[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






 
 THE ROAD AHEAD: SMALL BUSINESSES AND THE NEED FOR A LONG-TERM SURFACE 
                     TRANSPORTATION REAUTHORIZATION

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              JUNE 3, 2015

                               __________
                               
                               
                               

                 [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                 
                 
                               

            Small Business Committee Document Number 114-013
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
              
              
                           U.S. GOVERNMENT PUBLISHING OFFICE
  94-803 PDF                      WASHINGTON : 2015             


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                        TOM RICE, South Carolina
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts
                           MARK TAKAI, Hawaii

                   Kevin Fitzpatrick, Staff Director
            Stephen Dennis, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                  
                  
                  
                  
                    
                                 (II)                
                  
                  
                  
                  
                  
                  
                  
                  
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. William Schmitz, Vice President, Sales and Quality Control, 
  Gernatt Asphalt Company, Collins, NY, testifying on behalf of 
  the National Stone, Sand and Gravel Association................     5
Mr. Don Shilling, President, General Equipment and Supplies, 
  Fargo, ND, testifying on behalf of the Associated Equipment 
  Distributors...................................................     6
Mr. Matt Davis, Director, Build Our New Bridge Now Coalition, 
  Cincinnati, OH.................................................     8
Dr. Jonathan Gifford, Professor and Director, Center for 
  Transportation Public-Private Policy, George Mason University 
  School of Public Policy, Arlington, VA.........................    10

                                APPENDIX

Prepared Statements:
    Mr. William Schmitz, Vice President, Sales and Quality 
      Control, Gernatt Asphalt Company, Collins, NY, testifying 
      on behalf of the National Stone, Sand and Gravel 
      Association................................................    29
    Mr. Don Shilling, President, General Equipment and Supplies, 
      Fargo, ND, testifying on behalf of the Associated Equipment 
      Distributors...............................................    38
    Mr. Matt Davis, Director, Build Our New Bridge Now Coalition, 
      Cincinnati, OH.............................................    44
    Dr. Jonathan Gifford, Professor and Director, Center for 
      Transportation Public-Private Policy, George Mason 
      University School of Public Policy, Arlington, VA..........    47
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Statement of Congressman Blaine Luetkemeyer..................    51
    
    

 THE ROAD AHEAD: SMALL BUSINESSES AND THE NEED FOR A LONG-TERM SURFACE 
                     TRANSPORTATION REAUTHORIZATION

                              ----------                              


                        WEDNESDAY, JUNE 3, 2015

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:07 a.m., in Room 
2360, Rayburn House Office Building, Hon. Steve Chabot 
[Chairman of the Committee] presiding.
    Present: Representatives Chabot, Hanna, Rice, Radewagen, 
Knight, Curbelo, Hardy, Velazquez, Chu, Hahn, Meng, Moulton and 
Takai.
    Chairman Chabot. Good morning. The Committee will come to 
order. We want to thank everyone for being here as we discuss 
the importance of our Nation's surface transportation 
infrastructure, with a focus on the small firms that help build 
it and those that depend on it. I want to thank each of our 
witnesses here this morning who have agreed to provide 
testimony this morning.
    There are lots of projects throughout our Nation that I 
could cite as examples of why our infrastructure is important, 
but none that is closer to home for me than the Brent Spence 
Bridge. This is a bridge that connects Ohio to Kentucky, the 
Midwest to the South. It carries 172,000 cars and $1 billion in 
commerce every day, it is considered to be functionally 
obsolete. It takes about twice the amount of traffic every day 
that it was built for.
    I have actually worked with a lot of my colleagues in a 
bipartisan fashion from the region over the years, both 
Republicans and Democrats, from Rob Portman, to Jean Schmidt, 
to Brad Wenstrup, to Ken Lucas, to Tom Massie, and to Sherrod 
Brown, to Jim Bunning and Steve Driehaus and others at the 
Federal level and many at the State level, in both Ohio and 
Kentucky and in the Cincinnati area itself to try to find a 
solution to this. I am pleased that the Committee is able today 
to examine how our communities and small businesses suffer from 
the outdated infrastructure that is existent in this country 
and certainly in our area.
    America has always been a place where citizens are free to 
follow their dreams and pursue happiness. Well, infrastructure 
gets us there, it makes commerce possible, and the Brent Spence 
Bridge is the perfect example of why we need a long-term 
transportation bill that will keep America moving forward.
    When you speak to folks back home about infrastructure, the 
first thing they generally bring up is traffic, or the fact 
that they are sitting in traffic far too long. It probably is 
the case that my esteemed colleague, Ms. Velazquez, our ranking 
member, probably has a horror story or two about crossing the 
Brooklyn Bridge in her district during rush hour.
    Time spent in traffic causes more than just a headache; it 
costs Americans real money. If you are a florist, getting stuck 
in traffic means your deliveries aren't as fresh or as fast as 
they should be. If you are an HVAC repairman, it means you 
can't make as many house calls in a day as you otherwise would, 
which directly impacts your bottom line. If you are a 
manufacturer, it means a longer time for your products to get 
from one place to another, which is money out of your pocket.
    Improving our infrastructure is about making American 
businesses more competitive and making sure we have, as 
consumers, the best access to goods and services every day that 
we can, and that it keeps things as affordable as possible for 
American families. And it is about jobs, not just construction 
jobs, but jobs across the economy, from manufacturing to retail 
and just about everywhere in between.
    Small businesses play an important role in all of this. On 
the construction side, small producers provide the stone and 
sand to build the new highways, small equipment distributors 
rent and maintain heavy equipment that is used on construction 
sites, and in the end, the small business that needs to ship an 
order of their goods across the river will be able to do so 
quicker and cheaper with a new and modern bridge, for example, 
in place.
    Our country needs a long-term surface transportation bill 
to provide States and localities the certainty they need to 
tackle large, multi-year projects that fit the needs of their 
growing communities. Just last month Congress passed a short-
term extension to keep the Highway Trust Fund operational 
through the end of July. While that was necessary to ensure 
things didn't come to a grinding halt, we must find bipartisan 
solutions that lead to a long-term plan to improve the 
infrastructure that keeps our country moving forward.
    I want to thank all our witnesses again for being with us 
today. I have personally testified several times about the 
national significance of the Brent Spence Bridge, but since I 
am on the dais today, I asked a fellow Cincinnatian to come 
here and to share the Brent Spence Bridge story, Mr. Davis, and 
also its importance to our Nation.
    If we want to do something positive for the millions of 
Americans that rely on small businesses to put food on the 
table, we have to get to projects just like the Brent Spence 
Bridge and get them done. We owe it to the American people to 
invest in those projects that produce long-term savings, keep 
us competitive, and most importantly, create American jobs. I 
keep saying that, because it really, really is important.
    And, again, I want to thank the witnesses. And I would now 
like to yield to our ranking member, Ms. Velazquez, with her 
horror stories about infrastructure.
    Ms. Velazquez. Thank you, Mr. Chairman.
    I just want to take this opportunity to thank all of you, 
the witnesses, for taking time to be here with us this morning. 
This is a very important issue.
    As we all know, congressional action on a long-term 
reauthorization of transportation infrastructure programs is 
greatly overdue. It is my hope that this hearing will call 
badly needed attention to this matter. And I hope, Mr. 
Chairman, that the Republican leadership listens to you. It 
would be of a great help to the Nation.
    The small business sector is actively affected by 
transportation policy. Roads, bridges, and highways are there 
for the use of American commerce, and small firms depend on 
them to move goods to market. As such, traffic congestion and 
delays stemming from outdated infrastructure directly affect 
small firms' bottom line. Traffic congestion deprived the U.S. 
economy of $124 billion in 2013 alone. It is estimated that the 
costs could rise to as much as $186 billion if steps are not 
taken to address these delays.
    Beyond being users of our roadways, small businesses have a 
key role to play in upgrading our transportation and 
infrastructure system. The construction industry is dominated 
by smaller firms, with 90 percent of companies defined as 
small. Almost seven and a half million Americans are employed 
by companies in this sector, making it a key driver for the 
broader economy. Other industries, like equipment operators, 
manufacturers, material producers, and engineers benefit from 
these investments. That is why each dollar of federal highway 
grants received by a state raises that state's gross product by 
$2.
    Conversely, delays and uncertainty in federal 
transportation policy hold back our economy. To plan and hire 
employees, it is important small businesses are able to predict 
future government infrastructure projects. Unfortunately, 
Congress has sidestepped the hard work of a long-term 
reauthorization, opting instead to kick the can down the road 
with short-term extensions. Last July, the House passed a 10-
month extension, failing to adopt a longer term 
reauthorization. In May, we extended these programs until July, 
pulling the expiration date yet again.
    This piecemeal approach has a very real impact on the 
American economy. The uncertainty it creates slows economic 
development and hampers job creation. One trade group has 
suggested that this has cost the U.S. over 900,000 jobs, 97,000 
of them in the manufacturing sector. That is why business group 
after business group has called for a long-term solution for 
the Highway Trust Fund.
    Congress' failure to lead on this issue is evident in our 
transit system condition. Once viewed as an infrastructure 
leader, the U.S. now ranks 16th. Nearly one-third of our roads 
are considered to be in poor or bad condition. Twenty five 
percent of U.S. bridges require significant repair or cannot 
handle today's traffic.
    Mr. Chairman, I have spent a lot of time trying to cross 
bridges to make it into other parts of my district. I have to 
cross four bridges that will connect me from either Queens or 
Brooklyn into Manhattan. It is just unacceptable.
    Mr. Chairman, it is critical Congress pass legislation to 
maintain our roads and infrastructure for the long-term. It is 
my hope that today's hearing will move us toward that goal.
    With that, I would like to thank again the witnesses and 
the chairman for holding this important hearing. Thank you.
    Chairman Chabot. Thank you very much.
    And I will--before introducing our panel, I will go ahead 
and inform you of our timing rules, which you are probably 
already familiar with. We have what we call the 5-minute rule. 
You have 5 minutes to testify. We will ask questions for 5 
minutes also. A yellow light will come on to let you know when 
you have got 1 minute to wrap up. When the red light comes on, 
we ask that you cease talking at the end of that sentence, 
maybe, or a little bit beyond that if you need a little more 
time, but we would ask to you stay within those constraints if 
at all possible.
    And introducing the panel, we will begin with William 
Schmitz, who is vice-president of quality control and sales at 
Gernatt Asphalt Products in Collins, New York. Gernatt has been 
in business since 1946 and serves all of western New York and 
northwest Pennsylvania. The company has provided crushed stone, 
gravel, and other products to several major projects in New 
York, such as construction of Ralph Wilson Stadium, the First 
Niagara Center in downtown Buffalo, and the New York State 
thruway. He is testifying on behalf of the National Stone, Sand 
and Gravel Association. We thank you for being here, Mr. 
Schmitz.
    Our next witness will be Don Shilling, who is president of 
General Equipment and Supplies, headquartered in Fargo, North 
Dakota. Don has been an owner and in the company's management 
since 1984, serving as president since 2000. During that time, 
the company has grown from one with three locations in North 
Dakota to one with nine facilities in three States. He 
currently serves as chairman of the Associated Equipment 
Distributors and he is representing that organization today. We 
want to thank you for your testimony, Mr. Shilling.
    Our next witness will be Matt Davis, who is director of the 
Build Our New Bridge Now Coalition, and advocacy organization 
made up of nearly 200 businesses, labor organizations, and 
community leaders advocating to build a new Brent Spence Bridge 
Corridor in Cincinnati. In addition to his work at the 
coalition, he serves as president of DSD Advisors, a full 
service government relations firm that partners with public, 
private, and non-profit clients to achieve their public policy 
goals at the local, State, and Federal levels. We are looking 
forward to your testimony as well, Mr. Davis.
    And I will now yield to the ranking member to introduce our 
other witness.
    Ms. Velazquez. Thank you, Mr. Chairman. It is my pleasure 
to welcome Dr. Jonathan Gifford, professor in the School of 
Public Policy at George Mason University, and the director of 
its Center for Transportation Public-Private Partnership 
Policy. His primary area of expertise is transportation and 
public policy, with a particular focus on infrastructure 
finance. His book, ``Flexible Urban Transportation'', examines 
policies to improve urban transportation systems, and he has 
twice chaired committees of the National Academy of Sciences 
that review U.S. Department of Transportation programs.
    Professor Gifford received his Ph.D. in civil engineering 
from the University of California Berkeley, where his research 
focused on the history and development of the interstate 
highway system.
    Welcome, and thank you for being here.
    Chairman Chabot. Thank you very much.
    Mr. Schmitz, you are recognized for 5 minutes.

