[Senate Hearing 113-732]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 113-732

  THE NEED TO INVEST IN AMERICA'S INFRASTRUCTURE AND PRESERVE FEDERAL 
                         TRANSPORTATION FUNDING

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 25, 2013

                               __________

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

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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                    ONE HUNDRED THIRTEENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  DAVID VITTER, Louisiana
THOMAS R. CARPER, Delaware           JAMES M. INHOFE, Oklahoma
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island     MIKE CRAPO, Idaho
TOM UDALL, New Mexico                ROGER WICKER, Mississippi
JEFF MERKLEY, Oregon                 JOHN BOOZMAN, Arkansas
KIRSTEN GILLIBRAND, New York         DEB FISCHER, Nebraska
MAZIE K. HIRONO, Hawaii

                Bettina Poirier, Majority Staff Director
                  Zak Baig, Republican Staff Director
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                            C O N T E N T S

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                           SEPTEMBER 25, 2013
                           OPENING STATEMENTS

Boxer, Hon. Barbara, U.S. Senator from the State of California...     1
Barrasso, Hon. John, U.S. Senator from the State of Wyoming......     3
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland     3
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     6
Fischer, Hon. Deb, U.S. Senator from the State of Nebraska.......     8
Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode 
  Island.........................................................     9
Wicker, Hon. Roger, U.S. Senator from the State of Mississippi...    11
Vitter, Hon. David, U.S. Senator from the State of Louisiana.....    11
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    20
Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........    21
Baucus, Hon. Max, U.S. Senator from the State of Montana, 
  prepared statement.............................................   146
Boozman, Hon. John, U.S. Senator from the State of Arkansas, 
  prepared statement.............................................   229

                               WITNESSES

Ruane, T. Peter, President and CEO, American Road and 
  Transportation Builders Association............................    22
    Prepared statement...........................................    24
    Responses to additional questions from Senator Boxer.........    43
    Response to an additional question from Senator Vitter.......    51
    Responses to additional questions from Senator Inhofe........    54
Lewis, Hon. Michael P., President, American Association of State 
  Highway and Transportation Officials...........................    61
    Prepared statement...........................................    64
    Responses to additional questions from:
        Senator Boxer............................................    76
        Senator Vitter...........................................    78
        Senator Inhofe...........................................    82
Kavinoky, Janet, Executive Director of Transportation and 
  Infrastructure, Vice President of Americans for Transportation 
  Mobility Coalition, U.S. Chamber of Commerce...................    84
    Prepared statement...........................................    86
Cohen, Gregory M., P.E., President and CEO, American Highway 
  Users Alliance.................................................   104
    Prepared statement...........................................   106
    Responses to additional questions from:
        Senator Vitter...........................................   113
        Senator Inhofe...........................................   114
Poupore, Ray, Executive Vice President, National Construction 
  Alliance.......................................................   117
    Prepared statement...........................................   119
DiLoreto, Gregory, P.E., President, American Society of Civil 
  Engineers......................................................   123
    Prepared statement...........................................   125
    Response to an additional question from Senator Boxer........   131
    Responses to additional questions from Senator Inhofe........   132
Basso, Peter J. ``Jack,'' Principal, Peter J. Basso and 
  Associates, LLC................................................   150
    Prepared statement...........................................   152
Ruffalo, Kathy, President, Ruffalo and Associates, LLC...........   156
    Prepared statement...........................................   158
    Responses to additional questions from:
        Senator Boxer............................................   164
        Senator Vitter...........................................   165
    Response to an additional question from Senator Inhofe.......   166
Schenendorf, Jack, Of Counsel, Covington and Burling, LLP........   167
    Prepared statement...........................................   169
    Responses to additional questions from Senator Vitter........   205
    Response to an additional question from Senator Inhofe.......   209
Connaughton, Hon. Sean T., Secretary of Transportation, 
  Commonwealth of Virginia.......................................   213
    Prepared statement...........................................   215

 
  THE NEED TO INVEST IN AMERICA'S INFRASTRUCTURE AND PRESERVE FEDERAL 
                         TRANSPORTATION FUNDING

                              ----------                              


                     WEDNESDAY, SEPTEMBER 25, 2013

                                       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 Building, Hon. Barbara Boxer (chairman 
of the full Committee) presiding.
    Present: Senators Boxer, Vitter, Baucus, Carper, Cardin, 
Whitehouse, Merkley, Inhofe, Barrasso, Wicker, Boozman, and 
Fischer.

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

    Senator Boxer. We will come to order. We are very, very 
pleased, we have quite a great panel and a second that is 
wonderful. We have a big job ahead of us and I am going to put 
my statement into the record and just ad lib and hear from my 
colleagues for an opening statement.
    The ranking member is on his way, he has been delayed, so 
he will be here soon, I hope. He is speaking on the floor. So 
we won't get into that.
    Anyway, we are here on an issue that has united us, and 
that is a good thing, given that we probably couldn't pass a 
Mother's Day resolution. So I think it is excellent that we can 
agree that transportation is something we can rally around and 
work together on.
    A lot of the people here today I know very, very well. We 
have been in the trenches in the last MAP-21 bill, and we are 
in the trenches now. But I really believe we can work and get a 
sustainable funding source for transportation. I believe this. 
I have seen some ideas that are quite compelling on how to do 
this. Simplify things, get one funding source, follow the lead 
of some of our States that are turning to a percentage highway 
fee that is paid for at the refinery level. This could bring in 
more than all the other taxes bring in for transportation.
    There is also the talk of a more controversial idea that 
some of us don't think is controversial, and that is a carbon 
fee. That brings in quite a lot, some of that could be used. 
There are many ideas out there. And the one that I am leaning 
toward myself, although this is going to be a decision of the 
Finance Committee, and that is for sure, is to be able to do 
away with the per gallon fee at the pump and replace it with 
this sales fee as they have done in Virginia and Maryland. It 
would fund the entire highway program for 6 years, or is it 5 
years? Six years, I think, David. And it would do that, we are 
doing away with all the other fees. It is a very exciting idea.
    Here is the point. We know that the status of our roads, 
the condition of our roads and our bridges is just not 
acceptable. Not acceptable. We know that we have 70,000 of our 
Nation's bridges which are structurally deficient. One in four 
bridges is either structurally deficient or functionally 
obsolete. This is the greatest country in the world and we have 
70,000 deficient bridges. And one in four of our bridges is 
either structurally deficient or functionally obsolete.
    In fact, according to the American Society of Civil 
Engineers, listen to this, every day more than 200 million 
cars, trucks and buses cross a deficient bridge. Just think 
about that. People are actually in danger just going to work. 
And we have seen it too many times. So this job that we are 
doing is not a lighthearted job. It is very serious. And we 
need to keep our economy moving. You cannot be a great economy 
if you can't move people and you can't move goods. And the 
system is not reliable.
    That is why we have the Chamber of Commerce here and that 
is why we have the unions with the Chamber on this. This is 
something we can all unite behind.
    A recent report from the National Association of 
Manufacturers found that 70 percent of our manufacturers 
believe America's roads are getting worse. And 67 percent 
believe infrastructure is important enough to American business 
that all options to fund investments should be on the table. 
Look, roads and bridges are not Republican or Democrat. So we 
need to work together. And we have a wonderful history of 
working together on this. We worked with Senator Inhofe when he 
was the ranking, we work with Senator Vitter as he is the 
ranking, we have worked with Senator Barrasso, Senators from 
both sides of the my colleagues on the Democratic side, because 
we all understand this.
    In closing, I would say the States are demonstrating 
greater leadership. They are taking bold action. And we will 
have a representative from Virginia here to discuss that 
State's successful effort, and again, quite bipartisan. So we 
are facing a challenge. I believe we are going to find the 
sweet spot, I really do. I have spent, I think now, more than a 
year looking at all the funding options. I think we can unite 
behind something that takes us away from the per gallon tax and 
moves us away from that toward a sales fee for highways. It 
would make a big improvement in the security of this fund. We 
know that the funds will then go be deposited in the fund.
    The last time we did this we had to take from the General 
Fund. Those days are over. We are trying to get rid of a 
sequester that is hurting our economy deeply. I hope we 
succeed. But we certainly have no room to go to the General 
Fund to fund highways and transportation. It is not going to 
happen, let's be clear.
    So we must work together, and I thank you very much. Seeing 
that my ranking isn't here, we will be happy to call on Senator 
Barrasso.
    [The prepared statement was not received at time of print.]

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

    Senator Barrasso. Thank you very much, Madam Chair, for 
holding this hearing. As the ranking member of the 
Transportation and Infrastructure Subcommittee, I do look 
forward to working with you, Madam Chair, about our national 
transportation investment needs.
    I would also like to welcome Janet Kavinoky, who is 
testifying on behalf of the U.S. Chamber of Commerce. She is 
from Thermopolis, Wyoming, which is my wife Bobbi's home town. 
Janet, thank you for being here.
    Wyoming is one of those bridge States, Madam Chairman, 
where it allows for the flow of commerce to move coast to 
coast. This Committee must not lose sight of the importance of 
a national, interconnected system of highways that includes 
access for rural America.
    The I-80 corridor is a crucial link and a critical link for 
moving commerce from the west coast ports to cities throughout 
the United States. Interstate 80 captures about 60 percent of 
the truck traffic, most of which doesn't originate or terminate 
in my home State of Wyoming.
    In the next 20 years, traffic on I-80 is going to double, 
according to the Federal Highway Administration. Wyoming, like 
many other low-populated States, will have needs that are very 
different from the needs of cities like New York or San 
Francisco. So in order to meet the highway system's national 
needs, rural States must have flexibility to use Federal 
dollars that serve the national interest.
    Madam Chairman, I have full faith in the Wyoming Department 
of Transportation that they will continue to direct Federal 
resources that will keep our highway system whole. Thank you so 
much for your leadership and holding this hearing.
    Senator Boxer. Thank you, Senator, for your leadership.
    Now, by order of arrival, we will go to Cardin, then 
Carper, then Whitehouse.

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

    Senator Cardin. Madam Chairman, thank you very much for 
holding this hearing. I want to thank all the witnesses that 
are here today to help us deal with the funding of our 
transportation priorities here at the Federal level.
    It has been 20 years since we last adjusted the 
transportation revenues, 1993. And we have an opportunity now 
to do something about it. I serve not only on this Committee, 
but I serve on the Senate Finance Committee, and we are engaged 
in tax reform discussions, including the transportation 
revenues.
    So I hope this Committee can work with the Senate Finance 
Committee, leadership of both parties, to recommend a 
responsible way to deal with the transportation needs of this 
country.
    We need a long-term reauthorization of our transportation 
programs. I was proud to be part of the MAP-21 effort. It was 
extremely important and difficult to get done. I applaud the 
leadership of this Committee, Senator Boxer, what you did to 
get that bill passed. But we know we need a longer term 
transportation reauthorization. We couldn't get that, because 
we didn't have the revenue to deal with the longer term. So we 
need a longer term solution to these problems.
    I want to compliment the representative from the Chamber of 
Commerce, because I think you have laid out the three fiscally 
responsible options we can do. One is to cut the transportation 
programs commensurate with available funding levels. That would 
be fiscally responsible, but it would shift dramatically the 
burdens on transportation to our State and local governments, 
as they do not have this capacity and these programs are 
national in need and that is not what we should be doing.
    Second option would be to continue to shift General Funds 
into the transportation funds, motor vehicles and dollars. That 
violates the user pay philosophy of the transportation funding 
and would jeopardize our ability to pay our other bills. That 
is not really a very viable option.
    The third option you spell out very clearly, is that we can 
increase user fees and identify new revenue sources to address 
the well-documented needs of today and tomorrow.
    I particularly want to compliment the comment that you make 
in your written statement saying this debate, particularly the 
revenue consideration it entails, will never be convenient. 
Well, matters of convenience are not what Americans are asking 
their leaders in Washington to do. And let me just underscore 
that point. Because in my State of Maryland, our Governor, our 
legislature stepped up to the plate. They changed their 
transportation revenues. Changed the gasoline tax into a more 
inflation-sensitive revenue source. It was not popular.
    But guess what? The Governor is now going around to all the 
communities in our State, showing what that revenue increase 
meant as far as community improvements and transportation. 
Communities are now saying, gee, this was a pretty good thing 
to do.
    So I understand it may be difficult for us to take up these 
issues. But politically, from a responsible point of view we 
need to, but politically, at the end of the day I think it will 
be rewarded when we give the communities the type of 
transportation they need.
    I will just give you one example, Madam Chair. The Texas 
Transportation Institute at Texas A&M rates the different 
communities as far as the most congested in the country. 
Congratulations, we won. The Washington area was rated the most 
congested area in the country.
    And I experience it first hand, because I do travel into 
the city. You can't find too many more places to build highways 
or expand capacity for automobiles, but we can improve transit. 
One of the things that I have urged as we go through this 
debate, maintain the comprehensive nature of transportation. We 
have a Purple Line in this area that we are working on that 
will help a great deal in the Washington area. In Baltimore, we 
have the Red Line. We have alternatives and transportation 
programs that help get cars off the roads and help us.
    My point is this. For quality of life, we have to succeed 
here. It is just unacceptable that it takes a couple of hours 
to get into the Nation's capital. That is what it takes me to 
get in from Baltimore, a couple hours.
    So this is an urgent issue. I would urge us to, and I think 
this hearing, and we have the experts who can help us develop a 
way that we can be responsible to find the revenue we need to 
carry out our Federal responsibility.
    [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 today's hearing on a 
very important issue that is especially timely with ongoing 
talks about comprehensive tax reform, coupled with the 
expiration of MAP-21 being just about a year away. The last 
time the gas tax increased it was done as part of the 1993 Tax 
Reform Act, and I am glad that in the Finance Committee we have 
been discussing including surface transportation revenues in 
tax reform.
    When SAFETEA-LU expired the Highway Trust Fund was in the 
red. Keeping the Trust Fund solvent so that USDOT wouldn't 
default on its obligations to the States required a series of 
General Fund transfers. The incremental diversion of billions 
and billions of dollars from the General made each SAFETEA-LU 
extension increasingly more controversial to point that there 
were credible threats from the House to allow USDOT to default 
on its debt.
    We cannot afford to go through that situation again.
    Especially not now, not when the infrastructure needs of 
our States is so great. MAP-21 has certainly helped. The 
American Society of Civil Engineers (ASCE) Infrastructure 
Report Card noted modest improvement in the quality and 
condition of our Nation's bridges and roads. But there is still 
a lot of work to do.
    The needs in Maryland are extremely high. The Texas 
Transportation Institute, at Texas A&M, for the second year in 
a row gave the Greater Washington region the dubious 
distinction of having the worst traffic congestion in the 
Nation. Traffic congestion across the region hurts my State's 
economy, the quality of life of my constituents and the 
public's health both in terms of air quality and mental stress.
    My home State of Maryland has set forth ambitious plans to 
improve the safety of the State's highways while reducing 
traffic congestion in our major metropolitan regions.
    As several traffic and community planning studies have 
concluded: the long term path toward reduced traffic congestion 
is best achieved by providing and improving transportation 
options in and around population centers. The best way to 
reduce long term congestion is by having fewer vehicles on the 
road. Providing convenient and affordable public transportation 
options as well as safe bike and pedestrian infrastructure are 
especially effective at eliminating the number of single 
occupancy vehicles on the road.
    It is these benefits that highway users receive from local 
and regional investments in transit systems and transportation 
alternatives that more than justify the modest investment of 
Federal gas tax dollars in public transit service.
    I am a regular highway user and my daily commute from 
Baltimore to DC is usually pretty bad. It can take upwards to 2 
hours for me to travel the 45 miles between my house and the 
Capitol. I cannot imagine how many times worse it would be if 
Metro and MARC didn't provide hundreds of thousands of 
commuters rides to work each morning.
    The fact of the matter is the Old Line State is at about 
capacity for new roads. Expansion of transit service is the 
best, if not only, option to significantly reduce congestion in 
Maryland.
    Maryland's top transportation priorities recognize this 
forward thinking approach to transportation planning.
    The development of the Purple Line in the Washington 
suburbs of Montgomery and PG Counties will provide needed 
congestion relief along East/West corridors of the inner 
suburbs. In Baltimore, the Red Line will provide fast and 
convenient light rail service for the inner suburbs into 
downtown Baltimore.
    MDOT's plans are not limited to just our two major 
metropolitan areas. In the rural reaches of the State, 
improving local road safety along the major trucking routes is 
incredibly important, and the State is making safety 
improvements along some of the State's more deadly stretches of 
highway a priority.
    If all of this sounds ambitious it is because it is. The 
reason, however, it is possible is because Maryland recently 
did something that we desperately need to do at the Federal 
level. Earlier this year, Maryland raised new transportation 
revenues.
    Reforming the State's gas tax, indexing it to CPI, and 
putting in place other smaller revenue measures will provide 
the State an estimated $3.4 billion in additional 
transportation revenues. The State's transportation needs are 
great. Raising new transportation revenues was the right 
decision for the legislature to make, even if it was not the 
politically popular thing to do at the time.
    I say ``at the time'' because now, as Governor O'Malley and 
Maryland Transportation Secretary Jim Smith visit communities 
across the State to detail and explain the new transportation 
projects coming to their communities and the improvements these 
communities will experience to their local economies and the 
livability of their neighborhoods, the State's decision to 
raise the gas tax is no longer a controversial issue.
    Transportation infrastructure happens to be very visible 
and tangible evidence of taxpayer dollars. And when our 
constituents experience a safer drive across their county, a 
new transit line serving their neighborhood, or less congestion 
on the highway they know, and usually approve, of how their tax 
dollars are being spent.
    It probably goes without saying, but Maryland cannot 
succeed with its ambitious transportation goals without a sound 
Federal partner. This is true in every State. Maryland has 
shown its commitment to improving its share of responsibility 
for America's economic competitiveness and meeting our national 
goals to improve highway safety. The Federal Government must do 
the same, starting with Congress approving the means of 
acquiring the necessary resources to make these investments.
    Thank you, and I look forward to our witnesses' testimony.

