[Senate Hearing 115-146]
[From the U.S. Government Publishing Office]
TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2018
----------
WEDNESDAY, MARCH 8, 2017
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:02 a.m., in Room SD-192, Dirksen
Senate Office Building, Hon. Susan Collins (chairman)
presiding.
Present: Senators Collins, Boozman, Daines, Hoeven, Reed,
Leahy, and Coons.
DEPARTMENT OF TRANSPORTATION
STATEMENT OF HON. DAVID BERNHARDT, COMMISSIONER, MAINE
DEPARTMENT OF TRANSPORTATION, PRESIDENT,
AMERICAN
ASSOCIATION OF STATE HIGHWAY AND
TRANSPORTATION
OFFICIALS
opening statement of senator susan collins
Senator Collins. The hearing will come to order. Today, our
subcommittee is holding this hearing on the state of our
Nation's transportation infrastructure and potential funding
and financing options to help meet the long-term transportation
needs of our Nation.
I am very pleased to be joined by Senator Jack Reed, who
returns to the subcommittee as our ranking member. We have
worked very, very closely together, and I am just delighted
that he did not abandon me and go to some other subcommittee. I
also want to also welcome our other subcommittee members who
have joined us today, as well as our panel of witnesses.
We are joined by witnesses Dave Bernhardt, who is the
Commissioner of Maine's Department of Transportation, and he
also serves as President of the American Association of State
Highway and Transportation Officials, or AASHTO, as I am told
it is called. Jim Tymon, the Chief Operating Officer of AASHTO
is also with us.
Todd Hauptli, the President and CEO of the American
Association of Airport Executives, will be providing an
important perspective, as well as Ed Mortimer, the Executive
Director of Transportation Infrastructure at the U.S. Chamber
of Commerce, and we are delighted that Beth Osborne, the
Director of Technical Assistance for Transportation for
America, or (T4A), is also with us.
The impetus for today's hearing, not surprisingly, is
President Trump's intention to invest $1 trillion in our
Nation's infrastructure over the next 10 years. I doubt that
there is a person in this room who would dispute that our
transportation system is in disrepair and requires additional
investments.
The American Society of Civil Engineers (ASCE) has rated
our roads, transit, and aviation systems as a ``D,'' and our
bridges a as ``C+.'' ASCE will be releasing its updated grades
tomorrow.
According to Airports Council International, our airports
have nearly $100 billion in infrastructure needs over the next
5 years to accommodate growth in passenger and cargo
activities.
For our Nation's highways and bridges, the Department of
Transportation's Conditions and Performance report also
identifies a backlog of unmet needs that approaches $840
billion.
We have made marginal improvements in reducing the
percentage of bridges that are either structurally deficient
and functionally obsolete, but the percentage of highways rated
as ``poor'' quality has increased, particularly in rural areas.
The DOT report projects that current funding levels are
only sufficient to maintain our existing infrastructure. In
order to address the $836 billion backlog and meet the future
needs over the next two decades, all levels of government
combined would be required to increase spending by 36 percent.
Deficient roads have a real cost. They are costing
motorists in my home State of Maine $1 billion annually in
vehicle damage, congestion delays, and traffic crashes. In
Portland, those costs can exceed $1,000 per motorist. You only
have to drive on Maine roads during the spring and hit all
those potholes to know what I am talking about, despite the
great efforts of Maine's DOT, I hasten to say.
So, it should be no surprise that according to a recent
poll, 87 percent of American voters support increasing Federal
spending on roads, mass transit, and other infrastructure.
The question is how do we pay for this much needed
investment. The average American now pays less than $160 per
year in Federal gasoline and diesel taxes, virtually unchanged
since the last gas tax hike in 1993.
In the interim, many states have raised their gas taxes,
which makes it more difficult for the Federal tax to be
increased, given the combined impact on consumers, particularly
those in large rural states like mine, who have no choice but
to drive long distances to get to work or to doctor
appointments.
As a result of the inadequate gas tax revenues to support
the Highway Trust Fund, Congress has been required to transfer
$143 billion in General Fund revenues since 2008, and will
likely once again be required to plug the hole in fiscal year
2020 if we do not find a long-term solution now. Of course,
with any fiscal problem, the longer you delay addressing it,
the more difficult it becomes.
The challenge that this Administration and Congress faces,
as previous ones have faced, is finding a way to pay for much-
needed infrastructure spending without increasing taxes on
those who are least able to afford them or using budget
gimmicks that simply lead to more deficit spending and add to
our Nation's ever-growing debt.
It is important that we explore all potential sources of
revenues that would allow us to invest in our infrastructure.
Many states are testing a vehicle miles traveled or VMT, user-
fee model, while others have switched to a sales tax.
The FAST Act provided funding for states to pilot
alternative funding mechanisms to allow certain states to test
these concepts in the real world.
Regarding our Nation's airport infrastructure, it is
critical to recognize that airports play a pivotal role in
moving people and goods, and are a great economic driver for
our communities.
In Maine alone, airports directly or indirectly generate
$2.9 billion in economic activity, while employing more than
26,000 people in jobs related to aviation. These astounding
numbers show just how important a role airports play.
Improving our Nation's highway and airport infrastructure
will also require us to look to new ways to finance projects
such as public/private partnerships, tolling, expansion of the
TIFIA loan program, and private activity bonds that are
typically more useful in large urban areas.
However, the Department of Transportation at the Federal
level has been slow to fully utilize these programs, and I hope
that our witnesses will offer us ideas on how to cut red tape
in order to move the available private financing, loans, and
tax credits out the door faster.
For rural areas similar to Maine, what has worked well are
competitive grant programs, such as the Transportation
Investment Generating Economic Recovery (TIGER) Program, which
allows DOT to prioritize funding to projects that are essential
to our transportation network but may otherwise not be funded.
The Airport Improvement Program, or AIP, also provides the
means to fund critical investments in our Nation's airport
infrastructure through the collection of Passenger Facility
Charges or PFCs.
Now, previous Administrations had proposed increasing the
cap on the Passenger Facility Charges, but it has been
accompanied by lowering the overall AIP funding substantially,
and that has generated opposition in Congress.
Working with the new Administration, we in Congress have a
great deal of work to do in developing an infrastructure
project to promote economic development, improve the transport
of people and products, and create jobs, and our biggest task
is going to be figuring out how to pay for it.
[The statement follows:]
Prepared Statement of Senator Susan M. Collins
Today, our subcommittee is holding this hearing on the state of our
nation's transportation infrastructure and potential funding and
financing options to help meet the long- term needs of our nation. I am
very pleased to be joined by Senator Jack Reed, who returns as the
Subcommittee's Ranking Member. I want to welcome our panel of
witnesses. We are joined today by:
--Dave Bernhardt, the Commissioner of Maine's Department of
Transportation, who is also currently serving as the President
of the American Association of State Highway and Transportation
Officials, or AASHTO;
--Jim Tymon, the Chief Operating Officer of AASHTO;
--Todd Hauptli, the President and C.E.O. of the America Association
of Airport Executives;
--Ed Mortimer, Executive Director of Transportation Infrastructure at
the U.S. Chamber of Commerce; and
--Beth Osborne, Director of Technical Assistance for Transportation
for America, or T.4.A.
The impetus for today's hearing is the Administration's intention
to invest $1 trillion in our nation's infrastructure over the next 10
years. I believe there is not a person in this room who would dispute
that our transportation system is in disrepair and requires additional
investments.
The American Society of Civil Engineers (A.S.C.E.) has rated our
roads, transit, and aviation systems as a ``D'', and our bridges are
rated ``C+''. A.S.C.E. will be releasing its updated grades tomorrow.
The Department of Transportation's ``Conditions and Performance''
report also identifies an $836 billion backlog of unmet needs for our
nation's highways and bridges. We have made marginal improvements in
reducing the percentage of bridges that are structurally deficient and
functionally obsolete, but the percentage of highways rated as ``poor''
quality has increased, particularly in rural areas that have lower
travel volumes.
The report projects that current funding levels are only sufficient
to maintain our existing infrastructure. In order to address the $836
billion backlog and meet the future needs over the next two decades,
all levels of government combined would be required to increase
spending by 36 percent.
Deficient roads are costing motorists in my home state of Maine $1
billion annually in vehicle damage, congestion delays, and traffic
crashes. In Portland, these costs can exceed $1,000 per motorist. So it
should be no surprise that according to a recent Quinnipiac University
poll, 87 percent of American voters support increasing Federal spending
on roads, mass transit, and other infrastructure. The question is: how
do we pay for this much-needed investment? The average American pays
less than $160 per year in Federal gasoline and diesel taxes, virtually
unchanged since the last gas tax hike in 1993. In the interim, many
states have raised their gas taxes, making it more difficult for the
Federal tax to be increased given the combined impact on consumers. As
a result of inadequate gas tax revenues to support the Highway Trust
Fund, Congress has transferred $143 billion in general fund revenues
since 2008 and will likely once again be required to plug the hole in
fiscal year 2020 if we do not find a long-term solution now.
The challenge that this Administration faces, as previous ones have
faced, is finding a way to pay for the much-needed infrastructure
spending without increasing taxes on those who are least able to pay
them or using budget gimmicks that simply lead to more deficit spending
and add to our nation's ever-growing debt.
I think it is important that we explore all potential sources of
revenues that will allow us to invest in our nation's infrastructure.
Many states are testing a vehicle-miles-traveled, or V.M.T., user-fee
model, while others have switched to a sales tax. The FAST Act provided
funding for states to pilot alternative funding mechanisms to allow
certain states to test these concepts in the real world.
Regarding our nation's airport infrastructure, it is critical that
we remember that airports play a pivotal role in moving people and
goods, and are a great economic driver for communities. Upgrading and
modernizing our nation's airports are crucial to any infrastructure
spending proposal.
In Maine alone, airports directly or indirectly generate over $2.9
billion in economic activity while employing over 26,000 people in jobs
related to aviation. This astounding number shows just how important a
role airports play in local communities.
Improving our nation's highway and airport infrastructure will also
require us to look to new ways to finance projects, such as public-
private partnerships, tolling, expansion of the TIFIA loan program, and
private activity bonds that are typically more useful in large urban
areas. However, the Department of Transportation has been slow to fully
utilize these programs, and I hope our witnesses will offer ideas on
how to cut the red tape in order to move the available private
financing, loans, and tax credits out the door faster.
For rural areas similar to Maine, what has worked well are
competitive grant programs, such as TIGER, which allows D.O.T. to
prioritize funding to projects that are essential to our transportation
network but may otherwise not be funded. The Airport Improvement
Program, or A.I.P., also provides a means to fund critical investments
in our nation's airport infrastructure through collection of Passenger
Facility Charges, or P.F.C.s.
Previous administrations have proposed increasing the P.F.C. cap
from $4.50, but this was also coupled with lowering the overall A.I.P.
funding substantially, which generated opposition in Congress. Some
have questioned the timing, need, and magnitude of such increases. I
look forward to discussing whether a modified proposal to the P.F.C.
increase could
provide additional funding for all airports, even those in rural
communities. Working with the new Administration, we in Congress have a
great deal of work to do in developing an infrastructure package to
promote economic development, improve the transport of people and
products, and create jobs.
Let me now turn to Senator Reed for his opening remarks.
Senator Collins. Let me now turn to Senator Reed for his
opening statement. Senator Reed, welcome.
STATEMENT OF SENATOR JACK REED
Senator Reed. Thank you very much, Chairman Collins. I want
to commend you for your leadership, and your great patience and
tolerance of me, which is a Herculean task sometimes. I look
forward to the work of the committee, and I thank you again for
your leadership.
We, on the committee are charged with trying to provide the
resources for critical aspects of American life--the safe and
efficient transportation and access to safe and quality
housing. These are responsibilities that we take very
seriously, and we are fortunate to have this Chairman in the
lead.
While we are still considering the funding package for 2017
and anticipating the budget request for 2018, it is a very
opportune time to discuss, with your expertise the issues that
we will face as we go forward.
What is very clear is that the current levels of Federal,
state, and local funding are insufficient to bring our
transportation network into a state of good repair. Like many
Americans, I am eager to hear the details of President Trump's
plan to invest $1 trillion in our Nation's infrastructure. It
is one area where I think that we can find broad bipartisan
agreement. Leader Schumer has already laid out a blueprint for
how we can work together to deploy resources among a wide
assortment of infrastructure needs.
Certainly, we have mechanisms in place through the Highway
Trust Fund, the Airport Improvement Program, the TIGER Grant
Program, New Starts, and other programs to make smart and bold
investments in transportation projects across the country, not
to mention addressing needs in other areas, including
affordable housing, water infrastructure, and school
facilities.
What I hope we do not see from this Administration is a
plan built around massive tax incentives for private investors.
This approach will not fix our crumbling roads, replace lead
water pipes, or build new schools without placing a huge
financial burden on average Americans. Those types of deals
just do not pencil out in rural communities, and as a result, I
am afraid those communities might be left behind.
I also hope that the Trump administration does not attempt
to solve our infrastructure problems on the cheap. When we
crafted the last surface transportation authorization bill, our
counterparts in the House restricted investments in our
transportation infrastructure, barely providing more than an
inflation adjustment. If we are going to make real progress, we
must do more, much more.
That is why I am also deeply concerned about the budget
plan that was recently outlined by OMB Director Mulvaney. If we
adhere to the steep budget cuts that the Administration is
contemplating for non-defense discretionary funding, it will be
impossible to sustain even today's funding levels for critical
infrastructure programs: such as TIGER, rail safety, Amtrak,
and transit Capital Investment Grants.
The fact is that we cannot take $54 billion in cuts to non-
defense programs without doing significant harm to the
sustainability and safety of our transportation network. Even
if the Administration completely eliminated its favorite
target, the EPA, another $46 billion in cuts to the budget
would still need to be made.
As we consider where funding is needed, here is what is at
stake, according to the Department of Transportation's most
recent Conditions and Performance Report. We are facing an $800
billion maintenance backlog on the Federal-aid highway system
and a $123 billion maintenance backlog for structurally
deficient bridges.
Traffic congestion is now wasting 6.7 billion hours and 3
billion gallons of fuel nationwide. This cost our economy
$154.2 billion last year, and that is a new record
unfortunately. There is a $90 billion state of good repair
backlog on transit systems, a $28 billion state of good repair
backlog for Amtrak's Northeast Corridor, and a $3.35 billion
shortfall in airport improvement funding.
DOT's report confirms what we already knew. This moment
calls for new ideas and additional funding in order to meet our
current and future needs. This moment, again, beckons us to
build our economy for the future and to create good paying jobs
today.
As the President said, it is a chance to buy American and
hire Americans. Finally, on that note, we should make sure that
the infrastructure investments that we make also benefit the
American workers who build our roads, bridges, railways, and
airports.
We know that the wages of average Americans have stagnated,
and we know that we should reject any attempts to scale back
the Davis-Bacon Act as well as barriers to entry into project
labor agreements. Such efforts only denigrate and cheapen the
hard work that everyone from masons to welders to painters to
operators do every day.
I look forward to the testimony of our witnesses today.
Your ideas and experience will help to inform our funding
decisions to make our transportation system smarter, safer, and
more efficient going forward. Once again, thank you very much,
Chairman Collins.
Senator Collins. Thank you, Senator Reed. I introduced the
witnesses in my opening statement, so we will proceed directly
to their testimony, starting with Commissioner Bernhardt.
SUMMARY STATEMENT OF HON. DAVID BERNHARDT
Mr. Bernhardt. Chairman Collins, Ranking Member Reed, and
members of the subcommittee, thank you for the opportunity to
provide input on investing in America by funding our Nation's
transportation infrastructure needs.
My name is David Bernhardt, and I serve as the Commissioner
of the Maine Department of Transportation, as President of
(AASHTO), the American Association of State Highway and
Transportation Officials.
Today, it is my honor to testify on behalf of the great
State of Maine and AASHTO, and AASHTO represents the state
departments of all 50 states, Washington, D.C., and Puerto
Rico.
My testimony today will emphasize four main points. One,
maintaining a strong Federal investment in surface
transportation by stabilizing the Highway Trust Fund, ensuring
timely action on annual appropriations to minimize program
disruptions, developing and deploying multimodal transportation
solutions with Federal funding support, and supporting the
development of a major infrastructure package that benefits
every part of our Nation.
Transportation matters more today than ever before, not
only in Maine but to our country and across the world. Families
and businesses depend on a strong transportation infrastructure
to keep our Nation competitive, and the backbone of Federal
investment in transportation has been the Highway Trust Fund.
It has provided predictable stable support for most of its
life, since 1956, but this crucial capital funding instrument
has been at risk since 2008 when it required the first of seven
general fund transfers totaling $140 billion.
Thanks to Congress' leadership, the passage of the FAST Act
has given us a temporary reprieve from the deep cuts in Highway
Trust Fund investments through 2020.
At Maine DOT, we produce a three-year work plan containing
all the work we plan to do over that period of time. Having
stability in Federal funding makes this work much more of a
reality than a guessing game.
It also means that we can keep our word with our customers,
from downtown reconstruction in Ogunquit, new road construction
in Presque Isle, to major bridge construction projects in
Kittery and Jonesport/Beales Island. Stable funding means
Mainers can depend on us sticking to our schedule.
Looking at the near term, we urge your leadership and
support in enacting a final fiscal year 2017 appropriations
package for transportation that honors the FAST Act obligation
levels.
For state DOTs, a series of continuing resolutions this
year has provided two challenges. First, states can make good
on their planned investments for the Federal fiscal year, only
if obligation authority for the entire year becomes available
on October 1.
Especially in cold northern states like mine, with a
limited construction window, not having the full year
obligation authority could mean project disruptions and delays.
Second, although the FAST Act provided for $43.2 billion in
highway obligation authority for fiscal year 2017, the
continuing resolution has locked in the fiscal year 2016 amount
of $42.2 billion so far. This means state DOTs are unable to
access the $1 billion that could be put to important use
throughout the country.
In addition, positive train control funding was authorized
only in fiscal year 2017 at $199 million from the Mass Transit
Account. This critical safety funding would be lapsed if CR is
extended for the rest of 2017.
State DOTs manage an increasing multimodal and
interconnected transportation network, and your subcommittee's
holistic approach to funding that covers all modes has been
invaluable. Thanks to the strong support from you, Madam
Chairman, and high quality applications and projects, Maine DOT
is fortunate to have been successful at every round of TIGER,
and in the first round of FASTLANE. The result is critically
needed infrastructure that would have been difficult to build
any other way.
For example, the Sarah Mildred Long Bridge connecting Maine
and New Hampshire, plus rail on the bridge to the Navy
Shipyard.
We have used a mix of funding, including TIGER funds. TIGER
funds also support rail and port infrastructure in Northern and
Central Maine, and built a commercially important breakwater in
Eastport, Maine.
With the help of Federal freight funds and your support,
Madam Chairman, Maine is also upgrading large portions of its
freight rail network, allowing for higher speeds and weights on
existing track. These projects support natural resource based
manufacturing and agriculture throughout rural Maine. Similar
gains and benefits have been seen across the Nation.
Finally, I urge the Congress and the Administration in
designing a major infrastructure package this year that any
increase in Federal funds should flow through the existing FAST
Act formula-based program structure rather than through
untested new approaches that will consume more time and
oversight.
The current federally assisted state implemented framework
has a century plus track record of success, which speaks for
itself. It is also important to note that any major
infrastructure package must focus on direct funding rather than
on Federal financing support.
Most projects we do cannot generate a sufficient revenue
stream through tolls, fares, or availability payments to
service debt or provide adequate return on investment to
equity.
To close, state DOTs remain committed in assisting Congress
to develop strategies to ensure long-term economic growth and
enhanced quality of life through robust multimodal
transportation investments.
Just last week, many of state DOT leaders from all corners
of the country were only a couple of blocks away attending
AASHTO's 2017 Washington briefing, over three days of
productive discussions.
Many of my colleagues and I were on Capitol Hill meeting
with our respective congressional delegations. As we did then
and as we do again now, AASHTO and the state DOTs will continue
advocating for the reaffirmation of a strong Federal/state
partnership to address our surface transportation investment
needs.
I want to thank you again for this opportunity to testify,
and I am happy to answer any questions that you may have. Thank
you.
[The statement follows:]
Prepared Statement of Hon. David B. Bernhardt
introduction
Chairman Collins, Ranking Member Reed, and Members of the
Subcommittee, thank you for the opportunity to provide input on the
condition of our nation's transportation system and funding and
financing options to sustain long-term growth. My name is David
Bernhardt, and I serve as the Commissioner of the Maine Department of
Transportation (Maine DOT) and as President of the American Association
of State Highway and Transportation Officials (AASHTO). Today it is my
honor to testify on behalf of the great State of Maine and AASHTO,
which represents the State departments of transportation (State DOTs)
of all 50 States, Washington, DC, and Puerto Rico.
I first joined Maine DOT as a registered professional engineer in
1984. Prior to my appointment as Commissioner in 2011, I held several
positions at the agency over the years including Director of
Engineering and Operations and Director of Maintenance and Operations,
among other roles. During my tenure as AASHTO President in 2016-2017,
my three emphasis areas for the Association are to work closely with
the new Administration and you--the members of Congress--to develop
strong transportation legislation, freight and freight connectivity,
and implementing AASHTO's comprehensive committee restructuring.
My testimony today will emphasize four main points:
--Maintaining a strong Federal investment in surface transportation
by stabilizing the Highway Trust Fund;
--Ensuring timely action on annual appropriations to minimize program
disruptions;
--Developing and deploying multimodal transportation solutions with
Federal funding support, and;
--Supporting the development of a major infrastructure package that
benefits every part of our nation.
maintaining a strong federal investment in surface transportation by
stabilizing the highway trust fund
Transportation matters more today than ever before, not only in
Maine, but throughout our country and across the world. Families and
businesses depend on a strong transportation infrastructure to keep our
state competitive. Smart investment in the maintenance and upgrade of
this infrastructure is critical to sustaining a vibrant Maine economy
and connecting us to a global economy.
Going back to the founding days of the Nation, Article I, Section 8
of the United States Constitution notes that it is a duty of the
Federal government to provide support for the nation's transportation
system. Through the development of post roads, canals, railroads and
highways with strong Federal support throughout history, transportation
investment has an illustrative track record of creating jobs and
supporting economic development throughout the country.
For most of its life since its inception in 1956, the Federal
Highway Trust Fund (HTF) has provided stable, reliable, and substantial
highway and transit funding. I would be remiss if I did not share the
State departments of transportation's utmost appreciation for your
Committee's leadership, along with your Senate and House colleagues on
partner committees, in shepherding the Fixing America's Surface
Transportation (FAST) Act in December 2015 to ensure stability in the
federally supported passenger rail, freight, safety, highway, and
transit programs through 2020. While the 5 years authorized under the
FAST Act has given us a temporary reprieve--thanks to over $140 billion
of General Fund transfers since 2008--from recurring deep cuts in
obligations due to the $15 billion annual gap between Highway Trust
Fund receipts and outlays, the case for maintaining a strong Federal
role and investment in transportation remains as important as ever.
We in the transportation industry do everything in our power to
build our projects as fast as possible, but due to the nature of large
capital programs, including an extensive regulatory process many of
them take several years to complete. The lack of stable funding from
the HTF makes it nearly impossible for State DOTs to plan for large
projects that need a reliable flow of funding over multiple years.