   STATEMENTS OF WILLIAM SCHMITZ, VICE PRESIDENT, SALES AND 
    QUALITY CONTROL, GERNATT ASPHALT COMPANY, COLLINS, NY, 
  TESTIFYING ON BEHALF OF THE NATIONAL STONE, SAND AND GRAVEL 
  ASSOCIATION; DON SHILLING, PRESIDENT, GENERAL EQUIPMENT AND 
  SUPPLIES, FARGO, ND, TESTIFYING ON BEHALF OF THE ASSOCIATED 
  EQUIPMENT DISTRIBUTORS; MATT DAVIS, DIRECTOR, BUILD OUR NEW 
BRIDGE NOW COALITION CINCINNATI, OH; AND DR. JONATHAN GIFFORD, 
   PROFESSOR AND DIRECTOR, CENTER FOR TRANSPORTATION PUBLIC-
   PRIVATE POLICY, GEORGE MASON UNIVERSITY SCHOOL OF PUBLIC 
                     POLICY, ARLINGTON, VA

                  STATEMENT OF WILLIAM SCHMITZ

    Mr. Schmitz. Thank you, Chairman Chabot and Ranking Member 
Velazquez for the opportunity to testify today on behalf of the 
National Stone, Sand and Gravel Association, the NNSGA, about 
the importance of the Nation's surface transportation system to 
small businesses and particularly small aggregate companies. I 
am Bill Schmitz, vice-president of Dan Gernatt Gravel Products, 
a small business.
    Since 1946, the Gernatt family and their companies have 
been proud to serve all of western New York and northwestern 
Pennsylvania. Comprised of Gernatt Asphalt Products, Dan 
Gernatt Gravel Products and Countryside Sand and Gravel, our 
company provides sand, gravel, stone, hot mix asphalt, and 
trucking.
    NNSGA is a leading voice and advocate for the aggregates 
industry. Its members, the stone, sand and gravel producers, 
equipment manufacturers, and their service providers, produce 
the essential raw materials found in homes, buildings, roads, 
bridges, and public works projects. There are more than 10,000 
aggregate operations across the country, at least one in nearly 
every congressional district. During 2014, NNSGA member 
companies represented more than 90 percent of the crushed stone 
and 70 percent of the sand and gravel consumed in the U.S.
    Our locations are spread over three rural western New York 
counties, where people struggle to find good paying jobs. The 
Gernatt companies consider our 175 loyal employees as family, 
and we want to provide them the well paying, stable employment 
they deserve. We share the same faith-based values, and are 
strong supporters of local businesses and community efforts 
where we operate. It is important to us that these local 
businesses and communities benefit from our success.
    Aggregates are the foundation of our business in a key 
industry that serves as a barometer for the rest the U.S. 
economy. Stone, sand and gravel are essential to any 
construction project. When the demand for our products is high, 
jobs are being created and critical national assets are being 
built. If the aggregates industry is doing well, so is America 
and the Gernatt companies.
    Sales of aggregate generate over $40 billion annually for 
the U.S. economy. When combined with related industries, such 
as cement, concrete, asphalt, and construction equipment, they 
generate more than $200 billion in economic activity every year 
and employ more than 2 million people.
    Due to high transportation costs, proximity to a market is 
critical. Unlike many other businesses, we cannot simply choose 
where we operate. Because so much of our material is used in 
public projects, any cost increases are ultimately borne by the 
taxpayer. Congress needs to do what they were elected to do. 
Stop kicking the can down the road, and address the long-term 
funding of our Nation's surface transportation infrastructure. 
No more short-term extensions. Seventy percent of NNSGA members 
are small businesses. Reauthorization is critical to us.
    Multi-year highway bills are important for funding for the 
confidence they provide State transportation departments. When 
they know the Federal Government will apportion their funding 
year after year, they have the confidence that they will be 
reimbursed. The process of building and maintaining our 
infrastructure then can proceed as planned. Stability of the 
program is a critical factor, particularly for small 
businesses.
    Improved safety is another important reason to pass a 
multi-year highway reauthorization bill now. Safety must come 
first, to ensure that all Americans get to and from their daily 
activities safely. The Gernatt companies are committed to the 
safety of our employees, our most precious resource. We pride 
ourselves on our safety record. Our small company devotes 
numerous resources to maintaining our safety program.
    Mr. Chairman, again, thank you for the opportunity to 
testify today. Congressional action on a long-term highway 
bill, one that increases investment in the Nation's 
infrastructure, is vital to the aggregates industry and all 
small businesses. We require certainty to make sound capital 
investment decisions. Reverting to short-term extensions will 
only create havoc in resource development decisions and 
construction projects.
    Attached to my statements are two infographics that NNSGA 
put together. Small Change calculates the real costs to the 
average American of the Corker-Murphy proposal to increase the 
fuel user fee 12 cents. The second infographic shows virtually 
the cost of doing nothing.
    We look forward to continuing to work with you in what is 
right for America. If we ignore the maintenance and improvement 
of our Nation's road and highway network, it is at our own 
peril. We risk the loss of economic growth, improved safety, 
cleaner air, and jeopardize the freedom of mobility that we all 
take for granted. Thank you.
    Chairman Chabot. Thank you very much.
    Mr. Shilling, you are recognized for 5 minutes.

                   STATEMENT OF DON SHILLING

    Mr. Shilling. Chairman Chabot and Ranking Member Velazquez, 
and other distinguished members of the House Small Business 
Committee, my name is Don Shilling, and it is my pleasure to 
appear before you as executive of a construction equipment 
company impacted by uncertainty surrounding the Federal Surface 
Transportation Program, and my capacity as chairman of the 
Associated Equipment Distributors.
    AED is the trade association representing distributors of 
construction, mining, energy, forestry, industrial, and 
agricultural equipment. AED members, the overwhelming majority 
of which are small family businesses, supply equipment that 
builds America's highways, bridges, airports, sewer, and 
drinking water systems.
    I am president of General Equipment and Supplies. The 
authorized Komatsu construction equipment dealer for North 
Dakota and western Minnesota. We have four North Dakota 
locations, two facilities in Minnesota, one in South Dakota, 
and employ 235 American workers.
    General Equipment and Supplies and AED members across the 
Nation are ready to supply the heavy equipment needs to rebuild 
America.
    The Highway Trust Fund consistently flirts with bankruptcy, 
as gas taxes and other user fee revenues are insufficient to 
support even the current inadequate levels of investment. This 
is creating enormous uncertainty for the entire construction 
sector.
    My company is fortunate. The energy boom in North Dakota 
has allowed General Equipment and Supplies to stay in business 
despite sufficient decreases in equipment sales to road 
contractors, which account for about 50 percent of our customer 
base. However, in Minnesota locations, the most prominently--
which we most prominently service highway--the market, we see 
dramatic reductions in sales due to uncertainty surrounding the 
Federal investment. In fact, between 2013 and 2014, we saw a 34 
percent reduction in equipment whole good retail sales. Even in 
North Dakota, the State is reluctant to bid long-term equipment 
extensive jobs, and recently pulled 30 contracts due to the 
lack of confidence in the highway Federal program.
    Historically, General Equipment and Supplies and most AED 
members primarily sold heavy construction equipment. However, 
we have increased rentals by 26 percent between 2013 and 2014 
due to the uncertainty surrounding the Federal investments. 
While we are grateful for the business, the drop in sales has 
broad implications, including forcing dealers to continue to 
carry rental equipment on our balance sheets along with 
associated financial risks, tying up cash that could be used to 
hire more workers and invest in our companies.
    Federal highway fund's precarious situation is also 
impacting business decisions. My company has considered opening 
a new location in North Dakota, which means purchasing a 
20,000-square-foot building and hiring 12 to 20 new employees. 
We have been reluctant to expand, because of a lack of 
confidence in the highway market since the new facility would 
primarily serve road building and agricultural sectors.
    Additionally, it should be noted that AED members' interest 
in resolving the uncertainty surrounding the Federal Surface 
Transportation Program isn't solely to increase sales. My 
company services customers in a territory of over 100,000 
square miles and we rely heavily on interstate highway systems. 
We deliver parts nightly from Minneapolis to western North 
Dakota. We also--a majority of our equipment is serviced and 
repaired in the field, where our service trucks are dispatched 
daily to remote locations.
    As a small business, delays and costs associated with 
inadequate highways and congestion sufficiently increases 
operating expenses and hinders investment in the company.
    The detrimental impact of the Highway Trust Fund certainly 
isn't unique to General Equipment and Supplies. In August, in 
fact--the fact by August, without action, economic shock waves 
will reverberate throughout the country as the Federal program 
is unable to support the transportation spending, jeopardizing 
more than $50 billion annual investment and threatening $2.4 
billion in equipment market activity, and close to 4,000 
equipment dealership jobs.
    Chairman Chabot. Did you want to wrap up?
    Mr. Shilling. I just had one more comment here.
    Chairman Chabot. Sure. Okay.
    Mr. Shilling. Sorry. I turned my page too soon.
    We did do a survey amongst our dealers and, an example; 91 
percent of the respondents said that they would add employees 
if Congress would pass a highway bill, 78 percent would 
purchase new service trucks, and 91 percent would invest in 
additional inventories if--to help in the manufacturing sector. 
And we have additional information in our packet----
    Chairman Chabot. Okay.
    Mr. Shilling. --that describes that. Thank you.
    Chairman Chabot. Thank you very much.
    Mr. Davis, you are recognized for 5 minutes.

                    STATEMENT OF MATT DAVIS

    Mr. Davis. Chairman Chabot, Ranking Member Velazquez, and 
members of the House Committee on Small Business, thank you for 
the opportunity to meet with you today to offer testimony on 
the importance of transportation infrastructure to business 
growth. Thank you for dedicating the time of this Committee on 
this important issue too. Thanks for spending your time on 
this. This is important.
    My name is Matt Davis and I am president of DSD Advisors, 
an advocacy and consulting firm and small business in 
Cincinnati, Ohio. In addition to that, I am also the director 
of the Build Our New Bridge Now Coalition.
    Created in 2012, the Build Our New Bridge Now Coalition is 
a diverse group of small, medium, and large businesses, 
community, government, and labor leaders who have come together 
to advocate for the rebuilding and rehabbing of the I75/71 
Brent Spence Bridge Corridor. These leaders joined to focus 
their efforts to rebuild the corridor because it is 
inextricably linked to our region's current and future economic 
opportunities, quality of life, and safety.
    If you don't already know, the Brent Spence Bridge is a 52-
year-old span that carries Interstates 75 and 71 across the 
Ohio River locally. It also serves as a major artery in our 
national highway system, carrying the equivalent of 4 percent 
of our Nation's GDP every year, and connecting Michigan to 
Miami, servicing many communities and companies, both large and 
small, along the way.
    Locally, the Cincinnati region has a distinct geographic 
advantage which has supported our economy, being within just a 
90-minute flight or one-day drive of 25 of the top U.S. metros 
and 41 percent of the Nation's purchasing power. Couple those 
numbers with the amount of the Nation's GDP I referenced 
before, you can see that our geography has served our region's 
residents and small, medium, and large businesses very well. 
Unfortunately, our roads and bridges have not.
    The Brent Spence Bridge was built more than 50 years ago to 
create jobs and spur our economy. Now it is failing our region. 
The Brent Spence carries more than twice the amount of vehicles 
per day that it was designed to accommodate, it is considered 
functionally obsolete, and was given a grade of C minus in 2014 
by Kentucky transportation officials, down from a B plus grade 
in 2006. Congestion on this crumbling, decaying and out of date 
span continues to increase, stifling productivity, slowing the 
flow of goods and commuters, raising safety concerns and 
lowering our quality.
    According to our NPO, the Ohio, Kentucky and Interregional 
Council of Governments, approximately 60 percent of our local 
population and 75 percent of our local jobs are within 5 miles 
of I-75. This data shows us that the interstate corridor and 
the Brent Spence Bridge that supports it are critical to our 
region's present and future. Businesses chose the Cincinnati 
region because of its economic climate, and infrastructure, 
particularly the Brent Spence Bridge Corridor, is a key 
component of that climate, so we must care for it to ensure our 
economic future.
    Another statistic you should know, you are three to five 
times more likely to be in an accident in the Brent Spence 
Bridge Corridor than you are in any other portion of the 
interstate system in Ohio, Kentucky or Indiana. That stat leads 
to wonder what the future holds for the safety of our commuters 
and businesses.
    If we do nothing, will conditions improve? Probably not. 
And if we don't, then we fear that existing businesses will 
relocate and prospective businesses will look elsewhere. The 
corridor's future can either create a roadmap to our region's 
future or hold us back if we do not develop a strategy to 
modernize it.
    Businesses, particularly small ones, operate on very thin 
margins. As the old saying goes, time is money, and that rings 
true for every small businesses in Cincinnati and in the 
country. In order for those businesses to stay afloat, they 
need reliable roads, bridges, waterways, airports, and railways 
to move employees and goods from place to place as safely as 
possible. If a delivery or an employee is late, it can cause 
major disruptions for that business, with a multiplied effect 
on our region.
    The Build Our New Bridge Now Coalition is one of many 
groups that believe in developing strategies and infrastructure 
at the State and national levels with a set of priorities will 
be a springboard to significant job gains, particularly for 
small, homegrown businesses.
    So I said what we asked what would happen if a we did 
nothing. Let's ask what happens if we do do something on the 
Brent Spence Bridge project. Northern Kentucky University 
completed a study that looked at the economic impact of 
building the Brent Spence Bridge Corridor, and found that 
24,488 jobs would be created in Ohio and Kentucky, generating 
$1.9 billion in labor income and $193 million in State and 
local government revenues. Keep in mind, those are real jobs 
with real income just from the construction of this one 
project. I know most of you in Congress have not traveled the 
Brent Spence Bridge and many of you never will, but you all 
have projects like these in your district that if completed can 
make a huge difference.
    Providing reliable and safe infrastructure is one place 
where Washington and the States can play a major role in 
supplying the tools for success for America's small business. 
The sky is the limit for the future of small businesses, but 
not if employees can't get to the office or a delivery truck is 
constantly late. If that happens, the sky won't be the limit. 
They won't be able to get off the ground.
    Thank you for your time today and attention to this 
important issue, and I look forward to answering any questions 
you may have.
    Chairman Chabot. Thank you very much.
    Now, one kind of interesting historical fact is that the 
Brent Spence Bridge was slated to be dedicated, but it had to 
be delayed until the following week. It was supposed to be 
dedicated the week of John F. Kennedy's assassination, and so 
they did it the following week instead. So that tells you also 
how old the bridge is.
    So Dr. Gifford, you are recognized for 5 minutes.