    Senator Boxer. Thank you so much, Senator.
    Senator Carper.

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

    Senator Carper. Thank you, Madam Chair.
    For those of you who are sitting out at the dais, every now 
and then you see us take a drink of water. This glass that is 
right here where I am sitting, it is empty. This is our 
transportation trust fund. It is empty.
    What we have been doing for a number of years now, to the 
tune of, I think about $53 billion, we have been drawing from 
another fund, this is the General Fund of our country, in order 
to replenish the transportation trust fund. This one is empty, 
too.
    And when that is the case, we go to a big fund. This is, I 
think of this as the world capital markets. What we do is we go 
around the world with a glass in hand, and we draw on the world 
capital markets and we fill up the General Fund, so that we can 
then turn around and put something in our transportation trust 
fund. So far about $53 billion have gone from here to here in 
recent years.
    If we are going to have the kind of transportation system 
we want, we are talking about in the next several years about 
$100 billion more that we have to borrow to replenish the 
General Fund to in turn provide for transportation 
improvements.
    I don't think it is a very smart way to do business. Not a 
very smart way to do business. There are a number of kinds of 
investments that we need to make in order to grow our economy. 
We need to invest in the work force, so we have a world class 
work force. We need to invest in R&D that can be commercialized 
and turned into products that people around the world will want 
to invest in.
    A number of years ago, I don't recall exactly what year, 
Madam Chair, I would say about a half dozen or so years ago, 
when we passed the Railroad Transportation Bill, we created a 
commission. We created a commission and we said we would like 
for this commission to actually look at all the different 
options for revenues that we know that we need. They came up 
with, I want to say, maybe 25 different proposals. And their 
proposals came to us in very short order. Their recommendations 
were basically labeled dead on arrival. Dead on arrival. And 
for the most part, nothing much has happened to those ideas.
    Well, one of our former colleagues on this Committee is a 
fellow named George Voinovich from Ohio. Former mayor, 
Governor, Senator. He and I served together as Governors and 
Senators, he is one of my closest friends. He was by here about 
a week or two ago and we had a chance to commiserate.
    He was the only person in the Senate I could find who would 
join me in writing a letter to the Bowles Simpson Commission 
suggesting that we actually address this problem by raising the 
gas tax. Not like a dollar or 50 cents, but to do it over a 
period of time, and essentially to raise it a penny a month 
for, I think we suggested 25 months. Ten cents would go for 
deficit reduction, the other 15 cents would go into the 
transportation trust fund.
    The Bowles Simpson Commission took that idea and they 
amended it, as you may recall. They said no, don't do 25 cents, 
do 15 cents. And don't do it a penny a month for 15 months, do 
it a penny a quarter for 15 quarters, which is just under 4 
years. A majority of the commission actually voted for that.
    We need to do something like that. And what we then said, 
what the commission then said, then index whatever the gas tax 
ends up being, index it to the rate of inflation so we don't 
end up in this same kind of problem again.
    When George Voinovich and I sent that idea to the Bowles 
Simpson Commission, private letter, the next day it was public 
knowledge that we had done it. One of my colleagues said to me 
then, you have just written your first 30-second commercial 
that will be used against you the next time you run for office. 
I ran for office last year, I was reelected with 67 percent of 
the vote, just about. And the first 30-second commercial that 
was used against me was on this subject. And yet, all the other 
three candidates combined got about a third of the vote.
    My colleagues and I are reluctant to do this kind of thing, 
because we know it could have real political consequences. I am 
just here today to say, it did in my State. What I have said to 
my State for years, my constituents for years, if things are 
worth having they are worth paying for. If things are worth 
having, they are worth paying for. We need a world class 
transportation in our country. We have a number of States that 
have stepped forward and said, we have the political courage to 
do what is the right thing to do. We need as a body, as the 
U.S. Senate, the House and the Congress, to also figure out 
what is the right thing to do, and summon the courage to do it.
    Thank you.
    Senator Boxer. Thank you so much. Senator Fischer, followed 
by Senator Whitehouse.

            OPENING STATEMENT OF HON. DEB FISCHER, 
            U.S. SENATOR FROM THE STATE OF NEBRASKA

    Senator Fischer. Thank you, Chairman Boxer, for holding the 
hearing today to discuss the need to invest in America's 
infrastructure and preserve Federal transportation funding.
    Our transportation infrastructure expands and strengthens 
commerce. It provides for the movement of goods, the efficient 
transportation of products in and out of State, and from farm 
to market, is vital to our economy. Highways promote commercial 
development in our communities and growth from businesses. They 
provide citizens access to services and a better quality of 
life.
    One of my guiding principles in the Nebraska legislature, a 
principle I now apply in the U.S. Senate, is that a limited 
government should focus its resources on meeting its core 
duties. Infrastructure, including highway maintenance and 
construction, is one of these important responsibilities.
    In the Nebraska legislature, I served as chair of the 
Transportation and Telecommunications Committee. In that role, 
I had the opportunity to examine how State government can 
responsibly invest in the lifeblood of its communities, its 
roads. I traveled the State and spoke to countless Nebraskans 
and various organizations. Throughout these conversations, I 
heard a reoccurring theme: Nebraskans wanted their State 
government to live within its means and fund only what could be 
done with existing resources. In Washington, I refer to this 
point as Nebraska common sense.
    I am proud that my colleagues and I were able to craft a 
bill that the legislature passed in 2011 and it carries out 
this objective. The Build Nebraska Act directs a portion of 
Nebraska's existing sales tax fund to fund new road 
construction. Now we are beginning to see the results. The 
economy is improving. We have completed, and there are ongoing 
infrastructure projects now across the State.
    The success of this Build Nebraska Act, I believe, is a 
model for other States, and importantly, it is a model for our 
Federal Government. Rather than raising taxes to solve the 
problem, the State government lived up to its duty by using 
only these existing resources.
    At the Federal level, I am committed to ensuring that 
infrastructure funding challenges are addressed with the same 
fiscal responsibility that we have demonstrated in Nebraska. 
And we have demonstrated that it works.
    I look forward to today's hearing to examine our 
transportation funding needs and to explore solutions to meet 
these demands. Thank you.
    Senator Boxer. Thank you, Senator.
    I want to point out that with the current Highway Trust 
Fund, it will be empty, completely empty, by 2015. So we have 
to come up with a better way to pay for it, and I believe we 
can do it, and do away with a lot of the current taxes, and 
replace it with something that is more reliable. That is going 
to be what we do.
    But if we take the position that we have to live within the 
current situation, there will be no Highway Trust Fund in 2015. 
I think that is an important point for us to remember.
    Senator Whitehouse.

         OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Whitehouse. Thank you, Chairman Boxer.
    My most important task this morning is to welcome Mike 
Lewis, who is our Rhode Island Director of Transportation and 
is here representing the American Association of State Highway 
and Transportation Officials, of which he is now the president. 
He has done a wonderful job for us in Rhode Island. When the 
Economic Recovery Act passed and we tried to get money out to 
stem the worst of the great recession, I don't think there was 
a single State that put more of their money out more rapidly 
into more shovel-ready projects and often used it to leverage 
private financing as well than Mike did. He was a bright spot 
in a previous administration, and he was kept on by a former 
member of this Committee, Lincoln Chafee, now as Governor 
Chafee. I am delighted to welcome him here.
    He is somebody who clearly sees the infrastructure deficit 
that this country has. I would note that we have a water 
infrastructure deficit as well as a road and highway and bridge 
infrastructure deficit. We tackled about 1 percent of our water 
infrastructure deficit in the Economic Recovery Act, leaving 99 
percent of the hole still to be filled. And on the roads and 
highways and bridges side, we continue to earn a D from our 
civil engineers for the second rate state of our infrastructure 
in our first rate Nation. Our first rate Nation should not have 
second rate infrastructure.
    But we are going to need 60 votes in the Senate to do 
anything, and we are going to get many things through a 
Republican-controlled House. So if we are going to do this, it 
is going to have to be bipartisan. So far, that record hasn't 
been so great. We passed a very bipartisan Water Resources bill 
here and it is still tangled up in the House of Representatives 
and has not passed there. We tried to pass a Transportation 
Funding bill and that got torn up by filibuster on the Senate 
floor, and torn apart in the House by the battle that we are 
seeing now between the more practical Republicans and their 
extremist fringe. So we are no place on the Transportation 
Funding bill.
    So I think we need, if we are really going to try to move 
from having second rate infrastructure for roads and highways 
and bridges to having first rate infrastructure, we really are 
going to have to rethink where everybody's position is. And 
particularly I think the absolute no revenue pledge that has 
characterized the Republican position to the point where it has 
been less important to them to address the deficit than it has 
been to protect the embarrassingly low tax rates paid by hedge 
fund billionaires. They pay lower tax rates than a brick mason 
does in Rhode Island. That is a principle that is worth 
defending. The oil subsidies to the most profitable companies 
in the history of the universe, those are worth defending. 
Companies that hide revenue by off-shoring or they move jobs 
offshore and get protection in the tax code, that is all worth 
protecting, because of this no revenue rule. And I think it is 
a mistake, frankly, to have those very unfair peculiarities 
built into our tax code. They are the product of special 
interest lobbying over the years, and I don't think they are 
entitled to that vigorous of a defense.
    But while the no revenue rule applies, they get that 
vigorous of a defense, and of course, they love it. If you are 
a hedge fund billionaire and you are paying a lower tax rate 
than a brick mason, life is really good for you. You might even 
actually be willing to spend a little money on politics to try 
to keep it that way.
    So I think we are headed for a bit of a collision here, and 
it's going to take some rethinking by our colleagues to figure 
out how we are actually going to refill the--to use Senator 
Carper's very good show and tell there--the empty glass of our 
Highway Trust Fund without just borrowing. That I think 
requires is to cross the revenue threshold. That is something 
that we should be going about, because otherwise we are just 
spinning in circles here in this Committee.
    I think our infrastructure deficit is important. I think we 
need to fill it in. I think the American people deserve first 
rate infrastructure. And I think frankly, if you took a poll, 
most Americans would say, yes, I will pay to have first rate 
infrastructure. I want my roads to work right. I want my water 
to be clean. I want to have first rate resources, and not to 
travel to other countries and see how much nicer their airports 
or their roads or their bridges are than ours. That is not 
something that we should be proud of.
    Thank you for your leadership on this, Chairman, and I am 
sorry to put a bit of a cloud in the sky. But I really do think 
that we are going to have to address this no revenue issue if 
we are going to get this solved.
    Senator Boxer. That is exactly the point of this hearing. I 
just feel even more optimistic than you do. That is just the 
way I am. I do feel that, we did do the WRDA bill and I do 
believe the House will pass the WRDA bill. I have no reason to 
believe that they won't. You are right, it took them a long 
time. I think Chairman Shuster now believes he has the votes to 
do it. We will see. Leader Cantor said he believes that it can 
pass as well. So I hope that my optimism is not misplaced.
    I also feel this Committee has been a bright spot in terms 
of what we have done on transportation before. I also believe, 
and I have spoken to Senator Barrasso about this, Senator 
Vitter about this, Senator Inhofe and others, that there are 
ways to follow the leadership of the States who have worked in 
a bipartisan way to do away with a lot of taxes and they have 
come up with a new way to fund.
    But I share your view. If we fail on this, this is our 
moment in the sun or in the darkness, to be honest. Because if 
we fail to get a way to fund it, there is no program because 
there is no room in the General Fund as we face sequester. So 
it is, the challenge is as stark as you have posed it, Senator 
Whitehouse. I just believe that we can do this. We can set 
aside some of our deep differences and we can do this, because 
business, labor, the public, wants this. You are absolutely 
right. Seventy-five to 80 percent of them, they see what is 
happening. The Business Roundtable sees what is happening, the 
Chamber of Commerce sees what is happening.
    So I think that there is political will out there in the 
community for us to work together. That should reflect, that 
light should reflect on all of us. It certainly has on me and I 
hope, dare I say pray, because I think it is that important, 
because it is saving lives. These bridges go down, there are 
Republicans and Democrats on the bridges.
    Senator Wicker, it is your turn and then Senator Vitter.

            OPENING STATEMENT OF HON. ROGER WICKER, 
           U.S. SENATOR FROM THE STATE OF MISSISSIPPI

    Senator Wicker. Thank you, Madam Chair. We have a 
distinguished panel today and I am eager to hear what they have 
to say. I look out over the audience and I see faces that I saw 
yesterday at a subcommittee hearing of the Commerce Committee 
on the innovative ways to finance transportation projects.
    Let me weigh in on behalf of the optimism expressed by the 
Chair of this Committee and hope that my distinguished friend 
from Rhode Island will have his spirits lifted by the sort of 
bipartisanship that we had with the WRDA bill. And indeed, a 
work of art. I am optimistic, having talked to Chairman Shuster 
in the House and others that we can move that in addition to 
other transportation legislation.
    So thank you, Madam Chair. I am very interested to give our 
panelists an opportunity to talk.
    Senator Boxer. Thank you.
    Senator Vitter, Ranking Member.

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

    Senator Vitter. Thank you, Madam Chair, and thank you for 
your leadership in calling this important hearing, which we 
fully support on the Republican side. This is very, very 
important.
    We all know what has been happening over several years to 
erode the sustain ability of the Highway Trust Fund. We are 
going to have some great testimony about that today. I won't 
repeat that.
    But I will say the Highway Trust Fund was designed to 
create a sustainable fund paid for by users to benefit those 
users. Such a structure was intended to not only facilitate the 
unique characteristics of funding transportation 
infrastructure, but also to provide safeguards for dedicated 
transportation funding.
    Putting such a structure back on a sustainable course is 
essential and it will restore confidence in the highway program 
and provide the needed certainty of continual investment that 
can produce the long-term reauthorization bills that meet our 
infrastructure needs.
    Now, since 1993, the trust fund has relied on a set of 
static funding mechanisms to maintain and grow this Nation's 
infrastructure. As a result, every year its purchasing power is 
eroded by rising gas prices, increased fuel efficiencies, 
inflation, rising costs of material, et cetera. Some believe 
that it is somehow some core conservative principle to adhere 
forever to this static, flawed mechanism in perpetuity and that 
is all there should ever be to meet our infrastructure demands.
    I don't understand that, I don't agree with that, I don't 
think that is a core conservative principle.
    Equally, I would caution, I don't think it is fair or 
reasonable to expect middle class families to endure a net tax 
increase. And I don't agree with that, won't support that, and 
I don't think that is doable in terms of this Congress at all. 
So I think we need to look hard in the realm of the possible 
and put this important financing mechanism back on a 
sustainable course that is sustainable, that is a user fee but 
that isn't net tax increase to those middle class families who 
can't afford it, particularly in a horrible economy where they 
endure many other cost and tax increases.
    This hearing is a very important part of the discussion to 
hopefully get us there. Again, I want to thank the Chair and 
the witnesses for all of their hard work, and look forward to 
continuing down this path to get to that important goal.
    Senator Boxer. Thank you very much, Senator Vitter.
    I ask unanimous consent to place in the record two very 
thoughtful statements, one from the American Council of 
Engineering Companies, representing a half-million employees. 
And then this very interesting long and thoughtful piece, 
written by the Associated General Contractors of America, the 
AGCA. And I will quote briefly, they lament the fact that MAP-
21, once it is expired, we will be out of funding. And we have 
to ``avoid draconian cuts,'' and how important it is.
    In their conclusion, they say that the U.S. has been under-
investing in our transportation systems far too long. The 
impact is being felt in every State and town. With the 
interstate system beyond capacity and design life, this under-
investment is costing U.S. business and individuals time and 
money.
    I think this is very important, so we will put those in the 
record and we will get started with you, Dr. Ruane.
    [The referenced information follows:]
    
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    Senator Boxer. Yes, we are just about finished with opening 
statements, but go ahead.