Major transportation projects around the country will be put to risk
near the expiration of the FAST Act due to the unpredictability of
Federal funding at that time. Such delays have serious economic
consequences both in the short- and long-term. These projects employ
thousands of companies and hundreds of thousands of workers every year.
More importantly, these projects are what connect the traveling public
to the many of facets of their lives. Once completed, they help
stimulate economic growth in every community where they are built.
At MaineDOT, we produce a three-year work plan containing all the
work we plan to do over that period. Having stability in Federal
funding makes this work much more of a reality than a guessing game. It
also means that we can keep our word with our customers. From downtown
reconstruction in Ogunquit and new road construction in Presque Isle,
to major bridge construction projects in Kittery and Jonesport/Beales
Island, stable funding means Mainers can depend on us sticking to our
schedule.
Nationwide, State DOTs rely on the Federal surface transportation
program for nearly half of their capital investment on highway and
bridge projects. This year the Federal highway program apportioned over
$44 billion to State DOTs for road and bridge projects across the
country, in addition to over $9 billion in Highway Trust Fund support
for transit. It is important to note that Federal dollars are not
provided to States upfront; rather, this is a program based on
reimbursement. States only receive funding from the Federal Highway
Administration (FHWA) when work is completed on a project and the State
submits a request for reimbursement. States typically receive
reimbursements electronically from FHWA the same day payments to the
contractor are made.
If Congress is unable to address the structural cash shortfall in
the Highway Trust Fund by 2020 and allows the Highway Account of the
HTF cash balance to fall below $4 billion, FHWA will change how quickly
they reimburse State DOTs for work already completed. Rather than
reimbursing States as soon as the reimbursement request is submitted,
FHWA may delay reimbursements or make partial reimbursement subject to
available cash in the Trust Fund. States count on prompt payment from
the Federal government to be able to manage cash flow and pay
contractors for work they have already completed. Any delay in
reimbursement from FHWA will jeopardize the ability of States to pay
contractors in a timely manner. In turn, contractors rely on prompt
payment from the State to be able to pay their employees and suppliers.
Disruptions to this process have the potential to send unwelcome
shockwaves throughout the transportation community and other industries
indirectly supported by infrastructure investment. Of particular
concern should be the countless number of small businesses that perform
work on our nation's highways, as they often don't have the flexibility
to wait for additional days or weeks for payment on the work they have
already completed on a project.
As I mentioned, we do have a bit of a grace period right now in not
having to face this funding cliff until 2020--thanks to the FAST Act.
But without action before then to shore up the HTF, this extremely
costly and disruptive scenario will be all but inevitable.
ensuring timely action on annual appropriations to minimize program
disruptions
The work of your Subcommittee is absolutely crucial to the dynamic
I described above with the Highway Trust Fund. That is because HTF
contract authority for the Federal surface transportation program can
only maximize its value and effectiveness when paired with timely
annual appropriations for the entire fiscal year that provide robust
obligation limitation and the liquidating cash necessary to pay for
Federal reimbursements to States. While we understand the difficulties
in Congress when it comes to resolving budget and spending issues, we
want to raise some of the impacts that can be felt by state DOTs and
our local partners from the use of continuing resolutions (CR). And we
stand ready to assist the Subcommittee as you work to complete the
fiscal year 2017 appropriations process and begin work on fiscal year
2018.
An important funding feature of the FAST Act was to authorize a 5.6
percent increase in highway funding from fiscal year 2015 to fiscal
year 2016, with subsequent annual adjustments between 2.1 and 2.4
percent. For the mass transit program, the FAST Act authorized a 10.2
percent increase between fiscal year 2015 and fiscal year 2016, with
subsequent annual increases up to 3.3 percent. In addition to avoiding
a series of short-term extensions of program authorization because the
FAST Act is in place until 2020, AASHTO is especially grateful to
Congress for being able to build in increases in annual authorized
funding levels above inflation. And we very much appreciate your
Subcommittee and the full Committee for honoring the FAST Act
obligation limitation in fiscal year 2016.
There are two principal challenges for States if Congress is unable
to pass a full-year appropriations measure that honors the FAST Act
funding levels.
First, building on FAST Act apportionments of contract authority,
States can make good on their planned investments for the Federal
fiscal year--especially in cold, northern States like mine with a
limited construction window--if obligation limitation for the entire
year becomes available on October 1. Continuing resolutions that
provide only a portion of obligation limitation mean that even if we
are ready to proceed with our much-needed projects, we can only commit
Federal dollars to a small portion of those projects. Missing the
construction window due to a less than full year obligation limitation
can mean that some projects are delayed.
Second, because continuing resolutions freeze obligation limitation
levels at prior year levels, FHWA is unable to provide the full funding
anticipated under the FAST Act. For fiscal year 2016, FHWA has been
able to provide only $42.2 billion of obligation limitation this fiscal
year at an annualized rate as opposed to $43.2 billion expected under
the FAST Act. This translates to States around the nation receiving
over $1 billion less in Federal highway funding, with resulting
reductions in funding at the State and local level. In addition,
operating under a continuing resolution in fiscal year 2016 has
prevented transit and passenger rail agencies from accessing $199
million authorized for positive train control (PTC) in the FAST Act for
fiscal year 2017. Given that fiscal year 2017 is the only year for PTC
funding from the Mass Transit Account, it is important that Congress
enact an appropriations measure for the balance of fiscal year 2017.
AASHTO is ready to provide any and all assistance necessary to
ensure the timely passage of annual appropriations bills on October 1
of each year, and respectfully request your Subcommittee and the full
Committee to honor the obligation limitation contained in the FAST Act
in the final fiscal year 2017 appropriations, and in future fiscal
years as well.
developing and deploying multimodal transportation solutions with
federal funding support
AASHTO and its member departments of transportation proudly trace
our lineage back to the early days of the State and Federal highway
program at the beginning of the 20th century. Since then, State DOTs
have underpinned economic activities enabled by passenger and freight
movement as the primary stewards of our nation's highway infrastructure
by designing, building, maintaining, and operating key highway assets
ranging from 7 percent of public road miles in California to 89 percent
in West Virginia. State DOTs also own and operate the Interstate
Highway System which handles nearly 25 percent of total vehicle miles
traveled annually and 40 percent of truck traffic even though it
comprises only 1.2 percent of total public road miles.
We are also proud, however, of the fact that State DOTs manage an
increasingly multimodal network by investing in public transportation
at a larger share than the Federal government, and in non-motorized
travel modes such as walking and biking. In addition, some State DOTs
operate public transportation systems, short line railroads, airports,
and harbors.
Similar to State DOTs, your Subcommittee has always brought a
holistic approach to transportation funding by directing the Senate's
resources to support all modes of transportation, especially through
the highly successful TIGER discretionary grant program. Since 2009,
the TIGER program has provided a combined $5.1 billion to 421 projects
in all 50 states, the District of Columbia, Puerto Rico, Guam, the
Virgin Islands, and tribal communities. These Federal funds leverage
money from private sector partners, states, local governments,
metropolitan planning organizations and transit agencies. The 2016
TIGER round alone is leveraging nearly $500 million in Federal
investment to support $1.74 billion in overall transportation
investments.
Thanks to the strong support from you Madam Chairman and high
quality applications and projects, MaineDOT is fortunate to have been
successful at every round of TIGER and in the first round of FASTLANE.
The result is critically needed infrastructure that would have been
difficult to build any other way. For example, the Sarah Mildred Long
bridge connecting Maine, New Hampshire and an important Navy shipyard
is currently under constructions using a mix of funding including TIGER
funds. TIGER funds also support rail and port infrastructure in
Northern and Central Maine and built a commercially important
breakwater in Eastport, Maine.
In addition, the National Highway Freight Program, a new formula-
based funding category, and the Nationally Significant Freight and
Highway Projects better known as FASTLANE Grants, in the FAST Act have
enabled States around the country to provide more targeted freight
funding support. These new programs focus investment in infrastructure
and operational improvements that strengthen economic competitiveness,
reduce congestion, reduce the cost of freight transportation, improve
reliability, and increase productivity. They also improve the safety,
security, efficiency, and resiliency of freight transportation in rural
and urban areas, and enhance all aspects of the National Highway
Freight Network.
I had mentioned earlier that one of my three emphasis areas during
my AASHTO presidency are freight and freight network connectivity.
The International Marine Terminal, in Portland, Maine, is a great
example of the FASTLANE Grant program. The Maine Port Authority and
MaineDOT have undertaken major upgrades that will double the capacity
of a terminal that is growing 20 percent year over year. The facility
utilizes marine, rail, and truck modes to move product across the
regional and internationally. The result--new markets for Maine and
U.S. products, lower logistical costs for Maine businesses and fewer
trucks in highly congested corridors in the Northeast.
With the help of Federal freight funds, and your support Madam
Chairman, Maine is also upgrading large portions of its freight rail
network allowing for higher speeds and weights on existing track. These
projects support natural resource based manufacturing and agriculture
throughout rural Maine.
supporting the development of a major infrastructure package that
benefits every part of our nation
For over one hundred years, we as a nation have enjoyed the fruits
of the Federal government's highly successful partnership with State
DOTs to build and maintain our Nation's surface transportation system.
From the Federal-Aid Road Act of 1916 establishing the foundation of a
federally-funded, State-administered highway program that has been
well-suited to a growing and geographically diverse nation like ours,
Federal investment in all modes of transportation have allowed States
and their local partners to fund a wide range of projects that serve
the interest of the nation as a whole. Thanks to the Federal surface
transportation program's flexibility that defers project selection and
investment decisionmaking to State and local governments based on
extensive public input, diverse communities in rural, suburban, and
urban areas of the country have all been able to help people get to and
from work, and help goods get access to a larger market than ever
before in a way that best meet their unique needs.
AASHTO and its member DOTs, like many of us in the transportation
industry, recognize a special opportunity this year to enact a major
infrastructure investment initiative given the high degree of interest
from the Trump Administration and strong bipartisan support in
Congress. As you and the President consider the design of this package
for transportation infrastructure, based on the Federal surface
transportation program's long track record of success, we recommend
that any increase in Federal funds should flow through the existing
FAST Act formula-based program structure rather than through untested
new approaches that will require more time and oversight.
Any effort that does not rely on the existing Federal surface
transportation program could undermine timely and successful delivery
of the new infrastructure package. Putting the program framework that
built the Interstate Highway System and the National Highway System--
the backbone of our national network of roads and bridges that drive
our national economy--into work again to deploy additional Federal
resources represent the optimal approach to serve all corners of our
country, improving mobility and quality of life in urban, suburban, and
rural areas.
It is also important to note that any major infrastructure package
must focus on direct funding, rather than on Federal financing support.
This is because financing tools that leverage existing revenue
streams--such as user fees and taxes--are typically not viable for most
transportation projects in the United States. We in Maine and many of
our state DOT peers certainly appreciate the ability to access capital
markets to help speed up the delivery of much-needed transportation
improvements. But we also fully recognize the inherent limitations of
financing for the vast spectrum of publicly-valuable transportation
projects that nevertheless cannot generate a sufficient revenue stream
through tolls, fares, or availability payments to service debt or
provide return on investment to equity holders.
The state DOTs continue to support a role for financing and
procurement tools such as public-private partnerships given their
ability to not only leverage scarce dollars, but to also better
optimize project risks between public and private sector partners best
suited to handle them. But we also maintain that financing instruments
in the form of subsidized loans like TIFIA, tax-exempt municipal and
private activity bonds, infrastructure banks, and tax code incentives
are just simply not enough in and of themselves to meet most
transportation infrastructure investment needs.
AASHTO and its member are well-prepared to work with Congress to
take advantage of our strong, productive partnerships with Federal and
local governments to deliver on a major infrastructure initiative.
conclusion
State DOTs remain committed in assisting Congress to develop
strategies to ensure long-term economic growth and enhanced quality of
life through robust multimodal transportation investments. Just last
week, hundreds of State DOT leaders from all corners of our country
were only a couple of blocks away attending AASHTO's 2017 Washington
Briefing. Over three days of productive discussions, many of my
colleagues were on Capitol Hill meeting with their respective
Congressional delegations. As they did then, and as I do again now,
AASHTO and the State DOTs will continue advocating for the
reaffirmation of a strong Federal-State partnership to address our
surface transportation investment needs.
I want to thank you again for the opportunity to testify today, and
I am happy to answer any questions that you may have.
Senator Collins. Thank you very much, Commissioner. Mr.
Tymon?
STATEMENT OF JIM TYMON, CHIEF OPERATING OFFICER AND
DIRECTOR OF POLICY AND MANAGEMENT, AMERICAN
ASSOCIATION OF STATE HIGHWAY AND
TRANSPORTATION OFFICIALS
Mr. Tymon. Thank you. Chairman Collins, Ranking Member
Reed, members of the subcommittee, thank you for the
opportunity to testify today. My name is Jim Tymon, and I serve
as the Director of Policy and Management and the Chief
Operating Officer at the American Association of State Highway
and Transportation Officials, otherwise known as AASHTO.
I would like to begin by expressing the state DOTs'
appreciation for your support and leadership in passing the
Fixing America's Surface Transportation Act (FAST Act). The
FAST Act provides a level of predictability for Federal
highway, transit, and passenger rail programs through 2020 that
allows states and local transit agencies to plan for large
projects that span multiple years.
However, that predictability is threatened by the lack of a
fiscal year 2017 transportation, housing and urban development
appropriations bill. The predictability of a five-year
authorization bill means little if we are unable to pass annual
appropriations bills that are consistent with the authorized
funding levels in the FAST Act.
As we approach the beginning of the spring construction
season, we urge you to pass a full year 2017 appropriations
bill that fully funds the surface transportation programs at
the authorized levels in the FAST Act.
In addition to 5 years of predictability, the FAST Act also
provided a small increase in funding over the baseline.
However, this increase does not begin to meet our Nation's
transportation investment needs.
As has been cited already this morning, according to the
most recent Conditions and Performance Report published by the
U.S. Department of Transportation, a funding increase of at
least 35 percent is necessary to begin to improve the state of
our Nation's highways and transit systems.
Despite these clear needs for additional investment, how we
fund our Nation's Federal Surface Transportation Program
remains at a crossroads. The Highway Trust Fund has provided a
stable and reliable source of funding for our highways and
transit programs since 1956, but today, that is no longer the
case.
Since 2008, the Highway Trust Fund has been sustained
through a series of General Fund transfers, and we are
currently spending approximately $15 billion a year more than
we are bringing in in receipts, and that amount continues to
grow each year.
If Congress were to reauthorize the FAST Act for 5 years
when it expires in 2020, nearly $100 billion in additional
revenue would be needed to keep the Highway Trust Fund solvent
through 2025.
The Highway Trust Fund derives about 90 percent of its
revenues from taxes on motor fuels, but that revenue source is
facing an increasingly unsustainable long-term future. Three
factors explain the challenges facing the Highway Trust Fund.
A leveling off of the number of vehicle miles that people
are driving each year, a more fuel-efficient vehicle fleet due
to changes in CAFE standards, and a loss of purchasing power
for a Federal gas tax that has not been increased in 24 years.
When the FAST Act expires in 2020, Congress will likely
need to choose from three possible scenarios to keep the
Highway Trust Fund solvent--provide additional General Fund
transfers to the Highway Trust Fund, provide additional
receipts to the Highway Trust Fund by either increasing
existing revenue mechanisms, such as the gas tax, or
implementing new sources of revenue, or by reducing funding for
programs funded by the Highway Trust Fund by over 40 percent.
A cut of over 40 percent will help keep the Highway Trust
Fund solvent moving forward, but again, that is a reduction on
the funding levels we are spending today.
If Congress does decide to increase revenue to keep the
Highway Trust Fund solvent, there are no shortages of
technically feasible options.
AASHTO produces a matrix of over 35 surface transportation
revenue options for Congress to consider. This matrix is
included in my written testimony, and AASHTO is happy to serve
as a resource as Congress works toward a long-term solution to
keep the Highway Trust Fund solvent.
As Congress begins consideration of an infrastructure
package, state DOTs strongly believe that the focus should be
on direct Federal funding distributed to the states and transit
agencies through existing programs.
Using existing programs is the most equitable and efficient
way to ensure that funding is distributed to every state in the
country and to every transit agency in the country.
Federal financing support, such as public/private
partnerships, are a great option for state and transit agencies
to consider. However, public/private partnerships are not
viable for most transportation projects in the United States.
As Commissioner Bernhardt said, most transportation
projects cannot generate a sufficient revenue stream through
tolls, fares, or availability payments to service debt or
provide a return on investment for private sector partners.
The state DOTs continue to support public/private
partnerships as an option, but state DOTs believe an
infrastructure package should include both direct Federal
funding and innovative financing tools, such as TIFIA or
private activity bonds.
I want to thank you again for the opportunity to testify
today, and I am happy to answer any questions you may have.
[The statement follows:]
Prepared Statement of Jim Tymon
introduction
Chairman Collins, Ranking Member Reed, and Members of the
Subcommittee, thank you for the opportunity to provide input on the
condition of our nation's transportation system and funding and
financing options to sustain long-term growth. My name is Jim Tymon,
and I serve as the Director of Policy and Management and Chief
Operating Officer at the American Association of State Highway and
Transportation Officials (AASHTO). Alongside David Bernhardt, our
Association's President and Commissioner of the Maine Department of
Transportation, today it is my honor to also testify on behalf of
AASHTO, which represents the departments of transportation (state DOTs)
of all 50 States, Washington, DC, and Puerto Rico.
My testimony today will emphasize five main points:
--Instability in Federal surface transportation funding due to
recurring Highway Trust Fund shortfalls;
--Examination of well-documented surface transportation capital
investment needs;
--Additional revenues needed simply to support current spending
levels;
--Policy considerations on surface transportation revenue options,
and;
--Critical importance of direct program funding relative to
financing.
instability in federal surface transportation funding due to recurring
highway trust fund shortfalls
I would like to first begin by expressing the State departments of
transportation's utmost appreciation for your Committee's leadership,
along with your Senate and House colleagues on partner committees, in
shepherding the Fixing America's Surface Transportation (FAST) Act in
December 2015 to ensure stability in the federally supported passenger
rail, freight, safety, highway, and transit programs through 2020.
While the 5 years authorized under the FAST Act has given us a crucial
yet temporary reprieve, the case for maintaining a strong Federal role
and investment in transportation remains as important as ever.
As we prepare for the post-FAST Act years, the Federal surface
transportation program funding remains at a crossroads. While the
Highway Trust Fund (HTF) has provided stable, reliable, and substantial
highway and transit funding over many decades since its inception in
1956, this is no longer the case. Since 2008, the HTF has been
sustained through a series of General Fund transfers now amounting to
over $140 billion. And according to the January 2017 baseline of the
Congressional Budget Office (CBO), HTF spending is estimated to exceed
receipts by about $17 billion in fiscal year 2021, growing to about $24
billion by fiscal year 2027. Furthermore, the HTF is expected to
experience a significant cash shortfall in fiscal year 2021, since it
cannot incur a negative balance.
CBO projects that based on the current funding levels for surface
transportation, the HTF will need at least $144 billion to remain
solvent through fiscal year 2027, which includes the minimum prudent
balance of $4 billion for the Highway Account and $1 billion for the
Mass Transit Account. To support a five-year FAST Act reauthorization
(fiscal year 2021-2025), the necessary additional HTF deposits or
increased tax receipts needed total about $95 billion; to support a
six- year bill, about $120 billion would be necessary.
Framing this HTF ``cliff'' in terms of Federal highway obligations,
we estimate that states may see a 40 percent drop from fiscal year 2020
to the following year--from $46.2 billion to $27.7 billion. In the
past, such similar shortfall situations have led to the possibility of
reduction in Federal reimbursements to states on existing obligations,
leading to serious cash flow problems for states and resulting project
delays. Even more alarmingly, due to a steeper project shortfall in the
Mass Transit Account, Federal transit obligations are expected to be
zeroed out between fiscal year 2021 and fiscal year 2023 excluding
``flex'' of highway dollars to transit. Simply put, this is a
devastating scenario that we must do all we can to avoid.
examination of well-documented surface transportation capital
investment needs
Despite Federal funding challenges, investment needs continue to
mount. According to the US Department of Transportation's (USDOT) 2015
Conditions and Performance Report, $142.5 billion in annual capital
investment is necessary for highways in order to improve Interstate
Highways, the National Highway System, and one million-plus miles of
Federal-aid Highways. Put another way, annual funding necessary to
tackle this $836 billion backlog of highway investment needs would
represent a 35.5 percent increase from 2012 levels, which itself was
above the baseline spending levels due to outlays related to the
temporary funding boost provided by the American Recovery and
Reinvestment Act. Similar funding outlook exists for Federal mass
transit investment. The Conditions and Performance Report states that
low- and high-growth scenarios for transit will necessitate annual
capital investment of $22.8 billion and $26.4 billion, respectively,
equating to a 34 or 55 percent increase over 2012 levels.
However, in the recent decades--especially after the completion of
the Interstate Highway System--Federal investment in transportation has
declined significantly as a share of the Gross Domestic Product (GDP).
Given that much of the Interstate system has now reached the end of
its design life and must be reconstructed or replaced--and there is
considerable need for additional capital improvements to the broader
Federal-aid highway network and the country's transit system--there is
a strong argument that the Federal government should strive to return
to this prior level of investment relative to the national economy. Yet
the Federal government's share of transportation and water spending has
actually been falling behind relative to state and local governments,
as evidenced by its 19 percent drop between 2003 to 2014; during the
same timeframe total state and local spending saw a 5 percent decline.
States are expected to reverse this decline in the coming years,
however, thanks to a series of successful enactments of state-level
transportation packages, numbering 23 states since 2012.
Our nation's freight network is an especially illuminating example
of the capital investment backlog in our transportation infrastructure.
Freight received a targeted funding boost to the tune of about $11
billion through the new National Highway Freight Program and the
Nationally Significant Freight and Highway Projects--also known as
FASTLANE Grants--in the FAST Act. While we welcome this new Federal
investment and focus on the freight network, it is important to provide
some context regarding the scale of the need for these projects.
According to the nationwide survey conducted for the State of Freight
II report published by AASHTO and the American Association of Port
Authorities last year, 57 percent of surveyed states have already
identified 6,202 projects through their freight plan development
process. Furthermore, $259 billion in project costs have been
identified by just 35 percent of all states--therefore we know the
national figure is much higher.
At the same time, we continue to fall behind global peers in
infrastructure quality and economic competitiveness. The recent Global
Competitiveness Report rankings from the World Economic Forum on
infrastructure quality has listed the United States at just 11th place
overall.
Sources: The Global Competitiveness Report 2016-2017
In light of continued population growth and increases in freight
movements for all modes, capacity enhancements--and not just
maintenance of existing infrastructure stock--must remain a key element
of the national transportation investment strategy. A potentially
catastrophic disruption to the Federal transportation program in fiscal
year 2021 will produce serious losses that threaten the macroeconomic
gains made since 2008.
additional revenues are needed simply to support current spending
levels
While the HTF continues to derive about 90 percent of its revenues
from taxes on motor fuels, they are facing an increasingly
unsustainable long-term future, therefore placing the viability of the
HTF in question.
Three factors explain the structural challenge faced by long-term
motor fuel tax revenue prospects.