                 STATEMENT OF JONATHAN GIFFORD

    Mr. Gifford. Thank you, Chairman Chabot, Ranking Member 
Velazquez, and distinguished members of the Committee for the 
opportunity to speak today.
    I am a professor at George Mason University, where I direct 
the Center for Transportation Public-Private Partnership 
Policy. The center provides objective analysis of 
transportation public-private partnerships through research, 
education, and outreach. We believe that a better understanding 
of P3s will lead to their more appropriate use.
    I would like to make three points today. First, public-
private partnerships for transportation projects offer 
significant opportunities for small business. P3s generally 
involve design, construction, and long-term operation and 
maintenance of transportation projects. P3s usually last 35 
years, in some cases up to 75 years. These long-term agreements 
support small business. Business needs include engineering 
materials, construction, public affairs, community relations, 
architects, attorneys, security, and appraisers. These business 
needs are not just for the construction of the project, but 
also for the long-term operation and maintenance, which goes on 
for decades. Such long-term agreements foster the creation and 
sustenance of local businesses.
    Moreover, such opportunities are not just discretionary on 
the part of the concessionaire. States participating in P3s 
typically establish goals for participation by small woman-
owned and minority-owned businesses and disadvantaged business 
enterprises.
    For example, Virginia's goals from three of its major 
projects total more than $1 billion for the design and 
construction phase alone. The recently completed 495 and 95 
express lane P3 projects in Virginia supported more than 28,000 
jobs during construction and employed hundreds of DBE/SWaM 
firms during that time, 184 firms for the 95 express lanes and 
250 firms for the 495 express lanes.
    A long-term surface transportation reauthorization can 
support small business by removing barriers to P3s and by 
continuing and possibly increasing Federal support for P3s. 
Without long-term reauthorization, agencies do not have the 
budget to let in and continue meaningful contracts. Large firms 
can often absorb this uncertainty, but small businesses are not 
well equipped to deal with the off-on nature of the current 
Federal process.
    A major barrier for P3s in many States is the Federal ban 
on tolling and reconstructed interstates. Congress may wish to 
reconsider that ban since so much of the interstate will 
require reconstruction in coming decades. Significantly 
relaxing or removing this ban can be done at no cost to the 
Federal budget and it would allow States to decide whether and 
how much to explore tolls as a means of renewing and expanding 
their highway systems.
    Congress may also wish to extend or expand current programs 
that support P3s, notably TIFIA and PABs. TIFIA provides loans 
and credit support to most P3 projects. PABs, or Private 
Activity Bonds, level the playing field between bonds for P3 
projects and municipal bonds by exempting PABs from most 
Federal income taxes. President Obama's proposed qualified 
public investment bonds would expand the dollar amount 
available for.P3s by eliminating the current $15 billion cap on 
PABs.
    My second point relates to the Federal gas tax. The gas tax 
and the Highway Trust Fund have played important roles since 
1956 in the construction of the interstate system and support 
for the Federal Aid Highway Program. The current gas tax rate 
doesn't support the program's ongoing expenditures. Congress 
has filled this gap in recent years from the general fund. 
Continued reliance on the gas tax as the primary source of 
program funds is problematic. As cars get more fuel efficient 
and the numbers of hybrids and electric vehicles increase, a 
flat per gallon tax on gasoline generates less and less for 
each mile driven on our highway system.
    In the long term, Congress will decide how much financial 
support it wishes to provide the program and how to pay for it. 
An increase in the gas tax could support an ongoing program at 
current spending levels. However, in the longer term, other 
sources of State, local, and Federal revenue, such as tolls, 
may provide a more stable and suitable financial foundation for 
addressing the Nation's transportation needs and opportunities.
    Global capital markets appear to have a significant 
appetite for infrastructure investment. Investment in the U.S., 
however, is limited, due in part to a lack of bankable 
projects. Removing barriers to tolling could enable more 
private capital investment.
    My third and last point relates to the University 
Transportation Center's program. This program has supported 
many universities, including my own, to research our Nation's 
transportation system and educate generations of students who 
go on to design, construct, operate, finance, and maintain it. 
As an active participant in the UTC program for most of my 
career, I would like to assure the Committee that the program 
has generated considerable value in research, education, and 
professional development.
    Our Nation appears to be on the cusp of major changes in 
its transportation systems. Important innovations include 
autonomous vehicles, GPS, mobile devices, advanced materials, 
companies like Uber and Lift, and public-private partnerships. 
These innovations are transforming the movement of people and 
freight. They are also disrupting industries and institutions 
that make up our transportation system. Continued support for 
the UTC program will allow research and education to continue 
to contribute to expanding the development of such innovations 
and our understanding of how they affect society.
    That concludes my statement. I look forward to your 
questions. Thank you.
    Chairman Chabot. Thank you very much.
    And we want to thank all the panel members for their 
testimony this morning. I think they were all excellent.
    And we will start the questioning, and I will begin with 
myself. I am recognized for 5 minutes.
    Mr. Davis, I will start with you. Downtown Cincinnati, as 
you know, has gone through pretty significant urban renewal 
over recent years, for the better. It seems to be looking a lot 
better downtown, more people coming down, and just the general, 
I think, attitude of the city about itself. Could you discuss 
what the new bridge, the Brent Spence Bridge, if we can finally 
get it done, what impact that would have on the overall urban 
renewal of the city, and also what--this is the Small Business 
Committee. What impact would you see this having amongst small 
businesses in, not only downtown Cincinnati, but throughout the 
region?
    Mr. Davis. Thank you, Mr. Chairman. I will take your first 
question first about urban renewal, how it could affect 
Cincinnati. As I mentioned earlier, you know, our statistic 
that 75 percent of the jobs in our region are within 5 miles of 
I-75. And as you know, Mr. Chairman, I-75 runs right next to 
downtown, right through the urban core, and also goes into 
northern Kentucky. So it is really--the Brent Spence Bridge, 
the corridor, is really at the center of our--is at the center 
of our--of our central business district.
    Expanding that, unlocking that, you know, decreasing the 
congestion, in our view, will lead to greater investment. There 
is--the CBO reported in 2014 that every dollar spent on 
infrastructure can lead to anywhere between $1.15 and $1.25 on 
return, so there is the numbers right there that show that it 
is a good bet that infrastructure investment will bring a 
higher return.
    On the small business side, we have many members of our 
coalitiion who work on both sides of the Ohio River, that work 
in northern Kentucky or work in Cincinnati, and, you know, take 
that bridge every day or take any of the--any other number of 
six bridges that we have in the region to cross the Ohio River, 
and timing is important to them. We have a lot of professional 
services companies, IT service, for example, who are often late 
because they are unable to--often late and waste time and gas 
and money by--because they are stuck in traffic. So we think 
that unlocking that, making it easier for businesses to access 
the urban core by widening the highway, by adding--rebuilding 
the Brent Spence Bridge and rebuilding the corridor will be 
helpful.
    Chairman Chabot. Thank you very much.
    Mr. Gifford, you--or Dr. Gifford, you already talked about 
the gas tax, so let me maybe turn to your colleague, one of the 
three of you, if you wouldn't mind answering this question. 
With people driving more fuel-efficient vehicles, do you have 
any suggestions outside the raise-the-gas-tax box that we ought 
to look into? Are there other ways besides that that you could 
see us coming up with additional funds to move forward on 
transportation?
    And whoever wants to handle it. Mr. Shilling, you look like 
you might want to----
    Mr. Shilling. Yes. I would like to state a couple things. 
Number one is even--even if the gas tax--if we looked at 
indexing the gas tax based on inflation would help increase the 
revenues, but also I think a lot of talk has been centered 
around actual miles driven, because you have a lot of vehicles 
using the highways that do not burn fuel or very much fuel 
anymore, so a mileage seem to be more appropriate mechanism for 
paying for the user fees.
    Chairman Chabot. Okay. Thank you.
    Mr. Schmitz, let me ask you this one. In your written 
testimony, you talked a little bit about the negative impact 
that the Waters of the United States regulatory action coming 
from the EPA will have on your industry. Could you elaborate a 
little bit? What are you concerned about there?
    Mr. Schmitz. That is a very ominous decree looking at us. 
We operate several operations which dredge sand and gravel from 
underwater. Ponds that we have created that are not connected 
are now being considered as Waters of the United States. One of 
our dredging operations, which has been in existence since 
1964, has now fallen under this jurisdiction, and we have spent 
hundreds of thousands of dollars on studies proving our point, 
but the ominous overreach that the Waters of the United States 
has us concerned at all of our locations, because even the mud 
puddles along the side of the road in front of our operations 
are now considered under this jurisdiction.
    Chairman Chabot. Thank you very much. My time has expired.
    Gentlelady from New York, the ranking member, Ms. 
Velazquez, is recognized for 5 minutes.
    Ms. Velazquez. Thank you.
    Dr. Gifford, I want to go back to the highway vehicle miles 
traveled, which have decreased since 2003. Now we also have 
increasing fuel standards and the rise of alternative-energy 
vehicles, so this made the gas tax even less of an indicator of 
highway usage. Given that reality, what sort of funding 
structure is most appropriate to fund our highways in the long-
term?
    Mr. Gifford. In the long-term, I think the viability, as I 
stated, of the traditional per-gallon gas tax is limited. There 
are a lot of alternatives that have been placed on the table by 
many of constituencies surrounding this issue, looking at a VMT 
or miles-traveled tax that is under consideration now in 
experiment in Oregon, it looks technically viable and it looks 
manageable in ways that can protect the privacy of motorists so 
that they don't have government tracking their everyday 
movements, that I think that is quite viable.
    I mentioned tolls in my statement. And I think, like gas 
taxes, tolls are a user fee. And from a public policy 
standpoint, I think looking at ways to, you know, charge users 
for their use of a system has a lot to commend it. The gas tax 
was a loose proxy for usage, but tolls, I think, are more 
direct and may be, as I mentioned, something where, at no cost 
to the budget, the Federal Government could enable.
    Ms. Velazquez. So let me ask you: From a small business 
perspective, user perspective, such as those involved in 
trucking or delivery or related companies, what is the least 
burdensome alternative?
    Mr. Gifford. I think it depends. That is not a very clear 
answer, but, you know, the tolls are usually higher for heavier 
vehicles, so step vans or delivery trucks are going to pay 
higher tolls than a--you know, than a light duty vehicle like a 
pickup truck or a car.
    On the other hand, gas taxes are also heavier. Those are 
more gas-dependent or diesel-fuel-dependent vehicles, so 
raising the gas tax also has a disproportionate impact on them 
from that perspective; appropriately so. They are heavier, 
larger vehicles.
    Ms. Velazquez. Yes. And with large general funds 
transferred occurring since 2008, all states now receive more 
funds that they contribute to the Highway Trust Fund. If 
Congress acted to tie the trust fund more closely to highway 
use, some states could again end up in a net loss position. 
What is your view on that issue?
    Mr. Gifford. The issue of donor-donee and now all donee 
States to a certain extent is a difficult one. If--I think 
every State would like 100 percent of the money it sends to 
Washington to come back to that State, where someone else takes 
the political heat for the tax, and they are able to have the 
spending money, but of course that--it doesn't work that way. 
Where a--you know, our Constitution gives two votes in the 
Senate to every State, we built the interstate system, and not 
every State was able to pay its costs. So I think some regional 
equity always emerges in a Federal system, and rightly so. 
Those are the terms of the deal in which the Union was created.
    Ms. Velazquez. I would like to ask you a question about one 
of the programs in DOD, and that is the DBE program. It has 
been operating since 1985, but recently the DOT's inspector 
general found that the program had limited success, mainly 
because there were little incentives for companies to grow 
beyond the DBE program itself. What are your views on the DBE, 
and should it be overhauled, reformed?
    Mr. Gifford. I am not familiar with the Federal DBE 
program. In my State, I mentioned the targets that States 
attached to public-private partnerships for as goals, and I 
think the results there are compelling, that many small 
businesses, disadvantaged businesses, women-owned and minority 
businesses, are recipients of contracts. I have data from 
Virginia Department of Transportation sent to me yesterday that 
more than 50 percent of the funds in public-private 
partnerships are spent locally.
    Ms. Velazquez. Okay. Thank you, Mr. Chairman.
    Chairman Chabot. Thank you very much. Thank you. The 
gentlelady yields back.
    The gentleman from New York, Mr. Hanna, who is the chairman 
of the Subcommittee on Contracting and Workforce, is recognized 
for 5 minutes.
    Mr. Hanna. I am also the guy who has owned lots of Komatsus 
and was in heavy construction for years. Used tens of thousands 
of yards of gravel. But to get to the point, though, we are on 
our 33rd extension. I mean, to say that I agree with all of you 
is--you know, I do, and I think most members here do. The 
question is what are we doing about it, and we are not doing a 
whole hell of a lot, are we?
    But to respond to the talk about the gas tax, in many ways 
it has become a more regressive tax. We know that mass transit 
doesn't pay in, and yet we can understand the value of mass 
transit. We also know that 34--ages 18 to 34 year olds, they 
are not driving, yet they enjoy the full benefit of the highway 
system through all the things they order online and all the 
other things, and we know that people who drive cars that don't 
necessarily pay in, which is, you know, roughly 2 or 3 percent 
now.
    So there are a lot of things about how we fund this that 
are problematic and lead us to believe that there is some--we 
need an overhaul. And Oregon's experiment is just that, an 
experiment, it is not going to happen in any kind of time limit 
that is going to help us solve our problem that we are talking 
about today. I think we can all admit that.
    So my point is that all of this builds a case--and triple 
P's are nice, but they are not happening, either, and that is 
something else we need to talk about, but all of this builds a 
case for me to take the money out of the general fund and find 
it someplace other than this, you know, kind of pretense we 
have about dealing with it some other place.
    And that is what we have had to do, that is how we were 
short, and I think that that is what Congress is, you know, 
trying to do at the moment, is find it someplace else, but 
the--I want to know what you think about that in terms of 18 to 
34-year-olds who aren't driving, why is it that mass transit 
isn't paying in. I can appreciate both sides of that argument, 
but--Mr. Gifford.
    Mr. Gifford. Well, as to the question of why mass transit 
isn't paying in, I think back in the 1950s when we created the 
Highway Trust Fund, the interests of the mass transit industry 
was being exempted from the gas tax. That was really the only 
thing they wanted out of the 1956 bill, and they got it. And 
that has been carried forward. Starting in the 1970s, as you 
know, we began to fund mass transit from the Highway Trust 
Fund. And, you know, there are debates about whether that is 
justifiable or whether that should be paid from the general 
fund.
    Mr. Hanna. But the point, who is contributing more to whom 
and how that distribution is fair or unfair is interesting to 
me, and I wonder about your opinion on that?
    Mr. Gifford. Let me understand your question. You--you are 
looking at the equity impacts----
    Mr. Hanna. Yes.
    Mr. Gifford. --of the gas tax, who is paying, who is 
benefiting.
    Mr. Hanna. Right. I live in the district. I go buy a loaf 
of bread, it costs me a couple bucks. I go across Manhattan, it 
costs a couple bucks, three bucks, whatever it is. So why isn't 
that--what can you make of that argument? And I value mass 
transit. It is not that. And the notion of 18-year-olds to 34-
year-olds not driving and yet we see the depletion, and we talk 
about the gas tax obsessively, which I get, you know, and I 
have worked to find a way to solve this problem, but there is 
kind of a confluence of issues here that people are not talking 
about, I think, appropriately in this Congress and around the 
country, and always pointing to the gas tax, I think, doesn't 
give us the kind of long-term solution we need.
    Mr. Gifford. Well, I mentioned tolls. I don't know if you 
are--you know, referring to tolls, but with respect to the gas 
tax itself, certainly there are some, you know, leakage that 
occurs. You know, all of the benefits of using the highway 
system do not redound only to the vehicle that is operating, 
the vehicle driver for personal vehicle or a delivery truck for 
a commercial vehicle. The whole economy benefits, as I think my 
colleagues on the panel have mentioned, when we have a well-
functioning transportation system, but there is no perfect 
taxing mechanism, either.
    And so you could certainly take the money out of general 
funds, but I think you know only too well how difficult it is 
to find pay-fors in the current general fund environment. And I 
agree that there are general benefits that redound to the 
economy from a good functioning transportation system.
    Mr. Hanna. Would you agree in the time I have left that 
there are broad sections of our economy and people therein who 
benefit from the highway system but don't pay proportionately?