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

    Senator Inhofe. We were a bit busy on the floor this 
morning, I apologize. I really do want to get my opening 
statement in. When we have an area where Senator Boxer and I 
agree so closely, I want to make sure everybody knows it.
    So I do thank you, the panelists, for taking time to be 
here as well. It is no secret I am one of the strongest 
advocates of strong, robust investment in our Nation's 
transportation system. I think a lot of people don't 
understand, a lot of my conservative friends, that the 
conservative position is to have this, that is what we are 
supposed to be doing.
    As CBO reported earlier this year, absent a new revenue 
source and General Fund transfer to address the $14 billion 
annual shortfall in the Highway Trust Fund, we are going to 
need to cut the current highway program by almost 80 percent. I 
am sure out witnesses will agree that at a time when the 
highways we built more than 50 years ago are at the end of 
their useful life, this kind of cut would be catastrophic.
    There is no hiding from the problem. We still need 
substantial infusions of cash just to maintain what we have 
now.
    Last month I hosted our new Secretary of Transportation, 
Secretary Foxx, in my State of Oklahoma, and showed him the 
major project being built with I-44 and I-235 in Oklahoma City. 
I see that Gary Ridley is in the audience today, and of course 
he was there. This interchange supports over 200,000 vehicles a 
day, many of which are passing through from other States, and 
encompass a railroad bridge crossing as well as two 
structurally deficient bridges over creek beds. With $100 
million of this $231 million project complete, there is a very 
real possibility that we would just have to halt construction 
after this year without the confidence of a solvent Federal 
highway program. This is just one of a couple of thousands of 
projects that the Oklahoma Department of Transportation has 
identified in its 8-year plan, which includes replacement of 
our structurally deficient bridges.
    Unfortunately, States are already backing away from their 
long-time regionally significant projects, like I-44, because 
of the uncertainty in Federal action. It is time to look at all 
options for the General Fund to avoid public disruptions, 
public bond defaults and continuing, as the market is 
uncertain. I feel very strongly that Congress needs to reassure 
our States and our cities that we are prepared to redirect 
this.
    I am committed to working with Senator Boxer and Senator 
Vitter to find new sustainable revenue sources for the Highway 
Trust Fund, even if that includes devolving the decision to 
totally new Federal highways back to the States to ensure all 
users pay their fair share. I recognize removing the Federal 
tolling prohibition is controversial. But we can't handcuff 
States' and localities' ability to maintain and modernize their 
obsolete roads, while threatening an 80 percent cut in their 
budget.
    So as for the General Fund, we have $14 billion annual 
shortfall in the Highway Trust Fund. We can't ignore the $200 
billion we pay farmers not to farm their land or the $24 
billion annually on vacant Federal properties or the $47 
billion spent on improper or fraudulent medical costs we pay 
out of the General Fund. We just have to say, there is nothing 
more significant except for our Nation's defense than 
infrastructure. To me, that should be further up the line in 
terms of the General Fund.
    So we have a lot of things to look at. The last thing I 
would say to my conservative friends, the conservative position 
is to have another highway reauthorization program instead of 
relying on extensions, which arguably cost about 30 percent 
more to do without any of the planning or the reforms.
    Thank you, Madam Chairman, for allowing me to come in late.
    Senator Boxer. Senator, I think your statement is very 
important. You have nailed it. This is our moment in this 
Committee. What we do now is going to be critical. Because we 
are going to do a 5- or 6-year bill, and we have to figure out 
a way to fund it. We will work with our friends on the Finance 
Committee. I am going to go see Dave Camp and Max Baucus and 
talk about this.
    I have been working to figure out a way where we can 
replace that gas tax at the pump with a different type of 
funding mechanism. I am hopeful we can come together, we need 
to come together for the good of the country. This is a place 
where, you are right, conservatives and liberals and moderates 
can come together.
    I see we have been joined by Senator Merkley. Do you have 
an opening statement? If so, please proceed.

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

    Senator Merkley. Thank you. Very briefly, I want to offer 
special thanks and a welcome to a fellow Oregonian, Greg 
DiLoreto. Thank you, Greg, for coming. He brings extensive 
experience as an engineer and general manager of Oregon's 
second largest water utility in Tualton. And your front line 
experience is very welcome in this conversation.
    I have other comments that I will save for later so we can 
get on with the testimony.
    Senator Boxer. Thank you.
    Senator Inhofe, did you see if Gary Ridley is out there?
    Senator Inhofe. Yes.
    Senator Boxer. Your friend and my friend now?
    Senator Inhofe. Yes, our friend Gary Ridley. Hold your hand 
up. Gary Ridley has been a witness at this table more than any 
other one person. He is our Secretary of Transportation in 
Oklahoma. He knows what he is doing.
    Senator Boxer. It is nice to see you here, Mr. Ridley.
    All right, we are going to go to Dr. Ruane, President and 
CEO, American Road and Builders Association. Please proceed.

 STATEMENT OF T. PETER RUANE, PRESIDENT AND CEO, AMERICAN ROAD 
            AND TRANSPORTATION BUILDERS ASSOCIATION

    Mr. Ruane. Good morning, Chairman Boxer, Senator Vitter, 
members of the Committee.
    Thank you for inviting me to participate in this important 
discussion about the challenges facing the future of the 
Federal surface transportation program.
    For too long, the primary metrics that gauge the impacts of 
the Federal highway program have been each State's 
apportionments, highway trust fund rate of return, and in times 
past, earmarks. Unfortunately, these methods of evaluation 
drastically understate the value of Federal highway investment.
    The purpose of the Federal highway program is to ensure the 
movement of people and goods among the States. As a result, an 
efficient national system of roads and bridges is the linchpin, 
the linchpin for a strong, growing U.S. economy. While this 
relationship is both intuitive and irrefutable, it is sometimes 
hard to quantify.
    What is more absorbable, however, is the contribution 
Federal highway investment makes to each State's annual road 
and bridge improvements. Federal funds account for roughly 50 
percent of State roadway and bridge capital outlays. And 
looking at the very specific State situation is particularly 
illuminating.
    The map that has been displayed here behind me shows that 
11 States rely on Federal highway investment for 70 percent, 70 
percent or more of their road and bridge capital improvements. 
It also shows that Federal reimbursement support between 50 and 
69 percent of capital outlays for some 20 States. For the 
remaining 19 States, Federal highway investment accounts for 
between 35 and 49 percent of their highway construction 
activities.
    These figures are a 10-year average of the relationship 
between Federal highway investments and State road and bridge 
improvements. Although the amount of reliance on Federal funds 
for needed road and bridge improvements may vary by State, it 
is clear, it is clear that for the vast majority of States, in 
fact 61 percent, the effectiveness of the highway construction 
programs is heavily dependent on a strong and reliable Federal 
partner. This is a very good proxy for the importance of the 
Federal program.
    This makes the fact that the Highway Trust Fund will face, 
as you know, the fifth insolvency crisis in 7 years when MAP-21 
expires at the end of 2014, even more disturbing. We should be 
clear that this continuing saga is not the result of runaway 
spending. In fact, Federal highway investment is less today 
than it was in fiscal year 2011.
    We should also be clear that the root cause of this problem 
is not declining Highway Trust Fund revenues. The revenues from 
the Federal gasoline, diesel and truck taxes have returned to 
their pre-recession levels, and the Congressional Budget Office 
rejects continued moderate growth in trust fund revenues over 
the next decade.
    The simple fact is the user fees that generate the Highway 
Trust Fund's revenue stream, as you know, have not been 
adjusted for 20 years. As a result, the trust fund has limped 
along from insolvency crisis to insolvency crisis since 2008. 
We have all seen the CBO's projections on the devastating 
investment cuts that would be necessary if remedial action is 
not taken to avert the revenue shortfall that again looms at 
the end of 2014. Alternatively, as Congress continues the 
recent practice of transferring resources from other parts of 
the budget to the Highway Trust Fund, you will have to add some 
$135 billion to the Federal deficit over the next 10 years, or 
shift about $135 billion from other Government activities to 
the trust fund. Neither of these approaches, in our judgment, 
are sound fiscal or economic policy.
    Chairman Boxer, the reforms that you and this Committee 
helped to craft as part of MAP-21, including the substantive 
refocusing of the entire program, are deeply appreciated. The 
remaining impediment that faces us right now is to come up with 
a long-term, sustainable, reliable source of funding for our 
Nation's transportation infrastructure. Thank you very much.
    [The prepared statement of Mr. Ruane follows:]

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    Senator Boxer. Thank you very much.
    Now we will hear from Hon. Michael P. Lewis, President, 
American Association of State Highway and Transportation 
Officials. We welcome you, sir.

    STATEMENT OF HON. MICHAEL P. LEWIS, PRESIDENT, AMERICAN 
   ASSOCIATION OF STATE HIGHWAY AND TRANSPORTATION OFFICIALS

    Mr. Lewis. Good morning, Chairman Boxer, Ranking Member 
Vitter, Senator Whitehouse, distinguished members of the 
Committee.
    I am Michael Lewis, Director of the Rhode Island Department 
of Transportation and President of the American Association of 
State Highway and Transportation Officials. Thank you for the 
opportunity on behalf of AASHTO and the State DOTs to share our 
views on the need for robust Federal investment in surface 
transportation and the potential impacts of the impending cash 
shortfall in the Highway Trust Fund.
    I have three brief points to make. One, if Congress does 
not act within the next 12 months to either increase the 
Highway Trust Fund revenues or provide additional General Fund 
support, the States will be unable to obligate virtually any 
new Federal funds in fiscal year 2015. Two, if Congress does 
not act there will be immediate and direct impacts to the 
States' economies, with lost jobs and permanently shuttered 
business. And there will be substantial additional economic, 
social and environmental costs associated with canceled or 
delayed projects. And three, if Congress does not act, the 
States, even with their local and private partners, simply 
cannot fill the infrastructure funding gap.
    Let me elaborate briefly on each of these. First, the 
Federal Surface Transportation Program is at a crossroads, as 
we have all said. The Highway Trust Fund has provided stable, 
reliable and substantial highway and transit funding over 
decades since its inception in 1956. This is no longer the 
case. According to CBO, spending from the trust fund is 
estimated to exceed receipts by about $15 billion per year on 
average over the next 10 years, starting in fiscal year 2014.
    Furthermore, the trust fund is expected to experience a 
significant cash shortfall in fiscal year 2015. By our 
estimate, States will not be able to obligate any new Federal 
highway funds in fiscal year 2015, a drop from approximately 
$40 billion a year to virtually zero.
    In addition to allowing no new obligations, it is possible 
that this cash shortage could slow down Federal reimbursements 
to States for costs already incurred and from prior obligations 
leading to serious cash flow problems for the States. Simply 
put, failure to act to address the current cash shortage would 
result in a devastating scenario that we must do all we can to 
avoid, which leads to my second point.
    What are the impacts, if Congress fails to act? A 
significant portion of much needed highway and transit 
projects, projects that underpin economic development and 
improve the quality of life in every community and 
congressional district will either be delayed or canceled 
outright. Cutbacks on contract lettings will mean missed 
opportunities to pare down the backlog of investment needs, 
causing a negative domino effect on the construction industry 
employment, exactly when it is starting to rebound after being 
one of the hardest hit segments in the recent recession.
    In my State of Rhode Island, if no additional revenue are 
found for the Highway Trust Fund by October 1st of next year, 
the immediate and long-lasting impacts will be devastating. As 
I just mentioned, without additional revenues, States will be 
unable to obligate new funding in fiscal year 2015. In the 
worst cases, States like Rhode Island and Louisiana could be 
facing a cliff now, in 2014. That is because of many large 
projects or multi-year projects that have committed funding 
future obligations to address cash flow needs.
    In addition, a decade ago, Rhode Island committed to a 
large number of regionally vital transportation projects using 
innovative garvee financing, which pledges future Federal funds 
for debt service. Without assurance that we can expect at least 
level funding in fiscal year 2015, Rhode Island will be facing 
the real possibility that all fiscal year 2014 funds will need 
to be pledged to cover existing obligations for both fiscal 
years 2014 and 2015, thereby eliminating new contract awards 
for 2 full years.
    Not only will this have devastating effects on the local 
construction industry, but it comes at a time, even with level 
funding, when Rhode Island's bridges are expected to further 
deteriorate from 20 percent structurally deficient today to 
over 40 percent structurally deficient by 2020.
    Third point, a long-term and dependable Federal partner for 
investing in surface transportation is essential to all States, 
large and small, rural and urban. Even those States that have 
recently increased their revenues and become leaders in 
infrastructure investment ultimately cannot do it alone. Robust 
Federal investment in surface transportation is needed today 
and in the future.
    Going back to the founding days of this Nation, Article 1 
Section B of the Constitution declares that it is a duty of the 
Federal Government to provide support for national 
transportation investment through the development of post 
roads, canals, railroads, highways and airways. With strong 
Federal support throughout history, transportation investment 
has an exceptional track record of creating jobs and supporting 
economic development throughout the country.
    In summary, transportation infrastructure investment is 
critical for long-term economic growth, increasing 
productivity, employment, household income, exports and overall 
quality of life. The outlook for the Federal Highway Trust Fund 
and Federal surface transportation program is unsustainable 
because the current Federal revenues are simply not enough.
    Congress can address this projected shortfall in one of 
three ways, as was mentioned earlier, by substantially reducing 
spending for surface transportation, not something I think that 
we support, by boosting revenues or some combination of the 
two. We know there is a long list of potential revenue options. 
We believe that at a minimum we need an approach that will 
allow us to sustain MAP-21's investment levels in real terms. 
We believe it is possible to reach this level without placing 
an unreasonable financial burden on most of the traveling 
public. Given the alternative, potentially devastating economic 
impacts from virtual elimination of Federal surface 
transportation funding, we believe the only solution is to find 
and implement a viable set of revenue solutions to the Highway 
Trust Fund shortfall that will work for 2015 and are 
sustainable over the long term.
    Thank you.
    [The prepared statement of Mr. Lewis follows:]
    
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    Senator Boxer. Thank you so much.
    Next we turn to Janet Kavinoky, a friend of all of us. She 
is Executive Director of Transportation Infrastructure, Vice 
President of Americans for Transportation Mobility Coalition, 
United States Chamber of Commerce. We welcome you.

      STATEMENT OF JANET KAVINOKY, EXECUTIVE DIRECTOR OF 
TRANSPORTATION AND INFRASTRUCTURE, VICE PRESIDENT OF AMERICANS 
FOR TRANSPORTATION MOBILITY COALITION, U.S. CHAMBER OF COMMERCE

    Ms. Kavinoky. Thank you, Chairman Boxer, Ranking Member 
Vitter, Senator Barrasso and members of the Committee, for the 
opportunity to lay out the case for Federal leadership and 
funding for transportation infrastructure.
    Quite simply, roads and bridges, transit systems, 
railroads, waterways and ports, airports and air traffic 
control form the framework that makes economic activity 
possible. A national transportation network that meets current 
and future demand enables mobility for customers and employees 
and supports seamless, reliable and safe supply chains will 
boost gross domestic product. A system that is disjointed, 
unreliable, unsafe and inadequate for future economic and 
population growth will drag down the economy.
    When transportation networks support predictable logistics, 
there is a positive and strong correlation with job-creating 
foreign direct investment. But as the United States 
transportation infrastructure becomes less competitive with the 
rest of the world, business will look to invest and employ 
people in other countries with more efficient physical 
platforms.
    Market outside their borders represent more than 80 percent 
of the world's purchasing power, 92 percent of its economic 
growth and 95 percent of its consumers. More than 38 million 
American jobs depend on trade. One in three manufacturing jobs 
depends on exports, and one in three acres on American farms is 
planted for hungry consumers overseas. The transportation 
system can either build and strengthen or undermine efforts to 
build these bridges to promising markets abroad and secure a 
brighter future where international commerce generates economic 
growth and job creation at home.
    The good news is that MAP-21 reflects a belief that the 
Federal Government plays a role in furthering national 
interests, such as U.S. global competitiveness, international 
trade and interstate commerce. In addition, the work of this 
Committee provided MAP-21 with critical reforms such as 
ensuring accountability for spending money wisely, improving 
planning and prioritizing, delivering projects faster and 
stretching user fees farther.
    Now we must focus on the money and the future of the 
Federal Highway Trust Fund, avoiding the impending crisis in 
2015, establishing a structurally sound revenue approach for 
the period of 2015 to 2024, and preparing for 2025 and beyond.
    There are three different paths to choose from. The first 
is to cut back programs to fit available resources. According 
to the Congressional Budget Office in July, this means zeroing 
out new Federal obligations for highways, transit and safety in 
2015, and substantial reductions from current services levels 
in subsequent years.
    In the last several years, Congress has repeatedly voted to 
reject dramatic cuts in highway and transit programs. We ask 
you to do so again, because this path is unacceptable.
    The second is to continue General Fund transfers. We are 
concerned that this approach may not support economic growth 
competitiveness in jobs over the long term, because the user 
fees are the key to contract authority in multi-year Federal 
funding commitments.
    The third is to increase existing user fees and/or find new 
user-related revenue sources, so that we can address the well-
documented needs for today and tomorrow.
    In the years through 2024, there are multiple revenue 
options that could work alone or in combination. But we 
continue to believe that the simplest, most straightforward and 
effective way to generate enough revenue for Federal 
transportation programs is through increasing Federal gasoline 
and diesel taxes.
    In addition, we must take full advantage of private sector 
capital, innovation, problem-solving and collaboration. 
However, public-private partnerships and other forms of private 
sector involvement still require revenues and do not resolve 
the Highway Trust Fund solvency issue.
    Finally, now is the time to initiate aggressive research 
and development in anticipation of 2025, when CAFE standards 
increase and revenues from excise taxes on fuel are likely to 
require substantial replacement as a primary source of funding.
    There is no shortage of research that looks to the 
questions of who pays how much and by what mechanism. One thing 
is for certain. There is no free lunch, there is no creative 
option and there is no avoiding the revenue discussion.
    Yes, this Nation is faced with difficult fiscal 
circumstances. However, without proper investment and attention 
to infrastructure, our economic stability, job growth, global 
competitiveness and quality of life are all at risk. The 
Federal role is at its simplest: to make sure that the Nation's 
transportation system functions well as a whole to support the 
economy. Let's seize the initiative now to set a new path that 
will ensure adequate funding to support that role for years to 
come.
    Thank you.
    [The prepared statement of Ms. Kavinoky follows:]
   
   
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    Senator Boxer. Thank you very much.
    And we are going to move ahead with Mr. Gregory Cohen. We 
are very happy to see him, he is President and CEO of American 
Highway Users Alliance.