First is the slowdown in the growth of vehicle miles traveled (VMT)
in the United States, on an aggregate basis. A steady increase in VMT
has allowed the HTF to see corresponding revenue increases without
necessitating constant adjustments in fuel tax rates for most of its
existence. While total VMT has resumed its growth in the last 2 years
due to increases in both population and economic activity in the post-
recessionary environment, it is unlikely to see the 3.2 percent growth
rate experienced on average between 1956 and 2007.
Second, motor fuel taxes at the Federal level were last increased
to the current rates of 18.4 cents per gallon for gasoline and 24.4
cents for diesel 24 years ago in 1993. As an excise tax levied per
gallon, taxes on motor fuel have lost a significant share of its
purchasing power. Compared to the Consumer Price Index, the gas tax had
lost 39 percent of its purchasing power by 2015, and is expected to
lose more than half of its value--or 52 percent--by 2025. Put another
way, while college tuition has increased by 379 percent and healthcare
by 180 percent in nominal costs since the last time Federal motor fuel
taxes were increased, Federal motor fuel taxes have stayed at the exact
same rate during this period.
Source: Bureau of Labor Statistics, Center for Medicare and Medicaid
Services, College Board, Federal Reserve Bank of St. Louis, Oak Ridge
National Laboratory, Census Bureau, Energy Information Agency, Postal
Service
Third, according to the CBO, the recent increases in Corporate
Average Fuel Economy standards are expected to cause a significant
reduction in fuel consumption by light-duty vehicles, which would
result in a proportionate drop in gasoline tax receipts. CBO expects
gradual lowering of gasoline tax revenues, eventually causing them to
fall by 21 percent by 2040. Just in the 2012 to 2022 period, CBO
estimates that such a decrease would result in a $57 billion drop in
revenues credited to the fund over those 11 years, a 13 percent
reduction in the total receipts credited to the fund.
policy considerations on surface transportation revenue options
While its annual cash imbalance widens, the HTF cannot incur a
negative balance unlike the General Fund. This situation leads to three
possible scenarios for fiscal year 2021:
1. Provide additional General Fund transfers to the HTF in order to
maintain the current level of investment and prevent a dramatic drop;
2. Provide additional receipts to the HTF by adjusting existing
revenue mechanisms or implementing new sources of revenue, or;
3. Reduce Federal highway obligations supported by the HTF by 40
percent in fiscal year 2021 and beyond, and reduce Federal transit
obligations supported by the HTF by 100 percent for 3 years.
In order to support the first two scenarios where current highway
and transit investment levels are maintained or increased, there is no
shortage of technically feasible tax and user fee options that Congress
could consider.
An area of rapid deployment thanks to seed funding in the FAST Act
is in the area of mileage- based user fees. The Surface Transportation
System Funding Alternatives grants from the Federal Highway
Administration (FHWA) provides $95 million through fiscal year 2020 to
states or groups of states to demonstrate user-based alternative
revenue mechanisms that utilize a user fee structure to maintain the
long-term solvency of the Highway Trust Fund. The objectives of the
program are:
--To test the design, acceptance, and implementation of two or more
future user-based alternative mechanisms;
--To improve the functionality of the user-based alternative revenue
mechanisms;
--To conduct outreach to increase public awareness regarding the need
for alternative funding sources for surface transportation
programs and to provide information on possible approaches;
--To provide recommendations regarding adoption and implementation of
user-based alternative revenue mechanisms; and
--To minimize the administrative cost of any potential user-based
alternative revenue mechanisms.
For the first round of funding under this program, FHWA identified
eight state DOT projects-- including two multistate consortia on east
and west coast--to test various user-fee concepts.
However, if no new revenues can be found for the HTF and the third
scenario prevails in fiscal year 2021, state DOTs and their local
partner agencies will be left to face a dire program disruption that
will severely undermine much-needed transportation investments
throughout the nation and therefore, will have a significantly negative
impact on the nation's economy.
critical importance of direct program funding relative to financing
Beyond fixing the HTF, it cannot be emphasized enough that any
major transportation infrastructure package must focus on direct
funding based on formula apportionments, rather than on Federal
financing support. This is because financing tools that leverage
existing revenue streams--such as user fees and taxes--are typically
not viable for most transportation projects in the United States.
AASHTO's member DOTs certainly appreciate the ability to access capital
markets to help speed up the delivery of much-needed transportation
improvements, and many states already rely on various forms of
financing and procurement as seen below:
--General obligation or revenue bonds: 45 states, DC, Puerto Rico
(PR)
--GARVEE bonds: 33 states, DC, PR
--Build America Bonds: 15 states
--Private Activity Bonds: 6 states
--TIFIA Federal credit assistance: 12 states, PR
--State infrastructure banks: 34 states, PR
--Public-private partnerships: authorized in 33 states, PR
--Design-build: authorized in 45 states, DC, PR
At the same time, states fully recognize the inherent limitations
of financing for the vast spectrum of publicly-valuable transportation
projects because they cannot generate a sufficient revenue stream
through tolls, fares, or availability payments to service debt or
provide return on investment to equity holders. In 2014, non-direct
funding sources amounted to less than 18 percent of total capital
outlays.
The state DOTs continue to support a role for financing and
procurement tools such as public- private partnerships given their
ability to not only leverage scarce dollars, but to also better
optimize project risks between public and private sector partners best
suited to handle them. But we also maintain that financing instruments
in the form of subsidized loans like TIFIA, tax- exempt municipal and
private activity bonds, infrastructure banks, and tax code incentives
are just simply not enough in and of themselves to meet most
transportation infrastructure investment needs.
AASHTO and its member are well-prepared to work with Congress to
take advantage of our strong, productive partnerships with Federal and
local governments to deliver on a major infrastructure initiative.
conclusion
There is ample documented evidence that shows infrastructure
investment is critical for long- term economic growth, increasing
productivity, employment, household income, and exports. Conversely,
without prioritizing our nation's infrastructure needs, deteriorating
conditions can produce a severe drag on the overall economy. In light
of new capacity and upkeep needs for every state in the country, the
current trajectory of the HTF--the backbone of Federal surface
transportation program--is simply unsustainable as it will have
insufficient resources to meet current Federal investment levels beyond
fiscal year 2020.
Congress could address the projected annual shortfalls by
substantially reducing spending for surface transportation programs, by
boosting revenues, or by adopting some combination of the two
approaches. Whichever revenue tools are utilized, it is crucial to
identify solutions that will, at a minimum, sustain the FAST Act-level
of surface transportation investment in real terms.
A potential 40 percent reduction of Federal highway funding fiscal
year 2021 and a virtual wipeout of Federal transit funding from fiscal
year 2021 to fiscal year 2023 will have a devastating impact on all
aspects of the national and regional economy. To overcome this
significant challenge, AASHTO looks forward to assisting you and the
rest of your Senate colleagues in finding and implementing a viable set
of revenue solutions to the HTF not only for fiscal year 2021, but that
can also be sustained for the long term.
I want to thank you again for the opportunity to testify today, and
I am happy to answer any questions that you may have.
Senator Collins. Thank you very much. Mr. Hauptli?
STATEMENT OF TODD HAUPTLI, PRESIDENT AND CEO, AMERICAN
ASSOCIATION OF AIRPORT EXECUTIVES
Mr. Hauptli. Senator Collins, thank you for holding this
hearing, thank you all for your service to the country. I am
Todd Hauptli, the President and CEO of the American Association
of Airport Executives.
I want to make three points this morning. The first point
is that we are chronically and systematically underinvesting in
infrastructure in this country, and it is not just airport
infrastructure or aviation infrastructure, or for that matter,
transportation infrastructure, the subject of this hearing, we
are also underinvesting in communications and power and water
infrastructure.
Increasingly, this lack of infrastructure investment is
negatively impacting both our domestic and our international
competitiveness. It is my belief that we need to do something
about this now for our generation, for my children's
generation, and for the generations that follow, so thank you
for holding this important hearing today.
Point number two. It is our belief that the Federal
Government and the Federal Government alone cannot solve this
problem. I will use airport infrastructure as an example.
Airports have about $20 billion a year in capital development
needs. The FAA says that the Airport Improvement Program, the
primary Federal program for infrastructure investment in
aviation, has about $7 billion a year in eligible projects, yet
the Congress funds that program at a little over $3 billion a
year.
Senator, your colleagues on the authorizing committees
could double the authorization level for the Airport
Improvement Program, and you and your colleagues in the
Appropriations Committee in the House and Senate could double
the obligation limitation each year for AIP, and you still
would not be in any danger of overinvesting in airport
infrastructure.
There is still a significant gap between what the needs are
and what we are able to meet through the sources that we have
for the Airport Improvement Program, through local fees, with
the Passenger Facility Charge, through non-aeronautical
revenues at airports, and also through access to the capital
markets.
That is why we believe it is so important that Congress
lift the cap on the Passenger Facility Charge Program. This is
an antiquated Federal cap that has been in place for 17 years
without adjustment. This is the single biggest bang for the
infrastructure buck with the least impact on the Federal
budget.
Point number three. Senator Reed, as a military history fan
and a fan of history, I hope you will appreciate this. Winston
Churchill once said that democracy is the worst form of
government, except for all the others. When it comes to
infrastructure investment and aviation infrastructure
investment, the Passenger Facility Charge Program is much like
democracy. It is the worst option, except for all the others.
There is only so much Federal AIP money. There is only so
much that airports can raise through non-aeronautical revenues,
and the access to the capital markets is uneven across the
country.
The Passenger Facility Charge Program allowing local
communities and local governments to decide, not the Federal
Government, but the governments closest to the people, to
decide what those local fees should be will allow for the
leveraging of those infrastructure dollars that you referenced
earlier.
P-3s are exciting and interesting in some circumstances,
access to the capital markets work in some circumstances. The
Passenger Facility Charge Program is the only program that can
benefit every airport of all sizes across the country.
I will be happy to answer your questions. Thank you.
[The statement follows:]
Prepared Statement of Todd Hauptli
Chairman Collins, Ranking Member Reed, and members of the Senate
Appropriations Subcommittee on Transportation, Housing and Urban
Development, and Related Agencies, thank you for inviting me to
participate in this hearing on the condition of our nation's
transportation system and financing options to sustain long-term
growth. It is an honor for me to be here today.
The American Association of Airport Executives (AAAE) is the
world's largest professional organization representing the men and
women who manage commercial service, reliever, and general aviation
airports. On behalf of all our members, I would like to begin by
thanking each of you for helping airports in your respective states and
throughout the country build critical infrastructure through the annual
appropriations process.
This committee has a strong track record of supporting the Airport
Improvement Program (AIP)--a Federal program that airports of all sizes
rely on to upgrade aging facilities and construct runways, taxiways and
other capital projects. Airport executives are also grateful that this
Subcommittee has funded programs that ensure people who live in rural
and less populated areas have access to safe and reliable air service.
We are also appreciative of the strong support for the Contract Tower
Program.
Unfortunately, the limited Federal funding that airports receive is
not nearly enough to cover their AIP-eligible projects let alone the
longer list of capital projects that airports must fund with other
revenues. By any measure, airports need additional resources to upgrade
aging facilities, accommodate rising demand, and to keep pace with
evolving safety and security standards.
While a number of difficult and complicated proposals for
infrastructure investment are swirling in Washington, airports have a
simple solution for expediting airport infrastructure: We are calling
on Congress and the Administration to eliminate the outdated Federal
cap on Passenger Facility Charges (PFCs), local airport user fees that
are imposed locally, justified locally, and used locally for key
airport projects. At a time when there is enormous pressure to reduce
Federal spending, allowing airports to finance a greater share of their
projects with local revenue free from Federal interference is by far
the easiest way to improve our nation's airport infrastructure.
the need for infrastructure investment
Considering the significant infrastructure needs in this country,
the women and men who operate airports around the country are
encouraged that this Subcommittee, lawmakers in both chambers, and the
Administration are focusing on improving our nation's infrastructure.
Investing in infrastructure will help rebuild our nation's airports,
roads, and bridges while supporting good-paying jobs.
We are systematically and chronically under-investing in
infrastructure in this country. And it is not just airport
infrastructure, aviation infrastructure, or even transportation
infrastructure. We are under-investing in water infrastructure, power
infrastructure, and communications infrastructure. And, increasingly,
this lack of investment in infrastructure across the board is having a
negative impact on our domestic and international competitiveness.
According to the 2016 Global Competitiveness report, the United
States has the 11th best infrastructure in the world and the 9th best
aviation infrastructure. The report points out that the United States
has been falling behind on infrastructure since 2007. It also makes the
case that ``effective modes of transport--including high-quality roads,
railroads, ports, and air transport--enable entrepreneurs to get their
goods and services to market in a secure and timely manner . . . .''
I'm sure all of us would agree that we can and should do better.
After all, 9th or 11th place simply isn't good enough if we want to
compete in the 21st century. That's why airport executives are
encouraged that Congress and the Administration are exploring various
ideas for a major infrastructure investment package.
President Trump and his advisors have talked about a $1 trillion
infrastructure package that could include possible tax credits for
private investors. Senate Democrats recently unveiled their own
proposal that includes $30 billion to improve airports and our aviation
system. In the House, there appears to be some level of bipartisan
support for legislation that proposes to eliminate the PFC cap.
Like other infrastructure stakeholders, we're awaiting details on
the Administration's approach and are anxious to see what proposals
Congress may ultimately coalesce around. Different approaches from the
White House and both chambers of Congress may have various components
that could help airports in some ways. But the PFC is the biggest bang
for the buck to build critical safety and security infrastructure at
our nation's airports without stressing the Federal budget.
Giving airports more local autonomy through additional PFC
flexibility would help airports of all sizes move forward with a long
list of critical infrastructure projects. Allowing large airports to
finance a greater share of their projects with local revenue could also
open the door to focus limited Federal dollars on smaller airports
around the country that rely on Federal assistance the most.
rising demand, aging facilities, and a long list of airport capital
needs
Rising Demand: 2016 was a banner year for our airline partners.
According to Airlines for America (A4A), U.S. passenger airlines set
multiple traffic and capacity records last year. The airline group
indicated that passenger enplanements, revenue passenger miles,
available seat miles and load factors all hit record highs in 2016.
Considering the current trajectory, it should be no surprise that
the FAA anticipates passenger levels will continue to grow in the
short- and long-terms. The agency's 2016 Aerospace Forecast estimates
that U.S. commercial air carrier enplanements will increase from an
estimated 786 million in 2015 to 839 million this year. That's an
increase of more than 50 million passenger enplanements in just 2
years.
The FAA's latest Forecast also indicates that passenger
enplanements will reach the one billion mark by 2027--just 10 years
from now and 2 years earlier than previously expected. By 2033,
passenger levels are expected to reach 1.16 billion. Adding
approximately 325 million passengers between now and 2033 is the
equivalent of adding the entire U.S. population to our already
constrained aviation system.
Sixteen years may seem like a long time into the future. But
planning, designing, and building runways, terminals and other
capacity-enhancing projects can take an enormous amount of time.
Airports need to prepare now for rising passenger levels to come in
order to avoid congestion on the ground.
Along with increasing passenger enplanements, the number of
aircraft operations is also slated to rise in the years ahead.
According to the FAA's Forecast, operations are expected to increase
from 50,000 in 2016 to almost 60,000 by 2036--a 20 percent jump. But
the FAA warns that ``inadequate'' infrastructure could result in
congestion and delays as well as impact the agency's projections for
demand and operations.
Increasing Airport Capital Needs: With increasing passenger levels
and aging facilities, large and small airports are also facing
significant capital needs. As part of its 2017 National Plan of
Integrated Airports System (NPIAS) report, the FAA estimated that
airports have $32.5 billion in AIP-eligible projects between 2017 and
2021 or approximately $6.5 billion annually.
As members of this Subcommittee know, Congress has appropriated
$3.35 billion for AIP in recent years, down from $3.5 billion a few
years ago. Of the current amount, approximately $3.2 billion is
designated for actual capital projects. The remaining amount goes to
the FAA to administer the program and to fund other research and small
community programs. At $3.2 billion, AIP funding is only enough to
cover about half of airport's annual AIP-eligible projects.
The FAA's NPIAS provides a snapshot of certain airport capital
needs. But it is important to note that the FAA estimate only reflects
some projects that are eligible for Federal funds. The FAA report does
not include other necessary but ineligible infrastructure projects such
as gates and certain terminal projects that airports fund with PFCs and
other revenue sources.
Like the FAA, our colleagues at Airports Council International-
North America (ACI-NA) evaluate airport capital needs. The
association's latest Airport Capital Needs Survey--which evaluates the
full range of airport capital needs rather than just AIP-eligible
projects--estimates that airports will face $100 billion in capital
needs between 2017 and 2021 or approximately $20 billion annually.
The results from ACI-NA's latest Airport Capital Needs Survey are
up from its survey 2 years ago that showed $15.1 billion in annual
capital needs. The new estimate is also more than three times the $6.3
billion that airports received in AIP funds and PFC revenue last year.
Construction Cost Inflation: In addition to rising passenger
levels, airports have been hit hard by rising construction costs.
According to the Means Construction Cost Indexes, the average
construction costs for 30 major U.S. cities have jumped approximately
75 percent since 2000--the last time Congress raised the PFC cap.
Unfortunately, rising construction costs have eroded the purchasing
power of artificially-capped PFCs and stagnant AIP funding levels.
Because the PFC has not been adjusted for inflation over the years, a
$4.50 PFC is worth only about $2.20 today according to the Means
Construction Cost Indexes. Unless corrective action is taken, the value
of PFCs will erode even more. The easiest way to keep up with annual
construction inflation is to completely eliminate the PFC cap.
recommendations for helping airports finance critical infrastructure
projects
Airports rely mostly on local PFCs, Federal AIP grants, and bonds
to finance infrastructure projects at their facilities. Ensuring that
airports have adequate funding to build critical infrastructure
projects will require Congressional action in all three areas. Needless
to say, flat or reduced AIP funding will only increase pressure on
airports to secure funds from other revenue sources like PFCs.
As you continue to move forward on the annual appropriations bills
and prepare to debate a possible infrastructure package, airports have
four steps that Congress could take to ensure that they have the
revenue they need for airport capital projects.
eliminate outdated federal cap on local pfcs
Airports are united behind a proposal to eliminate the Federal cap
on local PFCs. For more than 25 years, the PFC program has helped
airports increase safety, security, and capacity; mitigate the impact
of aircraft noise; and increase competition.
PFCs are local fees that must be approved locally, imposed locally,
and used locally for projects approved by the Department of
Transportation (DOT) in consultation with the airlines. There is an
inherent level of accountability locally that ensures any revenues
raised through the PFC are used for critical locally-supported
projects.
A PFC adjustment is long overdue. Congress has not adjusted the cap
since 2000--17 years ago. Considering the ongoing pressure to reduce
Federal spending, it is now more important than ever that Congress
eliminate the Federal cap on local PFCs. Eliminating the cap would
allow airports to finance a greater share of critical infrastructure
projects with their own local revenues.
PFCs Help Increase Capacity; Enhance Competition: Airports use PFC
revenue to build infrastructure projects that increase capacity, reduce
delays, and enhance competition among carriers. With over $13 billion
in capital needs, the Seattle-Tacoma International Airport (SEA-TAC) is
a good case study for why Congress should eliminate the Federal cap on
local PFCs.
Seattle-Tacoma International Airport: Last week, Lance Lyttle, SEA-
TAC's Managing Director, testified before the House Aviation
Subcommittee during a hearing on the state of American airports. He
told lawmakers that the airport plans to invest more than $3.2 billion
in capital improvement projects during the next 7 years including $660
million for a new International Arrivals Facility.
He also indicated that these upcoming capital projects will ``use
essentially all of Sea-Tac's anticipated PFC collections through 2035,
and most PFC collections through 2047, to pay revenue bond debt service
on PFC eligible projects.'' In other words, unless Congress adjusts the
outdate PFC cap, the airport will be PFC-constrained for the
foreseeable future.
But SEA-TAC, like other airports around the country, needs to
continue to repair aging infrastructure and expand its facilities to
accommodate rising passenger levels. The airport expects its passenger
levels will jump from 46 million last year to 66 million by 2034. To
accommodate the huge influx of travelers, SEA-TAC will need another $10
billion to build 35 more gates, expand ticketing/check-in facilities,
and rebuild airport access roads.
With AIP funding held flat in recent years, many in the airport
community think a big boost in Federal funding is unlikely. In Seattle,
airport officials would prefer that funds for their infrastructure
projects come from PFCs rather than from airline rates and charges.
Absent additional PFC flexibility, SEA-TAC has few feasible options
remaining.
PFCs Help Small Airports: Although large airports obviously benefit
from PFCs, the local user fee is an important source of income for
smaller commercial service airports around the country, too. In fact,
some of the most compelling calls for self-help come from communities
like Bangor, Maine; Providence, Rhode Island; and Missoula, Montana.
Small airports rely on PFCs to augment their AIP funding and to
help pay the higher local matching requirement for AIP funds. The last
FAA reauthorization bill regrettably doubled the local matching share
requirement for small communities over the previous requirement.
Doubling the local match requirement has had an enormous financial
impact on small airports. Eliminating the PFC cap would help small
airports generate more local revenue to meet their higher local
requirements.
Bangor International Airport: Madame Chair, as you know, the Bangor
International Airport recently completed work on a $14 million terminal
project that allowed the airport to add another passenger gate and jet
bridge for domestic travelers. That major renovation project was made
possible by a combination of local PFCs, AIP grants, and other revenue
sources.
Officials at the non-hub airport now have their sights set on two
major airside projects including rehabilitating a taxiway that
parallels the runway. At over 11,000 feet in length, the project is
expected to cost approximately $10 million. The airport, which is home
to the 101st Air Refueling Wing, also plans to redo the adjacent
runway. The runway project could cost twice as much as the taxiway, and
the airport plans to use AIP grants and PFCs for both.
The Bangor International Airport is experiencing tremendous
passenger growth. Last year the airport had a record 492,000
enplanements. That's 120,000 more enplanements than the airport had
just 8 years ago. With increasing passenger loads and the continuous
need to upgrade aging facilities, it's clear that the airport will need
to invest in other necessary airside and landside projects. Lifting the
PFC cap would give the airport another financing option to meet its
infrastructure demands.
T.F. Green Airport: T.F. Green Airport near Providence, Rhode
Island has relied on Federal grants and PFC revenue for critical
infrastructure projects. Two week ago, Rhode Island Airport Corporation
officials, Ranking Member Reed, and other leaders announced that the
airport will begin receiving new international service this summer.
Senator Reed deserves a great deal of credit for facilitating that new
service by helping to secure $110 million in AIP grants to upgrade the
airport and extend its runway.
Looking ahead, airport officials indicate that raising or
eliminating the PFC cap could help the airport fund critical
infrastructure projects and airfield equipment. With potential growth
in service to international destinations, airport officials point out
that they may need to use PFCs to help pay for expanding or potentially
building a new Federal Inspection Service facility. The airport also
intends to use PFCs to pay for debt service on associated airfield
projects.
Missoula International Airport: The Missoula International Airport
is another airport in need of a new terminal. The current terminal at
the Montana airport was built in the late 1940s, and the airport has
added on to it about a dozen times since then. In an effort to replace
outdated facilities and accommodate unprecedented passenger growth,
airport officials are preparing to break ground next year on a new $72
million terminal. The airport plans to use a combination of PFCs, AIP
grants, and other revenue sources to pay for the much-needed project.