    Mr. Gifford. I would say they don't pay directly, but when 
I order from Amazon, I pay a delivery fee, and that delivery 
fee goes in part to a delivery company that is paying gas taxes 
or other fees.
    Mr. Hanna. That is fair. Thank you.
    Chairman Chabot. Thank you. The gentleman's time has 
expired.
    The gentlelady from California, Ms. Hahn, is recognized for 
5 minutes.
    Ms. Hahn. Thank you, Mr. Chairman, and thank you for 
holding this hearing. I really appreciated the testimony from 
all of our witnesses today. And I sit on the House 
Transportation and Infrastructure Committee, very proud member, 
so I love it that we are bringing this incredibly important 
issue to how it impacts our local small businesses. I think 
that is extremely important. And certainly I am happy we sort 
of got into the discussion about how do we fund going forward 
our incredible needs in transportation.
    Certainly our infrastructure is crumbling around us, it is 
in--we have something like 70,000 bridges in this country that 
are deficient. That is--you know, that is really troubling to 
me.
    And I drive an electric vehicle, so I haven't been to a gas 
station for 4 years, and I think that is part of what we are 
discussing this morning. Our gas tax shouldn't be the only way 
going forward that we are going to try to attempt to fund this 
incredible need in the country. I am one of those that would 
like to look at alternatives.
    No one mentioned yet, but I even think a flat fee when 
folks register their cars annually with the DMV might be an 
interesting alternative, but I do think we need--apparently the 
gas tax still only brings in something like $34 billion 
annually, and yet we need about $50 billion annually to keep up 
with our infrastructure issues, so clearly that is not the way 
forward, so I am glad we are talking about this.
    I do have one idea that would help to fund our freight 
corridor in this country. I have come with an idea that doesn't 
raise the tax, doesn't call for a new fee, and it would work by 
diverting 5 percent of our incoming import fees at our ports. 
If we divert that, it would be about $2 billion a year that we 
could fund our freight projects in this country so that they 
wouldn't have to compete on an ongoing basis with the Highway 
Trust Fund.
    And I think that would solve a lot of our issues in this 
country in terms of congestion, in terms of moving goods, in 
terms of making us competitive globally, so I am hoping that 
bill will get some traction. I have a couple of Republican 
cosponsors so far, but I could use more.
    But, you know, I was going to--I am very concerned that we 
have had this short-term fix, and I was going to ask Don 
Shilling this question. We were told by some construction folks 
that construction jobs are for the most part seasonal, and we 
were told that because of what Congress--our inaction recently, 
that we have missed the summer construction season by not 
allowing for projects to be put on the books. Can you explain 
that to me? Is that correct, or what impact do you think this 
short-term fix has on our summer construction jobs?
    Mr. Shilling. Yes, it very much impacts us. As I mentioned, 
in North Dakota for the May letting, they pulled 30 jobs 
because of the no funding secured. Basically by the time they 
get those jobs back on the docket and bid them, we will--our 
work season will be done. So if you look at our bidding cycle, 
most of the bidding is done November, December, January, 
February for projects that start then in March and work through 
the end of October. And we are, of course, as far north as you 
can get, but most of the other states around us are the same. 
They are very seasonal. There are a lot of things that can't be 
done in the winter months.
    Ms. Hahn. I appreciate that.
    And, Mr. Schmitz, I was going to--in your testimony, you 
talked about how the cost of the materials increase because of 
transportation cost, and I was wondering if you could elaborate 
on what are transportation costs that then get passed on to the 
consumer in materials like sand and gravel?
    Mr. Schmitz. Yeah. That--transportation is a huge part of 
our cost of doing business. Our products are heavy, we are 
generally within 25 miles of the market, but if it is an area 
devoid of aggregate, we ship via rail and trek the trailer over 
longer distances. The cost of the material over 25 miles to 
transportation actually outweighs the cost of the materials.
    What we can put on our costs is we can put on our tolls and 
our Federal excise taxes, but when the truck is sitting in 
traffic or has to detour 10 or 15 miles to avoid the bridge 
that can no longer take the weight limit, the public is bearing 
these costs. It is tough for us as a small business to even 
quantify it, but we have to build that in. Instead of our 
trucks doing 45 miles on hour, they are down to 35 miles an 
hour or taking an extra 10 miles. So ultimately the traveling 
public is the one who is bearing the cost, the taxpayers are, 
for the conditions of the highways.
    Ms. Hahn. Thank you. My time is up, but I really appreciate 
all of you making the case again for why Congress needs to pass 
a long-term surface transportation bill.
    Chairman Chabot. Thank you very much. The gentlelady's time 
has expired.
    The gentleman from South Carolina, Mr. Rice, who is 
chairman of the Subcommittee on Economic Growth, Tax and 
Capital Access is recognized for 5 minutes.
    Mr. Rice. Thank you, Mr. Chairman.
    We are in the midst of the weakest recovery from a 
recession since the Depression. Average household income has 
declined 8.7 percent since the President took office, consumer 
spending is rising at a very anemic rate of 1.4 percent. Forty 
four percent, the most recent numbers I have seen, of recent 
college graduates are underemployed or unemployed. And I think 
a lot of that comes from this very fact that, you know, we are 
talking about uncertainty. Uncertainty doesn't allow our 
States, our counties or the Federal Government to invest.
    Complete lack of a long-term plan, bandaid solutions that 
are applied on a short-term basis; we have got to have a long-
term plan and we have got to have long-term solutions, and it 
is shocking to me that we don't have these things.
    This funding issue, we can resolve it. It is not a matter 
that we don't have enough revenue. I mean, we are collecting 
more revenue, the Federal Government is, that--it is above the 
40-year average, the amount of revenue we are collecting. We 
are spending far too much, and particularly on entitlements. 
Entitlements are two-thirds of our total spending.
    So we have got to find a solution for the Highway Trust 
Fund. I am going to propose one myself. I am going to propose 
increasing the gas tax and a simultaneous decrease in the 
income tax, because the Highway Trust Fund has got to be self-
sustaining, the Social Security Trust Fund needs to be self-
sustaining. All this uncertainty we are heaping on the economy 
holds back job creation, holding back GDP.
    We shouldn't be surprised that GDP has been--the forecast 
from CBO has dropped from 3 percent to 2.7 percent to 2.3 
percent. We had negative growth last quarter. It requires 
leadership, and we are not getting it. So I am going to put out 
my own solution to this.
    One of the worst calls I have had in Congress was from my 
State secretary of transportation last summer, I think it was 
in June, she called me and asked to meet with me, and I went 
and sat down with her and she said, I understand the Highway 
Trust Fund's supposed to expire in August. What am I supposed 
to do? Am I supposed to cancel my contracts? Am I supposed to 
not take anymore contracts?
    You know, you can't turn these things on a dime. It 
requires years to plan and execute.
    And in addition to the funding issue, we have got--the 
regulatory structure is incredibly burdensome and amok and it 
stifles progress on every front. It is not just in highway 
construction, it is across the board. It is so hard to get 
anything done in this country anymore. We used to be a can do 
country, and now we are a you can't do that country.
    I-73 in my district, I live in Myrtle Beach, South 
Carolina, 16 million visitors a year, one of the top ten 
tourist destinations in the country, and the only one in the 
top ten that does not have an interstate connection. I have 
been working on trying to get a permit for that road to connect 
really from the North Carolina line down to I-73--I mean, down 
to Myrtle Beach since I have been in Congress, 2 years and 4 
months, and it was--they were working on it for years before 
that, and we are still involved in wetlands mitigation. It is 
a--we are being held hostage by the environmentalists. They 
propose that in order to mitigate for the 270 acres of wetlands 
they say we are destroying in that 80-mile stretch, that we 
purchase 6,800 acres. The system is completely amok.
    The Port of Miami, they have been trying to get permission 
to dredge that port. There is not a port in the southeast that 
can take the post-Panamax ships today until we get dredged. The 
Port of Miami has been trying to get permission for 16 years, 
trying to get a permit. Port of Charleston, one of the most 
efficient ports in the country, been working on trying to get 
an environmental permit for 4 years and they have still got 
years to go.
    We are tying our own hands. We are making our own selves 
uncompetitive. We cannot point at anybody else. The only people 
holding us back is us. We have got to have leadership.
    Thank you very much.
    Chairman Chabot. Thank you. Does the gentleman yield back?
    Mr. Rice. I yield.
    Chairman Chabot. The gentleman yields back.
    I now recognize the gentleman from Florida, Mr. Curbelo, 
who is chairman of the Subcommittee on Agricultural, Energy and 
Trade.
    And before you get started, I would like to note the fact 
that we had the opportunity to do a wonderful event in his 
district last week during our district work period, several 
events, but one in particular at a college that I now realize 
is actually the most populous college in the world, if I am not 
mistaken, Miami Dade County, 165,000 students at the various 
campuses. Its 10,000 Small Businesses Program is just an 
incredibly impressive program that they do at 20 different 
places around the country. And so if you are interested, I 
would encourage you to perhaps seek out Mr. Curbelo. I am 
certainly going to do that for my district and see if we can 
spread this growth. Incredibly good program, and thank you for 
sharing it with us.
    So I will now yield, not on his time, but at this point his 
time. Mr. Curbelo is recognized for 5 minutes.
    Mr. Curbelo. Mr. Chairman, thank you for your leadership on 
this issue and thank you for visiting South Florida last week. 
We did have a wonderful visit to Miami Dade College, which is 
home to one of the 10,000 Small Businesses Programs. And Miami 
Dade College is one of those places where people go to find 
hope, opportunity, knowledge, and they certainly find it, and a 
lot of successful entrepreneurs graduate from that critical 
university.
    Chairman Chabot. Just for the record, I was down there for 
parts of 2 days, and during that entire time, I did not see a 
beach, so it was strictly business.
    Mr. Curbelo. Neither did I, Chairman, so--well, as the 
chairman has indicated, I hail from South Florida, Florida's 
26th Congressional District, southwestern Miami and the Florida 
Keys, at one point home to the Overseas Railroad. So we are all 
about transportation and infrastructure in South Florida. It is 
absolutely critical to our quality of life. So I certainly 
appreciate this opportunity, not only as a member of this 
distinguished Committee, but also as a member of the Committee 
on Transportation and Infrastructure.
    I wanted to ask, Mr. Davis, are there any reforms you see 
that we could implement in a potential highway bill, which, by 
the way, is one of my top priorities as a Member of Congress, 
that could empower state and local officials to give them more 
control over what projects take precedence?
    Mr. Davis. Thank you, sir, for that question. I think 
broadly, one reform that--you know, that--and it has been--Mr. 
Rice mentioned this before, there is a real need for general 
across-the-board regulatory reform and how we deliver these 
projects. The years and years that it takes to, you know, 
complete environmental documents, things of that nature, we 
believe that those should really be cut down.
    And I will use my project as an example of the cost of 
delay. And I can cite Kentucky Governor Steve Beshear for this 
number. For the Brent Spence Bridge, every month that we delay, 
the added cost is approximately $7 million a month. So every 
year that we are waiting, we are getting right around $100 
million that we wait to delay. So let's say we even--you know, 
let's start--say, okay, we are going to start moving forward 
with this with that $7 million, you know, ticker running, then 
we lump on top of that the time that it takes to wade through 
the regulatory process. I mean, I think really sharpening the 
pencils and looking at what the process is, what the needs for 
the regulatory--for the regs--what the needs for the regs are 
and how we might shorten the time and shorten the turnaround 
would be helpful.
    And your point about States, I think finding ways for 
States to--giving them more flexibility on things such as how 
they use public-private partnerships, how they look at 
different user fee models, what--when they can use user fees, I 
think those are all things that, you know, should be 
contemplated. So I would start there: just more flexibility, 
allowing them to prioritize as well, not so many boxes for 
States that they are stuck in that they can only spend this on 
this, I think, would be helpful.
    Mr. Curbelo. Thank you, Mr. Davis.
    Mr. Gifford, I understand that while I had to step out, 
UTCs came up. And just last month I led a bipartisan letter 
with 68 colleagues here in the House advocating on behalf of 
these university transportation centers and the upcoming 
highway bill. My district is home to one of these, Florida 
International University, which hosts the UTC Accelerated 
Bridge Program, and that program is doing cutting-edge research 
on repairing our Nation's aging bridges, which is clearly a 
chief priority.
    Can you talk about any partnerships or any of your 
experiences with universities to repair, not just our aging 
bridges, but infrastructure in general, especially as it 
applies to our Nation's urban areas?
    Mr. Gifford. Thank you for that question. I actually know 
the FIU program well and have worked with them on some small 
projects myself.
    I think the UTC program really does support a very broad 
array of university programs, not only in the engineering, 
material, sort of the hard side, and I say that as a civil 
engineer myself, but also on the soft side, the institutional 
policy, financial matters for delivering programs. So I think 
it is very important, not only the research that comes out of 
these programs, but the workforce that emerges from these 
programs. I think UTC program plays a critical role. About 4 
years ago I attended one of the national UTC meetings, and 
generations of transportation professionals have been 
beneficiaries of this program.
    So the workforce in universities as well as in our 
companies and government agencies, I think, have, you know, 
benefited from this program, so it is tremendously useful and I 
think something that we, you know, urgently need to continue to 
support.
    Mr. Curbelo. Thank you, Mr. Gifford. Thank you to all the 
witnesses. It is good to see you.
    And thank you, Mr. Chairman, for this opportunity. I yield 
back.
    Chairman Chabot. Thank you. The gentleman yields back.
    The gentleman from Nevada, Mr. Hardy, who is chairman of 
the Subcommittee on Investigations, Oversight and Regulations, 
is recognized for 5 minutes.
    Mr. Hardy. Thank you, Mr. Chairman.
    Just a little background about myself. I happen to have 
been a director of public works in my past life. I have been a 
business owner in the construction industry for over 20 years, 
heavy highway, roads, bridges, dams, treatment facilities, and 
other.
    So with that background, would you agree that for--and also 
on the RTC for about 14 years, Regional Transportation 
Commission, Regional Flood Control Commission.
    Would you agree that it takes long-term funding to be able 
to come up with long-term goals and solutions for these 
entities to be able to function properly? Anybody care to--Mr. 
Gifford, do you----
    Mr. Gifford. Yes. I think it is critical. The large, you 
know, multi-hundred million or multi-billion dollar projects 
are very difficult to start and stop on an annual funding 
basis. And it increases the expense, it reduces the amount of 
competition that is able to participate in such projects, and 
it raises the price to the--to the public of delivering these 
assets.
    Mr. Hardy. The reason I ask the question, I have got a 
little different line of questioning going here. You know, I 
found out--I am new to this place. I have been here about less 
than 5 months, and there is a lot of finger pointing goes on 
every direction, responsibility.
    I would like to go back to about 2008. You know, we had 
close to a trillion dollar stimulus program that went 
everywhere. Do you think that if that--some of that funding, 
say, to the tune of, for a 6-year program, about $333 billion 
of that, that would have gone to a long-term focus on our 
highway infrastructure and rail system infrastructure, that 
that might have been a better opportunity to stabilize an 
economy rather than going to a rental-type programs that 
equipment companies are going to, because the contractor cannot 
see the future, he can't tell what is going on, so he is not 
going to buy that equipment like we did in the past, he is 
going to rent. Do you think that might have been a better 
avenue to go if we are going to step down that road? Mr. 
Shilling, Mr. Schmitz?
    Mr. Shilling. Yes, I would agree with that. I--we noticed 
when we did the stimulus package, that a lot of the projects 
that got moved up and took immediate action on were--I wouldn't 
call them totally frivolous, but pretty frivolous, more 
patching, whatever, and they were not real investments in our 
infrastructure, so----
    Mr. Schmitz. I would echo that sentiment also. The projects 
that were done, it was a rush to get them done. In New York, we 
did a study. It takes 13 years, because of the regulatory 
environment and such, for a project to come to fruition. That 
shot in the dark did nothing to help the long-term plan. It was 
a quick fix, overlay some roads. It was not money well spent.
    Mr. Hardy. Thank you. Seen the same thing myself. It was a 
quick fix for certain things that didn't need to be fixed lots 
of times that were just on the mediocre end. Things like the 
bridge could have been done, and done right and been done and 
over with, and it would have been--wouldn't have been a problem 
anymore.
    Do you believe that maybe you have some of the same--do you 
have any of the same frustrations I have with the way the 
funding is done within this place where fuel tax takes care of 
all sorts of things, rather than a focussed targets. You know, 
I believe that fuel tax should maybe go for highway projects, 
interesting enough, and maybe light rail projects should have 
another source of funding. Targeted funding. I believe in 