    STATEMENT OF GREGORY M. COHEN, P.E., PRESIDENT AND CEO, 
                AMERICAN HIGHWAY USERS ALLIANCE

    Mr. Cohen. Thank you, Madam Chairman, Ranking Member Vitter 
and members of the Committee. I appreciate this opportunity to 
present the views of the Highway Users Alliance.
    I want to emphasize up front that we are facing an epic 
crisis with the insolvency of the Highway Trust Fund, and that 
a transportation fiscal cliff is approaching rapidly.
    As America fails to keep up with investment needs, we are 
sliding on the economic ladder. For decades, American roads 
were No. 1 in the world, indisputably. According to the World 
Economic Forum, today we are No. 18. This is no longer the 
exceptional system that we inherited from the greatest 
generation.
    The Federal highway program benefits every State, rural and 
urban; serves every citizen, whether they drive or not. My 
statement discusses the needs in detail, but I am going to 
select four areas to highlight:
    First is congestion. We talk about $100 billion or $124 
billion as the cost of congestion. That is just the cost of 
fuel and time lost. It scratches the surface. When you look at 
qualitative issues, the safety impacts of congestion, 
logistics, unreliability, jobs access, access to employees, 
stress and health effects of congestion, EMS slowing their 
responses, it is several times, probably, what we get from the 
Texas Transportation Institute.
    Let me talk about bridges. Yesterday's hearing that talked 
about the bridge collapses in Washington and Minnesota, 
tragedies. But our bridges, 25 percent, as the Chairman 
mentioned, are now deficient. That is the equivalent of 5,000 
miles of bridges. You could drive on I-10 all the way from the 
east coast to the west coast and back. That is the mileage of 
bridges that need work.
    Safety. One thing we can really guarantee is that if this 
program can't fund new projects in 2015, that 33,000 death toll 
that we are facing is going to go up. We know our safety 
projects have a benefit to cost on average of $42 for every $1 
invested. It is just crazy not to put in guardrails where they 
are needed. And that is the kind of thing that is going to 
happen.
    Commerce, particularly for road needs. Four percent of the 
road network is our national highway system, that carries 40 
percent of the traffic, 85 percent of the truck traffic and 95 
percent of the tourist traffic. If nothing else is a Federal 
issue, these interstate commerce routes certainly are.
    Let me turn to funding. As the voice of highway users, I 
will admit that we haven't always jumped at the idea of raising 
user fees. There are two main reasons we strongly support it 
now: First, as I mentioned, the situation is critical, and the 
very existence of the Highway Trust Fund is at stake. Second, 
the reforms in MAP-21 we really believe went a long way toward 
restoring public trust in Federal transportation programs and 
trust in the Highway Trust Fund.
    At this point, the Committee is focused on preventing a 
catastrophic cut, but there should also be some consideration 
to meeting actual needs. An annualized growth rate of about 1 
percent above inflation is basically what you need just to keep 
the situation from getting worse.
    Of course, it would be better to provide enough funding to 
actually improve the conditions. Here are three principles on 
funding we think are important to consider:
    No. 1, the mix of funding solutions must be focused on 
keeping the Highway Trust Fund solvent and robust. Any 
supplements that are beyond the Highway Trust Fund are good, 
but we need to focus on the trust fund itself.
    No. 2, we need to keep the tax broad, where everyone pays 
and everyone benefits. And No. 3, let's solve this problem once 
and for all. The funding solution has to be sustainable so that 
future reauthorization bills can be enacted with guaranteed 
funding levels that are a minimum of 5 to 6 years.
    Keeping these principles in mind, let's get specific. No. 
1, we need to look at raising the fuel tax once or in chunks to 
make up for what has been lost to inflation since 1993. No. 2, 
we need to look at indexing those fuel taxes to one or more 
variables to maintain or increase the purchasing power over 
time.
    Three, we need to look at what Maryland and Virginia have 
done, consider taxing fuel as a percent of wholesale fuel costs 
at the terminal rack and provide the additional protections to 
ensure stability when prices are volatile. Four, and this is 
really the last, I hear you, Madam Chairman, but this is sort 
of a last thing, if we can't do everything we need to do, we 
might need to supplement certain or all highway programs with 
either a one-time or small General Fund contribution. After 
all, everyone, whether they drive or not, benefits from good 
roads.
    In conclusion, MAP-21 was a great example of doing the 
right thing for the American people. Still, we can do better. 
Fiscal sustainability can be achieved, reforms can further be 
strengthened where appropriate. And it is in the national 
interest that we solve this problem. The benefits of the 
Federal highway program reach every corner of the country, 
urban and rural, all kinds of people and businesses, farmers, 
office workers, truckers and tourists.
    Thank you again for the opportunity to appear today and for 
your consideration of our views.
    [The prepared statement of Mr. Cohen follows:]
   
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    Senator Boxer. Thank you. What was your No. 1 again, of 
your list? You said there were four things, but I missed No. 1.
    Mr. Cohen. Raise the fuel tax, once or in chunks to make up 
for inflation lost since 1993.
    Senator Boxer. Thank you.
    And we now are going to hear from our friend from the 
National Construction Alliance, Ray Poupore.

 STATEMENT OF RAY POUPORE, EXECUTIVE VICE PRESIDENT, NATIONAL 
                     CONSTRUCTION ALLIANCE

    Mr. Poupore. Thank you, Chairman Boxer, Ranking Member 
Vitter and distinguished members of the Environment and Public 
Works Committee.
    The NCA2 that I represent is a partnership between four of 
the Nation's largest construction unions--the International 
Union of Operating Engineers, the United Brotherhood of 
Carpenters and Joiners of America, the Laborers International 
Union of North America, and the International Association of 
Bridge, Structural, Ornamental and Reinforcing Iron Workers. 
These four unions of the alliance represent more than 1.5 
million workers, many of whom build our Nation's 
infrastructure.
    I myself am a member of the Operating Engineers, Local 324 
Michigan, where I spent a lot of time working on transportation 
projects as a young man, as a crane operator. These four large 
basic trade unions that I represent build some of the Nation's 
largest transportation infrastructure projects. We just are 
finishing up the first phase of the Dulles Light Rail project. 
We built the Wilson Bridge a few years ago, and we just 
finished up the hot lanes in this capital area.
    If you move a little bit toward the midwest, right now we 
are just starting the Ohio River bridges in Kentucky and 
Indiana. We recently finished the Hoover Dam bypass bridge in 
Nevada and Arizona. And a couple years ago, 4 or 5 years ago, 
we finished building the Tacoma Narrows Bridge. We are 
currently underway with the Alaskan Way Viaduct replacement in 
the Pacific Northwest, which is in the State of Washington.
    Bottom line is, Madam Chairman, we build the Nation's 
infrastructure. This is the most important jobs bill for 
construction workers that we have. And the reason we are here 
today is because of the crisis to the Highway Trust Fund. We 
thank you for bringing everybody's attention to it, and 
hopefully we can do something with the time. We have 1 year to 
get this thing fixed.
    We thank you for the great work you did on MAP-21. But I 
would like to turn you and hopefully, I have extra copies if 
you don't of this graph that I included in my submission of 
testimony. It shows the amount of unemployment we have in 
construction. This is not a graph of my 401(k), it is worse. It 
is a graph of, we had in construction 7,490,000 jobs in 2008; 
we are down to 5,798,000. We have lost almost 1.7 million jobs 
since 2008, Madam Chairman.
    I testified in front of your Committee back in January 
2011. I mentioned what these numbers really mean. And I tried 
to paint a visual and I used a stadium analogy, the SuperBowl 
holds 100,000 people. Well, Madam Chairman, we could still fill 
17 SuperBowl stadiums with the amount of people we have out of 
work. And as you know, these are friends of yours and friends 
of mine, and everybody on the panel here. It is important that 
we get our neighbors, your constituents, back to work.
    Simply put, this battered industry cannot sustain the type 
of blow that would be inflicted if Congress fails to enact a 
multi-year fully funded surface transportation bill when MAP-21 
sunsets. Congress cannot allow the Highway Trust Fund to 
deliberately run off the cliff like Thelma and Louise. The 
effect on the employment in the construction industry would be 
catastrophic.
    So NCA2 offers a few ideas and suggestions on how we might 
be able to fix the hole in the Highway Trust Fund. We believe 
Congress should allow States more flexibility in opening up new 
transportation revenue streams, including a lifting on the ban 
on tolling for new capacity. In addition, programs such as the 
vehicle miles traveled tax, VMT, and other pilot projects, 
should be supported over the duration of the next authorization 
to explore the viability of these revenue sources.
    We believe that bonding some part of the dedicated revenue 
stream for the Highway Trust Fund may be a useful way to 
sustain the program. And we believe that in order to achieve 
the needed level of infrastructure investment, a gas tax 
increase is necessary at an absolute minimum. As a long-term 
strategy, the gas tax must be indexed as part of the solution.
    The Nation's roads and bridges are crumbling before our 
eyes. Millions of American construction workers have left the 
industry for lack of opportunity. We cannot afford to lose more 
construction jobs. Yet without a solution to the problems in 
the Highway Trust Fund, that is precisely what will happen.
    The passage of a robust, multi-year transportation bill 
will stop the bleeding and give the industry a much-needed shot 
in the arm.
    You have the power to make this happen. But it will require 
leadership. Saying no to every revenue option will not get us 
there. We need to say yes to investing in this country, raising 
new revenue. This Committee demonstrated that type of 
leadership in the last Congress. We are eager to continue to 
work with you in this 113th Congress to remedy an even bigger 
problem, and indeed, save the program.
    Thank you, Chairman Boxer, Ranking Member Vitter, 
distinguished members of the Environment and Public Works 
Committee, for the opportunity to join you this morning, and 
for all the work that you do that puts construction workers to 
work and especially the ones that I represent, I say thank you.
    [The prepared statement of Mr. Poupore follows:]
    
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    Senator Boxer. Thank you so very much.
    And our last speaker is Mr. Gregory DiLoreto, President of 
the American Society of Civil Engineers. We just received a 
really in-depth letter from them, but please proceed.

   STATEMENT OF GREGORY DiLORETO, P.E., PRESIDENT, AMERICAN 
                   SOCIETY OF CIVIL ENGINEERS

    Mr. DiLoreto. Thank you. Good morning, Chairman Boxer, 
Ranking Member Vitter, Senator Merkley, members of the 
Committee.
    It is an honor for me to appear before you today to discuss 
the status of our Nation's infrastructure. As noted, my name is 
Greg DiLoreto, and I am the President of the American Society 
of Civil Engineers.
    As you noted, Chairman Boxer, our Nation's infrastructure 
is in trouble due to the under-investment at all levels of 
government. As a result, ASCE believes that all options must be 
on the table as we consider long-term funding solutions to our 
Nation's surface transportation system.
    However, as we consider funding solutions, the question 
arises, how have we gotten here and what can we do to fix it? 
The story of our transportation infrastructure in this country 
is a story of our American system working exactly as it should, 
with government meeting the needs of the free market.
    So why does the system not work? I am not the only person 
here who has told you that our Nation's infrastructure is 
hurting. By looking to the past, I have to ask, now that we 
live in a global economy, why is our infrastructure not keeping 
pace with our growing demands?
    I recently spent time traveling in Asia on behalf of ASCE. 
I met with transportation ministers and public works officials 
from several countries. These countries are spending billions 
in transportation as they race to be competitive in a global 
market. As has been noted this past year, ASCE released the 
2013 Report Card for America's Infrastructure, which gave our 
country's infrastructure a D+. A committee of civil engineers, 
experts in the field of infrastructure, used their expertise to 
analyze publicly available information to assess our progress 
as a Nation over the last 4 years.
    The good news is that we went from a D in 2009 to a D+ in 
2013. However, when a D+ is good news, it is time for self-
assessment.
    So what does a D+ mean? Does it mean we are one stiff wind 
from total collapse? No. But it does mean we are not meeting 
our country's growing needs. We are not creating reliable 
funding mechanisms to assure maintenance of our transportation 
systems.
    Now, notice, I am not even talking about all the new 
infrastructure we are going to need to meet new demands. No, I 
am talking about the maintenance and condition of the entire 
infrastructure system that made this country great in the last 
century.
    Deteriorating and aging infrastructure affects our 
families, our local communities, our entire country. As was 
noted, for example, more than 40 percent of our urban highways 
are congested. That means Americans waste almost 2 billion 
gallons of gas per year and that folks spent more than $7 
billion on gas idling while in traffic. The point is that 
indirectly, we are spending this money and we are not getting 
anything for it.
    The Highway Trust Fund is essential for maintaining and 
improving our infrastructure system. Poor infrastructure hurts 
our quality of life, but it also hurts our economy. We also 
know that investing in the building and maintaining of our 
infrastructure creates jobs for every American, both directly 
and indirectly. Not just jobs for construction crews and 
manufacturers or even engineers, but jobs for everyone.
    In fact, at ASCE, we have conducted a series of economic 
studies and found that deteriorating surface transportation 
infrastructure will cost the American economy nearly 900,000 
jobs in the year 2020 alone. However, if we can increase 
investments for surface transportation, we can reverse this 
trend and instead create millions of jobs.
    Since the creation of the interstate highway system in 
1956, the Highway Trust Fund has been supported by revenue 
collected from road users. The system has served America well 
in the past, allowing States to plan, construct and improve our 
surface transportation network. Now with the trust fund going 
bankrupt, the States alone cannot solve our national 
transportation infrastructure issues.
    To prevent bankruptcy of the Highway Trust Fund in 2015, 
Federal surface transportation investment is estimated to have 
to be cut by 92 percent. That is an unacceptable path. What 
would that 92 percent cut mean for your State? State 
transportation projects would be delayed. Employees would be 
furloughed. Families would see their infrastructures fall into 
disrepair, congestion would worsen while businesses would not 
be able to operate efficiently, thereby increasing costs to 
American consumers.
    We need your leadership to achieve a long-term revenue 
solution for the Highway Trust Fund, which will help grow the 
economy, create jobs and improve the quality of life for all 
Americans. We need bipartisan, long-term solutions to ensure 
the Highway Trust Fund can support the transportation 
infrastructure improvements America needs.
    ASCE wants to thank you, Chairman Boxer, and members of the 
Committee, for your continued commitment to our Nation's 
infrastructure and for the opportunity to visit with you today. 
We look forward to working with the Committee as it develops 
sustainable revenue solutions for modernizing our 
infrastructure. Thank you.
    [The prepared statement of Mr. DiLoreto follows:]
    
