senator Boxer. In the gas tax?
    Ms. Ruffalo. Gas and diesel, right, yes, Madam.
    Senator Boxer. Well, could we get out our calculators and 
figure that out, please? And also I would say, Ms. Ruffalo, you 
said that the tire and vehicle taxes were very unstable. Is 
that correct?
    Ms. Ruffalo. Yes.
    Senator Boxer. And you said it is responsible for 10 
percent of the Fund and you said it was more responsible for 
the problem than the gas tax. I had not heard that from my 
staff? Does my staff agree with that? So, how much did that 
Fund go down?
    Ms. Ruffalo. Well, right now the decrease in the truck-
trailer sales tax and tire taxes is about $2.5 billion. That 
has been the decrease right now. So, if you look at the gap 
that we are facing, that is one of the sizable reasons why we 
are seeing, for 2009, I am just talking about fiscal year 2009, 
it is that volatility.
    Senator Boxer. What is each of your suggestions for 
replenishing the Fund, not on the short term but in the long 
term? Starting with you, Ms. Ruffalo.
    Ms. Ruffalo. Mine might be one of the longer answers, Madam 
Chairman.
    Senator Boxer. Go ahead.
    Ms. Ruffalo. Just having been on the Financing Commission--
--
    Senator Boxer. I know.
    Ms. Ruffalo. We put together a whole menu of options, as 
you all know. I can tell you, quite honestly, that given the 
makeup of our Commission, we probably spent the first year and 
a half of our 2 years with members wanting to recommend 
anything but a fuel tax increase, given the political 
difficulties in doing so.
    But at the end of the day, when we looked at over 40 
funding options, the option that kept coming to the top of the 
list as far as easy to administer, cost efficient to implement 
and could generate a sizable amount of revenue at the Federal 
level, was the fuel tax, both gasoline and diesel.
    So, we did recommend a 10 cents per gallon gasoline tax 
increase and a 15 cents per gallon diesel tax increase. And of 
that diesel tax increase, we proposed a portion of it be used 
for freight projects.
    Senator Boxer. Now, was that before you knew of the 
shortfall in the Fund?
    Ms. Ruffalo. Madam Chairman, we knew there was going to be 
a shortfall. We wrote our report over 6 months ago. So, we 
certainly did not. As you know, these projections have been 
changing quite dramatically. We certainly would not be able to 
use our projections today.
    Senator Boxer. So, that 10 cent increase, would that cover 
Chairman Oberstar's bill?
    Ms. Ruffalo. No, that would get us to where, that would 
reestablish the purchasing power from 1993, the last time the 
fuel tax was raised. It would help us sustain current funding 
levels in 2010. It would not fill the gap.
    Senator Boxer. OK. And he is increasing programs by how 
much?
    Ms. Ruffalo. Well, he has not put numbers in. But I believe 
he has spoken about $250 billion gap if it is a $500 billion 
bill.
    Senator Boxer. So, my understanding is that it is about a 
third increased, the Fund? More than that? So, you can see 
where, if you rely on the gas tax, you are talking huge 
increases in the gas tax. Any other ideas, Mr. James, on how we 
can fill the gap?
    Mr. James. Well, certainly, we were disappointed, as I know 
you were, that the stimulus package had much less 
infrastructure spending, highway infrastructure spending, as a 
percent of the total. I believe, as Secretary LaHood pointed 
out this morning, the highway industry will be able to 
demonstrate that it is creating jobs faster and more quickly 
than perhaps other components of the stimulus spending.
    As I said in my remarks and in my written testimony, we 
create private sector jobs months and months and months before 
the Federal money is actually disbursed----
    Senator Boxer. Let me just cut you off from this, Mr. 
James, because I agree with you when using the unspent stimulus 
money. But that is a short-term fix. I am not talking about 
that. I am talking about the long-term fix. What would your 
ideas be?