targeted funding would be better for us. And I don't call it 
taxes, I call it fees. Anybody comment on that? Short time 
here.
    Mr. Schmitz. I believe the user fee is the way to go, in 
that the revenue that is collected from highways should stay in 
the highways, the revenues collected from other things should 
stay in those. The fact that the people using the highways are 
subsidizing all other forms of transportation--it is not good 
for business.
    Mr. Hardy. I guess I will stop there, I am running out of 
time, but I really believe that we need to focus on those type 
of issues for fees, we need to make sure that we provide long-
term, because I am the type of individual that truly believes 
that when the engineers are busy, I know I am about to get 
busy, and when they are not doing anything, I know I am about 
to get really slow. And so we need to look for the future, stop 
looking for the immediate fix, but to look for the long-term 
and make sure we are out there.
    So with that being said, you--you all support the taxing 
fuels, do you support the--or what do you call it? The indexing 
of fuels. Are there any other avenues that you think are out 
there that you believe might be a good fix? Mr. Gifford on 
that? Tolling?
    Mr. Gifford. Well, I mentioned tolling, and not so much to 
impose tolling, but to allow States to decide if they wish to 
consider tolling for reconstruction and renewal of their 
systems.
    Mr. Hardy. Thank you. My time is expired.
    Thank you, Mr. Chairman.
    Chairman Chabot. Thank you. The gentleman's time is 
expired.
    The gentleman from Nevada mentioned he had been here for 
about 5 months, and I have been here almost 20 years now. When 
I was first elected another Member told me that when you first 
get here, you are kind of starry-eyed and you are thinking, how 
did I ever get to this place, and within about 5 months, you 
are wondering, how did these other Members get here? So it 
doesn't take too long for that to occur.
    The gentleman--and that has nothing to do with the next 
gentleman from California. Mr. Knight is recognized for 5 
minutes.
    Mr. Knight. How did that guy get here?
    You know, my comments will be very simple. I think we are 
going down the road to maybe increase gas tax. In California, 
we are at about $0.63. We are talking about raising it another 
$0.20 by January 1, so we will be the number one, as in 
California, we like to be number one in many tax categories, so 
us being number three right now doesn't sit real well, but that 
$0.20 is going to be upwards of a dollar. For every time you 
fill a gallon of gasoline, you are going to be paying almost a 
dollar in tax, and you could be more. With our global climate 
change issues, we could be paying well over a dollar in taxes.
    So I guess my question is, is if we are going to go down 
this road of more gas tax or higher gas tax, is there a point 
where the consumer is not going to take it, we are not going to 
be able to drive as much. Every week that I am home in the 
district, I average 850 miles on my personal car. At some point 
it is going to be transferred into, well, it already is, into a 
gallon of milk, into the groceries we buy, into all of the 
products that we buy.
    Do you see at some point that we just can't go down that 
road, that we have to make the commitment from the general 
fund, that we have to make the commitment from what the 
taxpayers believe, that this is one of the highest commitments 
from government that we have on infrastructure where people can 
rely on? Anyone want to take that question that we are getting 
to that point? Sir.
    Mr. Davis. Thank you, sir. It is hard for me to speak on 
behalf of, you know, consumers about what is or is not the 
tipping point. You know, $0.63 is a lot for some, it is not a 
lot for others. So it--you know, the pocketbook issues are 
tough, but I would say, though, as it relates to the work of 
this Committee and the work of the Congress is that if those 
investments don't happen right now and the priorities aren't 
made right now, and the strategies aren't put in place--aren't 
set forward right now, that that number is only going to go up. 
So the $0.63 only goes up.
    It is like at home, you have a leaky roof and you don't pay 
attention to it and you say, oh, I am going to let it go, and 
then the next thing you know, you are ripping your whole roof 
down because you have got to redo the whole deal. So it is a 
pocketbook issue on the $0.63 and whatever the tipping point 
is, you know, and that is something that businesses and 
consumers, a decision they will make by themselves, but, you 
know, one of the things I am excited about this conversation is 
hopefully it kick starts a real prioritization within the 
Congress about making and taking some steps right now so that 
those dollars don't go up in the future.
    Mr. Knight. Well, and I firmly agree with you. I think that 
prioritizing this is what Congress should be talking about. You 
know, outside of maybe defense of this Nation, one of the 
things an average taxpayer is looking for is a solid 
infrastructure. I need to get from point A to point B to go to 
work or church or wherever we are going to go, I need to be 
able to get there, and so infrastructure is always going to be 
one of those top priorities.
    Yes, sir.
    Mr. Gifford. I would add that it is not only the revenue 
side that we need to look at, but the spending side and how 
efficiently we deliver infrastructure. And I mentioned P3s in 
my statement, public-private partnerships, and I think the 
record is pretty solid that in terms of minimizing the life 
cycle cost for the delivery of assets, public-private 
partnerships have a lot of benefits compared to traditional 
delivery through design-bid-build or design-build projects, 
because of a focus on operations and maintenance and minimizing 
those life cycle costs. So we may be able to enhance the value 
we derive from funds that we are raising.
    Mr. Knight. I agree. I have been part of an author of 
design-build bills in California, several of them. They do save 
money. They are a faster way. All those things are helpful, but 
in the end, we are going to have to have a funding source that 
is going to be reliable. I think that a reliable funding source 
has got to be a big portion of the general fund. It just has 
to. If we have a user fee or if we have a mileage fee, like 
many States, and my State is talking about that, how many miles 
you drive, so if I drove 850 this week and you drove 12, you 
know, is that going to be the most effective way? Is that going 
to be the most useful way?
    And that--that is going to be several studies, that is 
going to be several ways down the line, but we are going to 
have to make that commitment. I think the biggest commitment is 
going to have to be a bigger commitment from the general fund.
    And I yield back the balance of my time. Thank you, Mr. 
Chairman.
    Chairman Chabot. Thank you. The gentleman yields back.
    The gentlelady from American Samoa, Ms. Radewagen, who is 
the chair of the Subcommittee on Health and Technology, is 
recognized for 5 minutes.
    Ms. Radewagen. Thank you, Mr. Chairman.
    I want to thank the panel for appearing today.
    Dr. Gifford, back in my home district of American Samoa, 
almost every business qualifies as a small business. At the 
same time, American Samoa has some of the worst surface 
transportation infrastructure in the Nation. This lack of 
quality surface transportation infrastructure has a lasting and 
profound negative effect on those businesses, and it is safe to 
say that the American Society of Civil Engineers would grade 
American Samoa's infrastructure with an F.
    Knowing of the benefits of the P3 approach, has the Center 
for Transportation Public-Private Partnership Policy included 
such territories as American Samoa in its research and 
outreach? Also, what challenges do you see in incorporating the 
P3 approach in the territories?
    Mr. Gifford. I have not had the privilege of visiting 
American Samoa and I am not very knowledgeable about it. I will 
say I am more familiar with Puerto Rico, which is a different 
case, of course, but they have been aggressive in the use of 
public-private partnerships, with some success in their airport 
and highway projects. And I lived briefly in high school in 
Puerto Rico as well, so I am a little more familiar with that 
territory.
    So I think in speaking generally, the statutory framework 
for public-private partnerships is something that redounds to 
the States and localities. The Federal policy has a few 
important provisions, like TIFIA, PABs that I mentioned in my 
statement, but primarily it is a function of the States, who 
own the assets, the transportation assets. I don't know if that 
is the case in American Samoa, but I think in general, delivery 
of reliable, low cost transportation can be done in most 
environments with consideration of--of the P3 model.
    Ms. Radewagen. Thank you very much.
    That is all I have. Mr. Chairman, I yield back.
    Chairman Chabot. Thank you very much. The gentlelady yields 
back.
    We will go into a second round here. I am not sure if Mr. 
Rice has any questions, but I am going to yield to the 
gentlelady.
    Ms. Velazquez. Thank you. Thank you, Mr. Chairman.
    Mr. Schmitz, you testified that the easiest way to not 
waste fuel and to improve air quality is to increase the 
capacity of roads and bridges. However, mass transit also plays 
a key role in this area, and it is especially important when it 
comes to commuting to and from work.
    What are your views on the role that mass transit should 
play in our transportation system?
    Mr. Schmitz. My view is mass transit is very important in 
the metropolitan areas and certainly has to be looked at in a 
logical sense. I am from the Buffalo area, a small city. They 
spent a lot of money on an underground transit system, which to 
me was a waste, when surface transportation is the most logical 
way to do it. I think that the mass transit systems have to 
look beyond building subways and spending a lot of money, and 
what is the most efficient system. Buses may very well be the 
most efficient to use the existing highways, but the highway 
infrastructure has to have the capabilities of handling the 
buses. So mass transit is very important and it certainly does 
need to be funded, but I think that highways play a key 
component in the mass transit system.
    Ms. Velazquez. Dr. Gifford, do you have any views on that?
    Mr. Gifford. Well, I think public transit plays important 
economic and also social roles in providing access to jobs, but 
also essential services, medical, healthcare, you know, 
shopping, education, plays, you know, a broad range of roles. 
And the users of many mass transit systems tend to be from 
lower income groups, and so it has a particularly important 
impact on--on the social well-being of those groups.
    The method of delivering that in the most cost-effective 
manner, I think, is something where we could see improvement. 
We have had for the last 50 years a model of generally public 
agencies delivering transportation services, and we are now 
beginning to see, for example, in Denver, the Eagle P3 project 
going from downtown Denver to Denver International Airport is 
being delivered through a long-term concession, saving 
considerable amount of money over the original cost estimates. 
Those can be paid for with something called availability 
payments from the government. So the government is still paying 
for the service, but delivering the product, the service in a 
more efficient way.
    Ms. Velazquez. Thank you.
    Mr. Shilling, contracting requirements, such as Buy America 
provisions, can help U.S. small businesses by ensuring demand 
for their products. However, it can create compliance 
difficulties even if a tiny portion of a larger product has a 
foreign component in it. In this regard, MAP-21 expanded the 
Buy America requirements on federal aid highway projects by 
applying these requirements to an entire project, not just the 
portion that receives federal funds.
    Have these provisions affected small companies like yours? 
Are they a good thing or a bad thing, from your perspective?
    Mr. Shilling. Well, we do represent a foreign manufacturer, 
and it does impact us. We have not had a tremendous amount of 
impact as our business, because some of our foreign-owned 
manufacturers that do have U.S. factories and they do produce 
the materials in the U.S., but I know that other components, 
steel and other goods, cements that are being shipped in from 
overseas, most of the people that I deal with in the 
construction industry are in favor of the Buy American side of 
things for that--for those type of products. The sand and 
gravels and whatever should be produced locally, so----
    Ms. Velazquez. Okay. Thank you, Mr. Chairman.
    Chairman Chabot. Thank you very much. The gentlelady yields 
back.
    I just have one question, and I am going to give it to you, 
Mr. Davis, and it is actually probably an unfair question, a 
little bit complicated, and--but I am going to let you see what 
you can do with it. And you have got up to 4 minutes and 47 
seconds right now, but it shouldn't take you that long.
    All right. The Brent Spence Bridge, we have talked about it 
in our community, as you know, for quite a few years now. Let's 
say we left it up to an equity court judge to decide, knowing 
the cost-benefit analysis, the realities that we all live in, 
how would you divvy up the bill, say, percentage-wise, for lack 
of a better way of doing it? We know it is going to cost two 
and a half, $3 billion, approximately, and the longer it takes 
us to get this done, the more expensive it is going to be.
    And here are the entities you have got to work with. You 
have got the Federal Government, which I think has at this 
point, I think, funded something in the neighborhood of $63 
million, I think, and most of that has gone for the planning 
and things like that. You have got the State of Kentucky, you 
have got the State of Ohio. You have got the local 
jurisdictions, the City of Cincinnati, the City of Covington, 
et cetera, on both sides of the river. So you have got the 
local folks other than the State in Ohio and the other local 
entities on--at Kentucky. So that is, I think, about five that 
I have mentioned so far.
    And then you have also got--well, let's say the private 
sector, if there are some local businesses that want to be part 
of this solution that are willing to have a special fund that 
they are going to help out. You can put them in. And then you 
have got a category called--we will call it tolls, and you can 
either include that as something over and above the categories 
that we have talked about here or not include it at all.
    That is why I say you have got to work at the--kind of the 
political realities that we are dealing with. And then if there 
is some other entity that you can think of that should be 
helpful to this or could be helpful, you are welcome to do 
that.
    So you have got--and everybody else is welcome to leave if 
they want to. This probably isn't particularly interesting to 
everybody else, but it is really interesting to me, and you 
have got 2 minutes and 40 seconds or so. And you can think out 
loud too, so we can decide how you have come to this process 
and----
    Mr. Davis. Think out loud on the record.
    Chairman Chabot. The floor is yours.
    Mr. Davis. Thank you, Mr. Chairman. Did I get this question 
because we went to rival high schools? Is that----
    Chairman Chabot. Yes.
    Mr. Davis. You know, how do you divvy it up.
    Chairman Chabot. Back in our community, by the way, 
everywhere else, people ask, where did you go to school, and 
they are talking about college; back in Cincinnati, we are 
talking about what high school you went to.
    Mr. Davis. St. Xavier and LaSalle.
    Chairman Chabot. And I went to LaSalle. And you went to?
    Mr. Davis. St. Xavier.
    Chairman Chabot. St. Xavier.
    Mr. Davis. Yeah.
    Chairman Chabot. And my son went to Xavier too.
    Mr. Davis. Well, how do you divvy it up, you know, and that 
is a--and I think that is a really--and I am not filibustering 
here, but this is really a question, I think, that comes up in 
every community across the country, right: Who is on the hook 
for the cost of delivering this public good. We have that 
discussion locally.
    You know, it is a Federal Government project and it is a 
Federal interstate. The Federal Government should pick up the 
tab for this. Well, you know, then other heads come in and they 
say, well, you know, maybe, but Federal Government is not 
paying 80 percent in the former 80/20 mix that we used to have 
before. There needs to be more State and local involvement as 
well.
    So while I don't know, and I don't know if you will let me 
get away with this as an answer, but----
    Chairman Chabot. Well, come on.
    Mr. Davis.--I don't know that--I don't know that I could 
put a specific percentage within all five, but I think that 
what we need--one thing that become very clear in the 
discussion today and the discussion that has led up to today is 
that everybody has to play--every level of government has to 
play a role in this. The Federal Government must play a leading 
role in the development of public good. The State governments 
need--they receive dollars, their gas tax dollars back. They 
need to find a way to program those behind a set of priorities. 
User fees, whether that be gas tax or tolls or however you--
whatever kind of type of user fee you would like to categorize, 
I think that needs to be part of it too.
    As Ms. Hahn referenced before, you know, you have got 
people who maybe are not--who get the benefit from--who get the 
benefit but maybe aren't paying, you know, the same amount. You 
know, there is a discussion--there is probably something there 
that if everybody benefits, then maybe everybody should have 
some skin in the game on that issue.
    So I don't know that I could put it down into specific 
percentages, but I think a discussion needs to happen between 
Federal Governments and State governments to say, you know, we 
are all in this together. Infrastructure is not just important 
from, you know, the--you know, everybody getting to, you know, 
go to a ribbon cutting, but it affects--it has a tremendous 
effect on our quality of life, it has a tremendous effect on 
economic development.
    To your point, Chairman, from the beginning, you know, what 
is the point of building out these cities and communities if we 
can't get to and from them? From a small business perspective, 
what is the point of opening--having a florist, and to use your 
example from the beginning, in downtown Cincinnati in an urban 
area, if his or her, you know, customers can't get to and from 
there.
    So I think it is a shared cost, but I do think that there 
is a leading role that the Federal Government needs to play.
    Chairman Chabot. Okay. I am going to let you get away with 
that.
    Mr. Davis. Thank you.
    Chairman Chabot. I want to thank you, both you, Mr. Davis 
and all the other witnesses. I think you have all done an 
excellent job here this morning, so thank you for taking your 
time to help us.
    Members will have 5 days to extend their remarks or to file 
extraneous materials. If there is no further business to come 
before the Committee, we are adjourned. Thank you.
    [Whereupon, at 12:40 p.m., the Committee was adjourned.]
                            A P P E N D I X