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    Senator Boxer. I just want to thank this entire panel. 
Sometimes we have great splits and divides in a panel because 
the Democrats pick our witnesses and the Republicans pick their 
witnesses, and we are all in contention. This has been a very 
important bipartisan statement of support for making sure that 
we invigorate the Highway Trust Fund and we have to do it in a 
smart way.
    So I want to start, I have so many questions, but I will 
stay to my 5 minutes. Mr. Poupore, thank you so much. First of 
all, this chart, it is not a happy read. And we are moving 
toward 2 million workers out.
    What I wanted to ask you is, does this not also reflect on 
the status of a lot of our small business people? Because 
obviously, these workers work for the contractors. So if you 
could comment on not only has it been such a disturbing trend 
for the workers, but the businesses who employ them as well.
    Mr. Poupore. You are absolutely right, Madam Chairman. The 
way it works with infrastructure, if we can get the funding out 
there, then the contractors have an opportunity to bid the 
projects. What that reflects with 2 million, almost 2 million 
people out of work, is a lot of contractors not having work. 
And I am sure the AGCE and Pete's group will confirm that, that 
it has been a real struggle.
    I would also like to put a point that I look at these 
million and a half, 1.7 million workers that are out of work, 
they are small family businesses. They support their family; if 
they don't have a job, they can't get anything done with that 
family and it is a burden on the rest of us. So anything that 
we can do to kind of get things moving in the right direction, 
rebuild America and put America to work. Again, we appreciate 
your support.
    Senator Boxer. Ms. Kavinoky and Dr. Ruane, please comment 
on the impact on our business community. Because when we hear 
these job losses, they are enormous. I don't know how many of 
these businesses have been impacted, if you could address that.
    Mr. Ruane. Yes, Madam Chairman. The exact number, according 
to Census Bureau reports, in the last 5 years we have lost 
about 740 business in this space. Our employment is down by 
over 50,000, this is transportation construction I am talking 
about, not construction generically. And that alone is a 
measure of, some of that is consolidation and mergers. But a 
lot of this is folks going out of business. Because I think 
what is not understood is, everyone at this table and in this 
room, I am sure, is very grateful for the leadership of the 
Congress and the Administration on the stimulus program. The 
fact today is the States, because of their own challenges, many 
of them are spending much less than what they were spending 
prior to 2008. In fact, the majority are not.
    So that is what is not understood by the general public. It 
is not a situation where it is a robust, we are still at a 9 
percent unemployment rate in construction, down from 20, which 
is a great Improvement, but it is still a very serious problem.
    Senator Boxer. So it is fair to say we are looking at 
hundreds of businesses?
    Mr. Ruane. Yes, absolutely.
    Senator Boxer. Just in this, as you call it, this space.
    Mr. Ruane. Yes.
    Senator Boxer. Janet, do you have anything to add to that?
    Ms. Kavinoky. I would take a step further to the suppliers 
into the construction industry. You realize that without a 
long-term view of where transportation funding is going in this 
country it ripples through that pipeline as well. So I think it 
is safe to say, and I would be happy to work with ARTB and 
others to look more closely at this, that there is that direct 
impact on the individuals, on the businesses directly in the 
construction industry, but then extending out through the 
economy as well.
    Senator Boxer. I wanted to talk to Mr. Lewis for a second. 
Could you elaborate on what would happen to States like Rhode 
Island that have prior financing obligations that must be met? 
How would they fare under a 100 percent cut to Federal 
transportation funding in the year 2015? Because that is where 
we are looking. We need to be very clear. This is a crisis, and 
we pushed that crisis down the road with a very good reform 
bill. I am so proud of members on both sides, by the way.
    And if I could just say, as a result of our work on the 
reform side, I say to my ranking member and Senator Inhofe, and 
of course my Democrats, we really don't have that much work to 
do in terms of more reforms. We just want to make sure these 
reforms are working. Our work can all be focused on the 
financing, and doing it in a way that we can all support. But 
tell us what it would be like if we fail. Because frankly, I 
don't want to mince words here. What would it be like if we 
fail and there is no Federal contribution?
    Mr. Lewis. That is a very critical question, and I don't 
think there is a lot of awareness of this out there. In Rhode 
Island we are at opposite ends of the spectrum from California 
in terms of scale and in geography. In Rhode Island, because of 
our past obligations and because of using garvee financing to 
do big regional projects over the past decade--long-term multi-
year projects that require multi-years of obligations--with our 
existing commitments if we can't rely on 2015 level funding, we 
will be basically in a position of not being able to obligate 
any new funds even next month for fiscal year 2014. This is a 
huge impact to a small State like Rhode Island. I believe 
Louisiana and some other smaller and rural States may be in the 
same situation we are in.
    But even a State like California, which has a huge program, 
without obligations in 2015, is facing planned construction of 
250 State-sponsored rehabilitation projects costing $2 billion 
that will be put at risk. So it is not just the small States 
that are dependent upon Federal funding for a large portion of 
our program. It is the big States too.
    Senator Boxer. And you are saying it is already being felt?
    Mr. Lewis. It is being felt, and I don't think that the 
immediacy of the impacts are truly understood because we have 
all been talking about the cliff in fiscal year 2015. We are at 
the edge now.
    Senator Boxer. That is why we are having this hearing. And 
I am grateful to colleagues on both sides for their interest.
    Senator Inhofe said he got permission from you, Senator 
Whitehouse, to go before you.
    Senator Whitehouse. Absolutely.
    Senator Boxer. That is very kind of you. So we will go to 
Senator Vitter, Inhofe, Whitehouse, then we will go to Senators 
Fischer and Boozman.
    Senator Vitter. Thank you, Madam Chair, and thank you 
again, witnesses.
    I guess this is to any or all of you. There is a pretty 
broad consensus that the gas tax is really not sustainable, 
middle and long-term. And yet there is still a lot of focus on 
the gas tax for this next bill. Do any of you have a concern 
that if we do a pretty big heavy lift in this bill and still 
focus on the gas tax, we are still not getting to a fully 
sustainable system?
    Mr. Cohen. Senator Vitter, I appreciate that question. I 
think that there are two things going on. One is that the 
current gas tax, the flat gas tax that has existed since 1993, 
is not sustainable. But I do think there is some hype out there 
that gas taxes in general are not sustainable, or that the 
whole country is not going to be using gasoline or diesel in 
the near or long-term future or medium term future.
    That is really just not correct. Set at the right rate and 
adjusted for the right variables, and we know that the fleet is 
going to become more efficient, you have to adjust for that. If 
you adjust for the right things, then I think the gas tax and 
the diesel tax have a great ability to continue to serve as a 
proxy for a good user fee for all.
    There are of course some vehicles that don't pay any fuel 
tax at all, battery electric, and the Chairman has talked about 
this in the past. At some point they are going to have to pay, 
once they are more prevalent in the marketplace. But for the 
vast majority, I think the gasoline tax set at the right rates, 
adjusted for the right variables, will work.
    Senator Vitter. Does anybody else have any reactions on 
that point?
    Mr. Ruane. I would say, Senator Vitter, that the gas tax 
remains as the most viable, efficient, reliable source of 
funding for the surface transportation program across the 
board. Nonetheless, I think what is not understood is what 
makes up the problem. The drop in revenue to the trust fund in 
recent years primarily came from the trucking industry's diesel 
fuel purchases going down and their purchases of equipment. The 
actual drop in gas tax revenues from the average user was about 
1 percent. And that is all coming back as the revenue from the 
trucking-related fees as well.
    So our position has always been that needs to be sustained, 
and many people here, everyone, I think there is unanimity 
about the idea of indexing that. The real issue is we are not 
doing what needs to be done with our existing infrastructure, 
let alone the need for new infrastructure. And the purchasing 
power that has been lost, several people mentioned that, I 
would like to underscore that again, is that we have lost a 
third, and over the next 5 years it is going to get up to some 
50 percent of the purchasing power since 1993, the last time 
this was dealt with.
    Then again, the reason I have used that chart of the 
States, well, some pundits and cynics like to joke about this 
as a fact-free zone in this city. Those facts are undeniable. I 
don't think people get lost in the shuffle sometimes, the 
dependence of the States for capital improvements, real world 
construction and improvements, is heavily reliant, over 50 
percent for all States. And some, you saw the yellow States, my 
God, it is way, way up there.
    So the removal of any kind of funding source, a gas tax or 
whatever, or diminishment of that, is going to have a 
devastating impact across this country.
    Senator Vitter. Let me ask a related question to my first. 
There are some users now who aren't paying through that core 
mechanism. That is at the margin, but that is going to grow 
over time. If you all have specific ideas about how to address 
those alternative vehicle users?
    Mr. Lewis. If I could, Senator, I think we are referring to 
alternative fuels, whether it is natural gas or electric 
vehicles. I think there is a way to factor in on a stepped 
basis how they will contribute on a user fee. I think that it 
is a relatively simple approach.
    Senator Vitter. Describe how that might be done.
    Mr. Lewis. There may be vehicle miles traveled as a way of 
addressing use by an electric vehicle that doesn't purchase any 
fuel. There could be a different rate for a natural gas 
vehicle. I think those are a relatively small percentage of 
system users now, but I think there are pilot programs that 
could be targeted specifically at those vehicles.
    Senator Vitter. A final question, I am running out of time. 
Mr. Poupore, in your submitted statement, you supported linking 
revenue from domestic energy production with Highway Trust Fund 
infrastructure investment. Would you also support that, I think 
you supported that for present or past. Would you support that 
for future or expanded energy production if we could achieve 
some consensus on some expansion?
    Mr. Poupore. The organizations I represent have been on 
record supporting that type of revenue. We want to find 
solutions to fixing the revenue need for mass transit and the 
highways. So the answer is yes.
    Senator Vitter. Thank you. Thank you all very much.
    Senator Boxer. We are going to move to Senator Inhofe by 
the graciousness of Senator Whitehouse, then we will go to 
Senator Whitehouse, then we will go to Senator Boozman, then we 
will go to Senator Carper.
    Senator Inhofe. Thank you, Madam Chairman. I appreciate 
Senator Whitehouse letting me go in front of him. We have a 
conflict I really can't get out of. But I have a message I have 
to deliver here, and I will need your help in doing this.
    One of the frustrating things that I went through a year 
ago when we did our small 27-month reauthorization was not the 
Democrats, but the Republicans. And I can say this, others 
can't say it, because I have been ranked as the most 
conservative Republican, more than anybody else has. Yet we had 
a lot of born-again conservative Republicans using this issue 
down on the floor to sound like this is a huge liberal versus 
conservative issue.
    And it wasn't. Because very clearly, as I mentioned, Gary 
Ridley back there, and he will nod with approval, it is hard to 
say just how much more it costs if we rely on extensions. We 
don't get any of the reforms.
    Now, I was in shock, and I want to applaud the Chairman, 
there are a lot of things that Senator Boxer went along with 
that I know she personally disagreed with. But we got the 
reforms in there, and there are no reforms when you operate on 
extensions.
    Second, the fact that you can't plan ahead, and we have 
been using, without being challenged, about 30 percent more 
than it costs. It costs about 30 percent more to do extensions 
versus a reauthorization.
    That is what the issue is right now. Because the 
alternative to our passing something that we all up here want 
to pass is it is going to go back to extensions.
    Now, when I listened to a lot of the Republicans on the 
floor, I didn't respond to them because I knew we had the votes 
to pass it. But I went right over, I walked right out the door 
and went over to the House side. I got the T&I Committee, 
Transportation and Infrastructure Committee, all the 
Republicans, 36 of them, in one room and sat down with them and 
explained why the conservative position, and thank goodness for 
the ACU, they came out, and I know Mr. Lewis, you mentioned the 
Constitution, actually Article 1, Section 8 of the Constitution 
says that is what we are supposed to be doing here. And what 
the conservative position was.
    As a result of that, I am sure that had something to do 
with it, because I talked to them before and after, every 
single one of the 36 Republicans voted for it. Now, what does 
that tell you? It tells you that when you really sit down and 
talk to them, this is something that is not liberal, 
conservative, Democrat or Republican.
    And I say that with one other part, and that is where you 
come in. If we are able to go to some of these States where we 
have someone who is opposing this, because of spending, 
transportation, all we have to do is go there and get the 
people, get the Gary Ridleys in each one of these States and 
talk about how this is the conservative position. I have yet to 
hear one Republican in one of these States not change his or 
her mind and say yes, transportation is important.
    But this has to be done at the grass roots. I know, Peter, 
you are tired of hearing me say this. But that is where you 
folks come in, that we are going to have to be able to go back 
to the States and let them lean on their own people. And I 
think we can get something passed. We are going to work hard to 
come up with a robust bill, and this is something that should 
be rallied around by both conservatives and liberals.
    So the only question I have, would any one of you want to 
validate what I just said in terms about, of the extensions 
versus a reauthorization bill? Anyone want to comment?
    Mr. Lewis. Senator, I absolutely agree with that. Not 
knowing some years ahead the funding you can plan for, we can't 
plan, we can't engineer, because we don't know what level of 
funding we are going to have in order to implement the 
construction. Any dollar spent today on the planning or 
designing of projects that we don't know we can build is a 
wasted dollar. It is just money that we are throwing away.
    In Rhode Island we have an interchange just west of 
Providence, which is critical to our capitol city. It is a 
structurally deficient structure, and it is close to a half a 
billion dollar project. I can't even begin to invest in the 
planning, because I have no idea where that construction money 
is going to come from.
    Senator Inhofe. All right. Since I have to go now, I would 
like to have the rest respond to that for the record. Let me 
thank Senator Whitehouse and the Chairman.
    Senator Boxer. Senator Inhofe, what you said was really 
music to my ears. Because this is a non-ideological issue. If 
we can't move people and goods, our economy isn't going to keep 
up with the rest of the world. I think in the Chamber of 
Commerce explanation they said that Canada is moving the goods 
so much more efficiently than we are, we have work to do. And I 
look forward to continuing our work, along with the ranking 
member and Senator Barrasso.
    And how we will hear from Senator Whitehouse, followed by 
Senator Carper, if we don't have a Republican present at the 
time.
    Senator Whitehouse. Thank you, Chairman.
    I wanted to follow up on the question that Senator Vitter 
raised about the gas tax. Correct me if I am wrong, but it 
strikes me that our vehicles are going to become increasingly 
more fuel-efficient. So for the same amount of miles that they 
roll over our highways, the gas tax will generate less and less 
and less revenue. That is the direction of technology, it only 
makes sense. I think we can foresee considerable growth in both 
the electric and the hybrid vehicle markets for a whole variety 
of reasons.
    So given that, I share his worry that if we go back to just 
a gas tax, we are putting ourselves on a glide slope that ends 
back in a bad place all over again. I know Mike mentioned the 
possibilities of finding other ways to generate revenue for use 
of the highways from different types of vehicles that burn less 
gas or no gas or whatever.
    But I am wondering, we are going to have to be looking at 
this pretty quickly. Is there anything out there that is pretty 
well developed about how one might go about doing this? Are we 
going to have to do a lot of original research in this 
Committee to try to sort these questions out? So two questions, 
and I will start with Greg Cohen, because I see his head up, 
and I will go to Ray Poupore after that, because he was nodding 
energetically. Is this a real problem about the declining and 
vanishing gas tax? And if so, what are the best sources to go 
to to look at alternatives that have been pretty well developed 
and had their consequences and their economics thought through? 
Mr. Cohen.
    Mr. Cohen. Thank you for the question. We have in the tax 
code a number of different equivalents to the gasoline tax for 
E85, CNG, LNG, ethanol. Basically almost any form of fuel can 
be taxed an equivalent energy rate.
    The one exception I think at this point, and maybe there is 
a way to do it, is the battery electric vehicle. And some 
States have experimented with ideas, and I think we should 
continue to look at that.
    Senator Whitehouse. Let's just stick with gas. There is the 
tax. Even if you don't move anything on it, as whatever the 
fuel is, as cars become more efficient, which they are 
naturally going to do, the amount of whatever fuel it is that 
they consume is going to be reduced, and that means that the 
revenues would fall. I don't see our maintenance costs falling 
in line with that. So you end up with the two lines crossing 
again and there you are at the point of crisis.
    Mr. Cohen. AASHTO I believe has done a chart that shows if 
we get to 54 miles per gallon, at that point I think we lose 
about 22 percent in revenue from the gas tax. So it is a valid 
concern. That is why what I am suggesting is that we look at 
all the variables to index to, so that we don't lose purchasing 
power.
    Senator Whitehouse. So the answer is, using the existing 
methods, but index them up?
    Mr. Cohen. Right, index to all of them, yes.
    Senator Whitehouse. Mr. Poupore, then Mr. DiLoreto.
    Mr. Poupore. Senator Whitehouse, I really don't have a good 
answer for you except that no matter how much more fuel 
efficient the cars get, they still wear out the roads. That is 
what we have to look for, a revenue source to maintain and fix 
and expand. We have some good suggestions out there, I believe, 
and I know Senator Boxer has been supportive of the vehicle 
miles traveled. I believe Oregon is using that, so I will turn 
it over to Greg.
    Senator Whitehouse. OK, Mr. DiLoreto. I have 1 minute left, 
so you will wrap up for us.
    Mr. DiLoreto. Chairman Boxer, Senator Whitehouse, I am from 
the State of Oregon . As you may know, several years ago the 
State did do a vehicle miles traveled research project on 
whether or not we could generate revenue from vehicle miles 
traveled as opposed to a gas tax. We showed actually we could.
    Now, part of the issue is reconfiguring the cars so you can 
do that. So it doesn't happen overnight. It is not a device 
that is going to happen overnight.
    Senator Whitehouse. A GPS-type technology?
    Mr. DiLoreto. It is a module under the car, when you go to 
the gas station, it reads off the number of miles. It doesn't 
read where you went, it doesn't know that you went to the store 
10 times. It just knows how many miles you traveled and then it 
gets added on to the price you pay, so it gets collected.
    This last legislative session in the State of Oregon they 
did authorize the State to expand it. It has an opt-out 
program, where you would pay a higher flat fee, and people 
don't want to do that. It is certainly a technology that can be 
added to everything else that we have. I think ASCE's position 
is there are lots of solutions, we probably shouldn't settle on 
just one, but we ought to put together a whole bunch of them, 
so when one does have a problem, the other one steps up and 
fills the void.
    If you are interested in more information, Oregon can 
certainly provide that to you.
    Senator Whitehouse. Thank you. Thank you, Chairman.
    Senator Boxer. Thank you. Senator Fischer.
    Senator Fischer. Thank you, Chairman Boxer. Mr. DiLoreto, 
you just said you were from Oregon and you have the VMT there. 
When I was a State legislator, I met a representative in your 
legislature, Bruce Starr, who worked on the VMT. How many 
vehicles did you have involved in that, do you know?
    Mr. DiLoreto. No.
    Senator Fischer. You said you were looking to expand it. Do 
you know how many are there?
    Mr. DiLoreto. I do not.
    Senator Fischer. Do you know what the cost of the program 
was?
    Mr. DiLoreto. No, but I can get you all that information. I 
am not an expert in it. I can get you everything you need on 
that.
    Senator Fischer. Do you know how long it would take to set 
it up?
    Mr. DiLoreto. I would estimate, if you were to do it fully, 
you are looking at probably 10 years or more, because you are 
going to have to either retrofit existing vehicles or you are 
going to have to wait until you turn over your entire fleet.
    Senator Fischer. Thank you. As a civil engineer, I know 
that Senator Inhofe, I was told, asked a question about 
planning, I believe, to Mr. Lewis when I had stepped out. For 
you, sir, as a civil engineer, on planning, and the uncertainty 
of planning when you don't know what the funding is, can you 
tell us a little bit about how you deal with that when you are 
looking at double digit percentage increases in construction 
costs and how that kind of throws a wrench in things, plus then 
dealing with red tape of government to move forward on 
planning?
    Mr. Lewis. It is certainly difficult when we don't have a 
funding source to know how we are going to plan projects in the 
future. There is no question about that. Now, we did benefit 
over the last few years from the economic recovery program. We 
were able to take advantage of that and do a number of projects 
that we probably couldn't have done otherwise. But those days 
are over, and we are seeing that now in our construction bids. 
They are starting to come in a little bit higher.
    So if you don't have a revenue source, you cannot plan 
long-term, as was stated by my colleague at the table here. And 
he will stop making those kinds of plans until he knows that he 
has the money to do it. Otherwise, as he mentioned, he is 
really wasting his money. If you hire engineers to come in and 
design it, it costs money. Then to put the project on the shelf 
doesn't make really any sense.
    Senator Fischer. Thank you. Mr. Lewis, did you have 
anything you wanted to add on that? I guess I am interested in 
knowing if you think the current gas tax that we have now, does 
that provide you with certainty? I see the math is back up 
where we look at how the big division on how the revenue from a 
Federal gas tax is sent back to States.
    Mr. Lewis. I think the certainty is that with the existing 
level of revenues going into the Highway Trust Fund, the 
certainty is that the Highway Trust Fund is going to go 
bankrupt a year from now. That is a certainty. We won't have 
the money to obligate funds for new programs. When it does 
rebound, it will rebound to a point that is considerably less, 
maybe two-thirds of what we are used to. So it is a certainty 
that we will have less to invest in transportation.
    Senator Fischer. It might be due to your position, maybe.
    [Laughter.]
    Mr. Lewis. It is a challenge that the level of Federal 
investment overall for the States is actually, on a percentage 
basis, on average, dropping, and more States are stepping up to 
raise revenue and fill the void. But all States cannot. 
Speaking for Rhode Island, we just don't have the opportunity 
to raise revenues, because of the size of the State, in order 
to fill that void. Our State gas tax is already 10 cents higher 
than our neighbors' in Massachusetts, and a big percentage of 
our population lives within a few miles of the Massachusetts 
border. You don't have to buy gas in Rhode Island.
    Senator Fischer. In Nebraska, we have a variable portion of 
a gas tax, too. We are kind of unique in that, where it moves, 
it fluctuates due to budgeting and how we handle that in our 
legislature.
    Do you know if that has ever been looked at by other States 
or by the Federal Government?
    Mr. Lewis. Others may have a comment on that. I do know 
that Virginia, for example, and Maryland reformed how they 
collect their gas tax. Rather than a flat excise tax, they 
changed to a percentage basis sales tax. I think that is the 
kind of reform that can address perhaps some of these issues we 
have talked about and the variability.
    Senator Fischer. Did you want to speak to that, Janet?
    Ms. Kavinoky. I am not able to recall a serious discussion 
at the Federal level where we actually tie the rate of taxation 
or the level of taxation to needs. However, that would 
certainly get us closer to figuring out how to address those 
needs, rather than attempting to address or take some of the 
needs off the table based on what the available revenue would 
be.
    Senator Fischer. If you went through a prioritization 
process on needs for each State on the Federal projects and 
then tie a variable to that, do you think that would be 
something your group might be interested in looking at?
    Ms. Kavinoky. Actually, I think that is a very interesting 
comment. I certainly can't comment on what the Chamber policy 
would be in terms of that. However, I think that a clear 
understanding of what the Federal priorities, national interest 
level projects are in States, then could help drive where we 
need to be with revenues. If you look back to when the 
interstate system itself was created, it was actually designed 
to be on a cost to complete basis, here is what we need to 
build, here is what it is going to cost, and we move forward.
    So I think that that is, from a planning concept and from a 
financing concept, something that is worthy of further 
consideration.
    Senator Fischer. OK. Thank you so much.
    Thank you, Madam Chair.
    Senator Boxer. Thank you.
    We are going to turn to Senator Carper, followed by Senator 
Baucus, and we are thrilled that he has joined us, because he 
will be in that seat making these decisions. Senator Carper, 
who is also on the Finance Committee.
    Senator Carper. And we will be looking forward to making 
these decisions with you, Mr. Chairman.
    [Laughter.]
    Senator Carper. I want to come back to what you mentioned, 
the VMT, as one of the user fees that we should consider. 
Before I do that, though, let me just ask for a show of hands, 
how many of you think that part, not necessarily all of the 
solution here to making sure that our resources meet the needs, 
how many of you believe that it is not a gasoline tax, some 
kind of user fee that relates to motor or fuel taxes is part of 
the solution, would you raise your hand?
    [Show of hands.]
    Senator Carper. All right, thank you very much.
    I have been interested for a while in the VMT proposal, in 
fact, when we considered MAP-21, I proposed a suggestion that 
we might create a research program to explore how we might 
structure a VMT fee. Unfortunately, the provision that was 
included in the Senate bill was taken out in conference.
    I'd like to ask Mr. Lewis, and Mr. DiLoreto, tell us how 
you think USDOT could help us support a long-term transition to 
a VMT fee? Take a shot at that.
    Mr. Lewis. I think the States would certainly support a 
very robust study on how we could transition to a vehicle miles 
traveled tax. I think there are some technical issues involved, 
and there are social issues involved. These are issues that 
need to have some light put on them. Then we really need a 
quantified assessment of how and when a VMT tax could be 
implemented over time. What about the fleet turnover? What 
about privacy issues? What about the way it gets collected?
    One thing about the gas tax today is we have a very well-
established means of collection. Does the VMT tax change that?
    But those are solvable issues. They just have to be 
identified. Put some good, smart people behind them and then 
air them publicly.
    Senator Carper. Mr. DiLoreto.
    Mr. DiLoreto. I think my colleague said it absolutely 
right. Those were the issues that Oregon faced when it went 
through its experimental project with the Federal Highway 
Administration several years ago. So he is absolutely right, it 
is solvable. But it would take time.
    Senator Carper. One of the pieces of legislation I worked 
on quite a bit was the 2007 CAFE legislation with Senator 
Feinstein and a number of others. During that discussion we 
talked a bit about all-electric vehicles, they are going to use 
the roads, highways, bridges. And if they never are going to 
use any gasoline, then are they really contributing to the 
upkeep. So there is a fairness for an equity question here that 
I think needs to be addressed.
    Others have suggested that by the time we get to 2025 we 
will have a lot of new vehicles coming onto the road that are 
even more energy efficient than the ones today. For somebody 
who is driving 25,000 miles a year on a vehicle that gets 50 
miles per gallon and somebody who is driving a vehicle that 
gets 20 miles per gallon, there are a number of miles there, 
there is a fairness and equity issue there.
    Anybody else have some thoughts for us on a VMT fee? 
Anybody else, just some thoughts you think are appropriate for 
us to keep in mind? Mr. Cohen.
    Mr. Cohen. I always take an opportunity to speak if it is 
open to everyone. I think the Oregon example is worth 
continuing to look at, and that the States are really the best 
laboratories right now for studying it. Oregon is not the only 
State. Right now their pilot is 5,000 vehicles. I think it is 
worth looking at that. I think there are three different ways 
of collecting revenue that they are looking at.
    And it may be that in time, this is an interesting way to 
go, there are positives and negatives, the point of collection 
is a very good point. Right now we have about 1,100 terminal 
racks that pay the gas tax, 250 million vehicles paying 
individually would be an interesting difference in terms of 
enforcement and administrative costs.
    But on the other hand, it is a more direct user fee. 
Potentially it could obviate the need for toll roads, because 
you are basically collecting from everybody, so you don't have 
to collect twice on certain roads. So it is something we might 
want to continue to study.
    Senator Carper. Thank you. A quick note, I used to be 
Governor, used to be the Chair of the National Governors 
Association for a while. One of the things we had was a center 
for best practices, clearinghouse for good ideas that worked. 
And we used to share those ideas. One of the great things about 
States, there are 50 of them, 50 laboratories of democracy. And 
we have the opportunity to test a lot of ideas and to see what 
works and what works best and try to incorporate that in our 
own plans going forward.
    Thank you all very, very much. Thank you, Madam Chair.
    Senator Boxer. Thank you. Chairman Baucus.
    Senator Baucus. I thank you, Madam Chair.
    I am just curious, does anyone on the panel disagree with 
the proposition that the highway reauthorization, highway 
program has to be a national program? That is, a lot of States, 
some States are donee States, some are donor States. And some 
of the donor States get a little upset because they are donor 
States. A lot of donee States say hey, we wouldn't exist if we 
weren't a donee State. That chart, the map over there makes 
that point. If you look at the States over there that are 
yellow, where 70 percent of highway funding is Federal, it is 
not State, but it is Federal, those are States that are donee 
States. Those are States where there aren't very many people.
    My State of Montana, for example, used to be first, maybe 
it is second in the Nation in the number of highway miles per 
capita. We have a very high State gasoline tax to try to 
contribute our match to the Federal.
    And General Eisenhower, as you know, when he put together 
the interstate system, recognized right off the top, we need a 
national system, not a sectional, but national. Some States 
say, let us forget this, let our State take care of it. Those 
are States that tend to be wealthier States, they have a lot 
more people. They are so-called donor States, they don't like 
being donor States.
    Is there anybody who disagrees with the proposition that we 
need a national program and not a sectorial or regional program 
if we are going to have the highway system that we need? Raise 
your hand if you disagree with that, or disagree with anything 
I said.
    [Laughter.]
    Mr. Lewis. Senator, I am certainly not going to disagree 
with that. I just want to add a point. I had an opportunity 
this year as president of AASHTO to visit many States around 
the country and talk with all my colleagues. To a person, that 
is an issue that we talk about as a group. It matters to 
Florida that Wyoming has I-80 in good condition, because it has 
to get its orange juice to Seattle. It matters to Boston that 
we don't have posted bridges on I-95 in Rhode Island because of 
the commerce between Washington, New York and Boston.
    Senator Baucus. What about Montana and 90?
    Mr. Lewis. I was saving the best for last, but I ran out of 
time.
    [Laughter.]
    Senator Baucus. That does come up, frequently. And that 
point is well understood.
    Mr. Ruane. Senator, in our statement is a chart from the 
Census Bureau on the actual shipments between States that shows 
the dependency of one State to the adjacent State or several 
States away for the flow of goods. It is something that they 
put out every 5 years, and it makes a convincing case of the 
importance of every State to have a strong interstate system.
    Senator Baucus. Good. I have no more questions. Thank you.
    [The prepared statement of Senator Baucus follows:]