Adjusting the PFC cap would allow the airport to service a higher
level of debt and complete all phases of the new terminal project.
Airport officials also point out that a higher PFC cap would allow them
to pay off the terminal-related debt more quickly. It would also allow
them to use PFC revenue for other high-priority projects such as
airfield pavement, Aircraft Rescue and Fire Fighting equipment, and
Snow Removal Equipment.
Response to Airline Arguments: Unfortunately, airports and airlines
don't agree on the need to eliminate the PFC cap. We've been going
around and around on this issue for the past 25 years. It is a dispute
about money. But, more importantly, it is a dispute about control.
Airlines don't like the fact that airports can use PFC revenue to help
increase competition at their facilities, which can lead to lower
fares.
The dispute between airports and airlines is also about
perspective. Airlines tend to look at the world in 90-day increments of
time and their next quarterly report. That is understandable since
their job is to maximize revenue for their shareholders. Airports, on
the other hand, look at the world in 3-, 5-, 7-, 10-, even 15-year
increments because that's how long it takes to build necessary
infrastructure.
Airports, like you, are representatives and stewards of their
communities. Airports are trying to provide the best opportunities for
competition and enhanced service. If an airline doesn't like their
yield in a particular market, they can pick up and leave. We believe
that our interest, as units of local government, aligns with your
interest, as members of the United States Senate, in looking out for
what is best interest of your community.
The airlines often make the erroneous claim that PFCs are taxes.
But PFCs are not taxes. They are local user fees charged to passengers
using airport facilities to help defray the costs of building airport
infrastructure. Moreover, PFCs are imposed by states or units of local
government--not the Federal government. PFCs are not collected by the
Federal government, not spent by the Federal government, and not
deposited into the U.S. Treasury.
Marc Scribner from the libertarian Competitive Enterprise Institute
described PFCs as ``classic example of a user fee.'' He correctly
pointed out that ``unlike taxes, user fees can only be imposed on the
service beneficiaries . . . The primary beneficiaries of airports are
the passengers who use the airports; thus, charging them a facility
user fee that will be used solely for specific, statutorily-defined
airport improvements cannot constitute a tax.''
Our airline partners will continue to try to make the case in that
raising the PFC cap isn't necessary because commercial service airports
collected $24.5 billion in revenues in 2013. The airlines might have a
point if airports could have devoted that entire amount for capital
projects. But, not surprisingly, airports use various revenue sources
to pay for capital and operational expenses.
The fact is almost half of the airline's estimate--or $11.7
billion--paid for airport operating expenses such as personnel costs,
firefighting and law enforcement. According to airport financial
reports, airports also had $6.3 billion in debt service costs in 2013.
That's the amount of principal and interest that airports paid for
long-term bonds during the year. When combined with airport operating
expenses, airport non-capital costs were $18 billion in 2013--or 73
percent of A4A's estimate.
Another 25 percent of A4A's estimate--or $6.2 billion--came from
AIP funds and PFCs. That estimate is misleading because airports didn't
actually receive the full $3.4 billion in AIP grants. According to the
FAA, airports received less than $3 billion in AIP grants in 2013 and
slightly less than $2.8 billion from PFCs. There's no question that
$5.8 billion is a large amount of money. But revenue from those two
programs would only cover a fraction of the $20 billion in annual
airport capital needs.
Finally, A4A's estimate also doesn't take into account the amount
of debt that airports have outstanding. Airport financial reports show
that airports had more than $83 billion in outstanding debt in 2013,
and that number climbed to more than $88 billion by 2015. Without a PFC
increase, airports that have more borrowing capacity will have to issue
even more debt to finance their infrastructure projects. Eliminating
the PFC cap and paying for more projects on is a fiscally responsible
approach that would help both airports and airlines.
continue to invest in federal airport improvement program
Airports are also urging Congress to continue to provide full
funding for AIP in the annual appropriations bills. As members of this
Subcommittee are well aware, no general fund revenues are used for AIP
grants. The AIP program is supported entirely by users of the aviation
system through various taxes and fees deposited into the Airport and
Airway Trust Fund.
AIP is a critical source of funding for airports of all sizes and
especially smaller airports around the country that don't generate as
much PFC revenue or have easy access to the bond market. Large and
medium hub airports also depend on AIP funding--particularly money
distributed through the Letter of Intent Program--to help pay for large
capacity-enhancing projects.
AIP funds key airport projects that improve safety, security,
capacity, and efficiency. Airports often rely on Federal grants to
construct and rehabilitate runways and taxiways. Despite enormous
demand and increased construction cost inflation, the authorized
funding levels for AIP has dropped in recent years from $3.515 billion
to $3.35 billion.
It is important to point out that not all AIP funding actually
flows to airports for actual construction projects. In fiscal year 16,
for instance, only about $3.2 billion went to actual infrastructure
projects. Slightly more than $107 million of AIP went to the FAA to
operate the program. At that funding level, the annual appropriations
for AIP amount is only enough to cover half the FAA's estimated $6.5
billion in annual AIP-eligible projects and one-third of airports'
entire annual capital needs.
The next FAA reauthorization bill may propose slightly higher
funding levels for AIP. But we realize that it is unlikely that the
program will double in size any time soon. It is for that reason that
we believe that it is absolutely imperative for Congress to eliminate
the PFC cap. Doing away with the cap could potentially open the door to
recalibrate the AIP program. With a PFC increase firmly in place,
limited Federal funds could be focused on smaller airports that need
AIP funds the most.
preserve and restore tax exempt financing for airport bonds
While it isn't under this Subcommittee's jurisdiction, airports
urge you to work with your colleagues on the Senate Finance Committee
to help airports pay for their infrastructure projects with bonds.
Specifically, we are urging Congress to retain the tax exemption for
municipal bonds and to eliminate the tax burden of the Alternative
Minimum Tax (AMT) on airport private activity bonds.
AAAE and ACI-NA have long argued that Federal tax law unfairly
classifies the vast majority of bonds that airports use as private
activity even though they are used to finance runways, taxiways and
other facilities that benefit the public. Since private activity bonds
are subject to the AMT, airport bond issuers traditionally have been
charged higher interest rates on their borrowing.
A permanent AMT fix would help airports reduce their borrowing
costs, allow them to invest in more infrastructure projects, and
support more jobs. Since reducing borrowing costs would benefit
airports and their customers, this is one airport infrastructure
financing proposal that airports and airlines will likely continue to
agree makes sense.
But it is important to note that unlike AIP and PFCs, bonds are not
a revenue source--they are essentially loans that airports need to pay
back. In terms of additional borrowing, many airports are unable to
issue new bonds because they have reached the limits of their debt
capacity. Other small airports are simply unable to go to the bond
market to finance infrastructure projects.
close bag fee loophole
While airports and airlines may agree on the need for AMT relief,
we continue to have a fundamental disagreement over the impact of
airlines' increasing reliance on baggage fees and other ancillary
charges. AAAE is recommending that those fees be subject to the same
aviation excise taxes as base air fares and that the revenue be
deposited into the Airport and Airway Trust Fund.
Airport operators respect our airline partners and the highly
competitive nature of the commercial airline industry. However, at a
time when Federal funding for airport infrastructure projects is
stagnant, and the purchasing power of PFCs is eroding, the airlines'
current business model simultaneously reduces funds that could be used
for airport infrastructure projects and air traffic control
modernization.
Air carriers are increasingly relying on revenue generated from
checked baggage fees and other ancillary charges and less on funds from
base airline tickets. Unlike airline tickets, baggage fees and some
other ancillary charges are not subject to a 7.5 percent excise tax. In
other words, the airlines' a la carte pricing model allows carriers to
avoid paying aviation excise taxes for services that were once included
in the price of traditional airline tickets.
According to DOT's Bureau of Transportation and Statistics, U.S.
airlines collected more than $3.8 billion in baggage fees in 2015--the
last complete year available. And carriers were on track to exceed that
amount in 2016 having collected approximately $3.15 billion in first
three quarters of the year. Those figures are for bag fees alone and do
not include revenue that carriers generate from reservation change fees
and other ancillary charges. The 2015 airline bag fee revenue exceeds
the amount that Congress approved for AIP in fiscal year 16 and the
amount that airports collected in PFC revenue in the same calendar
year.
The airlines' use of ancillary fees shortchanges the Airport and
Airway Trust Fund of revenue that could otherwise support airport
infrastructure projects, air traffic control modernization, and other
aviation system improvements. Between 2008 and the third quarter of
2016, the airlines raked in almost $28 billion in revenue from bag
fees. By the end of the first quarter of 2017--less than 1 month from
now--that number will likely climb to approximately $30 billion.
Closing the baggage fee loophole and charging the same 7.5 percent
as base fares would have generated approximately $285 million in 2015
alone. From 2008 through the first quarter of 2017, the bag fee
loophole is expected to cost the Airport and Airway Trust Fund
approximately $2.2 billion in foregone revenue.
We appreciate the airlines' responsibility to answer to their
shareholders. And airports want our airline partners to be successful.
But the ancillary fee loophole should be closed. Doing so would
generate over $1 billion every 4 years that could be used for AIP and
NextGen. It would also help the nation meet the long-term needs of our
aviation system.
recommendations for helping small communities
This Subcommittee has long looked out for small communities by
supporting programs that ensure people who live and work in rural areas
have access to our aviation system. As you consider the annual
appropriations bills, we urge you to protect the cost-effective
Contract Tower Program and maintain funding for small community
programs.
Contract Tower Program: On behalf of the 253 airports with FAA
contract towers, we would like to thank this Subcommittee for the full
and dedicated funding you have provided the contract tower program over
the years. This successful program allows smaller airports in 46 states
to have air traffic control services that have a direct impact on
aviation safety. It also plays a key role in connecting smaller
airports and rural communities with our national air transportation
system.
As you well know, the Contract Tower Program continues to enjoy
strong bipartisan and bicameral support in Congress for the way it
enhances aviation safety and provides significant cost savings to the
FAA and U.S. taxpayers. The enormous benefits of this highly-regarded
government/industry partnership have been validated repeatedly by DOT's
Office of Inspector General.
Almost half of all military operations at civilian airports in the
U.S. occur at contract towers and approximately 70 percent of all
contract controllers are veterans. Contract towers operate together
with FAA-staffed facilities throughout the country as part of a unified
national air traffic control system. Without this Federal program and
critical support from this Subcommittee, many of these towers would be
forced to close.
We are grateful that Senate and House versions of the fiscal year
17 DOT Appropriations bill include $159 million for the Contract Tower
Cost Share program. We urge you to include that full amount in the
final fiscal year 2017 and fiscal year 2018 DOT spending bills.
Essential Air Service: Congress created the Essential Air Service
(EAS) program as part of the Airline Deregulation Act of 1978 to ensure
that small communities could maintain a minimal level of scheduled air
service. Since then, this program has successfully allowed people who
live in rural and less populated areas to have access to the national
aviation system. According to DOT, 173 communities participate in the
EAS program including 61 in Alaska.
Commercial air service is not just a matter of convenience for
leisure travelers. It is also critical to economic development efforts
in communities around the country. Without the EAS program it would be
difficult for many small communities to retain commercial air service
and attract businesses that promote economic development and create
jobs.
The EAS program is funded by a combination of annual appropriations
and revenue from overflight fees. On behalf of EAS communities around
the country, we urge you to continue to support this program.
Small Community Air Service Development Program: AAAE has been a
strong supporter of the Small Community Air Service Development
Program. Since its creation, the program has helped numerous small
communities suffering from insufficient air service or unreasonably
high fares.
DOT officials have pointed out that small community grants fund a
variety of projects including financial incentives for airlines and
marketing initiatives. At a time when small airports are trying to do
everything they can to hold on to commercial air service and attract
new service, the Small Community Air Service Development Program can
provide small communities with a much-needed boost.
It is worth noting that small communities that participate in the
program bring significant local funds to the table. When announcing
grant recipients last year, DOT noted that ``nearly all the communities
pledged local cash and/or in-kind contributions from local, state,
airport, or private sources to complement their requests for Federal
assistance.''
Vision 100 authorized $35 million per year for the Small Community
Air Service Development Program, and authorizers reduced that level to
$6 million annually in the FAA Modernization and Reform Act of 2012.
This Subcommittee has approved even higher funding levels for the Small
Community Air Service Development Program in recent years, and we urge
you to help airports in small communities by continuing to support this
program in fiscal year 17 and fiscal year 18.
conclusion
Chairman Collins, Ranking Member Reed, and members of the Senate
Appropriations Subcommittee on Transportation, thank you again for
inviting me to participate in this hearing on airport issues and
infrastructure financing. We appreciate your long-standing support of
the nation's airports and maintaining air service. We look forward to
working with you as we seek to better prepare airports to deal with the
significant challenges on the horizon.
Senator Collins. Thank you very much.
Mr. Mortimer.
STATEMENT OF EDWARD L. MORTIMER, EXECUTIVE DIRECTOR FOR
TRANSPORTATION INFRASTRUCTURE, U.S. CHAMBER
OF COMMERCE
Mr. Mortimer. Great. Good morning, Chairman Collins,
Ranking Member Reed, and members of the subcommittee. My name
is Ed Mortimer. I serve as Executive Director of Transportation
Infrastructure at the U.S. Chamber of Commerce.
I also have the privilege of serving as Executive Director
of the Chamber-led Americans for Transportation Mobility
Coalition, which includes business, labor, and transportation
stakeholders advocating for improved and increased Federal
investment in the Nation's aging and overburdened
transportation system.
America's transportation network is a vast system that
connects people and places, moves goods, and boosts our
economy, and ensures our quality of life and safety. It has
served as the backbone of the Nation's economy.
For almost 100 years, America's infrastructure has been the
envy of the world, from our transcontinental railroads to our
airports, and from subways to the interstate highway system.
Our Nation's history of providing state-of-the-art
infrastructure is impressive, but like those who own a home
know, failure to maintain an asset allows minor problems to
turn into major reconstruction, and now we see an
infrastructure that we need to rebuild and modernize.
The U.S. Department of Transportation's Beyond Traffic
Report describes in detail what the future may hold for our
changing population. The report finds that the U.S. population
is expected to grow by 70 million people in the next 30 years.
By 2045, the Nation's economy is forecasted to grow by 115
percent.
We talked earlier about the needs that are out there. My
written statement really gets into those, but again, the needs
are great and the resources are limited.
What has changed? We are very excited that President Donald
Trump has announced his desire to enact an infrastructure
investment package, which many in Congress, many on this
committee and others, including the leadership, have expressed
a willingness to advance such legislation.
The Chamber and the ATM Coalition believes this is a once
in a generation opportunity to modernize America's
infrastructure, and that this effort is critical to future
economic success.
As this process moves forward, the Chamber believes any
package should include the following three principles: first,
the legislation should focus on actual infrastructure projects
whose completion can create greater potential for long-term
economic growth. The package should not be a replication of
what happened in 2009 with the Recovery Act.
These projects need to be selected and funded based on
potential to support long-term economic growth, not at the
speed at which they can be brought into construction and
completion.
Second, the legislation should employ a variety of funding
mechanisms tailored to various infrastructure project lines and
where possible utilize existing Federal programs. Funding
should come in the form of direct Federal funding, revolving
loan programs, direct Federal loan programs, tax-preferred
financing, and public/private partnerships.
Again, as my colleagues from AASHTO said, any legislation
must ensure the long-term solvency of the Highway Trust Fund,
and I will speak about that further in a minute.
Thirdly, while new Federal programs may be necessary to
reflect the breadth of infrastructure projects envisioned,
where possible, existing programs should be utilized and
reformed as necessary.
Additional financing and funding should be accompanied by
reforms that increase accountability, maximize and expedite the
use of scarce Federal resources, and accommodate future needs.
Best practices and performance requirements are needed to
ensure projects are selected to maximize economic
competitiveness, and that our national transportation system
remains cohesive and efficient.
By expediting permitting, modernizing procurement
practices, promoting innovation, and committing to project
analysis that focuses on long-term risk management, the Federal
Government can extract greater value out of limited funds, and
support the delivery of higher quality, longer lasting
infrastructure.
Rebuilding the Nation's transportation infrastructure
should also include embedding new technologies that can
leverage the impact of advances such as autonomous vehicles and
drones.
Before I get into some of the funding and financing options
for this infrastructure package, I would like to reiterate what
Commissioner Bernhardt and Jim Tymon from AASHTO said, we do
believe this committee needs to make sure that when the fiscal
year 2017 appropriations are done, that we fully fund this year
the FAST Act.
It is critical to maintain trust with our state partners
and business community to ensure that the funding levels
authorized in the FAST Act are met.
Now, I would like to talk about some of the funding and
financing options that could be evaluated as we look forward to
how we do this critical infrastructure package. Again, the
Federal Highway Trust Fund will run out of money after the FAST
Act expires in 2020. I think Jim talked about this.
Obviously, we have a hole at the end of that legislation of
over $100 billion, just to maintain the funding in the last
year of the FAST Act.
This shortfall will result in significant uncertainty, and
you all have seen what happened when we had extension after
extension of authorization, it really caused a lot of
uncertainty and it slowed down a lot of projects around the
country because of the lack of Federal long-term planning,
again, this is something we believe needs to be addressed as
part of any infrastructure package this year.
We believe that business, labor, public transit advocates,
and other key stakeholders must partner with Congress to find
long-term sustainable funding for the Highway Trust Fund.
Currently stuck at 18.4 cents per gallon, the Federal
gasoline tax has not been increased since 1993. Since then, the
user fee has lost more 35 percent of its purchasing power.
Could you imagine if we had indexed that and kept pace with
inflation? We would not have a lot of the problems we have
today.
Look, we understand that politically, this is the most
challenging one, but as the business community, we are
committed to stand with members of Congress to try to make sure
this is addressed this year, and we are willing to support this
type--it has been the way that has worked since 1956, and we
are willing to stand with elected officials to make that tough
decision and to make it happen.
Of course, there are several funding and financing tools
that are also available. We talked about TIFIA. Again, we
believe TIFIA can be reformed, and utilization of the Build
America Bureau can provide new opportunities. We also believe
the Railroad Rehabilitation and Improvement Financing (RRIF)
can be another program that can be reviewed.
The private activity bonds, we believe that cap on private
activity bonds should be lifted. There is a lot of opportunity
there moving forward. Tax credit bonds, we know Senator Hoeven
on this committee and others have looked at trying to use some
type of tax credit bonds.
But again, while these are all valuable private sources,
they are not a replacement for core Federal funding.
In closing, this is a critical juncture in our country, the
business community stands ready to work with all of you to
ensure that we actually have an infrastructure that can serve
the Nation for the next 50 years, just like Dwight Eisenhower
developed the interstate highway system.
Thank you for your time, and I look forward to your
questions.
[The statement follows:]
Prepared Statement of Edward L. Mortimer
introduction
Good morning Chairman Collins, Ranking Member Reed, and members of
the Subcommittee. My name is Ed Mortimer and I serve as the Executive
Director for Transportation Infrastructure at the United States Chamber
of Commerce. I also serve as the Executive Director of the Chamber-led
Americans for Transportation Mobility Coalition (ATM), which includes
business, labor and transportation stakeholders advocating for improved
and increased Federal investment in the nation's aging and overburdened
transportation system.
The U.S. Chamber is the world's largest business federation. We
represent the interests of over 3 million businesses of all sizes,
sectors, and regions, as well as state and local chambers and industry
associations.
condition of the nation's transportation infrastructure
America's transportation network is a vast system that connects
people and places, moves goods and boosts our economy, and ensures our
quality of life and safety. The country's transportation system is
comprised of roads, bridges, public transit, airports, ports, and
interchanges affecting thousands of communities, multiple industries
and job sectors. It has served as the backbone of the nation's economy.
For almost one hundred years, America's infrastructure has been the
envy of the world. From the transcontinental railroads to electric
streetcars, and from subways to the interstate highway system, our
nation's history of providing state-of-the art infrastructure is
impressive.
``Today, there are more than 4 million miles of road, 600,000
bridges, and 3,000 transit providers in the U.S. And yet, over the past
20 years, total Federal, state, and local investment in transportation
has fallen as a share of Gross Domestic Product--while population,
congestion, and maintenance backlogs have increased,'' according to
2014 White House document entitled: ``An Economic Analysis of
Transportation Infrastructure Investment.''
But like those of us who own a home know, failure to maintain an
asset allows minor problems to turn into major reconstruction. In the
infrastructure market, the latest American Society of Civil Engineers
Infrastructure Report Card, which will be revised tomorrow, tells this
sad story, ranking the nation's infrastructure a D+. Shockingly, this
is an improvement from a grade of D in the previous report. Grades that
should give this subcommittee pause include: Bridges (C+); Aviation
(D); Roads (D) and Transit (D).
Study after study has shown that investing in transportation
infrastructure leads to better safety, faster economic growth and
higher quality of life. Not maintaining the infrastructure will have
the reverse effect; the recent challenges of the Washington
Metropolitan Area Transit Authority are just the most recent example.
Another recent report analyzing the U.S. Department of
Transportation's (U.S. DOT) recently-released 2016 National Bridge
Inventory data finds cars, trucks and school buses cross the nation's
55,710 structurally compromised bridges 185 million times daily. About
1,900 are on the Interstate Highway System. State transportation
departments have identified 13,000 Interstate bridges that need
replacement, widening or major reconstruction.
The data in the report shows 28 percent of the nation's bridges
(173,919) are over 50 years old and have never had any major
reconstruction work in that time.
The most recent 2015 U.S. DOT conditions and performance report
highlighted the current state of good repairs needed for highways and
bridges at an estimated $830 billion. Of the total backlog, $394.9
billion (18.8 percent) is required for the Interstate System; $394.9
billion (47.2 percent) is for the National Highway System, and $644.8
billion (77.1 percent) is for Federal-aid highways.
This U.S. DOT report also stated the current state of good repair
needs for public transit at $89.8 billion. (2015 Status of the Nation's
Highways, Bridges, and Transit, U.S. Department of Transportation) Some
of the impacts of future transit capital investment scenarios are
listed below.
In the airport sector, a recent survey by the Airports Council
International-North America (ACI-NA) showed U.S. airports have an
estimated $75.7 billion in infrastructure investment needs through 2019
to accommodate growth in passenger and cargo activity, rehabilitate
existing facilities, and support aircraft innovation (Airport Capital
Development Needs: 2015-2019).
importance to system conditions to freight movement
The nation's freight network continues to experience strain. In
2015, our nation's transportation system moved 18.1 billion tons of
goods, worth $19.2 trillion, according to a Bureau of Transportation
Statistics document entitled ``DOT Released 30-year Freight
projection'' (March 2016). A recent U.S. DOT report, Beyond Traffic,
projects that the amount of freight traveling on our nation's
transportation network will grow 40 percent over the next 40 years. The
chart below shows the breakdown of those estimates by transportation
mode:
The nation's supply chain is also adapting to American consumers
expecting quicker delivery of product. Supply-chain programs are moving
from an inventory based ``manufacture-to-supply'' model to a
``manufacture-to-order'' model. Emerging technologies such as vehicle-
to-vehicle and vehicle-to-infrastructure communications and autonomous
vehicles need to have a transportation infrastructure able to allow
these innovations to achieve the desired effort of maximizing the
efficiency of the transportation network.
the challenge ahead
The Beyond Traffic report describes in detail what the future may
hold for our changing population. The report finds that the U.S.
population is expected to grow by 70 million people in the next 30
years. By 2045, the nation's economy is forecasted to grow by 115
percent and the transportation sector will represent $1.6 trillion of
gross domestic product.