                              STATEMENT OF


                            WILLIAM SCHMITZ


                      VICE PRESIDENT, QC AND SALES


                     GERNATT ASPHALT PRODUCTS, INC.


                              ON BEHALF OF


                   THE NATIONAL STONE, SAND & GRAVEL


                              ASSOCIATION


               BEFORE THE HOUSE SMALL BUSINESS COMMITTEE


                               HEARING ON


            ``THE ROAD AHEAD: SMALL BUSINESSES AND THE NEED


                 FOR A LONG-TERM SURFACE TRANSPORTATION


                           REAUTHORIZATION''


                              June 3, 2015

    Thank you, Chairman Chabot and Ranking Member Velazquez, 
for the opportunity to testify today on behalf of the National 
Stone, Sand and Gravel Association (NSSGA) about the importance 
of the nation's surface transportation system to small 
businesses, and particularly small aggregates companies. I am 
Bill Schmitz, Vice President of Dan Gernatt Gravel Products, 
Inc.

    Since 1946, the Gernatt family and their companies have 
been proud to serve all of western New York. Comprised of 
Gernatt Asphalt Products; Dan Gernatt Gravel Products, Inc.; 
and Country Side Sand and Gravel, Inc., our companies provide 
sand, gravel, stone, landscape aggregate, hot mix asphalt 
products and trucking to Buffalo, N.Y., western New York and 
northwest Pennsylvania.

    NSSGA is the leading voice and advocate for the aggregates 
industry. Its members--stone, sand and gravel producers and the 
equipment manufacturers and service providers who support 
them--produce the essential raw materials found in homes, 
buildings, roads, bridges and public works projects. During 
2014, NSSGA member companies represented more than 90 percent 
of the crushed stone and 70 percent of the sand and gravel 
consumed annually in the U.S., and there are more than 10,000 
aggregates operations across the United States. Nearly every 
congressional district is home to an aggregate facility. 
Production of aggregate in the U.S. in 2014 totaled 2.39 
billion tons at a value of $20.3 billion.

    Seventy percent of NSSGA members are small businesses. 
Failure of Congress to enact a highway bill, changes in the 
regulatory environment governing aggregates extraction or their 
use have huge impacts on small business. I know, because I come 
from a small business.

    The first of our sites was in Collins, N.Y., on the Gernatt 
family dairy farm. In 1955 Dan Gernatt mortgaged his farm to 
put up a sand and gravel plant when Interstate 90 was first 
constructed 12 miles from the farm. The dairy herd was milked 
daily while the gravel plant ran in the barnyard. This first 
operation was fun by Dan Sr., Dan Jr. and two employees. The 
cows were eventually sold as they added a concrete plant and an 
asphalt plant to the Collins location. Since our founding, we 
have expanded to have eight sand and gravel processing plants, 
six hot mix asphalt plants, one contractor supply outlet, a 
rock salt terminal and numerous sand and gravel excavation 
sites.

    Our locations are spread over three western N.Y. counties 
in rural areas where people struggle to find good paying jobs. 
The Gernatt organization considers its 175 loyal employees as 
family and we want to provide them the well-paying, stable 
employment they deserve. The business has grown because of the 
hard work by the Gernatts and their employees. We are an open 
shop operation where everyone works together for the common 
goal of making the company's successful. The Gernatts share 
their faith-based values and are strong supporters of the local 
businesses and community efforts where we operate. It is 
important to us that the local repair shops, auto dealers, tire 
shops, welders, painters and all other support businesses 
benefit from our success. We are an integral part of the 
western New York community and we do this because it is the 
right thing to do.

    Aggregates are the foundation of our business and an 
essential American industry that serves as a barometer for the 
rest of the U.S. economy. Without it we cannot make hot mix 
asphalt, concrete, landscape stone or winder road sand. Stone, 
sand and gravel are essential to any construction project--
public and private. When the demand for our products is high, 
the nation is growing, jobs are being created and essential 
national assets are being built. If the aggregates industry is 
doing well, America is doing well and so are Gernatt companies.

    Aggregates are used in nearly all residential, commercial, 
and industrial building construction. They are also used for 
many environmental purposes, including pervious pavements and 
other LEED building practices, the treatment of drinking water 
and sewage, erosion control on construction sites, and the 
treatment of air emissions from power plants. While Americans 
take for granted this essential natural material, it is 
imperative for the construction of our infrastructure and homes 
and for positive growth in our communities.

    We in the aggregates industry remove materials from the 
ground, then crush and process them for various uses. Hazardous 
chemicals are not used or discharged during removal or 
processing of aggregates. When aggregates producers are 
finished excavating the stone, sand or gravel in an area, they 
pay to return the land to other productive uses, such as 
residential and business communities, farm land, parks, lakes 
or nature preserves.

    While stone, sand and gravel resources may seem to be 
ubiquitous, construction materials must meet strict quality and 
technical guidelines to make durable roads and other public 
works projects. There is no shortage of aggregates; however the 
availability of future sources of high quality aggregates could 
become a significant problem in many areas of the country if 
proposed regulatory changes, like the recently issued EPA 
waters of the U.S. rule, are implemented.

    Sales of natural aggregates generate over $40 billion 
annually for the U.S. economy. When combined with related 
industries, such as cement, concrete, asphalt and construction 
equipment and supplies, the transportation construction 
industry generates more than $200 billion in economic activity 
every year and employs more than two million people.

    Through its economic, social and environmental 
contributions, aggregates production helps to create 
sustainable communities and is essential to the quality of life 
Americans enjoy. Aggregates are a high-volume, low-cost 
product. Due to high product transportation costs, proximity to 
market is critical; unlike many other businesses, we cannot 
simply choose where we operate. We are limited to where natural 
forces have deposited the materials we mine. There are also 
competing land uses that can affect the feasibility of any 
project. Generally, once aggregates are transported outside a 
25-mile limit, the cost of the material can increase 30 to 100 
percent. Because so much of our material is used in public 
projects, any cost increases are ultimately borne by the 
taxpayer. Since we operate near areas of limited quality 
reserves we ship up to 200 miles via truck and rail to meet the 
demand where quality aggregates are not locally available. This 
is only possible using adequately maintained highways and 
railways.

    Over the past eight years, the aggregates industry, like 
many others, has experienced the most severe recession in its 
history with the federal regulatory tsunami causing further 
harm to an industry that has seen production drop by 39 percent 
since 2006. During that time, when the commercial and 
residential construction markets slowed to a crawl, we were 
forced to scuttle expansions, lay off employees and alter our 
business plans.

    Our highway system infrastructure continues to deteriorate 
at a rate much faster than we are making repairs. Our local 
towns, counties and New York State DOT struggle to maintain 
adequate conditions, say nothing of reconstructing roads that 
have exceeded design life or design capacity. With federal 
funding in a continual state of limbo, states are unable to 
adequately plan for long term infrastructure repair and 
maintenance. With all this uncertainty small businesses, like 
ours, struggle to plan our futures. Our equipment is extremely 
expensive, so making huge capital equipment investments without 
a clear vision is difficult at best. Many things need to fall 
into place to do a project in the shortened construction 
seasons of the northern U.S. While it may not seem like long 
time, a four-week delay in funding or awarding contracts will 
cause a project to lose a complete construction season and add 
to its cost. This causes a ripple effect, affecting many 
businesses along the supply chain resulting in a great deal of 
economic distress.

    The business of successfully building and maintaining our 
national surface transportation infrastructure depends in large 
measure on funding stability and year-over-year predictability 
provided by the surface transportation authorization. The 
extension of the current law, MAP-21, expired on May 31.

    Congress passed a two-month extension of the program to 
July 31, which continues authorization of the program and 
allows continued expenditures from the Highway Trust Fund. It 
was the 33rd short-term extension of the program over the past 
six years. At the end of July, the Highway Trust Fund is 
expected have a balance of $3.5 billion.

    Congress needs to do what they were elected to do and stop 
kicking the can down the road by addressing the long-term 
funding of our nation's surface transportation infrastructure. 
No more short-term extensions. Reauthorization is critical to 
NSSGA's many small aggregates producers like us.

    We are active in our community organizations, within our 
state trade associations and with other national trade 
associations including the National Asphalt Pavement 
Association. Regardless of which organization I am 
participating in, the conversation is the same. When are we 
going to fix our highways and infrastructure? Elected officials 
on every level recognize the need for sustainable, stable, 
adequate funding to maintain AND improve our highway system. 
Our employees ask, ``When are we fixing the roads and bridges 
we drive on every day?'' New York State DOT personnel open each 
meeting with a plea for us to call our congressmen and get the 
state DOT a stable program so they can plan for our future 
needs. We can no longer ignore the elephant in the room.

    In the absence of a long-term plan, my customers are 
telling me they are not sure what the next years are going to 
bring to them, thereby causing me to withhold investment in 
plants and new machinery for the foreseeable future. It is 
increasingly difficult to do long range workforce planning due 
to uncertain demand.

    Last increased in 1993, the transportation user fee has 
outgrown its current buying power. The cost of materials and 
labor has gone up dramatically since then, as well as increased 
fuel efficiency. In order to keep up with the twenty-first 
century, two commissions, created by the last multi-year 
surface transportation reauthorization law, recommended a 
simple, straightforward, effective solution--to increase the 
fuel user fee coupled with indexing it to inflation. The 
commissions' reports suggested other potential revenue sources; 
so too, have reports from a host of organizations. Revenue 
options are not the problem.

    Continued patches and temporary fixes hurt future and 
existing projects as states and localities are hesitant to move 
forward out of fear the federal government will not meet its 
funding obligations.

    Multi-year surface transportation reauthorizations are 
particularly vital for the funding confidence they instill in 
state departments of transportation. When they know that the 
Federal Highway Administration will apportion their funding 
year after year, in the amount authorized, they have confidence 
that their state expenditures will be reimbursed. The states 
then award contracts, and the process of building and 
maintaining our transportation infrastructure can proceed 
smoothly. Confidence in the stability of the program is a 
critical factor in ensuring success, particularly for small 
businesses.

    When there are doubts, as there are today, awards for 
construction slow. Already Arkansas, Georgia, Tennessee, 
Wyoming, Montana, Nevada, Utah, Colorado, Nebraska, 
Mississippi, Pennsylvania, West Virginia, Connecticut, Vermont 
and Maryland have either delayed or cancelled highway, bridge 
or transit capital projects this year or are considering doing 
so because of uncertainty over future federal funding. 
Congressional highway program extensions have affected $1.3 
billion in transportation improvement projects.

    The aggregates industry alone employs approximately 100,000 
highly-skilled men and women. Nearly 700,000 jobs relay on 
federal transportation spending. At its core, surface 
transportation reauthorization is a jobs bill that results in 
long-term national assets.

    A recent Transit Labs report on the best and worst bridges 
found that 430 of 435 congressional districts have at least one 
structurally deficient bridge. What makes a bridge structurally 
deficient? Federal law requires states to inspect their 20+ ft. 
bridges every two years. Bridges are rated from 0-9 with 9 
being the best. Federal guidelines classify bridges as 
``structurally deficient'' if one of the three components 
holding up the bridge (deck, superstructure or substructure) is 
given a 4 or less.