    Mr. James. I think, and I agree with the commissions that 
have studied this and reported back to Congress, it will 
require a combination of user fees, which are, if they are 
dedicated to congestion relief and highway construction, I 
think we can get support. We know we have the support of the 
trucking association and hopefully the support of the Industry 
Coalition Alliance for that. I think being creative about 
tolling is another opportunity.
    Anytime the users of highways get the opportunity to pay 
for them, I think, and there is a direct, and taxpayers can see 
that every penny they are paying in gasoline tax and tolls is 
being reinvested in the transportation corridor they are 
driving on, I think you get very good support. Your State has 
certainly demonstrated that.
    Senator Boxer. We are using a lot of private sector-public 
sector agreements and tolling and so on and so forth. What 
about you, Mr. Basso, in terms of the long run, not the short 
run?
    Mr. Basso. Yes, the long run. We proposed at AASHTO a 
matrix of funding, revenue sources that came up to $1.3 
trillion. It included a range of things from gravitating from a 
fuel tax to a VMT fee collection system. It included from 
freight a whole series of potential freight charges that could 
be used to dedicate to the freight programs. It included a 
bonding program, a fairly complex bonding program using tax 
credit bonds to generate as much as $100 billion. It also 
included some additional fees that could be collected from 
other sources and put into this program. Ultimately, I think--
--
    Senator Boxer. Let me ask you--oh, I am sorry.
    Mr. Basso. Ultimately, I think--I am sorry.
    Senator Boxer. No, no, go ahead.
    Mr. Basso. The one thing that I would beyond that is, we 
obviously have an eye on climate change and cap-and-trade 
legislation, given the fact that I think some money 
particularly for the transit program can be dedicated----
    Senator Boxer. I agree with you completely. I think that a 
lot of our colleagues who are pushing for this do not 
understand the opportunities that they have with a cap-and-
trade system to dedicate funding to transportation.
    Let me just, my last question. The VMT, Vehicle Miles 
Traveled issue. Have you looked at it? Clearly, you obviously 
have because you are recommending that we look at it. There are 
a couple of problems that some of us have. We do not want it to 
be intrusive. So, we are trying to figure out a way to do it so 
that it is not intrusive into a car, because that is dead on 
arrival. We are not going to do that. But there may be other 
ways to do it.
    My question is, because the truth is the more vehicle miles 
you travel the more stress you put on the roads, have you 
looked at a flat fee on that and what that would bring in?
    Mr. Basso. We looked at flat fees and we looked at the 
equivalent of about what it would be just to equate what we 
have today from gas tax. It is somewhere in the range of 2 to 3 
cents per mile is what would be required.
    Two other points that I would make, something that I think 
would interest you, Madam Chair. We have a report coming out 
here in about 2 weeks from the Transportation Research Board. 
We took to heart your comments to us several months ago: can 
you come up with something in the shorter term that might work?
    Senator Boxer. Yes.
    Mr. Basso. And we have a report to deliver to you that I 
think you will find interesting.
    Senator Boxer. Well, I am very, very grateful to you.
    Senator Voinovich.
    Senator Voinovich. Thank you, Madam Chairman.
    I would like you to comment on the 2005 SAFETEA-LU piece of 
legislation and the fact that, because of the cost of gas, oil 
and steel, how that 285 has, in terms of today's dollars, 
evaporated in terms of what it buys. Because many of the States 
who wanted to move forward with their programs, as you know, 
were not able to go forward with them, know in Ohio because the 
money did not buy as much as what they thought it would buy 
because of the cost of steel and because of the cost of oil.
    The point I made to Mr. LaHood today is that, in effect, 
what we are buying is below, I don't know how much, a third or 
something, below what we had in 2005. So, if we continue that, 
we are at this lower level of spending. OK?