The same report shows investment in surface transportation is not
meeting demand. For example, improving the condition and performance of
highways and bridges over the next 5 years is estimated to cost $120
billion annually from all levels of government. Yet, we currently are
investing only $83.1 billion. For public transportation, current
investment is $17.1 billion annually, a far cry from the necessary $43
billion.
what should be included in an infrastructure package
President Donald Trump has announced his desire to enact an
infrastructure investment package, and many in Congress, including
leadership, have expressed a willingness to advance such legislation.
The Chamber and the ATM Coalition believe this is a once in a
generation opportunity to modernize America's infrastructure, and that
this effort is critical to future economic success. As this process
moves forward, the Chamber believes any package should include the
following principles:
legislation should focus on actual infrastructure projects whose
completion can create greater potential for long-term economic growth.
--Infrastructure includes transportation (roads, bridges, transit
systems, aviation, rail, ports and waterways), energy
infrastructure, water and wastewater infrastructure, and
broadband. Initiatives outside of these core areas should not
be included in the package.
--The package should not be a ``stimulus'' bill. Projects should be
selected and funded based on the potential to support long-term
economic growth, not the speed at which they can be completed.
legislation should employ a variety of funding mechanisms tailored to
the various infrastructure project lines and, where possible, utilize
existing federal programs.
--Funding should come in the form of direct Federal funding,
revolving loan programs, direct Federal loan programs, tax-
preferred financing, and public-private partnerships.
--Any legislation must ensure the long-term solvency of the Highway
Trust Fund (HTF).
--While new Federal programs may be necessary to reflect the breadth
of infrastructure projects envisioned, where possible, existing
programs should be utilized and reformed as necessary.
--A discretionary grant program should be created to fund mega-
projects, fund projects without existing Federal funding
source, stimulate competition, and maximize leveraging state,
local, and private-sector funds.
additional financing and funding should be accompanied by reforms that
increase accountability, maximize and expedite the use of scarce
federal resources, and accommodate future needs.
--Accountability, best practices, and performance requirements are
needed to ensure projects are selected to maximize economic
competitiveness and that our national transportation system
remains cohesive and efficient.
--By expediting permitting, modernizing procurement practices,
promoting innovation, and committing to project analysis that
focuses on long-term risk management, the Federal government
can extract greater value out of limited funds and support the
delivery of higher quality, longer lasting infrastructure.
--Rebuilding the nation's transportation infrastructure should
include embedding new technologies that can leverage the impact
of advances such as autonomous vehicles.
need to utilize various financing and funding options to increase
transportation infrastructure investment
Reauthorization, 6-year Highway Trust Fund Fix
The Federal Highway Trust Fund (HTF) will run out of money after
the Fixing America's Surface Transportation Act (FAST Act) expires in
2020. It will require an investment of approximately $150 billion over
current revenue projections just to maintain funding at FAST Act levels
over the following 6-year period. This shortfall will likely result in
significant uncertainty with states possibly delaying major
transportation projects. The size of the shortfall also will likely
mean that Congress will be unable to complete a well-funded
authorization bill in a timely manner and might force undesirable
policy outcomes that run counter to the best interests of the nation.
Funding Highway Trust Fund
We believe that business, labor, public transit advocates and other
key stakeholders must partner with the Congress to find a long-term,
sustainable funding source for the Highway Trust Fund. Currently stuck
at 18.4 cents per gallon, the Federal gasoline tax has not increased
since 1993. Since then, the user fee has lost more than 35 percent of
its purchasing power. Even with the passage of the FAST Act, our
nation's current level of investment in surface transportation is less
than half of what is needed.
It is the Chamber's position that the simplest, most straight
forward solution to the immediate problem we face is to increase user
fees--gasoline and diesel taxes--going into the HTF. Adding a penny, a
month for a year and indexing the total user fee to inflation could
support current services funding levels for the foreseeable future. The
collection system itself is highly efficient: the owner of the fuel at
the time it breaks bulk from the terminal rack pays the excise tax to
the Internal Revenue Service. According to the American Petroleum
Institute, there are about 1300 terminals in the country, translating
to a low number of payers and low cost of administration. The gas tax,
if adjusted in amount and indexed, is ideal and most transparent as a
revenue source.
And yes, in the long run, we know that there is a need to look to
other methods to pay for surface transportation investment. The vehicle
fleet is becoming more fuel-efficient. Driving patterns are changing.
Construction costs typically grow faster than the Consumer Price Index.
And multi-modal transportation investment calls for more diversified
sources of revenue. We have been closely following pilot programs
looking at transitioning to vehicles miles traveled such as Oregon and
others. While progress is being made, we believe that national
implementation of such a funding mechanism is at least 10 years away.
Financing Tools
Federal Loan Programs--Direct Federal loans are a critical tool to
bringing private capital to the infrastructure market. The most
successful loan program is known as Transportation Infrastructure
Finance and Innovation Act (TIFIA), which makes loans to highway and
transit projects. The Federal cost of loan programs (known as subsidy
cost) is determined based on the expected value of a potential default
of each project, which has historically been 8 percent. Each dollar
provided in subsidy cost historically leverages $30 in total project
funding. The FAST Act lowered subsidy cost funding from $1 billion to
$350 million because there was not enough demand for the higher level
of loans. We believe that with increased resources in U.S. DOT's Build
America Bureau, more project sponsors will find it easier to utilize
TIFIA.
We also would like to see expanded use of a financing tool for rail
projects, known as the Railroad Rehabilitation & Improvement Financing
(RIFF). The program, authorized in 1998, has experienced limited use
due to the private sector being required to pay the government the
subsidy cost when the loan closes, along with its restrictive loan
terms.
Private Activity Bonds--Private Activity Bonds (PABs) allow
private-sector project sponsors to issue tax-exempt bonds when
financing public-benefit infrastructure projects. Currently there is a
$15 billion cap on such issuances. We believe that raising or
eliminating this cap would provide a further incentive to increase
private sector investment in surface transportation projects. We
propose increasing the cap by $10 billion. The average P3 project is
funded 25 percent with PABs, so we assume an additional $10 billion cap
could leverage $40 billion in projects.
Tax-Credit Bonds--There are several competing proposals to leverage
private-sector investment by creating a new category of bonds,
including Build America Bonds (BABs) and Transportation and Regional
Infrastructure Project Bonds (TRIP Bonds). Many of the proposals would
provide a tax credit in lieu of paying the bondholder interest. We
believe they can be utilized as an additional tool to supplement other
financing/funding sources.
These valuable Federal credit tools, along with other sources of
debt and equity, are not free. When a project sponsor determines to
utilize private financing, revenues are required to repay lenders and
investors. Although using P3's and other private financing instruments
can free up pay-as-you go funding sources for projects that are not
amenable to private investment, they are no replacement for fixing the
revenue problem facing the HTF.
The Chamber has joined with the Bipartisan Policy Center and
several other industry stakeholders, including the National Governors
Association, the Business Roundtable, North America's Building Trades
Unions, the National Association of Manufacturers and the Securities
Industry and Financial Markets Association to promote robust, reliable
Federal funding as well as unleashing the power of the private sector
to address these infrastructure needs.
regulatory relief
The FAST Act and MAP-21 have made great strides in improving
project delivery for highway and transit projects, but many of the
provisions have yet to be fully implemented. Also, not all
infrastructure projects benefited from those changes. The Chamber urges
Congress to pass permit streamlining legislation, which would help all
infrastructure projects move forward in a timely but environmentally
responsible manner.
It is difficult to estimate the amount of direct saving regulatory
relief could bring to infrastructure projects. Generally speaking,
streamlining the permitting process accelerates spending rather than
leveraging additional funds. However, this acceleration of project
completion saves money. Additionally, the added certainty of a more
reasonable timeline for approval of Federal permits would likely
attract additional private capital to the U.S. infrastructure market.
conclusion
The bottom line is that the time to make important infrastructure
investments is NOW. Delaying action only makes the decisions more
difficult and projects costlier. From the business community's
perspective, the question is not if we need to make these decisions,
but when.
The Chamber strongly supports Federal investment in transportation.
We need a smooth flowing, efficient national transportation network
that will support the transportation needs of businesses from origin to
destination across the globe, and from the factory to the corporate
headquarters to main street retailers to medical centers.
From all levels of government, there is no single funding solution
that will solve all of our infrastructure problems. The Chamber
believes communities should have a large toolkit of funding and
financing options available that can be utilized to provide the
infrastructure needed, not just to succeed, but to lead the world in
providing economic and social mobility. Improving our current
infrastructure will be a key component in modernizing many parts of the
country. The Chamber and the ATM Coalition are committed to working
with elected officials to ensure our nation provides an infrastructure
that keeps up with the changing times.
Thank you for the opportunity to testify today. The Chamber as well
as the ATM Coalition look forward to working with this subcommittee to
provide the tools necessary to modernize America's transportation
network, stabilize the HTF, and grow investment in this nation's
transportation infrastructure so each state and region can get out of
the system what they need to be successful--whether that is moving
freight or their employees.
Senator Collins. Thank you very much for your testimony.
Ms. Osborne, I hope you will forgive me if I yield to the
ranking member of the full committee who has joined us and is
on a very tight timetable, and would like to give a very brief
opening statement.
Ms. Osborne. Of course.
Senator Collins. Senator Leahy, welcome.
STATEMENT OF SENATOR PATRICK LEAHY
Senator Leahy. Madam Chair, I appreciate the courtesy very
much. I am glad to see somebody from Maine and New England. You
have three New England Senators here, and our distinguished
colleague from Delaware.
Look, every single state could talk about the crumbling
infrastructure. We have the power to improve it. We should not
talk as though we do not have the power to do it. We used to do
this in a bipartisan way. We have to come back to that. We
cannot have a small minority in the Congress block what we need
to do.
Mr. Mortimer, you talked about the gas tax, that had it
been indexed, where we would be on that. Whatever we do, it
cannot be with hope and smoking mirrors, if you will excuse the
cliche. It has to be real. We cannot talk about, especially
those of us who come from rural areas, well, we will just build
toll roads or something of that nature; that just does not
work.
I join with my fellow Democrats to building a $1 trillion
infrastructure unit. It creates 15 million jobs, both in urban
and rural centers.
The President says he wants to invest in infrastructure,
but when he talks about increasing money as part of defense
spending, $25 billion for a wall on our southern border, that
takes money away from infrastructure, job creation, education,
and the environment.
If you think we are going to do this just by some kind of
tax incentives, that is not going to help rural America at all.
We do a lot in our state, in our small state, but we do need
help.
Madam Chair, I thank you for holding this hearing.
Senator Collins: Thank you very much, Senator Leahy.
Ms. Osborne.
STATEMENT OF BETH OSBORNE, SENIOR POLICY ADVISOR,
TRANSPORTATION FOR AMERICA
Ms. Osborne. Thank you very much for having me today. On
behalf of Transportation for America (T4A) and our alliance of
local transportation civic and business leaders across the
country, we are very pleased to be here.
Transportation for America seeks to ensure that local
leaders are better represented in the Federal programs since
that is the level at which most travel happens.
We also provide technical assistance to state and local
transportation agencies on measuring the performance of their
transportation systems, implementing practical and multimodal
design strategies, and successful models for raising state and
local money to support transportation.
As everybody testifying today has said, we have a great
need to invest in the transportation system, and one of the
best things about going last is I get to say what they said.
We at Transportation for America have been very supportive
of putting more funding into this program. Two years ago, we
produced a revenue proposal that suggested several ways to do
that. AASHTO has gone much further. Ours was just a subset.
I believe Jim said 35 different techniques that we could
use to fund those programs, and we agree that funding should be
sustainable and reliable, so that transportation agencies can
do the thoughtful planning and asset management necessary to
maintain our national transportation system.
However, funding is not the only thing that we need. We
need programs that promote innovation, that encourage
collaboration and maximize benefits. This committee funds most
of the programs that do that the best, including the TIGER
Program, New Starts, Small Starts, and potentially the
Consolidated Rail Infrastructure and Safety Improvements
Program, known as CRISI, which I think is an adorable name.
In fact, while we talk about the need to put more funding
into our crumbling infrastructure, that is not necessarily
where existing funding is going.
A 2014 report called ``Repair Priorities'' found that
between 2009 and 2011, states collectively spent $20.4 billion
annually to build new roadways and add lanes, but at the same
time, they spent only $16.5 billion repairing and preserving
the existing system.
As we talk about large infrastructure packages, it is only
fair to ask that the priorities of our transportation program
more closely align with the rhetoric we use to justify spending
on it.
There are some parts of the program, as I mentioned, that
do a better job of aligning these priorities with needs,
priorities like maintenance, and encouraging innovation and
leveraging local and Federal funds.
These programs tend to rely on you, and my particular
favorite is the TIGER Program, which I know many people on this
committee agree. To some extent, that is because when I was at
the U.S. Department of Transportation, it was my office that
was in charge of it. It also could possibly be that as a
graduate of Louisiana State University, I like the name.
This program is very popular with local and state
governments and transportation agencies across the country
because of its wide-ranging eligibility. It can fund anything
from ports to rail to transit to highways, and it has wide-
ranging eligible recipients.
Any governmental entity can apply. In fact, since the loss
of earmarks, this is one of the only programs that allow local
and county governments to directly access Federal funds.
The popularity has stayed strong in spite of the fact that
only five to 6 percent of applicants receive any funding from
the program, and that is because stakeholders can see the
enumerated strategic priorities of the U.S. Department of
Transportation in the funded project.
The program encourages people to try things that they never
tried before, like design-build project delivery or complete
street designs, or public/private partnerships.
It turns out that American cities and states will go a long
way to beat out their neighbors. Competition also makes it
possible to better coordinate transportation and development
decisions, which occur at the local level, and I hear a lot of
state engineers complain that they are always ``chasing the
land uses.''
I think about an example that was provided to me by folks
at Florida DOT of two houses that were 70 feet apart, but it
was a seven-mile drive between the two of them. This kind of
roadway design and local land use pattern seems almost designed
with the express purpose of generating traffic snarls.
When the problem is addressed, it is brought to the state
and the Fed, as if this is a congestion problem that requires
massive Federal spending.
No one is suggesting that the Fed needs to get involved in
local development decisions. That sounds like a terrible idea.
However, there should be a way to reward cities and states that
consider these issues and take action to produce better
results, and to lower all of our costs, and competitive
programs are the best ways to do that.
While I started my testimony by pointing out that Federal
funding is not the sole answer to addressing our Nation's
transportation needs, I do want to make clear that Federal
funding is essential.
Across the country, our cities, our suburbs, our rural
towns are in a serious bind. They know they must have top notch
transportation networks to attract the talent, and to compete
on a global scale, and preserve their quality of life. They
know they need to get workers of all wage levels to jobs, they
need to eliminate crippling bottlenecks.
And these communities are stretching themselves to raise
their own funds and to innovate, but they cannot bring these
important projects to fruition without a strong Federal funding
partner.
The programs that this committee funds are often the
lynchpin for aiding states and localities in meeting these
demands.
Thanks again for having me here today.
[The statement follows:]
Prepared Statement of Beth Osborne
On behalf of Transportation for America and our alliance of local
transportation, civic and business leaders across the country, I'd like
to thank Chairman Collins and Ranking Member Reed for inviting me to
testify today. Transportation for America seeks to ensure that local
leaders are better represented in the Federal program since this level
is where most travel happens and where people and freight are getting
stuck. We provide technical assistance to state and local
transportation agencies as well as metropolitan planning organizations
(MPOs) on measuring the performance of the transportation system,
implementing practical and multi-modal designs, and successful models
for raising local money to support transportation.
As everyone testifying today will say, we have great need to invest
in our transportation system, including our roads, bridges, and transit
systems. We can all cite big numbers from many studies, such as the
American Society of Civil Engineers infrastructure report card and the
U.S. Department of Transportation's (USDOT) System and Performance
report, explaining the challenge in stark numbers. However,
Transportation for America believes that our problems run far deeper
than just overall lack of funding.
To be clear, Transportation for America has been very supportive of
more funding for this program and has produced a revenue proposal that
suggests several specific ways that the Federal government could raise
more money for our nation's transportation needs, which can be found
here: http://t4america.org/our-vision/investment. This funding should
be long term and reliable so that transportation agencies can do the
thoughtful planning and asset management necessary to maintain our
national transportation system.
Because the bulk of the Federal program is handled outside of the
annual budget and appropriations process, we only sporadically talk
about how this funding is spent or how we could get more from our
sizable Federal investment. Yet, the programs that this committee funds
each year have an outsized role in promoting innovation, encouraging
collaboration and maximizing benefits. I am speaking specifically about
TIGER, New Starts, Small Starts, Core Capacity, and the Consolidated
Rail Infrastructure & Safety Improvements (CRISI) programs.
These programs are a vital part of the solution to our
transportation challenges. For decades now, Congress has consistently
increased transportation spending with each successive reauthorization
bill, sometimes by large amounts (like with TEA-21 and SAFETEA-LU) and
sometimes more modestly (as in MAP-21 and the FAST Act). While some
progress has been made, progress has been uneven and we are simply not
getting the maximum benefit--even with increasing Federal spending.
For one, we do nothing to require that current spending be
prioritized for repairs. So while we all cite huge figures for mounting
repair needs to make the case for investing more transportation
dollars, there is no guarantee that the current transportation
program--no matter how well funded--will actually repair our roads,
bridges and transit systems.
In fact, a 2014 report conducted by Smart Growth America called
``Repair Priorities'' found that repair and maintenance was not getting
its due. The report found that between 2009 and 2011, the latest year
with available data at the time of the report, states collectively
spent $20.4 billion annually to build new roadways and add lanes to
existing roads. During that same time, states spent just $16.5 billion
annually repairing and preserving the existing system, even while roads
across the country were deteriorating. On a scale of good, fair or
poor, 21 percent of America's roads were in poor condition in 2011.
Just 37 percent of roads were in good condition that year--down from 41
percent in 2008.
In fairness, that report showed that not all states approach the
problem equally, and some states dedicated a higher proportion of
funding to repair and maintenance needs. In the years since, as funding
has gotten tighter, some states report that they have increased their
focus on state of repair needs. However, in my technical assistance
work, I have found that some agencies classify expansions as state of
repair projects if they feel they are bringing a road or bridge ``to
standard.''
It's only fair to ask that the priorities of our transportation
program more closely match the rhetoric we use to justify more spending
on it -- especially at a time when we are discussing major cuts that
are likely to impact other major infrastructure spending programs, such
as housing and stormwater.
There are some parts of the Federal program that support aligning
spending with priorities and also encourage innovation and leveraging
of Federal funds. These are the competitive grant programs, my favorite
of which was created by this committee--the TIGER program. When I was
at USDOT, my office managed this program. This program is by far the
most popular at USDOT, and that is because it is the most flexible in
terms of eligible uses (everything from ports to rail to transit to
highways) and in terms of eligible recipients (any governmental
entity).
In fact, this is one of the only programs that allow cities and
counties to directly access Federal funds.
This popularity stayed strong in spite of the fact that only 5-6
percent of applicants received any funding. In fact, part of my job was
explaining to the 94-95 percent of applicants who didn't get funded why
their applications weren't chosen. It is not easy to have a popular
program when you are saying no to almost everyone. But through
competition, applicants and stakeholders could see the enumerated
strategic priorities of USDOT in the funded projects. The program
encouraged project sponsors to try strategies they had never tried
before--like design-build project delivery or complete street designs
or public-private partnerships. While I was at USDOT, TIGER projects
brought two non-Federal dollars to the table for every one TIGER dollar
they received. I have seen some analysis that shows this leveraging has
continued to increase. I also saw project delivery complaints, like
issues with the National Environmental Policy Act (NEPA), fade away
when project sponsors faced time constraints on the TIGER funding.
Turns out that American cities and states will go a long way to beat
out their neighbors and to keep a Federal grant. Competition brings out
the best.
TIGER, along with programs like New Starts, Small Starts, and the
Consolidated Rail Infrastructure & Safety Improvements (CRISI) program,
encourage transportation agencies to work with their sister agencies to
coordinate funding streams and planning efforts.
One of the places where this can have the greatest impact is when
transportation and development decisions are coordinated with one
another to serve the same goals. Aligning transportation investments
and development patterns can prevent transportation agencies from a
complaint I regularly hear from transportation agencies is that they
are continuously ``chasing land uses.'' They say as soon as they
address one group of needs along a corridor, poorly designed
development pops up and undercuts their investment, sending them back
to the drawing board. Using competitive programs can reward those that
interrupt this pattern, create better connectivity and avoid trying to
fix poor land use choices with expensive (and often ineffective)
transportation solutions.
I think about the two houses in Florida that are 70 feet apart but
require a seven-mile drive to get from one to the other. Such a roadway
and land use pattern is almost designed with the express purpose of
generating traffic snarls. But the problem is not categorized as a
development or road connectivity problem. It is put to the state and
the Federal government as a congestion problem that requires big
spending to widen roads. I think about my brother's house in Baton
Rouge that is three blocks from the grocery store but he has to drive
there because he is not willing to walk in 45 mph traffic with his
kids. Then the mass of cars required to carry everyone on every three-
block trip is presented not as a development and connectivity problem
but as a traffic problem that requires big spending to widen roads.
When I was at USDOT, I would regularly hear from school districts
that had sited a new school or consolidated schools to save money on
facilities. Only after this investment was made did people think about
the transportation burden they were putting on families and the cost
that would be associated with busing everyone to schools that once were
easily reached on foot. They would come to USDOT and present this not
as siting error but as a transportation challenge that required
transportation spending to fix.
Land use is a local issue, making it one of the reasons that local
governments are essential to the transportation program. That is the
level of governance that can best coordinate these efforts. However, we
are starting to see states seek ways to better engage in the
development conversation as well.
Governor Doug Burgum of North Dakota stated it about as well as
anyone I've ever heard when talking about his Main Street Initiative.
He calls for smart, efficient infrastructure as part of this initiative
and explains why it is important this way:
``A community's horizontal, low density expansion often results
in a geographic footprint that is increasingly expensive over
time, even to the point of becoming economically unsustainable.
Larger footprints require communities to invest more in
virtually every category--from new water towers, sewer lines
and sewage systems, to streetlights, sidewalks, snow plows,
lawnmowers, garbage collection, and more. And these aren't one-
time costs--they're ongoing expenses that require personnel and
maintenance, year after year.
``Ultimately, this leads to bigger government, higher property
taxes, and unsustainable spending.
``As one example, let's look at three cities: Fargo, North
Dakota; Ann Arbor, Michigan; and Boulder, Colorado. All of
these cities have comparable populations, yet Fargo's
geographic footprint (about 49 sq. miles) is nearly twice as
large as either Ann Arbor or Boulder. This means that in Fargo,
there are more roads to plow and patrol, more pipes to fix, and
an overall larger infrastructure to maintain, for a similar
population. Fargo now has over 2,000 lane miles of roads to
plow after each snow storm. That's almost twice as long as the
distance from Fargo to Frisco, Texas.