    According to the report, 11 percent of congressional 
districts account for over half of our nation's deficient 
bridges. If you break it down, there are more than 300 
deficient bridges per district and more than 32,000 
structurally deficient bridges in total. In many states--Iowa, 
Illinois, Indiana, Kansas, Missouri, Mississippi, New York, 
Oklahoma, and Pennsylvania there are at least 3 districts with 
more than 300 deficient bridges. The Memorial Bridge that links 
Arlington National Cemetery with the nation's Capital City was 
deemed structurally deficient and restricted to a single lane 
of passenger vehicles in each direction. The crisis is 
nationwide.

    We recognize the difficulty in finding long-term funding 
for the highway program. NSSGA supports an all-the-above 
approach to fund our nation's infrastructure projects. We also 
understand that no one funding mechanism is a panacea. In the 
absence of action, the costs to maintain and improve our 
nation's vascular system only increase. Meanwhile, Americans 
are becoming more and more frustrated with the growing number 
of potholes, cracked roads and traffic jams plaguing our roads, 
highways, and bridges. According to the Texas Transportation 
Institute Americans spend 38 hours and $121 billion in wasted 
fuel sitting in the congestion plague our urban areas. Extra 
vehicle repairs and operating costs are costing $94 billion a 
year billion--$444 per motorist.

    President Eisenhower signed the law creating the National 
Interstate Highway System nearly sixty years ago. It was 
designed to last 25 years. We are 34 years beyond is useful 
life. Is it any wonder that it is deteriorating?

    The least expensive way not to waste fuel and to improve 
air quality is to increase the capacity of our roads and 
bridges and alleviate congestion. The Federal Highway 
Administration estimates that each dollar spent on road, 
highway and bridge improvements results in an average benefit 
of $5.20 in the form of reduced vehicle maintenance costs, 
reduced delays, reduced fuel consumption, improved safety, 
reduced road and bridge maintenance costs and reduced emissions 
as a result of improved traffic flow.

    Improved safety is another important reason to pass a 
multiyear highway reauthorization bill now. There were 32,719 
traffic fatalities in 2013 in the U.S. A total of 165,340 
people died on U.S. highways from 2009 through 2013. The 
fatality rate on the nation's rural roads in disproportionately 
higher than that on all other roads. There were 1,199 traffic 
fatalities in 2013 in New York. Motor vehicle crashes cost New 
York $19.5 billion per year, $1,027 for each resident, in 
medical costs, lost productivity, travel delays, workplace 
costs, insurance costs and legal costs.

    We can do better. Safety must come first to ensure that you 
and I and our families, friends, and employees get to and from 
their daily activities safely. Gernatt Companies are committed 
to the safety of its most precious resource--our employees. The 
company uses all possible means, be they administrative or 
engineering controls--to protect employees. While our industry 
is based around large equipment, conveyors, crushers, off road 
equipment and lots of dump trucks, we pride ourselves on our 
safety record. Our small company devotes numerous personal and 
monetary resources to maintaining our safety program. While we 
all must comply with the federal regulations enforced by Mine 
Safety and Health Administration and Occupational Safety and 
Health Administration, we are part of a captive self-insured 
group that requires safety programs to exceed any federal 
regulations. We hold annual safety refresher courses, maintain 
our own safety committee and send a cross-section of employees 
to our captive safety meetings. We also utilize an employee 
wellness program through our health insurance captive as 
commercial health insurance has become cost prohibitive.

    There are those that say we should devolve the program to 
the states in order to return maximum discretionary authority 
and fiscal responsibility to them for all elements of the 
national surface transportation systems. It is critical to 
remember that the federal government's role in maintaining the 
national road network, which carries more than 73 percent of 
the 48 million tons of goods transportation across the country 
daily, is a constitutional one. Article 1, Section 8, directs 
the federal government ``To establish Post Offices and post 
Roads,'' or the forerunner of our national highway system. 
Devolution of the program would saddle the states with 90 
percent of the fiscal responsibility for supporting highways 
that the federal government has an obligation to establish. In 
order to make up lost federal monies, New York would have to 
raise the gas user fee 20.7 cents and the diesel fuel user fee 
19.3 cents.

    A better approach is to reform the system, not risk the 
nation's economic future by disinvesting in a highway system 
that is already under-funded.

    Mr. Chairman, again thank you for the opportunity to 
testify today. Let me reiterate the importance to the 
aggregates industry and all small businesses of Congressional 
action on a multi-year surface transportation reauthorization, 
one that increases investment in the nation's roads, bridges, 
and highways. Our industry, like most businesses, requires 
certainty to make sound capital investment decisions. Reverting 
to short-term extensions will only create havoc in resource 
development decisions and construction projects.

    Attached to my statement are two infographics that NSSGA 
put together. ``Small Change'' calculates the real costs to the 
average American of the Corker-Murphy proposal to increase the 
fuel user fee $12 cents. The second infographic shows visually 
the costs of doing nothing.

    We look forward to continuing to work with you in doing 
what is right for America. If we ignore the maintenance and 
improvement of our nation's road and highway network--the 
circulatory system of America, it is at our own peril, we risk 
the loss of economic growth, improved safety, cleaner air, and 
jeopardize the freedom of mobility we all take for granted.

    Attachments
    
    
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    Chairman Chabot, Ranking Member Velazquez, and other 
distinguished members of the House Small Business Committee, my 
name is Don Shilling, and it is my pleasure to appear before 
you today both as an executive at a construction equipment 
company directly impacted by the uncertainty surrounding 
federal surface transportation programs and in my capacity as 
chairman of Associated Equipment Distributors (AED).

    I am the president of General Equipment & Supplies, the 
authorized Komatsu construction equipment dealer for North 
Dakota and Western Minnesota. In addition to our four North 
Dakota locations, we have two facilities in Minnesota and one 
in South Dakota. We also have two Canadian locations. General 
Equipment & Supplies employs 235 American workers.

    AED is the trade association representing distributors of 
construction, mining, energy, forestry, industrial, and 
agricultural equipment. AED members supply the equipment that 
builds America's highways, bridges, airports, sewer, and 
drinking water systems and the association has a longstanding 
commitment to strong federal infrastructure programs. AED's 
members range in size from small dealerships with one location 
and a handful of employees to larger companies with thousands 
of employees and dozens of locations across several states. 
However, the overwhelming majority of AED's members are small, 
family businesses: AED's average member achieves about $40 
million per year in revenues and employs 80 people.

    I appreciate the opportunity to come before the Committee 
to discuss the nation's infrastructure crisis; the impact the 
federal highway program's uncertainty has on my company and the 
broader industry; and what needs to be done immediately to 
restore confidence in construction markets.

    Confronting the Nation's Infrastructure Crisis

    America's surface transportation needs are well documented 
and negatively impact the country's economy, national security, 
combativeness, productivity, and environment. In fact, the 
World Economic Forum ranks the United States quality of roads 
16th in the world, behind the likes of China, Japan, Oman, and 
the United Arab Emirates.

    According to the Transportation Road Information Program 
(TRIP), a nonpartisan organization that researches, evaluates, 
and distributes economic and technical data on surface 
transportation issues, nineteen percent of America's major 
roads are in poor condition and twenty-four percent of the 
nation's bridges are structurally deficient or functionally 
obsolete. Road and highway needs aren't limited to heavily 
populated areas. TRIP recently released a report concluding 
America's rural roads and bridges have significant 
deficiencies. In 2013, 15 percent of the nation's major rural 
roads were rated in poor condition and another 39 percent were 
rated in mediocre or fair condition. In 2014, 11 percent of the 
nation's rural bridges were rated as structurally deficient and 
10 percent were functionally obsolete, impacting U.S. 
agricultural sectors and hampering farmers from delivering 
goods from farm to market in a timely manner.

    As Congress delays addressing the country's drastic needs, 
the public is paying the price in lost productivity and vehicle 
repairs. TRIP found that inadequate roads cost U.S. drivers 
$109 billion a year in extra vehicle repairs and operating 
costs. According to the Texas Transportation Institute, traffic 
congestion (resulting in large part from inadequate capacity) 
detracts more than $121 billion per year in wasted fuel and 
lost productivity from the U.S. economy and costs the average 
American commuter approximately $818 annually, threatening the 
environment and public health.

    Few will argue that the time for substantial investment in 
our nation's surface transportation infrastructure is long 
overdue. Nonetheless, lawmakers continue to punt the tough 
decisions about how to pay for robustly funded, long-term 
surface transportation legislation to restore certainty to the 
Highway Trust Fund (HTF) and provide certainty to construction 
markets.

    Impact of Highway Investment Uncertainty on General 
Equipment & Supplies

    General Equipment & Supplies and AED members across the 
nation, operating in every state and congressional district, 
are ready to supply the heavy equipment needed to rebuild 
America. The HTF consistently flirts with bankruptcy as gas 
taxes and other highway user fee revenues are insufficient to 
support even the current inadequate levels of transportation 
investment. This is creating enormous uncertainty for 
transportation planners, contractors, and equipment 
distributors.

    My company is fortunate. The energy boom in North Dakota 
has allowed General Equipment & Supplies to stay in business 
despite significant decreases in our equipment sales to road 
contractors, which account for about 50 percent of our customer 
base. However, our Minnesota locations, which almost 
predominately services highway markets, have seen dramatic 
reductions in sales, due to the uncertainty surrounding federal 
investment. In fact, between 2013 and 2014 we saw a 34 percent 
reduction in equipment whole goods retail sales. Even in North 
Dakota, the state is reluctant to bid long-term, equipment 
intensive jobs, and recently pulled 30 contracts due to lack of 
confidence in the HTF.

    Historically, General Equipment & Supplies (and most AED 
members) primarily sold heavy construction equipment. However, 
we increased rentals by 26 percent between 2013 and 2014 due to 
the uncertainty surrounding federal investments. While we're 
grateful for the business, the drop in sales has broad 
implications, including forcing dealers to continue to carry 
rental equipment on our balance sheets (along with the 
associated financial risk) and typing up cash that could be 
used to hire more workers and investment in the company.

    The HTF's precarious situation is also impacting business 
decisions. My company has considered opening a new location in 
North Dakota, which means purchasing a 20,000 square foot 
building and hiring between 12 and 20 new employees. I've been 
reluctant to expand because of lack of confidence in highway 
markets, since the new facility would primarily service the 
road building and agriculture sectors.

    Additionally, it should be noted that AED members' interest 
in resolving the uncertainty surrounding federal surface 
transportation programs isn't solely to increase sales. My 
company services customers in a territory over 100,000 square 
miles and we are heavily reliant on the interstate highway 
system. We deliver parts nightly from Minneapolis to Western 
North Dakota. Also, a majority of our equipment servicing and 
repairs happen in the field where our service trucks are 
dispatched daily to remote job site locations. As a small 
business, delays and costs associated with inadequate highways 
and congestion significantly increase operating expenses, 
hindering investment in the company.

    The Impact of Highway Investment Uncertainty on Equipment 
Markets

    The detrimental impact of the uncertainty surrounding the 
HTF isn't unique to General Equipment & Supplies. In fact, by 
August, without action, economic shockwaves will reverberate 
throughout the country as the HTF will be unable to support any 
highway or transit spending, jeopardizing more than $50 billion 
in annual investment and threatening $2.4 billion in equipment 
market activity (i.e., dealer revenue from sales, rental, and 
product support) and close to four thousand equipment 
dealership jobs.

    In preparation for this hearing, AED conducted a quick 
survey of its membership to gage the federal highway program's 
impact. Ninety-one percent of respondents said that surface 
transportation construction either had a significant impact on 
demand for their companies' products or that it was their most 
important market. Not surprisingly, the effects of the 
uncertainty are the same nationwide as they are in my 
territory. Here's a sampling of some of what our members said 
about how they and their customers are impacted:

    Uncertainty is forcing dealers to cut jobs. ``Our company 
has 25% less employees than we did in 2008m with a $10 million 
smaller payroll,'' said an AED member in Tennessee.

    Dealers must carry more risk and divert resources due to 
the uncertainty. ``Contractors have less certainty about their 
long term future, thus they tend to rent equipment rather than 
buying. That means we have to borrow more money to have 
equipment on hand to meet our customer's needs,'' writes an AED 
member in Texas.

    Congressional inaction is hindering economic growth. An AED 
member in Connecticut said, ``Without a long term plan, 
contractors are not willing to invest in equipment for future 
work, thus restricting growth in our business.

    Uncertainty is causing contractors to delay investments in 
heavy equipment. An AED member in New York said, ``It has 
negatively impacted our company due to the lack of longer term 
planning of projects/programs. The larger, more impactful 
projects tend to be delay and postponed--contractors are less 
likely to invest in equipment due to the uncertainty of future 
projects.'' A California-based equipment distributor wrote, 
``The short-term extensions do not allow construction 
contractors to make decisions regarding fleet equipment 
purchases.''

    While the economic harm being caused by the uncertainty is 
clear, so is the fact that enacting a new fully-funded, long-
term highway bill would have broad economic benefits for our 
industry and beyond. For example, ninety-one percent of our 
survey respondents said they would likely add employees if 
Congress passed a highway bill. Seventy-eight percent would 
purchase new service trucks and 91 percent would increase 
inventory levels, all of which would help the manufacturing 
sector.

    A new, long-term highway bill would also create new 
business activity for construction contractors, even those who 
don't build roads as evidenced by the fact that 47 percent of 
our survey respondents, similar to my company, are likely to 
expand or improve existing facilities and more than a third 
would open new locations if Congress restores certainty to the 
program.

    The Solution

    What's needed is bold, decisive action to restore long-term 
certainty to the federal highway program. A 2013 study 
conducted by researchers at William & Mary's Thomas Jefferson 
Program in Public Policy found that the HTF deficit will amount 
to $365.5 billion by 2035. The AED report also proposed bold 
solutions: increasing the gas tax to 25 cents per gallon and 
indexing it for future inflation would raise $167 billion more 
than current baseline spending requirements over the next two 
decades.

    AED strongly supports a user fee increase in the near-term 
as Congress develops a more sustainable revenue model (e.g., 
vehicle miles travelled fee). Nonetheless, all options should 
be on the table to fully fund the federal highway program well 
into the future and ensure a strong federal role in surface 
transportation investment.