    Now, you have the stimulus bill which has come in and that 
has given us a little lift here. We are getting more money 
there. But, if we do not make it clear that we are going to 
provide the money to pay for this year, does this not leave a 
large uncertainty out there among the States about where we are 
going? That is, if we are able to say look, we are going to 
take care of the extension, do not worry about it. But it is at 
this lower level. You have got your stimulus money coming in. 
And by the way, we are going to do everything we can to get 
this bill done. We will have new money coming in. This is the 
level it will be. This is the level it will buy. Do you not 
believe that, from a public policy point of view, would be the 
best way to go?
    And I just want to quote Mr. James. You said, I am hopeful 
that Congress will pass legislation that brings financial 
stability to the Trust Fund for remainder of fiscal year 2009 
and 2010 while also working on a multi-year bill prior to 
Highway Trust Fund insolvency. But his will not mean that our 
company, our employees and our customers would have avoided the 
impact of the current perception that the Trust Fund might 
become insolvent without remedy or that a new multi-year bill 
might be delayed.
    Now, that is, that is getting at the planning. I was around 
when we passed ISTEA. I was a Governor at the time. I said we 
have got to go to multi-year spending so that the companies and 
the suppliers, everybody knows what the level is so that they 
can properly spend. And that brought a lot of logic and common 
sense to it and, by the way, I think was a lot cheaper way of 
doing it than this appropriate this year down and up and nobody 
ever knew what was going on.
    So, could all of three of you comment on that, in terms of 
what impact, psychologically, this is going to have if we do 
not say we will take care of this year and then people say 
well, we are going to delay the bill until after 18 months? You 
understand what I am getting at.
    Ms. Ruffalo. Well, Senator, there is no doubt that having 
some predictability and stability, not just of the States but 
for businesses as well, is going to be really important. One of 
the things that I hope Congress does not do is a number of very 
short extensions like we had under SAFETEA-LU, 3 weeks, a 
month, that kind of uncertainty just does nothing but give lack 
of confidence to people outside of Washington, DC.
    So, there are certainly impacts to not having a multi-year 
bill done on time on October 1st and you have certainly 
articulated what they would be, whether it was an 18-month 
extension or some other version of an extension. There is 
always an impact of not having the bill completed on time.
    Mr. James. Senator Voinovich, I think the real key is to 
get the next multi-year highway bill done and in place. That is 
what is needed to get predictability and certainty that allows 
DOTs to move forward with significant projects and allows 
companies like Vulcan to gear up to provide the materials 
efficiently on projects like that.
    I am not a politician and I do not understand necessarily 
all that has to happen to get the bill done. I agree with Ms. 
Ruffalo that having a series of short-term extensions is very 
damaging to the whole system and the program. I do think 
getting to the multi-year bill as soon as possible, and 
eliminating the uncertainty about what is going to be in that 
bill, which seems to be an issue today about the content of 
what is in the bill and how all of that is going to work, that 
uncertainty creates a great deal of difficulty for the 
transportation network, I think.
    Mr. Basso. Senator, just two observations. I think the 
ultimate disaster would be a bill that drops the $5.7 billion 
because nothing is enacted. We at AASHTO see that. We need 
stability and predictability on the funding side.
    As to the extension, I think we think that an extension, 
assuming it will happen, needs to create some stability and 
predictability. But ultimately the point I made earlier about 
getting a multi-year bill in place, as soon as possible, is the 
critical piece to a capital program that can be actually put in 
place and sustained over the long term.
    Senator Voinovich. See, what I am worried about is that we 
are a lower level on the spending and we are going to fund that 
lower level. Then, the stimulus starts to tail off, and then we 
have a big, as I mentioned, you have a balloon and you have a 
little air in it, and then all of sudden it just evaporates. I 
think that whole concept, from a psychological point of view, 
is going to have a very, very negative impact on everybody, 
States in terms of what they are doing, businesses that are out 
there and what they can do to plan.
    You would all agree that the sooner we can get the multi-
year bill done, the better off the Country is going to be.