``Simply put, one of the major determinants of cost for a city
or community is linear feet. The more linear feet, the greater
the cost of everything.''*
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* https://dougburgum.com/main-street-initiative/
I am sure Governor Burgum is not calling for the Federal government
to get involved in local land use decisions. No one is calling for
that. It is not an issue that can be handled through Federal dictates
or regulation. However, it is not a cost burden that the Federal
taxpayer should have to bear either. Through competitive programs that
this committee funds, the Federal government can reward the states and
local leaders that are coordinating land use and transportation to
encourage less expensive local development patterns. This can reduce
the need for humungous funding increases and make the case to the
American taxpayer that we are maximizing Federal investment and not
passively reacting to and throwing money at the problems caused by
inefficient land use patterns.
Competition can also make it possible to reward those that are
getting more out of their transportation investment. With the new
Federal rules requiring states and MPOs to measure the performance of
their transportation system in terms of safety, state of repair and
system reliability, transportation leaders will set goals for their
programs and report to stakeholders and the public whether they have
met their own goals. While the new Federal rules are rather gentle--
transportation agencies set their own targets, grade their own papers
and suffer no real consequence for failure--these rules are an
important first step to greater transparency in this program and to
making clear to stakeholders and the public how far current spending
can really take us in meeting Federal, state and local policy
objectives.
My organization works with overachieving transportation leaders
that want to go beyond the Federal minimum requirements and more
typical engineering measures to consider metrics like transportation
costs and access to jobs, education and essential services. Finding
ways to reward agencies that set tougher performance targets, get
greater results and use more innovative outcome measures is going to be
an important task for Congress in the future. The competitive programs
that you all fund can play a significant role.
While I started this testimony by pointing out that Federal funding
is not the sole answer to addressing our nation's transportation needs,
I do want to make clear that Federal funding is essential. Across the
country, our cities, rural towns and suburbs--the local centers of
commerce that form the backbone of America's economy--are in a serious
bind: They know they must have top-notch transportation networks to
attract talent, compete on a global scale and preserve their quality of
life. They know they need to get workers of all wage levels to jobs.
They also know they need to eliminate crippling bottlenecks in freight
delivery. These communities are stretching themselves to raise their
own funds and to innovate, but they cannot bring these important
projects to fruition without a strong Federal funding partner. The
programs that this committee funds are often the lynchpin for aiding
states and localities in meeting the twin demands of maintaining their
existing infrastructure and preparing for the future.
Senator Collins. Thank you very much. Mr. Tymon, you put in
your testimony a very interesting matrix of some 35 options for
dealing with the financial problem and funding problem that we
face. I wish I had thought to put them all on a chart and blow
them up because you do go through every possible alternative.
In your professional judgment, which of these options would
best meet our need to fund the Highway Trust Fund without being
unduly burdensome for the average American driver?
Mr. Tymon. Well, again, thank you for recognizing the hard
work that was put into producing this matrix. I agree, it does
present better in a larger format, but we do have copies for
all of the members of the committee, as well as for the staff,
and we can get that to you.
I would say that the existing revenue sources for the
Highway Trust Fund have served the Trust Fund very well for
over 50 years. I would say that it is probably also the most
efficient way of collecting revenue from the users of the
system and being able to funnel that revenue back into surface
transportation programs.
The Federal gas tax is a very efficient program or a very
efficient method of collecting revenue, even if it is not
something that has been adjusted in the last 24 years.
I do think that using those existing revenue sources,
taking a look at them, is probably the most efficient way. We
are doing a lot of work in looking at vehicle miles traveled.
There is the pilot program that was referenced in the FAST Act.
The first round of money went out last year to essentially
further explore whether or not vehicle miles traveled fees are
the solution to moving forward.
The gas tax is very efficient. It served the program very
well for the past 50 years. It is something that I think
Congress should continue to look at.
Senator Collins. Thank you. Mr. Mortimer, you, too, have
suggested that we look at the gas tax. In preparing for this
hearing, I was surprised to see the number of states, including
some very conservative states, like Idaho and Wyoming, that had
acted to increase their gas tax.
To what do you attribute the reluctance at the Federal
level to even consider indexing the gas tax?
Mr. Mortimer. Thank you, Chairman Collins. Look, it comes
down to political courage. If you go and look at a lot of those
states that you just mentioned, the business community was
there with organized labor helping, and none of those people I
am aware of have lost their seat because they supported
increasing revenue to pay for infrastructure.
I know some members here have signed a pledge saying they
did not want to raise revenue for anything. I think our belief
is everyone needs to come into Congress as elected officials
with an open mind, and we need to look at this.
Jim lays out there has been two national commissions that
Congress has authorized. There have been more studies known to
man.
The gas tax is the most sufficient, and the least
administrative cost, and getting to your earlier question, what
is the easiest way that does not impact rural America versus
others, there is no simple answer to that. Unfortunately, we
have to pay for the infrastructure. There has to be a component
of revenue.
Even all the private investment that I talked about, and I
think there is a great opportunity to increase private
investment, there has to be public investment.
The gasoline tax is the only way we have seen. Now, we are
open to other options. Jim talked about the vehicle miles
traveled. We are watching those pilot programs very closely. We
do believe that is the future. We believe it is 10 plus years
away. We are not there yet.
Senator Collins. Thank you. I am shocked that you would
suggest state legislators have more courage than members of
Congress, but I will try to get over that, but that was an
interesting analysis.
Commissioner Bernhardt, given your role as President of
AASHTO, could you tell us how states around the country are
coping with the insufficient transportation funding?
Mr. Bernhardt. Madam Chairman, so what we are doing, DOTs,
we understand that the Nation's infrastructure is running on
less than optimal at this point in time efficiency. So, we are
problem solvers.
Some of the things we are doing is we are getting our own
houses in order, becoming more efficient and effective. We are
using innovative materials, innovative designs, innovative ways
of getting projects out. We are trying to stretch the dollar as
much as we can. We use asset management principles where we
optimize with the funding we have the amount of assets we can
get to.
I can tell you we are not getting to all the assets that we
would like to. There is only so much we can do to become
efficient and effective with the resources we have. At some
point in time, there will be a breaking point, and something
will fail.
Senator Collins. Thank you.
Senator Reed.
Senator Reed. Thank you very much, Madam Chairman, for your
leadership. Thank you, ladies and gentlemen, for your great
testimony; it was extraordinary.
Mr. Bernhardt, Maine and Rhode Island have many things in
common. Unfortunately, one of them is their deteriorating
bridges, but I think Rhode Island has the record, 56 percent of
our bridges are structurally deficient or functionally
obsolete. In fact, at one point we, had to close Interstate 95
because of a bridge in Pawtucket, Rhode Island, and, as a
result all of New England was slowed to a crawl.
With that in mind, have you done an assessment of what you
need to fix your bridges, and related to that, to the extent
that you do not fix them and they keep deteriorating, the
situation gets worse, I assume. Is that accurate?
Mr. Bernhardt. That is accurate. So, it was just a few
years ago that I had asked through my chief engineer to put a
team together to do just that. So, we did a report. Anybody can
get it online. It is ``Keeping Our Bridges Safe Report.''
What it came down to, it took them about a year to put this
report together, we had great asset inventory on every one of
our bridges, so what they did is they looked at what we were
spending and what was necessary to spend, so we were spending
on average around $70 million per year on bridges.
So, I asked, are we moving the needle, and the answer was
no, and the answer came back that we needed to spend around
$140 million per year.
One, we have not been able to get to that level yet. We are
at around $119 million per year. One of the things that we
looked at heavily is what are some of the trade-offs on the
bridges.
There are certain bridges that we have to post, we post
down to weight. We might go fix them, but we might only fix
them up to another certain weight, just to get a school bus
across, a fire truck, a fuel delivery. We might not bring it
back to its optimal level.
So, those are the tradeoffs we have to do. Maine being very
rural, spread out. There are certain bridges that we have to
get to that 100,000 pound because of the types of vehicles that
are crossing them. We are a heavy fiber industry. We have to
focus on those. It is a tradeoff.
Senator Reed. Let me just raise a point, which I think
throughout the course of the hearing will come back, and that
is if a project is a private/public partnership, the private
entity has to be able to realize profits, which means the
private benefits have to exceed the costs. It is a simple
analysis.
In many cases, particularly when it comes to bridges in
rural areas and many other infrastructure projects, those
private benefits are not as substantial as the public benefits,
i.e., getting a school bus or an emergency vehicle across the
bridge.
As a result, the likelihood of a public/private partnership
there is close to zero, but the necessity of fixing the bridge
exists, and that calls for much more direct public investment.
Is that your view?
Mr. Bernhardt. That is my view. That is correct.
Senator Reed. Thank you. Let me switch gears slightly. Ms.
Osborne, we tend to categorize projects in terms of rail,
transit, highway, et cetera, but the real future is intermodal
transportation.
We have some successful examples. We have an old Navy Base,
Quonset Point. It has an airport. It has rail service. It has
access to the sea. In fact, it is one of our biggest import
ports for automobiles on the East Coast. That success has
resulted from over 20 years of effort. Also, at T.F. Green
airport, we are working very diligently to get trains to stop,
including MBTA, et cetera.
One of the things that strikes me is that we have different
categories in the programs of Federal matches, Federal
requirements, et cetera, which sometimes do not encourage
intermodal transportation. In fact, discourage it.
Can you comment about that?
Ms. Osborne. Absolutely. You are absolutely right, that a
lot of our programs are very siloed and kind of put the thumb
on the scale for particular modes. If you want to connect to
communities by a highway, you can get 80 percent Federal
funding. If you want to connect those same communities by
transit, it is down to about half. If you want to do it by
rail, it is generally about zero.
So, people make the logical decision based on where the
funding is. Through the FASTLANE Program, we encourage states
to do really thoughtful freight planning that looks at the
needs across the state to set the priorities, and then it says
but we will really only fund the highway ones. That also sends
a very clear indication about where the priority is from the
investor.
Also, when you are trying to put all those various programs
together, it actually is a lot more complicated than it needs
to be. That is just within DOT. That is one agency trying to
put together funding for ports and highways in the various
programs, even between surface and aviation, it is very
complicated. If you then try to bring in funding from other
agencies that are authorized by totally different committees,
it gets even more complex.
When I was at USDOT, we tried to do joint planning grants
between USDOT and HUD. We made joint awards, but when we tried
to go and sign grant agreements with the recipients, we had to
do two separate grant agreements from the two agencies because
of all their different rules and their cultures.
So, it really puts a huge onus on those local leaders to
figure out how to overcome all of these different rules and
cobble together the funding.
That is why programs like TIGER are so important because
you can come in with a project that has a great objective, and
you can ignore those silos. You can just come in and say these
are the things we want to accomplish, the methods that we are
going to use to accomplish include many different modes, and
programs like TIGER can meet that.
Senator Reed. Thank you. Thank you, Madam Chairwoman.
Senator Collins. Thank you.
Senator Boozman.
Senator Boozman. Thank you, Madam Chair, and thank you all
for being here. You know, the nice thing about these committee
hearings is as we look around, everybody really is in agreement
we want to get these things. This is not a Republican or
Democrat thing. This is about trying to improve the
infrastructure.
I have been running back and forth between the Environment
and Public Works Committee, and there is great ranker on the
environment part of that, but the public works part of it,
again, people are joined at the hip trying to get these things
done. We do appreciate your hard work in that respect.
Commissioner Bernhardt, we have had a lot of talk about the
public/private partnerships and stuff. The tolling in rural
states, tolling in places like Arkansas, because of traffic and
things, it really does not seem to benefit that much.
Can you talk about specific areas that perhaps specific
public/private partnerships would be of benefit, when you take
tolling out of the equation?
Mr. Bernhardt. I can give examples in Maine, as was
discussed. Very difficult for public/private partnerships
because of the rural nature, the inability to toll, how are you
going to pay it back. We already do financing through bonding
and stuff. I can get a much better rate than they would give me
to pay them back, so I can do that.
We in Maine do public/private partnerships. It is something
I developed about 4 years ago, we call it ``business
partnership initiative.'' In those public/private partnerships,
it is not necessarily the equity firm, it is not the person
coming with capital, it is a business that benefits from what
we do at a certain location.
I am building an interchange on the interstate, and the
business is paying a third. I do not have to pay them back
because in the end, they are going to get it back because their
business is going to be able to grow.
There are some states that have large projects where
public/private partnerships will work. I can tell you in Maine
I have had equity firms come to me, sit with me in my office,
and the dollar amounts they talk about are much bigger than
what I would ever put out as a project, and anything lower than
that, they really do not want to talk to you. It has to be $100
million plus.
Even some of your bigger states that have the ability, they
still have hundreds and hundreds of projects that go out every
year that would not meet that public/private partnership need.
Senator Boozman. Very good. Mr. Mortimer, it is encouraging
again that we are talking and the Administration is talking,
really about trying to get some of these things done. One of
the things that I am a little bit concerned about is the fact
that when we talk about infrastructure, we do just talk in
terms of roads and bridges and things, or inland waterways, the
infrastructure that is so important. We talk about rural
states. All of that. Our ports, our harbors. With the economy
that we have, so much imports. Hopefully, we are working hard
to get more going in the other way. Our farmers relying on our
inland waterways and things.
Can you talk about how important it is for reliable and
efficient ports and waterways to help our industries remain
competitive in both the domestic and global marketplace?
Mr. Mortimer. Sure, glad to, Senator Boozman. Well, I mean,
ports are kind of the gateways to trade, so our ports are
critical to the economy, and we are in a global economy.
We have done a lot of research on the ports, and what we
found is while there are some water access needs, a lot of it
is the connections with the rail and the last mile of the
infrastructure, getting in and out of the port areas.
Again, our inland waterways, as you mentioned, they are
critical to agriculture and other communities. We continue to
under invest and we continue to have locks and dams in this
country that are over 100 years old. The Army Corps of
Engineers has a project list that says some projects will not
be got to until 2097. That is unacceptable.
So, we need to figure out a way--the Congress has done a
good job, so at least now we are authorizing new Army Corps'
projects every 2 years. That is very important, to show that
Federal commitment to continue to move this process forward,
but we need to come up with more innovative ways.
Again, encouraging more public/private partnerships in the
water infrastructure to supplement Federal funding. The bottom
line is there is no--this conversation about public/private
partnerships, there is no one tool or solution that is going to
solve all these infrastructure funding and financing needs,
what we talk about is we would like to have communities to have
a toolkit of options so they choose what makes sense in their
communities.
In some communities, it is a toll. In rural communities,
public/private partnerships work, like in Pennsylvania, they
took a rural bridge program, put it together, and they used a
P-3. Public/private partnerships are not always tolls, they are
also availability payments.
There are a variety of tools and options we would love to
see project stakeholders have, so they can choose which ones
they want to use to fund and finance their projects.
Senator Boozman. Did you say 2097?
Mr. Mortimer. That is correct, Sir.
Senator Boozman. That is remarkable. Thank you, Madam
Chair.
Senator Collins. Thank you.
Senator Coons.
Senator Coons. Thank you, Madam Chair, Ranking Member Reed.
If I could be an honorary New Englander, I would be thrilled.
Senator Collins. We will not tell your constituents.
Senator Coons. I said honorary.
Senator Reed. Your state is small enough; you might
qualify.
Senator Coons. I really appreciate all of the witnesses
today. I think it was Commissioner Bernhardt who at the outset
reviewed the deeply failing grade given by the ASCE to our
infrastructure. The chairwoman also reviewed that they are
about to give another grade, which we expect will also be well
below a ``D.''
There are some areas of rail that are only a ``C,'' but
there is nothing that is above a C. We have D grades in roads,
aviation, transit, inland waterways, rail and ports get Cs.
If my kids came home from school with grades like this, my
wife and I would be deeply disappointed, and why we consider it
acceptable year in and year out as Federal legislators for us
to deliver this sort of a report card to the American people
about our shared investment in the infrastructure that moves
our families, our goods, and tries to keep us competitive, I
think it is completely unacceptable.
I am going to agree with what every member of the panel
said. We need to find sustainable bipartisan ways to finance
America's infrastructure. Those of us who have the opportunity
to occasionally travel overseas and see the world class cutting
edge competitive infrastructure that our competitors enjoy
recognize just how much this is putting us at risk, and just
how much this is causing us to fall behind.
If I might, Mr. Mortimer, on Amtrak, as someone who rides
Amtrak virtually every day to and from my home state, I
understand passenger rail is a critical part of our
transportation network, it reduces congestion, it improves
efficiency, it connects towns and cities across our country.
Does continued funding for Amtrak through discretionary
investment help take cars off the road and reduce pressure on
the highway system in your view, and does it make sense for
Congress to continue to fund Amtrak really only through
discretionary funding rather than having a predictable and
dedicated source of funding for rail?
Mr. Mortimer. Sure. Thanks for the question. Look,
passenger rail is a critical component of the national
transportation system from the business community's
perspective. There are parts of the country, and in particular,
where you are from in Delaware, the Northeast Corridor, where
passenger rail service is critical to mobility.
Those are places we believe need investments, and there has
to be a variety of sources. We are very excited with the new
leadership at Amtrak and looking at trying to operate more like
a business. We believe there are some great opportunities there
for growth and expansion.
At the same time, one of the challenges Amtrak has always
had is to get support in Congress. We have service in a lot of
parts of the country that perhaps the ridership needs do not
meet it. So, we would like to see focused investment in Amtrak
and passenger service to those communities that most need it,
and that it is a partnership.
It cannot just be the Federal Government. The Federal
Government can play a role. It has to be a public/private
partnership of everyone coming together. I think you know in
Delaware the business community works with your elected leaders
to make sure that Amtrak service in Delaware is good, and I
think those opportunities are there.
How we fund it through the Federal Government,
discretionary or not discretionary, I am not sure I have the
exact answer to that question except that there is a Federal
role, and it is a partnership though that the Federal
Government cannot overtake and just do all of it, it is a
partnership as we move forward.
Senator Coons. Thank you, Mr. Mortimer. One of the funding
vehicles that is a partnership, as you just testified, Ms.
Osborne, is TIGER. My state relies on a variety of different
transportation means. We are part of the Southeastern
Pennsylvania Transportation Authority (SEPTA) regional rail
network. We benefit from the Port of Wilmington. We have civil
aviation terminals in several places.
As you said in your testimony, TIGER is popular because of
its flexibility, to support a wide range of uses and funding
recipients. Would you agree we should invest more in TIGER,
obviously, and what can we do in Congress to support and
empower local government transportation decisions through that,
and tell me if you would about the economic importance of
investing in rail and transit capacity and train stations, and
the role that CRISI grants might play?
Ms. Osborne. Yes, there is a lot there. Starting from the
latter and talking about the importance of investing in rail
infrastructure, you know, one of the great innovative financing
tools in rail is value capture. That tells you a lot about the
importance of investing in rail. It often creates value next to
it so you can take some of those increased property values and
put it back into the system to support its maintenance and
operating.
That shows you right there what a value that investment is.
It creates a center of gravity. It brings a focal point for
development in an area.
When I was at USDOT, one of the things we worked on between
Federal Transit and HUD was the fact that in many cases when we
invest in rail, we create so much excitement and development
around that infrastructure that we increased the cost of living
there to the point where those that are transit dependent
cannot afford to then take advantage of the service and be
close by.
It is just a sign of what a huge level of demand there is
for this kind of transportation, but we are holding the supply
very low, making sure only people who have a lot of money can
compete to get into those communities.
We definitely need to reach deeper into that demand and
make sure we are providing those centers of gravity for our
communities.
Senator Coons. Thank you, Ms. Osborne. I would like to
thank the whole panel. Thank you, Madam Chair.
Senator Collins. Thank you, Senator.
Senator Daines.
Senator Daines. Thank you, Madam Chair. Thank you all for
testifying today. I come from the State of Montana. We have an
extensive transportation system. It is truly a pillar of our
economy. We are land locked. Agriculture is our number one
business. Energy is one of our huge sectors. So, without having
infrastructure, we are not able to compete in a global economy.
It is a big topic for us back home and it is how we stay
connected to the rest of the world.
As it relates to the energy sector, we have about 14,000
Montanans who work in the energy sector. Obviously, relying on
our transportation infrastructure to get goods to market. We
are working to expand production. We have tremendous
opportunities. In fact, Montana has more recoverable coal than
any other state in the United States.
When I think of my home state, I think about fly fishing
and the amazing national parks we have, incredible public
lands. Absolutely true, it is what keeps Montanans there.
We also have to have jobs so we can stay there, so we do
not just become a playground for the rich and famous, but the
average Montanan who buys their elk tag at Wal-Mart still can
stay and raise their kids there, and that is why these energy
jobs are also so important.
Mr. Mortimer, in your testimony you touched on the
increasing multimodal demands to move freight, which includes
energy commodities. As demand grows, how do we ensure the
infrastructure will meet future needs and our rural communities
will have access to this funding?
Mr. Mortimer. Thanks, Senator, great question. Obviously,
the Chamber truly believes that we need to have a country that
is energy independent, and a big part of that is making sure we
are able to get those energy sources to and from market, so it
is a combination of sources.
Obviously, the freight rail business, which is largely
private, we need to allow them to continue to innovate and
grow. It used to be whether it is rail or truck, I think that
debate is pretty much over. We need to have a lot more of both.
Making sure communities have those tools because we know
the freight is coming. Again, energy independence is critical
on transportation options. Having those sources.
You touched on just getting the workers to and from work,
that is something a lot of businesses--we talk to local
chambers around the country, and when the local chambers are
looking to attract businesses to those communities, one of the
first questions they ask is what is the infrastructure in that
community, are they connected by rail, is there adequate
highways, is there an airport close by, what are the
connections.
These are all questions that businesses ask for where they
locate. As you are looking at the State of Montana, those are
the types of things that businesses look at when they locate.
We need to make sure that the tools are there for those
communities to make those decisions so they can grow in the
economy.
Senator Daines. Thank you. Speaking of connectivity and
infrastructure, a question for Mr. Hauptli. I was very glad to
hear you reference Missoula's airport's new terminal in your
written testimony. This is one great example of aviation
development certainly in Montana, and I am grateful. Aviation
allows many of us to get back and forth to work here in
Washington, D.C.
You mentioned Passenger Facility Charges (PFC), being used
to finance these projects, and argue that the cap should be
increased.
I held an aviation roundtable recently back home. It was
clear the jury was still out on whether or not the cap should
be raised, while it may be a local user fee, it can
disproportionately affect rural airports which require more
connections. It is rare as a Montanan we can get to our
destination without having to make a connection. That would
therefore raise ticket prices for Montanans.
How do you ensure that increases in fees will not
negatively affect rural Americans? I speak as someone who lives
in a state where we are typically in the bottom quartile if not
in the bottom 10 percent in per capita wages.
Mr. Hauptli. Senator Daines, thank you for the question. It
is good to see you again. It is an interesting question in
terms of connectivity for rural America.
As I noted before you had a chance to come in the room, the
Passenger Facility Charge, lifting the cap there, really is the
only funding option for airports that guarantees that airports
of all sizes, whether they are urban or rural, whether they are
large hub, medium hub, small hub, non-hub, or general aviation
airports, they will actually benefit.
The larger airports as they increase funding will then give
up Federal funding through the AIP, and that recirculates back
into the smaller airport fund, generating additional revenues
for smaller airports. Point one.
Point number two, your concern, as I understand it, would
be let's say we are going to go from Bozeman to Chicago or
Denver and then on from there, and the concern that a Chicago
or a Denver might increase their fee to a non-competitive rate.