    Finally, Congress must also keep in mind that funding 
surface transportation infrastructure isn't government 
``spending''. It's an investment that pays for itself. A 2012 
AED study found that as with capital assets bought by a 
business, over 20 years, each dollar invested in highways and 
streets returns approximately $0.35 in tax revenue and for each 
dollar invested in highways and streets, $0.23 of tax revenue 
accrues at the federal level.

    Conclusion

    In sum, our nation faces an unparalleled infrastructure 
crisis. Congress can't keep kicking the can down the proverbial 
road because the road is deteriorating and full of potholes. We 
need immediate and aggressive congressional action to ensure 
that our transportation system does not degrade further and 
that state and federal governments have the resources they need 
to address the crisis. The small business-dominated 
construction equipment industry is directly impacted by federal 
infrastructure spending and thousands of jobs are affected by 
this federal program.

    The current uncertainty surrounding federal infrastructure 
programs is contributing to volatility in equipment markets. At 
the same time, equipment distributors and their employees 
suffer the consequences of under-investment in infrastructure 
along with other businesses and the general public.

    AED therefore urges Congress to quickly resolve the near-
term uncertainty surrounding the HTF and to enact a long-term 
highway reauthorization bill that creates new revenue streams 
to support infrastructure investment. Further delay is 
inexcusable; the American people deserve bold, decisive 
leadership. Now is the time for Congress to step up to the 
plate.

    If Congress seizes this historic opportunity to the act, 
the benefits of new infrastructure investment will be felt 
immediately and for years to come as America positions itself 
to compete globally with a stronger economic backbone.
[GRAPHIC] [TIFF OMITTED] T4803.004

    Chairman Chabot, Ranking Member Velazquez, and members of 
the House Committee on Small Business, thank you for the 
opportunity to meet with you today to offer testimony on the 
importance of transportation and infrastructure to business 
growth.

    My name is Matt Davis and I am president of DSD Advisors, 
LLC, a government affairs consulting firm based in Cincinnati, 
Ohio. I am here today in my capacity as Director of the Build 
Our New Bridge Now Coalition. Created in 2012, the Build Our 
New Bridge Now Coalition is a diverse group of small, medium, 
and large businesses, and community, government, and labor 
leaders who have come together to advocate for rebuilding and 
rehabbing the 1-75/71 Brent Spence Bridge Corridor. These 
leaders joined to focus their efforts to rebuild the Corridor 
because it is inextricably linked to our region's current and 
future economic opportunities, quality of life, and safety.

    If you do not already know, the Brent Spence Bridge is a 52 
year-old span that carries Interstates 75 and 71 across the 
Ohio River, locally. It also serves as a major artery in our 
national highway system, carrying the equivalent of 4% of the 
nation's GDP every year and connecting Michigan to Miami, 
servicing many companies, both large and small.

    Locally, Southwest Ohio, Southeast Indiana, and Northern 
Kentucky have a distinct economic advantage, being within just 
a 90 minute flight or a one-day drive of the 25 top U.S. metros 
and 41% of the nation's purchasing power. Couple those numbers 
with the amount of the nation's GDP that the Brent Spence 
Bridge carries alone, you can see that the geography serves our 
region's residents and businesses well.

    Unfortunately, our roads and bridges have not. The Brent 
Spence Bridge was built more than 50 years ago to create jobs 
and spur economic opportunity. Now, it is failing our region. 
The Brent Spence Bridge carries more than twice the amount of 
vehicles per day that it was designed to accommodate, is 
considered ``functionally obsolete'', and was recently given a 
grade of ``C-'' by Kentucky transportation.

    Congestion on this crumbling, decaying, and out-of-date 
span continues to increase, stifling productivity, slowing the 
flow of goods and commuters, raising safety concerns, and 
lowering air quality.

    According to our MPO, the Ohio-Kentucky-Indiana-Regional 
Council of Governments, approximately 60% of the local 
population and 75% of the local jobs live within 5 miles of 
Interstate 75. The Interstate corridor and Brent Spence Bridge 
that supports it are critical to our region's present and 
future. Businesses chose the Cincinnati region because of its 
economic climate, and infrastructure, particularly the Brent 
Spence Bridge Corridor, is a key component of that climate. So 
we must care for it to ensure our economic future.

    Another statistic you should know: You are 3-5 times more 
likely to be in an accident on the Brent Spence Bridge Corridor 
than you are on any other portion of the interstate system in 
Ohio, Kentucky, or Indiana. That stat leads one to wonder what 
the future holds. If we do nothing, will conditions improve? 
Probably not. If not, then we fear that existing businesses 
will relocate and prospective businesses will look elsewhere. 
This corridor, a great benefit to our region, could hold us 
back if we do not develop a strategy to modernize it.

    Businesses, particularly small ones, operate on very thin 
margins. As the old saying goes, ``time is money'' and that 
rings true for every small business in Cincinnati and the 
country. In order for their businesses to stay afloat, these 
small businesses need reliable roads, bridges, waterways, 
airports and railways to move employees and goods from place to 
place as safely as possible. If a delivery or an employee is 
late, it can cause major disruptions for that business, with a 
multiplied effect on our region.

    The Build Our New Bridge Coalition is one of many groups 
that believe developing strategies on infrastructure at the 
state and national levels with a set of priorities will be a 
springboard to significant job gains, particularly for small, 
homegrown businesses.

    Northern Kentucky University completed a study that looked 
at the economic impact of rebuilding the $2.7 billion Brent 
Spence Bridge Corridor. It found that 24,488 jobs would be 
created in Ohio and Kentucky, generating $1.9 billion in labor 
income and $193.1 million in state and local government 
revenue. Keep in mind, those numbers are just those directly 
associated with rebuilding the corridor. Providing reliable and 
safe infrastructure is one place where Washington and the 
states can play a major role by supplying the tools for the 
success of America's small businesses, but it requires 
significant resources and focus. The sky is the limit for the 
future of small businesses, but not if employees cannot get to 
the office or a delivery truck is constantly late.

    Thank you for your time today and attention to this 
important topic. I am happy to answer any questions you may 
have.
 The Road Ahead: Small Businesses and the Need for a Long-Term 
                            Surface

                 Transportation Reauthorization

                            Hearing

                     June 3, 2015, 11 a.m.

                  Committee on Small Business

                 U.S. House of Representatives

            Statement of Dr. Jonathan L. Gifford \1\
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    \1\ [email protected]; 703-993-2275; p3policy.gmu.edu;@p3policy

   Professor and Director, Center for Transportation Public-
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                   Private Partnership Policy

    School of Policy, Government, and International Affairs

                    George Mason University

         3351 Fairfax Drive, MS3B1, Arlington, Virginia

    Chairman Chabot, Ranking Member Velazquez, and 
distinguished members of the committee, thank you for the 
opportunity to speak to you today about the reauthorization of 
the nation's surface transportation legislation.

    I am a professor at George Mason University, where I direct 
the Center for Transportation Public-Private Partnership Policy 
in Arlington, Virginia. The Center's objectives are to provide 
objective analysis of transportation public-private 
partnerships (P3s) through research, education, and outreach in 
order to facilitate their application in the most effective 
situations. The Center's program focuses on building the 
evidence base to evaluate P3s, advancing the capacity of public 
entities to asses and utilize the approach, educating 
researchers and professionals, and reaching out to business, 
government and the community at large to improve their 
understanding of the P3 approach to infrastructure development. 
We believe that a better understanding of P3s will lead to 
their most appropriate utilization.

    I would like to make three points about the subject of 
today's hearing on small business and the need for a long-term 
surface transportation reauthorization.

    My first point is that public-private partnerships (P3s) 
for transportation projects offer significant opportunities to 
small businesses. P3s generally involve design, construction 
and long-term operation and maintenance of a transportation 
project. P3 contracts usually have a term of 35 or more years, 
in some cases 75 years.

    These long-term agreements create a favorable environment 
for the small businesses in the communities surrounding the 
projects. Business needs include engineering, materials, 
construction, public affairs, community relations, architects, 
attorneys, security, and appraisers. Many of these business 
needs last not just for the duration of the construction but 
for the life of the concession agreement--many decades. Such 
long-term agreements foster the creation and sustenance of 
local businesses.

    Moreover, such opportunities are more than discretionary on 
the part of the concessionaire. States participating in P3s 
typically establish goals for participation by small, woman-
owned and minority-owned businesses and disadvantaged business 
enterprises (SWaM/DBE). For example, Virginia's goals for three 
of its major projects total more than $1 billion for the design 
and construction phase alone.\2\ The recently completed 495 and 
95 Express Lanes P3 projects in Virginia supported more than 
28,000 jobs during construction, and employed hundreds of DBE/
SWaM firms, 184 firms for the 95 Express Lanes and 250 firms 
for the 495 Express Lanes.\3\
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    \2\ Virginia Office of Public-Private Partnerships, ``PPTA DBE/SWaM 
Programs: Achieving Historic Results,'' n.d., http://
www.p3virginia.org/wp-content/uploads/2014/07/FACT-
SHEET--PPTA-DBESWaM.pdf.
    \3\ Transurban, personal communication, June 2, 2015.

    A long-term surface transportation reauthorization can 
support small business by removing barriers in federal law 
regarding P3s, and by continuing and possibly increasing 
federal support for P3s. Without long-term reauthorization, 
agencies are experiencing difficulty in letting and continuing 
meaningful projects because they do not have the requisite 
budget authority. Large firs may be able to absorb this 
uncertainty, but small businesses are not well-equipped to deal 
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with the off/on nature of the current federal process.

    A major barrier for P3s in many states is the federal 
prohibition against charging tolls on reconstructed 
Interstates. Congress may wish to reconsider that prohibition 
since so much of the Interstate system will require 
reconstruction in coming decades. Significantly, relaxing or 
removing this prohibition can be done at no cost to the federal 
budget. And it would allow states to decide whether and how 
much to explore tolls as a means of renewing and expanding 
their highway systems.

    Congress may also wish to extend or expand current programs 
that support P3s, notably TIFIA and PABs. The TIFIA program 
(for Transportation Infrastructure Finance and Innovation Act) 
provides loans and credit support to most P3 projects. PABs, or 
private activity bonds, level the playing field between bonds 
for P3 projects and municipal bonds by exempting PABs from most 
federal income taxes.

    President Obama's proposed QPIBs (Qualified Public 
Investment Bonds) would expand the dollar amount available for 
P3s by eliminating the current $15 billion cap on PABs.

    My second point relates to the federal gas tax. The federal 
gas tax and the Highway Trust Fund have played important roles 
since their establishment in 1956 in the construction of the 
Interstate Highway System and supporting the Federal-Aid 
Highway Program. The current gas tax rate is not sufficient to 
support the ongoing expenditures of the existing surface 
transportation program. Congress has filled the gap in recent 
years with contributions from the general fund.

    Continued reliance on the gas tax as the primary source of 
funds to support the federal surface transportation program is 
problematic. As cars get more fuel efficient and the number of 
hybrids and electric vehicles increase, a flat per-gallon tax 
on gasoline generates less and less for each mile driven on our 
highway system.

    In the long term, Congress must decide how much financial 
support it wishes to provide the surface transportation 
program, and how to pay for it. An increase in the gas tax 
could support an ongoing program at current spending levels. 
However, in the longer term, other sources of state, local and 
federal revenue such as tolls may provide a more suitable 
financial foundation for addressing the nation's transportation 
needs and opportunities.

    There appears to be significant appetite for infrastructure 
investment in the global capital markets. Investment in the 
U.S., however, is limited due in part to a lack of bankable 
projects. Removing barriers to tolling could enable more 
private capital investment.

    My third point relates to the future of the University 
Transportation Centers program. This program has supported a 
number of universities, including my own, in conducting 
research on our nation's transportation system and educating 
generations of students who go on to design, construct, 
operate, finance and maintain that system.

    As an active participant in the UTC program for most of my 
career, I would like to assure the Committee that the program 
has generated considerable value in research, education and 
professional development.

    Our nation appears to be on the cusp of major changes in 
its transportation systems. Important innovations include 
autonomous vehicles, GPS, mobile devices, advanced materials, 
shared use of cars and bicycles, transportation network 
companies like Uber and Lyft, and public-private partnerships. 
These innovations have the potential to transform the movement 
of people and freight. They also have the potential to disrupt 
the industries and institutions that make up our transportation 
system.

    Continued support of the University Transportation Centers 
program will allow research and education to continue to 
contribute to expanding development of such innovations and 
understanding their implications for society.

    That concludes my formal statement. I would be happy to 
answer your questions.

    Thank you.
   Small Business Committee Hearing: ``The Road Ahead: Small 
 Business and the Need for a Long-Term Surface Transportation 
                       Reauthorization''

   Congressman Blaine Luetkemeyer - Statement for the Record

    Coming from a state that has the seventh largest highway 
system, I know just how crucial America's roads and 
infrastructure are to our state's and our nation's economy. The 
route from point A to point B can determine how many deliveries 
or repairs are made in a given day by a small business owner 
simply trying to make ends meet. Failure to pass a 
comprehensive long-term surface transportation bill will have 
drastic implications on the economic health of our great state. 
The unfortunate truth is this--the American Society of Civil 
Engineers (ASCE) assessed the roads and transit infrastructure 
in Missouri and gave the Show-Me State an embarrassing ``D'' 
letter grade, while our bridges merely received a ``C+.'' In 
Missouri, we fund maintenance, improvements, and desperately 
needed projects from the state gas tax, just as the federal 
Highway Trust Funds is funded. With increases in fuel 
efficiency mandated by the EPA and less total miles being 
driven, the revenue collected by the gas tax is not sufficient 
to adequately fund desperate maintenance and improvements to 
our state's highways and transit system.

    On May 21st, the House and Senate passed a short-term 
Highway Bill reauthorization, which will extend current 
programs and spending levels until July 31, 2015. While this 
will allow some construction to continue during the peak 
season, it leaves long-term projects and contracts with little 
certainty. This by no means answers our long-term highway and 
infrastructure troubles. It is imperative that a bipartisan 
solution be reached to benefit all Missourians on the road. 
During the next few months, Congress will craft a new long-term 
highway bill. The top priority will be to consider methods to 
fund the nearly $12 billion dollar Highway Trust Fund shortfall 
that is exceedingly unsustainable. If we stay on the current 
path, it is estimated that the Highway Trust Fund outlays will 
exceed incoming revenue by $167 billion over the 2015-2024 
period. As a nation we can no longer take the approach of 
simply maintaining our failing infrastructure.

    I am confident that with a proactive approach and exploring 
viable alternatives to the status quo, we can make real changes 
that yield positive and long-term benefits for all. This is an 
issue that has not received satisfactory attention in decades 
and definitely needs to be readdressed with fresh ideas.