    [Witnesses respond in the affirmative.]
    Mr. James. Yes, I do agree. I was very encouraged by the 
comments from the Committee about the need for any extension to 
be a clean extension because, if there is an extension and it 
is not a ``clean extension'' that is going to create a 
tremendous amount of uncertainty and the DOTs are going to tend 
to want to back up and wait and see, and the whole job creation 
benefit of the stimulus and the extension will get lost in the 
concern about the details of what new provisions are in the 
extension.
    Senator Voinovich. Thank you.
    Senator Boxer. Thank you, Senator Voinovich.
    Just to make it clear so that we do not send a mixed signal 
from the Chairman and the Ranking Member, we plan to mock up a 
clean extension, for 18 months, the week of the 20th of July. 
That is our plan and we are going to do it. I want to make that 
clear.
    Yes, Senator Klobuchar, welcome.
    Senator Klobuchar. Thank you very much, Chairman Boxer. 
Thank you to our witnesses.
    Like everyone here, I would like to see this bill enacted 
as soon as possible, especially for the State of Minnesota, the 
home State of Representative Oberstar. And also, I understand 
the hazards of doing this month to month and on the short term.
    When you talk about, Mr. James, not having a clean bill, 
what do you mean by that exactly? Some of the things going 
through, or what?
    Mr. James. I think that the programs that the State DOTs 
understand and can move forward with, and an extension, in my 
opinion, are very important. If there are programmatic changes 
that the House or the Senate wishes to have in a multi-year 
bill, that will have to be worked out.
    But trying to do that in an extension, in whole or in part, 
I would have a great deal of concern that it is going to cause 
the State DOTs to go whoa, we do not know how that is going to 
work and we are going to back off on contract awards until we 
fully understand. And then we have destroyed probably the most 
important part of the reason for an extension, which is to keep 
the jobs----
    Senator Klobuchar. To keep the jobs going and the whole 
reason for the stimulus. Do you think that there are some 
transportation policy issues that Congress should be 
considering outside of the comprehensive authorization process 
of either the new bill or this extension? If you could pick 
some priorities. Secretary LaHood talked about better use of 
cost benefit analysis, improved mobility of goods and people 
promoting livable communities. What do you think we could be 
doing now outside of this extension?
    Mr. James. Senator, let me just mention, I think outside of 
the extension, and in the long term, there is a lot of reform 
and a lot of things that we proposed at AASHTO and the Congress 
has proposed that need to be done.
    Given the short time, just being candid, that Congress has 
to deal with this extension, you may have been, or may not have 
been, informed, the DOT issued a letter last night saying 
payments will be curtailed to the States in August.
    Senator Klobuchar. Right. I am aware of that.
    Mr. James. So, there is not much time left to deal with 
this. We think a clean extension, from our point of view, is 
one that deals strictly with the shoring up and the money issue 
and does not try to enact major themes of reform, something 
that probably, candidly, cannot be done in the short time that 
we have forward, with the consequences of basically funding 
being cut off at a critical time.
    Senator Klobuchar. All right.
    Ms. Ruffalo.
    Ms. Ruffalo. Senator, I would just add that, having gone 
through three of these transportation bills from the vantage 
point of a staffer on this Committee, given that there are only 
5 weeks really in session in July and the first week in August 
to get some sort of extension to fix 2009, keeping it as clean 
as possible would certainly make it a little easier to get it 
through process given the busy calendar that the Senate has.
    I think one of the challenges will be, are there any 
reforms that could be done on an extension that would not be so 
controversial that people would not want to see this extension 
passed. I think one of the reasons why you hear concern about 
having an extension that is clean is just the need to get an 
extension done so quickly so that we do not see the States have 
a slower reimbursement date beginning the first week in August, 
potentially.
    Senator Klobuchar. All right. Thank you very much.
    Senator Boxer. We are going to have to close this because 
of time. It is after noon.
