[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.''*
---------------------------------------------------------------------------
    * 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.]