                     Statement of Hon. Max Baucus, 
                 U.S. Senator from the State of Montana

    Thank you, Madam Chair. You are a strong advocate for our 
Nation's infrastructure. This hearing is an important step 
forward in addressing one of our country's biggest challenges.
    As President Eisenhower once said, ``Together, the united 
forces of our communication and transportation systems are 
dynamic elements in the very name we bear--United States. 
Without them, we would be a mere alliance of many separate 
parts.''
    If we do not make a national commitment to our 
infrastructure, America will fall behind.
    We need a national system of highways.
    Rural highways are crucial to our Nation's economy. Nearly 
70 percent of federally supported highway lane miles are in 
rural areas.
    Earlier this month I brought the top diplomats from Canada, 
China, Germany, Japan and Peru to Montana. They met with 
ranchers, farmers, workers and businesses. Seeing five cities 
in 4 days, these Ambassadors traveled on 675 miles of Montana's 
highways. Driving along Flathead Lake, down through the 
Blackfoot Valley, and ending in the heart of the Rockies, let 
me tell you, they appreciated Montana's strong network of rural 
highways.
    Make no mistake, American jobs depend on a strong, reliable 
highway system. And nowhere is that more evident than Montana.
    Montana has nearly 4,000 miles of National Highway System. 
Every year these highways transport more than $10 billion of 
Montana goods. And more than 10 million visitors will use 
Montana highways this year to enjoy our great State and spend 
tourist dollars Montana jobs depend on.
    Our infrastructure system drives the economy. Domestic 
commerce, job growth, and international trade simply cannot 
progress without a strong, national infrastructure system.
    How do we ensure that we make the investments we need in 
the future? The Highway Trust Fund is projected to be near a 
zero balance in fiscal year 2015.
    The Trust Fund is primarily funded by fuel taxes.
    But vehicles today are becoming more fuel efficient, miles 
traveled are down, and over the past 20 years, the gas tax has 
lost more than a third of its purchasing power to inflation. In 
recent years, we have only been able to maintain necessary 
investments through transfers from the General Fund. We're 
robbing Peter to pay Paul.
    In the last Highway Bill we came together and found 
bipartisan consensus around responsible offsets to fund the 
Highway Bill without adding one dime to the deficit.
    Once again we must join together to responsibly fund future 
transportation investments. The Highway Trust Fund needs 
sustainable funding so State and local transportation officials 
will have the certainty they need to engage in long-term 
planning. We cannot continue to kick the can down the road. 
American jobs depend on it.
    The Finance Committee has begun this process. Earlier this 
year, as part of a plan to overhaul the Nation's tax code, we 
published a white paper on transportation funding options. We 
are moving toward a markup on tax reform this fall. As part of 
this process, we'll be ensuring that our Nation's 
infrastructure is sustainably financed.
    A fairer tax code will create a better environment for 
American competitiveness, innovation, and opportunity.
    Ensuring the long-term solvency of the Highway Trust Fund 
will require input and collaboration from both sides of the 
aisle, from both urban and rural States, from East to West and 
North to South. President Eisenhower was right to emphasize 
that these are the United States of America. We have a 
responsibility to get this right for the entire country.

    Senator Boxer. OK. I just want to say, while Senator Baucus 
is here, that this panel, representing a very broad brush of 
American thought on this, I would say the whole political 
spectrum and the rest, they have told us that we are just 
getting to grips with this problem out there, that there will 
be no money in the trust fund by 2015. It is just zero.
    Senator Baucus. That is right.
    Senator Boxer. So we have to act. And they also make the 
point that we need to solve this problem for the long term. And 
so we have an opportunity to do that. If it is not solved, we 
are really talking about, as Mr. Poupore pointed out, millions 
of jobs, and as Janet pointed out, and actually Pete as well, 
literally hundreds and thousands of businesses. So the country 
is counting on us, and Senator Baucus, I know that you have a 
lot on your shoulders. But we are going to share with you our 
ideas, so that we give you all of them, and then you and Mr. 
Camp and Senator Hatch and I guess, who is Camp's ranking, 
Sander Levin, will have the benefit of this Committee's work, 
of which you have been a part, and your staff has been a part. 
And all the people here have been so extremely helpful. They 
are not just saying, it is up to you, we are out of here. Each 
of them has come forward with a way to handle this, for which 
we are all very grateful.
    So thank you, panel one. We thank you very much.
    Senator Baucus. I would like to back up, if I might.
    Senator Boxer. Go ahead, please.
    Senator Baucus. Is there a prevailing view on how to 
address the deficit? Is there a prevailing view? Is there a 
tendency toward consensus on what we have to do? Not dotting 
the Is or crossing the Ts.
    Senator Boxer. Let me try to answer what they told us 
through this thing.
    Senator Baucus. Sure.
    Senator Boxer. Tell me if I have misstated it. They want to 
see a user fee. They don't want to see, although there was one 
exception, maybe you can patch a small amount with the General 
Fund. That is not the consensus of the group.
    The consensus of the group is, we need a user fee, we need 
a long-term solution, and it should be pretty much related to 
oil and gas, that fee, whether it is collected the way it is 
now and we increase the gas tax, or as I understand it, follow 
the lead of a State like Virginia which is looking at a tax, 
but it is at a different level, it is wholesale, it would be at 
the refinery level and as a percentage of the cost.
    Senator Baucus. I appreciate that. Anybody want to add a 
little texture to Chairman Boxer's statement, add a little 
context?
    Mr. Ruane. Senator, I think moving it up the food chain in 
terms of some of the States who have looked at this and 
collection points, you can go further up instead of the 
individuals paying this, at the refinery or at the whole sale 
level. Some States have looked at that very closely.
    I think there is an efficiency argument there from a 
collection standpoint. So with most of us, I think it is all of 
the above. And whatever combination is obviously, work can be 
done both economically and politically and everything else.
    But one of the points we want to underscore, and it is a 
little redundant here, is let's not throw the baby out with the 
bath water. There is a reliable source already there, and if 
you are going to change that, that is fine, but keep the buying 
of that source and whatever new method the Congress might come 
up with.
    Senator Baucus. Thank you. Mr. Cohen, did you raise your 
hand?
    Mr. Cohen. Let me just add that the sustainability issue is 
I think something that we all also talked about. This last 
bill, we ran out of money, so we wrote a bill that can only be 
funded for 2 years. What would be nice and what would be 
preferable, so that Congress doesn't have to deal with this 
every few years, is to chart a course that includes an index so 
that reauthorizations can be done for 6 years at a time so that 
the States can do their plans, projects can be done and we can 
achieve greatness again and not just try to get the point where 
we run out in, say, 2020 or 2021.
    Senator Baucus. How do you deal with the anti-tax crowd 
that raises its voice around here?
    Mr. Cohen. I represent the highway users. And as I 
mentioned in my testimony, the users pay and we have not always 
been in favor of raising the tax.
    Two things I think have changed. One is MAP-21. Tremendous 
reforms, and I didn't stress this, but the streamlining 
provisions, and this certainly came up at least week's hearing, 
are absolutely critical to taxpayers' support for paying more. 
We are going to have to look at them, because they haven't been 
fully implemented, obviously.
    And second, just the dire nature of the situation right 
now. It is not like the old days when we had a big balance and 
we could simply draw from the balance. So we represent the 
users, AAAs, truckers, bus companies, and we all agree that we 
have to pay more.
    Senator Baucus. Your goal is to sustain current levels of 
construction and repair, or do you want to boost? What is the 
prevalent view here?
    Mr. Lewis. I defer to ASCE on this. But I think sustaining 
is the absolute floor. I think the country does need to think 
and talk and debate additional investment. I think we are 
falling behind, as Janet has pointed out. Other countries are 
investing more on a percentage basis than we are. But perhaps 
the enemy of good is better. We need to get to where we can at 
least maintain a level funding.
    Mr. Ruane. Senator, I would say that we have to do both and 
we have to do them simultaneously. That may seem like a huge 
leap for some, but this Congress is more than capable of doing 
that. And what you showed in MAP-21, the bipartisan nature of 
the vote, proved it can be done. Getting financing is obviously 
a bigger lift.
    But the Nation is growing by 3 million people a year, 2 
million new users, new drivers on our Nation's roads in a year. 
We are growing, we are a growing country. And to accommodate 
that growth, we have to not only take care of our existing 
system, we have to enhance our system to accommodate that 
growth alone.
    Senator Baucus. You are right.
    Mr. DiLoreto. Let me just follow up. The American Society 
of Civil Engineers gave roads a grade of D. We estimate you 
need $1.7 trillion over the next 8 years to get it into good 
condition. We have about half of that, assuming the Highway 
Trust Fund was to maintain current funding levels.
    So the question of do we need more, well, if our goal is to 
get our transportation system into good condition, meet 
capacity needs, meet the condition needs, then we are going to 
have spend more as Americans on it.
    Senator Boxer. Mr. Chairman, I am going to give you more 
time to do your opening statement. And I wanted to make a point 
here.
    Senator Baucus. You may regret that.
    [Laughter.]
    Senator Boxer. No, I don't. I don't regret it at all.
    But I just want to say this point. Your question is 
important, sustaining the current levels for actually moving 
forward. I wanted to point out, because of our work together, 
all of us, on TIFIA, we had a way that was able to dramatically 
leverage existing funds. So for example, just by using a 
billion dollars for TIFIA, which we agreed upon, is going to 
stimulate the economy up to $30 billion, there were other 
proposals, I think, that your committee will look at.
    So one idea is to do the basic funding and then look for 
ways that we can leverage the Federal investment, it is just a 
thought, without putting so much pressure on the user fee.
    In any case, you have the floor for 5 minutes.
    Senator Baucus. I am fine.
    Senator Boxer. OK. Thank you very much. And we will call up 
panel two.
    Senator Whitehouse. Madam Chair.
    Senator Boxer. Yes.
    Senator Whitehouse. While the panels are changing, I just 
wanted to emphasize the point that Mike Lewis was making very 
well to Senator Baucus' question that a lot of places have big 
projects that are out there that are looming because of the 
surge of infrastructure that was built 50 years ago and is now 
sort of reaching the end of its natural life. Those have never 
been in any baseline. Because they have always been 
unmanageable, because we have always been just scraping by with 
basic maintenance.
    At some point, those become things that we absolutely have 
to do. In Rhode Island, Route 10, Route 6 and Route 95 all come 
together in the center of our capital city. If the Route 10 and 
Route 6 connectors fail, we have a problem that is going to 
affect the entire eastern seaboard. Never got into the budget 
of the Rhode Island Department of Transportation, it was too 
big to fit in a year's budget. There has always been the hope 
that someday.
    Well, I think there is a lot of that out there. We need to 
make sure we have the scope in this to take on those big 
projects that are coming due.
    Senator Boxer. All right.
    First of all, thank you to our second panel, a very 
distinguished panel. Thank you for waiting around here. It is 
my pleasure to start it off with Jack Basso. I know it is Peter 
J., but I call you Jack. Principal, Peter J. Basso and 
Associates, a very important part of my world in advising me. 
So please go right ahead, sir.