    Let me say thank you to all my Committee members who came 
today. It is a very tough moment and we have to stand up and 
make sure we do the right thing for the American people, for 
the environment, for our future.
    Now, I want to say for me, I hope people do not believe 
that I am supporting an 18-month extension because I have a 
full plate. That is not the reason. The reason is we have a 
crisis in the Highway Trust Fund and we have no consensus on 
how to fund a transformational bill that I want and the 
majority of us want. We do not have that consensus. Nowhere 
close. And, in this very delicate, slow economic turnaround, we 
cannot have a moment's worth of hesitation on what we do.
    Now, for those who want to focus on transformation, I urge 
them to work with me on my global warming bill. That is going 
to have a section on transportation. We are not waiting on that 
front. Because one of the best ways we can move to really clean 
up the air, to get off foreign and all the rest, is to make 
sure that we move toward a transportation system that is 
viable, that is convenient, that is affordable, and all the 
rest.
    I hope that I have been clear here, for those that have 
been thinking that the reason we are not going into the 5 or 6 
year bill is because our plate is full. No. If I had a 
consensus on how to fund this, and I could put it together in 
three or 4 weeks, I would be right there.
    But if you listen to our witnesses, and they all want a 
transformational bill, they all said they are recommending to 
us that we take a dual track. I think Ms. Ruffalo, her original 
idea was a shorter fix, but she is even open to a longer fix, 
and the others definitely feel an 18 month.
    I think that President Obama wants changes as much as any 
one of us. He wants change. And part of the change will be 
reflected in the five of 6 year reauthorization bill that we do 
pass. And it is also reflected, frankly, in Chairman Oberstar's 
bill.
    I know it is hard to have a two-track strategy, but we 
must. Because if we do not, we send a mixed signal out there 
and that is the last thing I want to do because too many jobs 
are relying on this and too many hopes are relying on this.
    We will do both. We will solve our short-term crisis and we 
will have a long-term bill that everyone is going to be proud 
of. Our President is going to be part of drafting that. Senator 
Voinovich is going to be part of drafting that. Because we are 
not waiting for 18 months or 12 months to start. The day after 
we fix the short-term problem we will get started. And that is 
a commitment from me to the members of this Committee.
    Senator Voinovich.
    Senator Voinovich. Yes, I would just like to say this. From 
a psychological point of view, right now we have got to get 
people to believe that the glass is half full and things are 
going to get better, Madam Chairman.
    But maybe what we would be better off to do, and I know you 
do not agree with this, is that we guarantee that the problem 
this year will be taken care of so that the States will know 
that they have got the money and we will represent to them that 
we are going to be doing everything in our power to get the 
multi-year bill taken care of so that we do not have to go 
through another extension.
    I think that approach, from a psychological point of view, 
in terms of what Mr. James is concerned about, and Ms. Ruffalo 
and Mr. Basso, would put us in a much better position that if 
we just do the 18-month extension. Well, everybody says an 18-
month extension. After it is extended, how many more years is 
it going to be before we get a highway bill? That is what we 
are talking about today. We have to keep people like Mr. James 
and his customers confident that there is going to be money on 
the street so that they can keep going.
    Senator Boxer. Senator, except for the exact timing, we are 
in full agreement. I want a short-term fix. You are now 
suggesting a short-term fix, but your short-term fix is a 
little shorter than mine and a little shorter than the 
President's.
    But we are moving closer. Let me just say that today, 
already, is this in the Wall Street Journal? It says, there is 
a warning that payments to the States could be delayed as we 
debate how to close the growing gap. That is a terrible signal.
    So again, I want to say to the Wall Street Journal or 
whoever is covering this, that this Committee is ready. We have 
agreement across party lines. We are going to move this the 
week of July 20th. We are sending a signal that we are going to 
take care of this problem.
    I thank you very much and we stand adjourned.
    [Whereupon, at 12:10 p.m., the Committee was adjourned.]