Airports have an incentive to keep their passenger costs as
low as possible because they are competing against each other
for traffic as well, and in the case of Chicago, we will use
that as an example, lots of people flowing through Chicago as a
hub, but it is almost equally split between those that are
going through Chicago as a transit point versus those that
would originate in Chicago.
So, if I am the mayor of Chicago, I do not want to raise
that local fee to an unhealthy amount, an uncompetitive amount
that is going to hurt my own constituents any more than they
would want to hurt yours.
Senator Daines. I am out of time here. Thank you, Madam
Chair.
Senator Collins. Thank you very much. I want to follow up,
Mr. Hauptli, on the very good question--I am sorry, Senator
Hoeven, it is your turn.
Senator Hoeven. Thank you, Madam Chairman, and to the
ranking member as well, and thanks for holding this hearing on
this very important issue, and thanks to our panelists,
appreciate it.
If you want to go on with your question, I am sure it is a
really good one, I would be happy to listen.
Senator Collins. It can wait.
Senator Hoeven. The President said that he wants to do an
infrastructure package, which I think is a great idea, and he
also said that we ought to have public/private partnerships,
which I also think is a great idea.
In fact, I have introduced legislation along with Senator
Ron Wyden, called the ``Move America Program.'' Has anyone
heard of it? Oh, good. Then you get to answer first. I am going
to ask you all the same question.
Essentially, the Move America Program provides either a tax
credit or tax exempt financing so that we can capture private
investment along with public investment to build all kinds of
infrastructure, and the states, there is an allocation to every
state, and that number would be $1.5 billion for the least
populous states, all the way up to more. It is based on a
population calculation, and other considerations.
The state essentially gets to decide. So, if you need a
bridge, you build a bridge. If you need an airport, you build
an airport. If you need to deepen your port, you deepen your
port. Right? We like that, instead of the Federal one size fits
all.
As you might not be surprised to hear, I am advocating for
this legislation, and I would like to know what each of you
think. That is kind of dangerous, right? Because somebody might
say something negative, which would break my heart, of course.
I would like all of your honest opinions on the legislation and
maybe thoughts on how we can advance it.
Mr. Mortimer. Senator Hoeven, thanks for the question. I
appreciate your leadership. Look, we think tax credit financing
is a tool in a toolkit. It is not necessarily going to solve
every problem, but as you mentioned, it can be used for a
variety of infrastructure financing needs, and we think it
needs to be part of this package and part of this discussion.
It is an important part of the discussion. We think as the
Congress is going to take up tax reform, this is going to be an
important part of the discussion, this infrastructure package,
an important part of the discussion.
Again, from our perspective, it is another tool in a
variety of tools that are needed. There is no one thing that is
going to solve all the problems. We certainly think your
proposal along with many others has to be part of the solution.
Senator Hoeven. Well, I am glad you raised your hand first.
I agree. I think that is right, it is not the whole thing. We
need public sector financing, too. It is part of the package,
but it does create dramatic leverage. I think it scores it at
about $8 billion, but leverages $226 billion, which would be a
very significant part of the package, particularly when you
consider the FAST Act was $305 billion.
Maybe you would like to go next.
Ms. Osborne. Absolutely. I am going to make this easy and
not take up much of your time. I am just going to echo
everything that Ed said. I could not have said it better
myself.
Senator Hoeven. I thought he did a good job, too.
Mr. Hauptli. I will go next, Senator. As Ed said, we are
for any additional tools in the toolkit that can help with
leveraging. In the case of airports and the advantage of
lifting the cap on the Passenger Facility Charge Program, just
like your legislation, it allows for that dramatic leveraging
to occur without negatively impacting the Federal budget.
Senator Hoeven. And at local discretion, too. Steve raised
a real good point, but who's better to make that decision than
the local authority. Their customers are starring them in the
face every day. That is what counts. I appreciate that.
Mr. Tymon. Senator Hoeven, I would also echo what Ed had
said. I would also say that AASHTO is an organization that has
had a long history with this concept and providing technical
assistance to your office, Senator Wyden's office, and your
predecessors that have sponsored this bill in the past.
It is an important tool to have in the toolkit. It is
something that helps us better leverage. Let's be honest. It
has been politically difficult to insert additional funding on
the transportation side in recent years, and this is an
innovative approach to get additional money out there, like you
said, provide states and localities with the flexibility to
choose which projects are the best fit to address their
transportation challenges.
We did talk earlier about the fact that the Highway Trust
Fund is continuing to run a deficit. We are spending more out
of it than we are bringing in. We talked about the existing
revenue streams and the gas tax. Obviously, that has
politically been difficult to address that from a gas tax
standpoint or for the existing revenue sources.
Looking at kind of innovative options like your bill is
certainly important in moving forward.
Senator Hoeven. AASHTO has been very helpful, and we
appreciate it. Thank you.
Mr. Bernhardt. So, I am last. We like any new tool in the
toolbox, not specifically knowing enough about that, it would
only be one of the tools. The fact that states will still need
some type of funding mechanisms, not only just financing
mechanisms, especially in some of the more rural states.
Senator Hoeven. Right, and that is absolutely true, and I
agree with you. What I would emphasize is this is a tool that
is at your discretion. You get to decide how to use it, whether
you want to use the tax credit to draw on private investment,
whether you want to use the tax exempt financing, what you want
to do in terms of how you bid the projects, where you do the
construction, any of the pay-fors, and again, I emphasize,
because I do not want this to get into an either/or. This is
part of a package that includes public funding, right?
Thank you very much, appreciate it. Again, Madam Chairman,
thank you.
Senator Collins. Thank you. Mr. Hauptli, I want to go back
to the issue of the Passenger Facility Charges and the Airport
Improvement Program. If the funding for the Airport Improvement
Program remains flat, how would an increase in the Passenger
Facility Charge benefit small and medium hub airports such as
in the State of Maine that are competing for funding?
Mr. Hauptli. Thank you very much for the question, Senator
Collins. The way the Passenger Facility Charge Program
interacts with the Airport Improvement Program is important
here, and as larger airports with an increased Passenger
Facility Charge, larger airports would forego AIP entitlement
funds.
Those dollars then flow under the formulas in the
authorization legislation into what is called the Small Airport
Fund. Smaller, non-hub airports and general aviation airports
all across the country have increased revenues to tap into to
help them.
So, even if for some reason an airport in Maine decided
with the additional PFC authority that this committee will
grant, they did not want to do that, they would still benefit
from that because there would be a larger pool of dollars on
the AIP side for them to get.
Senator Collins. Thank you. That is very helpful. Ms.
Osborne, in your role at Transportation for America, you
provide technical assistance to state and local governments
that are applying for the TIGER Grant Program, which is
extremely competitive, and one of my favorite programs.
Could you tell us what specific benefits you are seeing
from the TIGER Program that the traditional formula highway and
transit programs are not able to provide? In other words, I
fully expect when we get the budget, that we may well see the
TIGER Grant Program slashed.
Help me make the case for why we need the TIGER Grant
Program in addition to the traditional formula programs.
Ms. Osborne. Absolutely. To be clear, the formula program
is essential because it allows for real asset management, which
is what we want, but programs like TIGER reward performance and
innovation in a way that formula grants cannot.
In the formula grant program, whether you are ambitious or
innovative or performing beautifully or not so well, your
formula stays even. In competition, when you do more than your
neighbor, you get the money, you win.
What I found is a lot of agencies, in many cases, they have
something they want to try on the books, and the competition is
what gets it off the shelf and gets them to just go ahead and
give it a try. They know it sets them apart by adding that to
the project, so maybe they make it a little more multimodal,
maybe they try a new project delivery method, maybe they try a
completely different type of project than is funded by formula
grant programs.
I think of places like Rochester, New York that took a 12-
lane highway that had no more traffic on it than H Street here
in D.C., but they were paying for 12 lanes, and decided maybe
that was not an efficient expenditure of dollars, and they are
shrinking it down to an urban boulevard, reclaiming a lot of
what they used to maintain for economic development that will
generate profit.
That is a great thing that the regular program does not do
quite as well, it is something that is outside of the norm. I
have also seen locals come in and say just the process of
preparing for a TIGER grant has gotten more stakeholders
involved, not just in supporting the project but in funding a
project, and in many cases, even when they do not get funded by
TIGER, they have so much excitement generated behind the
project, they are able to go forward even without it.
Senator Collins. Thank you. Commissioner Bernhardt, if you
could just add to that. In Maine, we have seen the ability to
use TIGER grants for regional projects with New Hampshire.
Could you expand on that? You talked a little bit about the
Sarah Mildred Long Bridge. There was a second bridge as well.
Mr. Bernhardt. Yes, the Sarah Mildred Long and the Memorial
Bridge both had TIGERs. The unique thing about the Sarah
Mildred Long Bridge, which is under construction now, is the
fact that it is not just a highway bridge, but it is also a
freight rail bridge, which goes to the Portsmouth Naval
Shipyard.
The fact of the matter is you cannot use Federal highway
money for a freight rail. So, what TIGER grants have done,
because it is through USDOT, has allowed us to do things,
projects, two of them were through Maritime Administration
(MARAD), three of them have been through Federal Railroad
Administration (FRA), some of them have been a mix, and it has
allowed us to make those regional connections, those freight
connections, where in the past, we would not have been able to
do or we would have had to come up with massive amounts of
state funding to make that happen.
A lot of these things like the Sarah Mildred Long, is a
very regional project, so half of it is being paid for by New
Hampshire, half by us. Without the TIGER, it would have been
very difficult to make that project happen.
Senator Collins. Thank you. That is a great example. Of
course, that bridge and that freight line are absolutely
essential to the public shipyard, the Portsmouth Naval Shipyard
in Kittery, Maine, which overhauls nuclear submarines. This is
an example of a project that also had implications for our
national security as well. Thank you.
Senator Reed.
Senator Reed. Thank you, Madam Chairman. First, let me
thank you all for your excellent testimony. I particularly want
to recognize Mr. Mortimer, who reminds us that we really have
to put our money where our mouth is when it comes to the
Highway Trust Fund. Revenue is necessary, and we have to find
ways to generate it. It is challenging, but we have to meet
that challenge.
Let me just switch briefly to Ms. Osborne. Your
organization has put together some proposed solutions in terms
of how we generate that revenue. Can you kind of give us an
idea of what your preference or what your preferred option
would be?
Ms. Osborne. That is a very good question. My answer is we
do not have a strong preference between them. There are pluses
and minuses to all the approaches. I really like what Jim said
earlier about the gas tax being an incredibly efficient way to
fund the program. Each way you might fund it comes with pluses
and minuses that might need to be ameliorated with other
policies.
I also want to mention something that Ed said about while
locals and states are raising money, we are not seeing people
lose their seats due to voting for increases in these areas.
In fact, we did an analysis a couple of years ago of what
happened after the gas tax was raised, and even in
Massachusetts where the voters reversed the tax increase, they
still did not throw the people out of office who voted for the
thing they just reversed. People get why this is important.
One of the things we just need to do, I think, at the
Federal level, is make the Federal program a little bit more
understandable to the taxpayer. It is very much removed from
them, and how the money is raised and where the money goes is
not very well understood by our taxpayers, making it a little
bit harder to understand why they want to put more money in our
hands up here. At the state and local level, they are a little
bit better connected, so there is more confidence there.
Senator Reed. Thank you. Let me just shift gears for a
minute. Mr. Bernhardt, transit is the stepchild of most of our
transportation programs, frankly. The Committee with
jurisdiction is the Banking Committee, not the Public Works
Committee. It does not enjoy some of the built-in structural
preferences that we give to other modes of transportation, but
it is absolutely critical to every state in the country, and
particularly urban communities.
In your position, what is the main challenge? Is it funding
for capital investment, operations, or both, or everything? Can
you comment?
Mr. Bernhardt. Everything above. The big challenge is our
rural nature and our aging population when it comes to transit.
What we have done is we have put together a 25-year strategic
plan working with all our providers.
It is not always the capital side. Sometimes we can come up
with the capital, but it is the operating of those, and who is
going to even drive the bus. Those are the things that we are
having issues with. We are so spread out that it is very
difficult for us to get providers out to those people that have
need.
Senator Reed. Again, as you point out, some of this is
basic human capital, including trained, adequate drivers,
mechanics, et cetera. That is a challenge too.
Mr. Bernhardt. That is a challenge.
Senator Reed. Again, I think we tend to focus on the
Highway Trust Fund, building roads, rail, airports, et cetera,
and then we forget that transit is so important, particularly
to seniors and to entry level workers trying to get to their
jobs. We have to focus on that quite significantly.
A final point I would make is that I am still processing
your comments about Winston Churchill. He was a remarkable
gentleman. Let me share; he was at a dinner party once with a
very, very difficult woman, who went on and on, and finally she
was so frustrated that she said Mr. Churchill, if I was your
wife, I would put poison in your coffee, to which he replied,
Madam, if you were my wife, I would drink it.
A tip of the hat to a historian. Thanks.
Mr. Hauptli. Senator Reed, before you yield, may I just
make one comment?
Senator Reed. Yes.
Mr. Hauptli. I just wanted to compliment you on the work at
Providence. You have done amazing work with the airport
management there in bringing that airport new opportunities for
air service, new resources with CBP and others, and it is
making a very big difference in the region. I just wanted to
compliment you on that.
Senator Reed. Thank you very much. Thank you, Sir.
Senator Collins. Thank you. I want to thank all of our
witnesses today. This was indeed an excellent hearing. When I
first heard of the President's plan for $1 trillion
infrastructure investment, I was extremely excited about it,
but I started thinking about the financing and the fact that no
one was really talking in specific terms about the financing.
So, it is my hope that this hearing today will help advance
the dialogue as we move forward on what I believe could well be
one of the few bipartisan activities of this Congress, and I
think there is widespread support and recognition of the need
for major investments in our infrastructure.
It has been extraordinarily helpful to have such an expert
panel before us today, and I thank all of you for
participating.
I also want to thank our staff. I think we are very
fortunate to have our staff directors back with us during this
Congress, and the supporting staff as well.
ADDITIONAL COMMITTEE QUESTIONS
I should mention before I do that the record will remain
open until next Wednesday, March 15, 2017. That means there may
be some additional questions from members who are not able to
be here today or from us that may come your way.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted to Hon. David B. Bernhardt
Questions Submitted by Senator Steve Daines
Question. Mr. Bernhardt, local and regional surface transportation
benefits the nation. For example, those in Chicago benefit from
Interstate 90 traversing Montana--they get access to the best beef in
the nation and they receive goods cheaper from our coasts than if they
had to be flown. You understand this as a rural state department of
transportation (DOT) commissioner. As we continue the conversation
about long-term infrastructure financing, how do we ensure Congress
fully appreciates the benefits to urban centers from rural
infrastructure? How do we ensure there is equitable financial support
for this infrastructure?
Answer. The Federal surface transportation program supports
communities located in urban, suburban, and rural areas across our
nation. I would offer the following reasons to aid in Congress's
appreciation of investment in rural transportation infrastructure, and
how this investment directly benefits urban areas as well:
--Rural transportation system serves as a safe and reliable route for
truck and personal traffic between other states and between
major metropolitan areas, advancing interstate commerce and
mobility;
--Rural transportation system serves the nation's agriculture,
ethanol production, energy extraction, and wind power
industries, which are located largely in rural areas;
--Rural transportation system provides access to scenic wonders like
the Acadia, Glacier, and Yellowstone national parks, along with
many other great national parks, monuments, and forests located
in rural states;
--Rural transportation system enables people and business to access
and traverse vast tracts of federally-owned land, and;
--Rural transportation system facilitates military readiness.
The best way to ensure equitable financial support for rural
transportation infrastructure is to rely on direct funding through the
federally-assisted, state administered transportation program that has
worked well for over a hundred years and is exemplified by the FAST
Act. The formula-based apportionments remain well-suited to a growing
and geographically diverse nation like ours, allowing states and their
local partners to fund a wide range of projects in all parts of the US
that serve the interest of the nation as a whole. This means Federal
support for financing mechanisms rather than funding would face
inherent limitations given that most transportation projects simply
cannot generate a sufficient revenue stream through tolls, fares, or
other user fees to service debt or provide return on investment to
private-sector equity holders. In 2014, such non-direct funding sources
amounted to less than 18 percent of total capital outlays.
Question. In your testimony, you mentioned supporting an
infrastructure package that would reach all corners of the nation. To
be holistic, we should include communications infrastructure. Would you
please elaborate on how state DOTs can leverage their tools to
facilitate this connectivity? How can the Federal government equip
state DOTs?
Answer. An important component to advance roadway technology is the
ability to create a digital highway with fiber optics to make our roads
smarter and safer, benefiting surrounding communities, including
underserved rural areas. I believe this is best accomplished through
voluntary partnerships between transportation agencies and
communication providers. In addition, streamlining Federal regulations
that provide maximum flexibility to states would better enables us to
successfully support expansion of service provider networks. Rigid
regulations or mandates can remove the very flexibility that is needed,
complicating implementation and adding unnecessary additional system
costs.
Questions Submitted by Senator Christopher A. Coons
investment in transit
Question. Every day, Americans take more than 35 million trips on
public transportation. This level of ridership enables the nation's
largest regions to sustain a level of economic output that is essential
for our international competitiveness. However, aging transit
infrastructure, reflected in a $90 billion state of good repair
backlog, is suppressing transit ridership. Because reliable transit is
such a critical part of the nation's transportation network and helps
Americans save millions of hours of travel time and preventing billions
of dollars in lost productivity, how does public investment in
maintaining transit infrastructure support the nation's overall
transportation goals and priorities?
Answer. In both metropolitan and rural areas, a well-performing
transit network expands commuting options as well as providing expanded
access to jobs and essential services. AASHTO supports continued
investment in public transportation with a goal of doubling transit
ridership to 20 billion trips by 2035.
Public transportation is indispensable to move people in both urban
and rural areas and remains a critical part of the nation's multimodal
transportation system. It also provides basic mobility options for
elderly individuals, individuals with disabilities, and low-income
individuals. Public transportation continues to play a significant role
in state and national efforts to mitigate traffic congestion, conserve
fuel, enhance the efficiency of highway transportation, address air
quality issues, and support security and emergency preparedness
activities. As our nation's population is expected to top 400 million
by 2050 and the population of seniors is expected to slightly more than
double by this time, our member DOTs are continuing to focus on
providing public transportation as a mobility option.
Historical funding patterns demonstrate the important role that
state DOTs fulfill in public transportation finance and administration.
State DOTs spent approximately $17.2 billion on transit in fiscal year
2014, which is an increase over the past 5 years when states spent
$13.6 billion in fiscal year 2010. (It is also larger than $10.6
billion in Federal investments in fiscal year 2014.) States remain
committed to sustain these important investments in order to grow our
public transportation system.
______
Questions Submitted to Jim Tymon
Questions Submitted by Senator Dianne Feinstein
Question. I hope that Congress will decide to invest more in our
nation's infrastructure, and one of the key reasons is that we have an
enormous maintenance and repair backlog. One-third of our major roads
are in poor or mediocre condition, and one-tenth of our bridges are
structurally deficient. The American Society of Civil Engineers have
given the nation's infrastructure a grade of ``D+''. More specifically,
bridges received a grade of ``C+'', aviation a ``D'', ports a ``C+'',
roads a ``D'', and transit a ``D-''.
But when Congress has provided new funding, we have not actually
required the states to focus on a fix-it-first approach.
Mr. Tymon, as a representative of state highway officials, how do
you decide what the right balance is between maintenance of existing
road networks and expansion of those networks?
Answer. State departments of transportation (State DOTs) are
constantly optimizing their program to find the appropriate balance
between preservation/maintenance and new capital investments. When
making this determination, states rely on extensive input from the
public and their local partner agencies to develop planning and
programming frameworks including, but not limited to, the statewide
long-range transportation plan, statewide transportation improvement
program, asset management plan, and project financial plans.
By AASHTO's estimate based on state DOT-reported data to the
Federal Highway Administration's Office of Policy Information, state
DOTs invest about 71 percent on highway system preservation and 29
percent on capacity expansion. System preservation includes
restoration, rehabilitation and resurfacing of existing facilities,
bridge replacement, bridge rehabilitation, reconstruction of a facility
on an existing footprint, minor widening and right of way acquisition.
System expansion includes new construction, major widening, and new
bridge construction. Our estimate excludes spending on operational
investments such as safety, traffic operations and control systems, and
environmental enhancement.
There are other analyses that in some case estimate state DOT
investment in capacity expansion at 45 percent of all expenditures. We
have found such analyses to inaccurately portray state DOT investments
because they tend to focus on ``road repair and preservation'' to the
exclusion of state DOTs investments in bridges. Bridge preservation is
an important aspect of ``road repair and preservation,'' and a basic
element of transportation asset management.
Question. America's failure to adequately maintain existing
infrastructure will only get worse with climate change. I worry that
neither the Federal government nor states have done enough to
anticipate increased storm damage, both in terms of retrofitting
existing infrastructure, but also in terms of long-term planning to
move infrastructure away from increasingly hazardous areas.
For example, California's State Route 37 runs along the north edge
of San Pablo Bay near San Francisco. It is surrounded on both sides by
marsh land that is increasingly vulnerable to rising sea levels, and it
was just out of commission for weeks due to storm-related flooding.
Mr. Tymon, what steps has your national association taken to ensure
that state highway officials are including climate change in their
assessments of maintenance needs and even relocation projects?
Answer. In order to ensure transportation infrastructure resiliency
and sustainability, AASHTO provides technical assistance to our member
DOTs through the Resilient and Sustainable Transportation Systems
(RSTS) Program. It is designed to help state DOT practitioners better
understand the potential effects of extreme weather and the range of
strategies and options for mitigation and adaptation.
RSTS technical assistance covers a broad range of topics, including
climate change, energy efficiency, energy security, infrastructure
adaptation, alternative vehicles and fuels, and other relevant topics.
This program is a critical resource for state DOTs to examine climate
change and energy issues, while also providing the information needed
to engage in and influence infrastructure resiliency and energy policy
developments at the Federal level.
Examples of RSTS products are listed below (links embedded within
product name):
--State-by-State Interactive Map: This interactive map of the United
States contains links to information on state DOT climate
change and energy activities. Links include reports, policies,
plans, and research sponsored by the designated state DOT or
generated as part of a collaborative effort that involves the
state DOT. Information on both greenhouse gas mitigation
activities as well as climate adaptation activities is
provided.
--Extreme Weather 101 Briefs: These briefs provide high level
information on four common extreme weather events: coastal
flooding; heat waves; heavy rainfall; and drought, dust storms,
and wildfire. Each one-pager includes a brief overview of the
event, as well as regional trends and regional projections.
They also give examples of how state DOTs and MPOs are
effectively responding to these events, and provide links to
additional resources for further investigation.
--Extreme Weather Sessions: As a follow-up to the 2013 Extreme
Weather Events Symposium, AASHTO in partnership with the FHWA
and sponsored by the Center for Environmental Excellence by
AASHTO, presented practitioner-focused updates on the latest
research, case studies, and tools pertaining to extreme weather
and climate change in 2014 and 2015.
--Extreme Weather Events Symposium 2013: In 2013, AASHTO held a
national symposium entitled ``Impacts of Extreme Weather Events
on Transportation'' in Washington, D.C. The symposium was
sponsored by the RSTS Program, in coordination with the Center
for Environmental Excellence by AASHTO and the FHWA. The
symposium provided an opportunity for DOT staff from a broad
range of disciplines to convene and discuss the implications of
extreme weather events on transportation. The event covered
state DOT case studies related to experiences with extreme
weather events; an overview of trends and projections for
extreme weather in the United States; costs of extreme weather
events; and risk management strategies in design, operations
and maintenance, and asset management, and emergency response.