STATEMENT OF PETER J. ``JACK'' BASSO, PRINCIPAL, PETER J. BASSO 
                      AND ASSOCIATES, LLC

    Mr. Basso. Thank you, Madam Chairman, for those kind 
comments. Thank the Committee, Senator Baucus and Senator 
Whitehouse and other members of the Committee.
    I am going to be brief but hit on what I think are some 
important points. While others on the panel will discuss in 
some detail what might be considered to address the funding 
crisis, and I think it has been discussed heavily with the 
first panel, what I want to do is discuss first what is the 
magnitude of the problem. I think it has been stated, it is a 
100 percent reduction in fiscal year 2015 in the highway 
program. And also, for that matter, the transit programs.
    I want to talk a little bit about the evolution of that 
problem and contrast traditional funding grants and direct 
funding with the financing tools, such as the TIFIA program, 
and how those in combination are critical to infrastructure 
investment. The Highway Trust Fund, and in my written testimony 
I show, faces a dramatic shortfall. In fact, the fund has been 
spending about $50 billion per year while the revenue averages 
about $35 billion a year. Through the good offices of the 
Congress, we have been able to put in the $4 billion from the 
General Fund that has kept, so to speak, bankruptcy staved off.
    Thus, in fiscal year 2015, if the programs receive no new 
revenue, we are literally out of business. I think the impacts 
are dramatic and very bad for the country.
    The reduction in capital programs, of which the Federal 
funding averages 45 percent in the States, is devastating to 
both capital investment and jobs. In fact, for every billion 
dollars of investment, about 28,000 jobs are supported. So we 
are talking about hundreds of thousands of jobs lost in fiscal 
year 2015 on the back of an already dramatic decline in 
construction employment.
    So how do we get there? A combination of factors created 
that situation. Let's give a little credit to the great 
recession, because it did impact it. For the first time in 50 
years, vehicle miles traveled dropped in 2008. They had been 
growing at a rate of 2 to 3 percent a year for 50 years.
    That translated into a dramatic decline in revenue, 
combined with another factor, heavy truck taxes from the sales 
tax on trucks took a nose dive during that same period. Thus 
the fund approach to deficit and potential similar program 
reductions in 2008. The Congress responded, as I said, by 
making a series of General Fund transfers that have been 
critical and much appreciated by those of us in the 
transportation community.
    However, the real problem lies in the fact that no rate 
adjustment has been made since 1993, 20 years. And I might 
note, that adjustment was made actually in the incomprehensive 
balanced budget agreement in 1993 as to how this got addressed. 
So I think that is important to note.
    A quick word about financing. Early 1993, the Federal 
Government began promoting a series of tools to allow financing 
for programs with revenue streams, garvee bonds, State 
infrastructure banks and in particular, Madam Chair, I want to 
note your role in the dramatic 20-fold expansion of the TIFIA 
program, which is hugely important and hugely useful. Also 
Build America bonds, at one time the program was useful and 
very helpful to our infrastructure investments.
    But these things alone cannot substitute for direct 
funding. So the time has come, and causes me to conclude, as we 
approach reauthorization programs and address funding and to 
continue the successful financing programs such as TIFIA and so 
forth is absolutely imperative to the Nation's well-being and 
to the improvements that can be made in our infrastructure 
investment. And are as important to maintain our international 
competitive position.
    Thank you.
    [The prepared statement of Mr. Basso follows:]
    
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    Senator Boxer. And we turn to Kathy Ruffalo, President, 
Ruffalo and Associates. Welcome.

STATEMENT OF KATHY RUFFALO, PRESIDENT, RUFFALO AND ASSOCIATES, 
                              LLC

    Ms. Ruffalo. Thank you, Chairman Boxer, Chairman Baucus and 
Senator Whitehouse, for the opportunity to address you today 
regarding the shortfall in the Federal Highway Trust Fund and 
possible solutions to this transportation funding crisis.
    As a former staff member to this Committee, I fully 
understand the challenges that you face regarding 
reauthorization and the need to fill the current funding gap. I 
applaud your leadership and that of the other committees to 
address this situation.
    Before I begin, I want to let you know that any opinions I 
express are mine and mine only and not any group or entity. 
Jack has done a good job of telling you and the other panel 
about the trust fund shortfall, what that picture looks like. 
So I am not going to go over it again, except to reiterate that 
the crisis is fast approaching and it is important for Congress 
to find the appropriate vehicle to address it through tax 
reform or a broader agreement on spending and taxes, which 
recent history has shown to be a good option or through other 
appropriate legislation.
    I am going to cover two areas in my oral statement, an 
overview of the types of funding options that Congress can 
consider. I am also going to end with some questions that I 
believe are key policy and implementation questions for 
Congress as well.
    If Congress agrees that we need to find additional revenue, 
there are three general ways in which to do so. My written 
testimony includes some specific examples of each.
    No. 1, raising the rate of taxation or fees of existing 
Federal revenue streams into the trust fund. No. 2, identifying 
and creating new Federal revenue sources into the trust fund. 
And No. 3, diverting current revenues and possibly increasing 
the rates from other Federal sources into the trust fund.
    As Congress looks at individual funding options, of which 
there are many, you may wish to evaluate each option based upon 
how much money could realistically be raised, how much would it 
cost and how long would it take to put in place the structure 
to collect revenue in a new way, and what administrative, legal 
and enforcement issues would need to be addressed, what is the 
impact to urban and rural users of the system, and what is the 
applicability to other levels of government. If finding the 
revenue for transportation were easy, it would have been done 
already. Each funding option has supporters, opponents and each 
has policy considerations.
    So given that, here are my key questions for you today. No. 
1, with the Highway Trust Fund balances nearing zero in early 
2015, which funding options can be implemented most quickly? If 
Congress wants to prevent dramatic cuts to State DOTs, transit 
agencies and other transportation partners, the time necessary 
to collect revenue from any option becomes critical.
    You can't forget the new revenue has to be collected prior 
to 2015, while possibly another General Fund transfer would 
have to take place. In other words, the time to implement any 
funding option has to be considered. As you explore any list of 
options, you may want to categorize them into short-term, 
intermediate term and long-term in order to accurately 
calculate the time necessary for any new funding scenario to be 
fully implemented.
    Question two, how might any new Federal revenue option 
impact our State and local funding partners? Several possible 
funding solutions are currently used by States, local 
governments and transit agencies to collect revenue. If the 
Federal Government would add a new fee onto this existing non-
Federal funding sources, the Federal Government might crowd out 
the ability of transportation partners to raise revenue from 
these sources in the future.
    Question three, should we retain the user fee concept? We 
had some discussion about that on the previous panel. Do we see 
the benefit of having the funding source tied in some way to 
the users of beneficiaries of the transportation system? Or is 
it now the case that funding from anywhere is what matters 
most? What would the lack of a user fee basis mean in retaining 
contract authority? Of course, as has been talked about, 
contract authority is what makes this program unique, and it 
allows the States and local governments to plan and construct 
transportation projects with limited funds on a long-term 
basis.
    Finally, what is the public appetite for multiple funding 
sources? Given how controversial and difficult it is to raise 
almost any tax or fee, you may wish to consider the 
implications of choosing multiple sources of revenue and the 
level of opposition that may entail. Some funding options raise 
very little revenue and others would necessitate new 
collection, administrative and enforcement systems.
    At the end of the day, we are all trying to do what is best 
for this country. We need to remember there are real men and 
women behind all the numbers and statistics that we use. 
Thousands of jobs depend upon Federal transportation funding, 
not just direct jobs but indirect ones as well, whether it is 
to get to work, to move goods across this country to maintain 
our quality of life, the Federal Government is an important 
partner in transportation investments.
    I know that with your leadership, Madam Chairman, Senator 
Baucus' leadership on the Finance Committee and other 
committees, Congress will resolve the insolvency of the Highway 
Trust Fund and provide the funding necessary to continue 
valuable Federal transportation investments.
    Thank you again for holding this hearing and for providing 
me with the opportunity to share my thoughts and perspectives 
with you today.
    [The prepared statement of Ms. Ruffalo follows:]
    
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    Senator Boxer. I think it was very helpful.
    Our next speaker is Jack Schenendorf, Of Counsel, Covington 
and Burling, LLP. Welcome, sir.

   STATEMENT OF JACK SCHENENDORF, OF COUNSEL, COVINGTON AND 
                          BURLING, LLP

    Mr. Schenendorf. Thank you, Madam Chairman. You have 
already heard from a number of witnesses today, so I will be 
brief. It is a special honor to appear before this Committee. 
Almost 60 years ago, it was the leaders of this Committee, 
Democrats and Republicans, together with President Eisenhower, 
who had the vision, the wisdom and the political will to make a 
major investment in America's future by creating the interstate 
system.
    If there was ever a time to take a similarly daring look at 
our Nation's surface transportation system, it is now. In 
recent decades the United States has under-invested in the 
national surface transportation network. As a result, the 
aging, congested network is in need of repair and does not have 
adequate capacity to accommodate future population and economic 
growth.
    How did we get from having one of the world's preeminent 
transportation systems to an overburdened system that is 
steadily falling into a state of disrepair? The heart of the 
problem is this: while we have been benefiting from the 
expenditures of the generation that helped build the interstate 
highway system, we have failed to make adequate investments of 
our own. It is time for Republicans and Democrats to come 
together again and put in place a vision for the next 50 years 
that will ensure U.S. prosperity and global preeminence for 
generations to come.
    MAP-21 took an important first step by modernizing our 
Nation's surface transportation policies for the 21st century. 
My testimony today will focus on what MAP-21 left undone: 
ensuring an adequate level of investment in our national 
surface transportation network.
    I would like to make three points for your consideration 
today. Point one, fixing the Highway Trust Fund and increasing 
investment in our national surface transportation network must 
be a foundational element of any pro-growth economic agenda.
    According to a recent report by McKenzie Global Institute, 
our inadequate infrastructure imposes unnecessary additional 
costs on the U.S. economy and American taxpayers. They have 
estimated that increasing road congestion is costing the Nation 
$85 billion a year. On a per traveler basis that works out to a 
little over $1,000 per traveler in urban areas and about $400 
in suburban and rural areas. At a time of increasing global 
competition and uncertain economic growth, the United States 
can't afford to undermine the benefits that a well-functioning 
transportation system provides or allow inaction to impose 
additional costs on U.S. travelers. U.S. jobs, the U.S. economy 
and this Nation's position as a global economic leader are at 
stake.
    Point No. 2, I want to emphasize one of the principles I 
identified in my written testimony for evaluating appropriate 
solutions. That is the need for a truly national investment 
policy. Modernizing the 233,000-mile national highway system 
which makes up just 5.7 percent of the Nation's road mileage 
but carries 55 percent of the vehicle miles traveled annually 
will require significant sustained investment over a 
considerable period of time. The Highway Trust Fund is uniquely 
suited for this type of investment.
    The focus in creating the Federal aid highway system and 
the national highway system in particular was the concept of a 
country unified by a nationwide infrastructure. In today's 
highly competitive global economy, this vision is more 
important than ever. Only a strong Federal role will help 
realize this unity, allowing for systemic improvements in both 
high traffic and low traffic States.
    Point three, we must not underestimate the magnitude of 
this problem. According to CBO, it will take the equivalent of 
a 10 cent gas tax increase just to close the hole in the 
Highway Trust Fund. The Policy and Revenue Study Commission 
that I served on as vice chair estimated that we should be 
spending about 25 to 40 cents additional on the gas tax in 
order to start meeting the needs of the Nation going forward, 
to rehabilitate the existing system and provide the additional 
capacity.
    In my written statement I have identified a number of 
options for raising these revenues. I subscribe to both what 
Jack and Kathy have said about the revenue options. I want to 
bring your attention particularly to the first page of the 
chart in Attachment A, which is a color chart which shows a lot 
of these options and the way that we evaluated them. I also 
want to call your attention to a paper that I have also 
attached that an associate at Covington and myself write on 
Federal user fees, an alternative way to raise funds if you are 
unable to raise any of these other taxes.
    Thank you.
    [The prepared statement of Mr. Schenendorf follows:]
    
    
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    Senator Boxer. Thank you very much.
    In closing, Hon. Sean Connaughton. We are very interested 
in hearing from you, because you have looked at a new way to 
fund your transportation in Virginia, you are the Secretary of 
Transportation. We are very pleased you are here. Thank you, 
sir.

      STATEMENT OF HON. SEAN T. CONNAUGHTON, SECRETARY OF 
            TRANSPORTATION, COMMONWEALTH OF VIRGINIA

    Mr. Connaughton. Chairman Boxer, members of the Committee, 
thank you very much for opportunity to be here and tell you a 
little bit about what we have done in Virginia.
    First, I will preface it by saying, every State is a little 
bit different in their transportation programs and some of 
their challenges. But one thing that is the same for the States 
and for the Federal Government has been about what has happened 
to the gas tax. In Virginia, we have not raised the gas tax 
since 1986. The buying power of the gas tax had gone down 54 
percent in that time period. We are seeing the impacts of much 
more fuel-efficient vehicles. In fact, we can actually track 
that we have in Virginia more cars registered, more vehicle 
miles being driven, yet our gas tax revenues are actually going 
down.
    Another thing is the increase in the cost of materials. 
Asphalt binder, which is a basic construction material, 
maintenance material that we use, has gone up alone 350 percent 
over the last 10 years. Revenues are flat, costs are going up 
and we just saw, obviously, like everyone else, some major 
problems with our major source of revenue.
    Virginia is what we call a maintenance first State. By 
State law, we must use any of the revenues coming in to our 
transportation fund first for maintenance, then for 
construction. We have had to take, just in the last 10 years, 
$3.3 billion of construction money, move it over just to do 
basic maintenance. And so everyone knew that there was a 
problem in the State.
    And the legislature has been looking at this for almost 10 
years. One of the challenges is, something that you are very 
familiar with, we had a House that had one position and the 
Senate had another. The House is very, very strongly 
conservative Republican and wanted to see more diversion of 
existing revenues to transportation. The Senate Democratic 
Majority, now it is tied, but essentially the position of the 
body was that they wanted to see additional revenues come in.
    So in other words, we didn't have anything happen for 
almost 10 years. We took office and, this is one of the things 
we really took on as an administration on how we were going to 
deal with transportation. The first thing is, we want to take 
all the excuses off the table. We have done everything that 
anybody has ever talked about regarding transportation funding 
and reform in our program. We have done audits, we load off 
people, we ended up becoming a model I think for the country 
for public-private partnerships. Last year we were the most 
projects closed in the country. In fact, if we were a country, 
we would have the second most projects closed in the world.
    We have ended up doing bonds, issued over $3.3 billion 
worth of bonds. We ended up establishing our own infrastructure 
bank to lend money to our localities to help them move projects 
forward. We have done all types of IT and better traffic 
management including our express lanes you can see on 95 with 
dynamic tolling. We have even proposed a very controversial 
toll on 95. We also look for ways to maximize some of the 
revenues coming out of, well, everything from naming rights to 
sponsorships to everything else.
    We did all that over 3 years. And even with all that, we 
were able to show to our legislature that we were not going to 
have enough money even to do our Federal match by 2017.
    By taking essentially all these arguments off the table, 
showing that we were serious about reform, and as renewing 
public trust in our program, we came forward with a very, very 
bold program or legislative proposals here, and that was to 
essentially do away with the gas tax, move over to a revenue 
source that we see growing. In Virginia, that is the sales tax. 
That actually passed our House, the Senate took it, replaced it 
all with a big increase in the gas tax. The conference 
committee came together and we came to a compromise. And it was 
a compromise that ended up having, essentially we lowered our 
gas tax and switched over to a sales tax. We split off the 
diesel and actually increased the diesel tax and made that a 
sales tax.
    We ended up increasing the State's sales tax statewide. We 
ended up putting in an alternative vehicle fee on all vehicles, 
whether electric or other alternative fuels. We took a little 
bit more general revenues and devoted it to transportation. And 
so we ended up a little bit of everything. It was a little 
piece of legislation I think that in many ways, no one was 
happy with the complete package, but it was a true compromise. 
And it ended up getting the majority of Democrats and 
Republicans to support it in the legislature.
    The bottom line is that this will mean about $1.5 billion a 
year more to our transportation modes in Virginia. That is 
everything from highways to transit to our airports to our 
ports and to passenger rail. We are actually putting in money 
and are dedicating these to passenger rail.
    So this is a piece of legislation that I think has become 
talked about throughout the country. And it is something that 
we think will solve our transportation problems out into the 
future. Thank you.
    [The prepared statement of Mr. Connaughton follows:]
    
    
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    Senator Boxer. Thank you. Thank you very much for that.
    Senator Baucus.
    Senator Baucus. Thank you, Madam Chair.
    I would like you all four to give us advice on how we 
proceed. I think everybody agrees, we have to fill up this 
hole. But the question is how, and how quickly. Ms. Ruffalo 
gave several criteria, one is how quickly, how it affects 
dates, move quickly to raise revenue and whether to unmorph the 
funding from users, what is the effect of that.
    But a deeper question is how we politically proceed. Some 
suggest that we are more likely to get the funding, which I 
think we all agree in this room, mostly in this room, agree is 
necessary, maybe through tax reform, maybe through an omnibus 
vehicle, some other vehicle, some larger legislation, rather 
than standalone, rather than straight highway legislation. The 
need to fill the gap in the trust fund is clear. But sometimes 
it is easier to address revenue questions in the context of 
larger legislation.
    Could any of you give us advice here, what is the history? 
My recollection is that increases in the gasoline tax in the 
past have been part of larger bills. It is not just straight 
highway. Could somebody else try a little bit? I don't have a 
lot of time here.
    Senator Boxer. You can have more time.
    Senator Baucus. Jack, you go ahead, then Kathy, you can go 
next.
    Mr. Basso. Thank you, Mr. Chairman. Yes, in fact, I can 
factually recollect in 1990 the Andrews Summit, which I worked 
on, the staff worked for, which actually increased the gas tax 
and addressed deficit reduction. In 1993, President Clinton and 
the Congress similarly addressed it. They came together and 
frankly, the last time we actually standalone raised the fuel 
tax was 1982 in the Reagan era at that point in time.
    So that is informative or instructive to me as to how one 
could move this forward. The thing that we face though I think, 
and here is the problem, we don't have in front of us 2 or 3 
years to deal with this. We have a situation where the 
opportunity presented itself and a comprehensive solution. To 
my mind, we ought to take that, and take it as quickly as 
possible.
    Beyond that, we run out of money at the end of fiscal year 
2014 to sustain the program. We are going to have to have a 
backup solution as well. But I commend to basically the 
Congress the question, what is the best way to take this on 
politically. And I am not unmindful how difficult this is.
    Senator Baucus. Ms. Ruffalo.
    Ms. Ruffalo. Mr. Chairman, I agree with what Jack said. 
Certainly recent history has shown that being able to use these 
revenues as part of a larger comprehensive package of spending 
and revenue discussions is what makes sense. I would agree, I 
totally defer to Congress as to which vehicle presents itself 
and when it presents itself.
    I would just say that as an industry, and I say myself as 
part of that industry, probably most people sitting behind me 
and the people who are at this table, we have done a really 
lousy job of explaining to the American people what they pay 
today at the Federal level for transportation. People think 
they are paying thousands and thousands of dollars each year in 
Federal fuel taxes to pay for transportation. And that is just 
not the case. I think the average is $250, maybe $300 a year 
for an average family of four.
    So when you look at what you are receiving for that amount 
of money, I just think we have not done a good job providing 
that push from the grass roots for this kind of investment. I 
do think as an industry we have to do a better job of providing 
you with that political cover at home when you do make some of 
these tough decisions, whether it is part of tax reform or some 
other vehicle that may present itself. I think that is the 
charge that you need to give all of us as we move forward, is 
to give you that grass roots support for this kind of 
investment.
    Senator Baucus. Mr. Schenendorf.
    Mr. Schenendorf. I want to add a couple of points on this. 
The first is, not only is it I think politically easier to 
include it in a larger, more comprehensive bill. But I do think 
that larger, more comprehensive bill allows you to do some 
other things which help, to the extent that you are raising 
revenues, which will need to be done in the transportation 
sector. You can do other things in the larger bill to help 
offset that and the impact that that would have on various 
classes by the business or individuals.
    So I think there is a real policy advantage to including it 
in that larger bill and it will make it easier to sell to some 
of your colleagues in the Senate.
    The only caveat I make is I don't think anybody knows when 
that big bill is going to come. And if it doesn't come before 
the end of next year, then something is going to have to be 
done for the trust fund in a standalone bill, because there 
won't have been this mini-grand bargain or grand bargain or tax 
reform bill. So part of it is just going to depend on the 
timing.
    Senator Baucus. That is true. Chairman Dave Camp, chair of 
the House Ways and Means and I and many others here are working 
on tax reform and have been for a couple of years. It has not 
been on the radar screen, but a lot of staff work has been 
done, working with the Administration, the Treasury on 
technical details and how these various provisions work.
    It is my goal to have a markup this year on tax reform. I 
know Chairman Camp has the same goal. It is going to be 
difficult to pass tax reform this year, but I think it is quite 
possible to get tax reform passed in this Congress, next year. 
The last year was 1986, and that was an election year. So 
elections didn't get in the way. In fact, it became quite 
popular to pass tax reform as a fall, maybe late summer or 
early fall of 1986 for an election.
    And certainly, the degree of tax reform does reduce 
complexity, does close a lot of loopholes. And also helps with 
growth and jobs in and of itself, makes America more 
competitive, and freight reduction and all that can become 
quite popular.
    Now, you make a good point: can we get all this wrapped up 
in time to fill the gap in the trust fund. Well, there are a 
lot of ways to skin a cat around here. For example, we could 
have another transfer, a temporary transfer. There are all 
kinds of things we can do pending final approval of tax reform.
    Other thoughts any of you have? Secretary.
    Mr. Connaughton. Senator, we in Virginia have been fighting 
about this for 13 years, every session fighting about this. And 
a few things looking back on it, the first was, we had to take 
all the excuses off the table. People wanted toll facilities, 
everyone want toll facilities until we started putting toll 
booths up, and then everyone started saying, well, maybe gas 
tax increases or other increases might not be a bad thing.
    People were complaining about our program was too top 
heavy. We made those reforms. We took essentially all the 
excuses off the table. I think we did some very good things so 
the public had confidence that if we were to put more money 
into the system it was going to actually lead to transportation 
improvements.
    And then we were very clear from the executive branch that 
this problem, this problem, we were heading toward a cliff. I 
think if we did all these other things when we said that and we 
could show them numbers, people bought into it. It took an 
enormous amount of leadership. I think we had a lot of national 
groups coming in, getting very active and trying to stop this, 
our proposal, just basically because of the implications 
nationally.
    So it took leadership, it took some bold proposals, some 
different proposals. And it just really took getting all these 
excuses off and making sure people understood. I will tell you 
one thing that is a challenge for us all. You hear it when we 
talk about this issue, we talk about trillions of dollars' 
worth of needs out there. It is very hard for the public to get 
their arms around that. When we could very much articulate what 
the immediate problems are, what we could raise, what we could 
do, it made a major difference in getting public acceptance.
    Senator Baucus. May I just ask one more question?
    Senator Boxer. Yes, Senator.
    Senator Baucus. So in Virginia, was transportation reform 
part of a larger effort or was it standalone in the State of 
Virginia?
    Mr. Connaughton. It was a standalone. We actually have a 
standalone special fund.
    Senator Baucus. It changes? That change in how you finance 
your transportation system?
    Mr. Connaughton. Yes, sir.
    Senator Baucus. That was just purely focused on 
transportation, nothing else? Was it part of a budget? Did the 
State have a budget and that was part of it?
    Mr. Connaughton. There was some discussion about making 
part of a bigger reform effort for tax reform in the State 
generally. We actually fought to keep it standalone, because we 
didn't know where the broader tax reform would go. Whereas we 
felt very confident that once we could get the tax reform for 
transportation isolated, we could get it through.
    Senator Baucus. One question, I know it is something that 
you have been interested in, Madam Chair, and that is these 
funds that are one-off. Everybody talks about, not everybody, a 
lot of people talk about trapped cash overseas. Very large 
multinationals have lots of trapped cash overseas, given our 
current tax estimate.
    And so the question is, shall we bring that back, tax at a 
lower rate, not current 35 percent, which is the current U.S. 
corporate rate, bring it back to a lower rate and dedicate that 
to the Highway Trust Fund. What do you think of that? Anybody.
    Mr. Connaughton. We are trying to do that with supporting 
your Marketplace Fairness Act, just for internet sales taxes.
    Senator Baucus. That is a whole different subject.
    Mr. Connaughton. Yes, sir. But we are dedicated that any 
new revenues that come from, once we can start to collect those 
Internet sales taxes would all be dedicated to transportation?
    Senator Boxer. How much revenue from that?
    Senator Baucus. From the Marketplace Fairness Act?
    Senator Boxer. No, I am talking about repatriation.
    Senator Baucus. Well, it depends. I mean, there is $2 
trillion overseas. So it depends on the rate. You can set any 
rate. In fact, the early repatriation rate is like five and a 
quarter, something like that. I don't think that is going to 
fly right now. It might be a higher rate than that. But yes, it 
is a one-off, it is not continual. That is the real question 
here.
    But my time is expired. The point I am making is, we need 
to figure out politically how to get the revenue we need and 
clearly, we need to put the amount of revenue in that you are 
all talking about. I sense that the Highway Trust Fund could be 
an engine that pulls the train here. Because people do want to 
solve this. They know it has to be solved.
    Madam Chairman, you saw this article. I was just stunned 
when I saw this article 4 or 5 days ago. Stunned. It is surface 
transportation, not highway, but surface. How China is 
building, and has, is up and running now, these massive high 
speed passenger train systems that go 180 miles an hour, 
connecting China. More people have traveled trains in China 
than by air. You go to China, as you know, oh, my God, all the 
airlines around and all the planes and so forth. It has done 
what many of you said, their highways have helped create 
growth. People get on a train, go 2 hours, go someplace, 
different business set up. It is efficiency and speed, top 
notch passenger transportation system.
    So if we can get our highways going here, clearly it is 
going to have a big impact, second and third degree, on growth 
in jobs. We have to break the gridlock around here and figure 
out how best to do it.
    Senator Boxer. Senator, I want to thank you for being here. 
I don't have any questions for the panel, but I want to kind of 
wrap up that way. Senator Inhofe was here, and he was just a 
very strong proponent of doing something here. And you may be 
right, maybe this pulls the train. But if it doesn't pull the 
train, I think we have to be prepared to separate it out. 
Because what is at stake here, as you know, well, in your State 
particularly, the rural States, everything is at stake in terms 
of roads.
    The other aspect of all this too is with the extreme 
weather conditions, it is even putting more stress on our roads 
than we ever used to have. We have to get this done.
    Now, what I want to say is, we are so fortunate to have 
Senator Baucus here, because he is the chairman of the 
subcommittee that deals with highways, plus he is the chairman 
of the Finance Committee. So it is a very important thing. I am 
going to do my part as Chairman of this Committee to just give 
as many ideas as I can over to Senators Baucus and Camp, Levin 
and Hatch. And I just want to thank all of you, you have been 
terrific, I wanted to look at your paper to see the other ideas 
that you have come up with.
    But we are meeting and we are going to do everything we 
can. To me, failure is not an option, period. This is on our 
backs. This is our responsibility. We have to be here at this 
particular time.
    And I would say, Mr. Schenendorf, I would take exception 
with a tiny bit of your critique. You made it sound like we 
haven't done anything since President Eisenhower, and I do 
think we have picked this up. I do think we have kept it going. 
I do think despite all odds we were able to keep this going.
    So I am feeling certainly part of that segment of the 
Congress that believes that this is an absolute obligation. But 
this is a no turning back point, and we have to come through.
    I would love to see a part of a big package, I say to my 
colleague, it would be wonderful. Because there are lots of 
other reforms that are important. But I think we have to be 
prepared, as you said, if we have to go a separate route.
    And on repatriation, count me in. Thank you very much 
everybody, we stand adjourned.
    Senator Baucus. If you don't mind, may I just make one 
comment?
    Senator Boxer. Yes, you can.
    Senator Baucus. We don't have any more low-hanging fruit to 
backfill the General Fund to reimburse the trust fund.
    Senator Boxer. I made that point, for sure. We are 
struggling.
    Senator Baucus. We have run out of stuff.
    Senator Boxer. You can't pull out that magic trick that you 
did the last time. Remember?
    Senator Baucus. That was just smoothing, that did it.
    Senator Boxer. Smoothing and all these things I thought I 
would never hear of. Thank you all for being here. You have all 
been very helpful. Be prepared, because we are going to work 
together as never before. And thank you to Virginia for setting 
an example on how to move forward.
    We stand adjourned.
    [Whereupon, at 12:35 p.m., the Committee was adjourned.]
    [An additional statement for the record follows:]

                    Statement of Hon. John Boozman, 
                U.S. Senator from the State of Arkansas

    Chairwoman Boxer and Ranking Member Vitter, thank you for 
holding today's hearing on highway and infrastructure funding 
issues. We have broad bipartisan support for smart spending on 
infrastructure. Senator Inhofe often points out that he is one 
of the most conservative members of the Senate, but he supports 
investments in our national defense and spending on 
infrastructure. I agree that these must be priorities. I 
compliment both of you for your work on WRDA earlier this year. 
The bill passed the Senate, with over 80 votes. In the last 
Congress, MAP-21 passed the Senate, with well over 70 votes, 
thanks to the work of our Chair and then-Ranking Member Inhofe. 
I think we can build on this progress, but there is a 
cautionary tale here.
    After decades of growth, the level of revenue coming into 
the Highway Trust Fund has begun to decline. This is due to 
good news and bad news. The good news is that all of our 
vehicles, from tractor-trailers to passenger vehicles, have 
become significantly more fuel efficient. People are also 
changing their driving patterns, and driving less. The bad news 
is that our sluggish economy has also contributed to declining 
revenues over the last 5 years.
    We've used General Fund transfers to supplement highway 
spending, but that practice cannot continue. Again, I was proud 
to support MAP-21, and our Committee leadership did a 
remarkable job putting that bill together, but when MAP-21 
expires, we will still continue to rely on ``pay-fors'' in the 
bill for another 8 years. In other words, it was a 2-year bill, 
with 10 years of ``pay-fors.'' This practice of borrowing from 
the future is simply unsustainable. That's why today's hearing 
is so critical.
    We really are coming to a major turning point in the way 
that highway and infrastructure projects are financed. It's 
time to carefully reevaluate our programs in a serious and 
comprehensive way. In order to sustain the support of the 
public and of fiscally conservative members--like me--we must 
continue to make progress on accelerated project delivery, 
State and local control, programmatic reforms, and the 
elimination of costly and counter-productive bureaucracy. The 
highway program should supplement the work of States and 
encourage local and State investment.
    Our infrastructure really sets our country apart. It helps 
American factories and farms to compete on the global stage. We 
need to maintain this competitive advantage. To do this, we 
must reevaluate how programs designed in the mid-20th century 
can be reformed for the 21st century.
    I am very encouraged that we are getting started now, and I 
appreciate the testimony of our witnesses. Thank you.

                                 [all]