--Workshop on Adapting Infrastructure to Extreme Weather Events: In
2012, AASHTO hosted a 3-hour workshop titled ``Adapting
Infrastructure to Extreme Weather Events: Best Practices and
Key Challenges.'' The purpose of the workshop was to provide a
forum for information exchange on state transportation
agencies' past experiences and future plans for managing
impacts of extreme weather events on transportation
infrastructure.
--National Climate Change Symposium: In 2010, Center for
Environmental Excellence by AASHTO, FHWA, FTA, the RSTS
Program, AASHTO Environmental Technical Assistance Program, and
the AASHTO Standing Committee on Planning, held a Climate
Change Symposium in Washington, D.C. The purpose of the
symposium was to provide information, both policy-oriented and
technical, to support State DOTs in their efforts to address
the challenges of climate change.
--Climate Change Adaptation Strategies Workshop: This workshop was
held in conjunction with the T&DI/ASCE Green Streets & Highways
Conference in Denver, Colo. Held in 2010, the workshop
discussed strategies for public agencies to proactively and
retroactively adapt infrastructure to the impacts of global
climate change. The workshop's technical focus was targeted at
planners, engineers, and environmental scientists from
government agencies, consulting, academia, and industry.
--State DOT Climate Change Workshops: In 2010, AASHTO sponsored
climate change workshops for 10 state DOTs: Colorado, Georgia,
Hawaii, Iowa, Missouri, Mississippi, Pennsylvania, Rhode
Island, Tennessee, and West Virginia. In 2011, an additional 7
workshops were conducted: Arizona, Connecticut, District of
Columbia, Illinois, Massachusetts, North Carolina, and Vermont.
These 17 states were selected from 30 states that applied to
AASHTO for a workshop. The workshops were one full day,
followed by a 1-2 hour executive session the following day.
--Webinar Series: These webinars, delivered February 2010 through
June 2012, cover myriad relevant climate change mitigation and
adaptation topics.
Questions Submitted by Senator Christopher A. Coons
investment in transit
Question. Every day, Americans take more than 35 million trips on
public transportation. This level of ridership enables the nation's
largest regions to sustain a level of economic output that is essential
for our international competitiveness. However, aging transit
infrastructure, reflected in a $90 billion state of good repair
backlog, is suppressing transit ridership. Because reliable transit is
such a critical part of the nation's transportation network and helps
Americans save millions of hours of travel time and preventing billions
of dollars in lost productivity, how does public investment in
maintaining transit infrastructure support the nation's overall
transportation goals and priorities?
Answer. Public transportation is a critical part of the nation's
multimodal transportation system and State DOTs spend more on public
transportation each year than the Federal government. In 2014 State
DOTs spent approximately $17.2 billion on public transportation
compared to $10.6 billion in Federal investments in the same year.
AASHTO supports continued investment in public transportation with a
goal of doubling transit ridership to 20 billion trips by 2035.
In metropolitan areas, a well-performing transit network expands
commuting options as well as providing expanded access to jobs. This
multimodal approach to transportation helps mitigate traffic
congestion, conserves fuel, improves highway efficiency, addresses air
quality issues, and supports security and emergency preparedness.
But public transportation is also essential to moving people in
rural areas. Our nation's public transportation network provides basic
mobility options for elderly individuals, individuals with
disabilities, and low-income individuals. State DOTs receive Federal
transit funding to assist in providing rural public transportation
services including non-fixed route paratransit services and intercity
bus service.
As our nation's population is expected to top 400 million by 2050
and the population of seniors is expected to slightly more than double
by this time, our member DOTs are continuing to focus on providing
public transportation as a mobility option.
______
Questions Submitted to Todd Hauptli
Questions Submitted by Senator Steve Daines
Question. Mr. Hauptli, as we discussed, connectivity is important
for rural America and our economic opportunity. We must continue to
expand this infrastructure without unduly increasing fees for rural
passengers that typically have to make more connections. You described
passenger facility charges (PFC) as a local user fee. As we continue
the debate on PFC changes, we should ensure airports justify fees to
the communities they serve. Enabling local accountability and not
subjecting transiting passengers to increased fees, what are your
thoughts on allowing an increase to the PFC cap for only the
originating airport?
Answer. Senator, I completely agree with your assessment that
airports should justify local user fees with their local communities.
Unlike Federal taxes, Passenger Facility Charges are local user fees
that airports must justify locally. Most commercial service airports
are owned and operated by state and local governments or by airport
authorities that are ultimately accountable to local citizens. As a
result, airport operators answer to local officials and their
constituents who live in nearby communities.
AAAE is advocating for Congress to eliminate the outdated Federal
cap on local PFCs to help airports finance critical infrastructure
projects, recognizing that it is highly unlikely that Congress will
dramatically increase annual spending for airport construction given
Federal budget constraints. If Congress agrees to adjust the PFC cap,
many--but not all--airports would consider raising their fee to help
pay for necessary capital projects.
At the same time, however, airports would be under enormous
pressure to keep their cost structure as low as possible in order to
retain and attract new commercial air service, to encourage passengers
to use their facilities, and to compete with other commercial service
airports--regionally, nationally, and internationally. In many ways,
airport executives and governing bodies that oversee airport operations
are judged by their ability to keep air service options as high as
possible and their costs as low as possible. Any decision about
possible fee or costs increases is made carefully with a keen eye on
what it means for an airport's cost per enplaned passenger or CPE.
Given the imperative that exists to get local buy-in to any
proposed fee increases and the market principles that exist to ensure
that airport costs remain as low as possible to ensure regional
national, and international competitiveness, AAAE and others continue
to advocate for the complete elimination of the antiquated Federal cap
on local passenger facility charge user fees. We understand that
proposals have emerged to provide for a possible increase only at
originating airports recognizing the legitimate concern that you and
others have articulated about the potential impact on rural passengers
who may be required to travel through ``hub'' airports to reach their
ultimate destinations because of the airline hub and spoke system. We
are certainly open to discussions on those proposals.
Question. I share your assessment about the importance of
commercial air service to the economic development of rural
communities. What concerns do you have about a reliance on private
capital to airports with only 10,000 enplanements or less per year?
Answer. I believe there is a role for private investment in airport
infrastructure and that airports could benefit from more Public-
Private-Partnerships (P3s). There are, however, legitimate concerns
that private investment may not be the solution for a large number of
smaller commercial service airports in Montana and throughout the
county that are seeking funds for capital projects.
In 2015, the Port Authority of New York and New Jersey (PANYNJ)
selected a private consortium for a massive $4 billion project at
LaGuardia. Other large airports in Denver and Los Angeles are also
turning to P3s for financial assistance. There may be instances where
P3s make sense at smaller airports, too. But, private investment is not
likely to be a widely deployable option for a large number of smaller
commercial service airports including those non-hub airports with less
than 10,000 enplanements.
That's why AAAE continues to urge Congress to eliminate the PFC
cap, which in addition to helping airports directly through local fee
collections can also boost funding for smaller airports because of the
return by larger airports of certain entitlement funding through the
Airport Improvement Program as I noted during the hearing. We are also
highly supportive of increasing Federal AIP funding overall, which
would obviously provide a direct impact to smaller airports. These are
two time-tested ways that Congress could quickly help large and small
airports rebuild aging facilities and construct critical infrastructure
projects.
Question. In your testimony, you highlighted the anticipated
increases in aircraft operations and looming congestion. As you know
NextGen air traffic control should help, but it has been slow to
deliver. That is why I introduced the NextGen Accountability Act
requiring tangible benchmarks and increased transparency in deployment.
How would this help airport planning and operations?
Answer. Senator, your proposal, which calls for annual performance
goals, makes sense. I am hopeful that Congress, the Administration, and
aviation stakeholders will continue to work together to expedite the
implementation of NextGen. Transitioning to a satellite-navigation
system should increase efficiency and capacity at a time when passenger
levels and aircraft operations are continuing to rise.
But improving efficiency through NextGen-related initiatives is
only part of the answer to enhancing capacity and reducing congestion.
We also need to focus on traditional infrastructure projects that
require bricks, mortar, concrete, and asphalt. We need to ensure we
have enough runways and taxiways to accommodate more aircraft. Airports
also need more gates and terminal space to accommodate increasing
numbers of passengers. As the FAA's latest Aerospace Forecast points
out, inadequate infrastructure ``could result in even more congestion
and delays.''
Finally, as the FAA continues to move forward with NextGen, it is
absolutely critical that the agency consult with airports and local
communities about new flightpaths that expose nearby residents to
aircraft noise. The FAA has already experienced problems at a number of
airports and communities around the country. I hope Congress will
continue to monitor this issue to ensure the FAA is working with
closely with airports and local communities.
Questions Submitted by Senator Christopher A. Coons
investment in transit
Question. Every day, Americans take more than 35 million trips on
public transportation. This level of ridership enables the nation's
largest regions to sustain a level of economic output that is essential
for our international competitiveness. However, aging transit
infrastructure, reflected in a $90 billion state of good repair
backlog, is suppressing transit ridership. Because reliable transit is
such a critical part of the nation's transportation network and helps
Americans save millions of hours of travel time and preventing billions
of dollars in lost productivity, how does public investment in
maintaining transit infrastructure support the nation's overall
transportation goals and priorities?
Answer. Senator, I completely agree that transit is a critical part
our nation's transportation system. I think we need an ``all of the
above'' approach to improving our nation's infrastructure. That means
increasing our investment in highways, bridges, transit, and airports.
All modes of transportation need to work together seamlessly to ensure
passengers can move efficiently on the ground and in the air. But we
have a lot of work to do. As you know, the American Society of Civil
Engineers recently issued its infrastructure report card. According to
the report, transit received a D-, and aviation received a slightly
better D.
It's critical that we continue to press for an efficient multi-
modal transportation system. Airline passengers often rely on public
transportation to get to and from our nation's airports. Without
reliable transit systems, airports would face increasing road
congestion. They would also likely be forced to invest in more roadside
projects and parking garages at a time when airports are struggling to
come up with enough funding to pay for runways, taxiways and other
critical infrastructure projects.
______
Questions Submitted to Edward L. Mortimer
Questions Submitted by Senator Steve Daines
Question. Mr. Mortimer, we discussed the long-term economic
importance of multimodal transportation infrastructure that moves
energy commodities. In your testimony you also mentioned the importance
of broadband deployment within an infrastructure package to create
greater economic potential. As a former tech executive for a global
cloud computing company based in Bozeman, Montana. I know firsthand the
importance of digital connectivity in addition to physical connectivity
for economic opportunity. How can we leverage limited resources to
expand broadband to rural America?
Answer. The Chamber believes Federal decision-makers should
continue to work in partnership with the private sector and states to
foster infrastructure deployment in remaining unserved areas. An
important role the Federal government can play is facilitating the
planning and approval process to provide regulatory certainly to this
process. With regulatory certainty, we believe leveraging limited
resources can play a key role in ensuring all parts of America have
broadband access.
Question. In your testimony you mentioned leveraging advances in
autonomous vehicles. Nationally, 54 percent of automobile fatalities
occur on rural roads, despite the fact that only 19 percent of
Americans live in rural areas. There is an opportunity here to save
lives as well as improving passenger and freight mobility. How do you
think we can accelerate those benefits to rural America?
Answer. The Chamber believes that making ``smart'' infrastructure a
priority by leveraging Internet of Things (IoT) solutions in new and
existing construction would increase connectivity, computing
capabilities, and the utilization of data analytics. Below are some
examples on how this could be done:
--Investment in 5G infrastructure to accelerate Automated Vehicles,
Vehicle-to-Vehicle safety, and Vehicle-to-Infrastructure
communications.
--Prioritize integration of IoT and data-centric solutions that
connect, secure, and manage actionable data from existing and
new infrastructure.
IoT solutions increase safety, efficiency and mobility--by
improving real-time decisionmaking and management of infrastructure
assets, enabling predictive maintenance, lowering long term
infrastructure cost, and increasing infrastructure life-span--thereby
saving significant taxpayer dollars, improving societal challenges, and
boosting the economy.
Questions Submitted by Senator Dianne Feinstein
Question. Mr. Mortimer, you mentioned in your testimony the need
for Congress to think beyond just transportation when it considers
infrastructure. Should Congress pass legislation leading to $1 trillion
in new infrastructure investments, what proportion would you recommend
be dedicated to improving America's water infrastructure?
Answer. The U.S. Marine Transportation System (MTS) consists of
ports, coastal and inland waterways, the Great Lakes, and the St.
Lawrence Seaway and is an integral part of the global supply chain and
the broader transportation network. While Congress did approve the
Water Infrastructure Improvements for the Nation (WIIN) Act, further
investment is needed to address many critical navigation needs.
The Chamber also recognizes that Federal investment and regulatory
relief for our drinking water, wastewater, and storm water systems
should be a part of any infrastructure package. The water the nation
uses for agriculture, manufacturing, and power production drives
economic development, maximize societal returns, and build strong
communities. While most water investments are made at the local level
or involve private investment, we do believe there is a targeted
Federal role to ensure limited resources are maximized to provide
adequate water investments.
Without knowing the scope of what infrastructure components would
make up a $1 trillion infrastructure investment bill, we are unable to
put a precise number on the proportion of an infrastructure package
should go to water investments. But we do believe water investments
should be included in any Federal legislation.
Questions Submitted by Senator Christopher A. Coons
investment in transit
Question. Every day, Americans take more than 35 million trips on
public transportation. This level of ridership enables the nation's
largest regions to sustain a level of economic output that is essential
for our international competitiveness. However, aging transit
infrastructure, reflected in a $90 billion state of good repair
backlog, is suppressing transit ridership. Because reliable transit is
such a critical part of the nation's transportation network and helps
Americans save millions of hours of travel time and preventing billions
of dollars in lost productivity, how does public investment in
maintaining transit infrastructure support the nation's overall
transportation goals and priorities?
Answer. Public transportation must continue to be an important
option in solving our infrastructure crisis. Businesses nationwide
determine where they locate based on transportation options available.
For a growing amount of communities, public transportation is a
critical component of the transportation solution. Study after study
has shown that investing in transit leads to better safety, faster
economic growth and higher quality of life. Not maintaining the
infrastructure will have the reverse effect. A strong Federal role in
public transportation investment ensures mobility for its over 35
million riders each day.
______
Questions Submitted to Beth Osborne
Questions Submitted by Senator Steve Daines
Question. Amtrak's Empire Builder serves 12 communities along
Montana's Hi-Line. It currently passes through the City of Culbertson.
This is an opportunity to expand Amtrak's service and produce a net
positive financial impact, according to a previously completed Amtrak
feasibility study. Transportation for America has shared its expertise
with Culbertson as it works to reinstate this service.
Ms. Osborne, in your testimony, you discussed the potential for the
Consolidated Rail Infrastructure & Safety Improvements (CRISI) program,
should it be funded. Would you please elaborate on what we as a nation
can accomplish if Congress fully funds CRISI and allows all eligible
projects, as authorized, to compete?
Answer. This program can provide connections for communities to job
centers, medical facilities and airports, which is especially important
to rural areas as Essential Air Service becomes unavailable in more and
more places. It is also important to improve the safety of the railroad
system by providing communities with much needed funds for grade
separations and crossing controls.
Questions Submitted by Senator Dianne Feinstein
Question. I hope that Congress will decide to invest more in our
nation's infrastructure, and one of the key reasons is that we have an
enormous maintenance and repair backlog. One-third of our major roads
are in poor or mediocre condition, and one-tenth of our bridges are
structurally deficient. The American Society of Civil Engineers have
given the nation's infrastructure a grade of ``D+''. More specifically,
bridges received a grade of ``C+'', aviation a ``D'', ports a ``C+'',
roads a ``D'', and transit a ``D-''. But when Congress has provided new
funding, we have not actually required the states to focus on a fix-it-
first approach.
Ms. Osborne, how do you recommend that Congress, and specifically
this Committee, ensure that sufficient resources are devoted to
maintaining rather than just expanding the transportation
infrastructure we already have?
Answer. Absolutely. For decades, the American people have been told
that roads and bridges are crumbling. Every few years Congress passes a
transportation bill and promises it will fix things only to come back a
few years later and complain about the condition of infrastructure
again. Smart Growth America reviewed transportation spending across the
nation in a 2014 report called ``Repair Priorities'' and found that the
majority of funding is currently spent on new capacity, not state of
repair. Congress needs to make its rhetoric and its spending
consistent.
Question. America's failure to adequately maintain existing
infrastructure will only get worse with climate change. I worry that
neither the Federal government nor states have done enough to
anticipate increased storm damage, both in terms of retrofitting
existing infrastructure, but also in terms of long-term planning to
move infrastructure away from increasingly hazardous areas.
For example, California's State Route 37 runs along the north edge
of San Pablo Bay near San Francisco. It is surrounded on both sides by
marsh land that is increasingly vulnerable to rising sea levels, and it
was just out of commission for weeks due to storm-related flooding.
Ms. Osborne, how do you recommend that Congress ensure that states
are using Federal funds to make their infrastructure more climate
resilient?
Answer. Congress required transportation agencies to create asset
management plans and to measure the state of repair of the
transportation system in MAP-21. Congress could require that asset
management plans and state of repair performance measures be inclusive
of climate resilience. Congress might also require that design
standards for roadway infrastructure include resiliency in those
designs.
Question. The area where this subcommittee has the most direct
impact on infrastructure is the Capital Investment Grant or New Starts
program for transit investment. I am particularly grateful to Chairman
Collins for always treating the transit investment projects fairly and
keeping them moving along with the annual funding they need.
As Congress begins to discuss additional funding for infrastructure
investments, I want to point out that other modes of transportation do
not receive the same level of scrutiny and opportunities for
Congressional delays that transit does. For example, when a state wants
to invest in new highway capacity, it can direct its share of Federal
funds in almost any manner it chooses. But when a transit agency wants
to invest in new rail capacity, it has to come before Congress for each
individual project, year after year.
Ms. Osborne, how do we ensure that states are building new highway
capacity in ways that actually reduce congestion and encourage the
development of more sustainable communities?
Answer. The simplest approach is to put the entire Federal Transit
program and the new rail programs under the Highway Trust Fund, so that
project sponsors need not come to Congress every year. While
considering this, it might also be worthwhile to think about aligning
the design of the highway, transit and rail programs. Many facets of
the transit program should be considered for the entire transportation
program. For example, in the transit program fomula funds are used for
maintenance of the system while new capacity requirements have to come
to the Federal government for evaluation based on 1) project benefits,
2) the sponsor's ability to maintain the project once built and 3)
evidence that the sponsor can maintain the rest of their system with
the addition of the project. At the very least, the latter two factors
should be evaluated before any Federal investment is made, whether
through grants or loans.
Questions Submitted by Senator Christopher A. Coons
local governments
Question. I noted in your testimony that the TIGER program is one
of the only programs that support transportation projects at the local
level. As a former county executive, I understand the headaches that
can come from trying to combine land use planning, transportation
decisions, and other local community priorities; and I appreciate the
flexibility that TIGER grants can provide. Other than TIGER grants,
what are a couple of things we can do in Congress to support and
empower local government transportation decisions?
Answer. Congress could make more funding available to local
communities, either through growing programs like TIGER or by
increasing local involvement in decisionmaking within the formula
programs.
Additionally, local governments often run into challenges because
they are more likely to prioritize serving regional businesses with
boulevards and main streets while states are more likely to prioritize
throughput by moving vehicles through and past those businesses on high
speed and wide roadway designs. State transportation engineers often
want to give locals what they are seeking but feel their hands are tied
by Federal requirements and by the highway-focused engineering
standards laid out by the American Association of State Highway and
Transportation Officials (AASHTO) ``Green Book.'' More flexibility in
design of roadways would help local governments get the roadway network
that best serves their needs.
last mile connections
Question. Passenger rail brings more and more riders, many of them
commuting to work, some on business travel, some of them tourists
exploring towns and cities on these routes. What can we do to improve
last mile connections, both rail-to-rail (i.e. passenger rail to local
or regional transit) and multi-modal connections such as rail to
busses, or rail to shared-use platforms such as ride shares and bike
shares to allow these customers to experience seamless integration of
their travel experience?
Answer. There are two things that can be done. First, Congress can
provide more for these purposes either through increasing the size of
the Transportation Alternatives or getting flexible funding down to the
local level where these investments are best understood.
Second, first and last mile challenges with transit and rail are a
sign of poor roadway design and/or poor land use decisionmaking. To
address the roadways, the Federal government could push for a
modernization of roadway design that more consistently supports the
safe movement of all users (drivers, bicyclists, transit users and
pedestrians) rather than focusing solely on moving cars and trucks at
high speeds.
Land use is a local issue; however, the Federal government need not
reward and subsidize land use decisions that drive up costs and reduce
mobility and safety. Spread out, low-density development results in
more need for driving, which in turn causes more and more expensive
infrastructure on the back of a smaller tax base. It also makes walking
to destinations difficult because they are farther away. That larger
infrastructure needed to support the induced car travel caused by
spread out development leads to the roadway design (referred to above)
that is both expensive and unsafe. A good place to start to fix this is
to emphasize the connection between land use and transportation
throughout the transportation program and project development process.
Congress could also provide the Federal Highway Administration (FHWA)
with funding and a directive to develop transportation models that are
capable of recognizing how land use can impact travel demand. The
current four-step model cannot.
pedestrian safety
Question. Delaware is one of the deadliest states for pedestrians
in America, with one of the highest rates of pedestrian deaths per
capita (#1 in 2015). My understanding is that most attention paid to
this problem has focused on urban areas, but this is largely a suburban
problem for us, with most fatalities occurring due to uncontrolled
pedestrian crossings of high-speed suburban commercial corridors. What
kind of support can we provide at the Federal level to help address
this issue?
Answer. Pedestrian deaths are often by poor roadway design and/or
poor land use decisionmaking. To address the roadways, the Federal
government could push for a modernization of roadway design that more
consistently supports the safe movement of all users (drivers,
bicyclists, transit users and pedestrians) rather than focusing solely
on moving cars and trucks at high speeds.
Land use is a local issue; however, the Federal government need not
reward and subsidize land use decisions that drive up costs and reduce
mobility and safety. Spread out, low-density development results in
more need for driving, which in turn causes more and more expensive
infrastructure on the back of a smaller tax base. It also makes walking
to destinations difficult because they are farther away. That larger
infrastructure needed to support the induced car travel caused by
spread out development leads to the roadway design (referred to above)
that is both expensive and unsafe. A good place to start to fix this is
to emphasize the connection between land use and transportation
throughout the transportation program and project development process.
Congress could also provide the Federal Highway Administration (FHWA)
with funding and a directive to develop transportation models that are
capable of recognizing how land use can impact travel demand. The
current four-step model cannot.
The National Complete Streets Coalition can bring national leaders
to these communities analyze the transportation and land use changes
needed to address the problem.
SUBCOMMITTEE RECESS
Senator Collins. This hearing is now adjourned.
[Whereupon, at 11:39 a.m., Wednesday, March 8, the
subcommittee was recessed, to reconvene at a date and time
subject to the call of the Chair.]