Statement of Bill Fay
American Highway Users Alliance
ISTEA REAUTHORIZATION HEARING
February 26, 1997

Mr. Chairman and members of the subcommittee, thank you for the invitation to appear before you today and the opportunity to present our views on the transportation programs that will best serve our nation's needs in the 21st Century.

I am Bill Fay, President and CEO of the American Highway Users Alliance. The Highway Users represents a broad cross-section of businesses and individuals who depend on safe and efficient highways to transport their families, customers, employees, and products. We support a strong federal role in transportation policy and the prudent investment of scarce highway use taxes in those programs that enhance our economic productivity, decrease safety risks, and contribute to the enviable quality of life Americans enjoy.

Today, I will comply with the request of committee staff and limit my remarks to the big picture issues. In that context, I will discuss the appropriate federal role in transportation, the proper level of funding for the federal highway program, how those funds ought to be targeted to meet national transportation interests, and the degree of flexibility granted to state and local officials to set their own transportation priorities. I will also comment on what we know of the Administration's reauthorization proposal.

FEDERAL TRANSPORTATION POLICY AT THE CROSSROADS FEDERAL ROLE

Since 1956, the federal highway program has been largely focused on constructing the Dwight D. Eisenhower National System of Interstate and Defense Highways. Now that the Interstate System is virtually completed, some have questioned whether the federal government should continue to play a significant role in highway transportation policy. These same objections were raised two years ago by opponents of the National Highway System (NHS) legislation, and Congress answered them decisively with its overwhelming vote for final passage of the National Highway System Designation Act. With NHS designation, Congress recognized the federal government's continuing responsibility to foster interstate commerce and economic growth by ensuring that our most basic transportation infrastructure is maintained and improved.

Without the NHS, many U.S. businesses could not compete in national and international marketplaces, military readiness would be put at grave risk because of the inability to mobilize quickly, and the ability of individual Americans to travel where they want, when they want would be severely hampered. To put it another way, a strong federal role in the development and maintenance of highways and bridges is essential to support economic growth, to enhance individual freedom, and to sustain our quality of life. Few other federal programs can claim such a sweeping national impact.

But there is a lot of work ahead to make the promise of the NHS a reality. The nation will not only have to invest substantial financial resources, but invest them wisely, in order to ensure that this small but important network of highways becomes the engine for economic growth, greater personal freedom, and safer travel that we all hope it will be. FUNDING

Funding, then, has to be the top priority issue. Members of this committee understand the critical importance of increasing our nationwide investment in highways. This year, the issue takes on even greater significance as Congress works to reauthorize the federal highway program. First, returning to the states more of the money motorists pay in highway taxes will certainly help resolve many of the difficult issues involved in the formula debate. Second, and of equal importance, without additional funding our nation cannot meet its documented need for increased road and bridge investments.

We are all familiar with the U.S. Department of Transportation's most recent assessment of road and bridge conditions, so I will not rehearse the statistics again here. I will just reiterate that we are presently investing $20 billion per year less than is needed just to maintain current conditions, and a staggering $40 billion per year less than is needed to leave a better network of highways for the next generation.

This remarkable gap between actual highway investments and the amount we should be spending has important implications for our economy, our travel safety, and our overall quality of life:

--Economy _ A recent study commissioned by the Federal Highway Administration (FHWA) indicates that between 1950 and 1989, investments in non-local roads yielded production cost savings of 24 cents for each dollar spent. Amazingly, those road investments paid for themselves in just over four years because of the economic gains they made possible. If we fail to maintain those roads, however, the previously realized gains could soon disappear.

--Safety _ Highway fatalities have been of the rise over the past four years, reversing the steady improvements of the prior four years. When ISTEA took effect in 1992, 39,250 Americans died on our highways. Since then, fatalities have climbed to 40,150 in 1993, 40,676 in 1994, and 41,798 in 1995. 1996 fatalities are projected to be about the same as 1995. According to FHWA, substandard road designs and poor road conditions are a factor in nearly 30% of fatal crashes. Our failure to invest in better highways will only make travel more dangerous in coming years.

--Quality of Life _ Under investing in highways will make it more difficult for working parents to get from the office, to the day care, to the grocery store, to home; will make vacations more time consuming and expensive; and will make medical care less accessible for many rural Americans.

For the sake of our continued economic growth, the driving public's safety, and maintaining our standard of living, Congress must increase overall highway funding this year. That's why we applaud the recent efforts of members on this committee to increase the funding allowed for highways in this year's budget resolution.

We particularly congratulate you, Chairman Warner, and Senator Baucus for taking the initiative to raise this issue among your colleagues. We thank you and the other members of this committee who signed a letter to the Budget Committee requesting that the highway program be funded at $26 billion in FY 1998, a nearly $6 billion increase over this year's spending level. Combined with a similar letter sent by Senator Moynihan and Senator D'Amato, 59 senators have indicated clearly their support for a badly needed boost in highway funding. As both letters indicate, the highway account of the Highway Trust Fund could sustain a program funded at $26 billion through at least FY 2002 with no additional revenues.

I also want to take this opportunity to congratulate Senators Chafee and Bond on an initiative they recently announced in a Dear Colleague letter. They propose to create a new budget account and scoring procedures to ensure that annual spending from the highway account equals annual tax receipts deposited into the account. Although their proposal would not allow us to invest the $12 billion cash balance already existing in the account, it would guarantee that new tax revenue collected from highway users and deposited in the highway account would actually be spent on road and bridge improvements.

Obviously, we would like to go further by spending down the cash balance over time. The Chafee/Bond proposal, however, is a laudatory step in the right direction, and we applaud their important work on this legislation.

America's motorists should be able to count on their highway taxes being used for road improvements. Highway users today are paying substantially more in taxes than the federal government is spending on highway and bridge investments. In 1995, motorists paid $30.9 billion in federal highway use excise taxes. 1995 is the most recent year for which state-by-state data is available, but total highway use taxes increased in 1996 and will hold steady in 1997. Although highway users pay around $31 billion per year, the federal government returns only $18 billion to the states for highway and bridge improvements. The chart I have attached to my statement provides a state-by-state breakdown of the difference between what motorists in each state pay in federal highway taxes and the amount each state has received this year in total highway spending authority.

Of course, the major reason for this disparity between what highway users pay and what they receive from the federal government is that not all of the taxes collected from highway users are deposited in the Highway Trust Fund, much less in the highway account of the trust fund. Taking the 4.3 cents per gallon tax that currently goes to "deficit reduction" which simply means the use of a regressive excise tax to fund general government programs _ and depositing it in the Highway Trust Fund would go a long way towards keeping faith with the American driving public.

FOCUS THE FEDERAL PROGRAM

Just as we should increase overall highway funding this year, we must ensure that those limited resources are wisely invested in programs of vital national interest. Guided by two overriding national goals "improved interstate mobility and safer travel" The Highway Users recommends a simplified highway program that targets federal funds towards five program accounts. They are:

--The National Highway System _ While the NHS constitutes only 4% of the nation's road mileage, it carries over 40% of all traffic, 75% of commercial truck traffic, and 80% of tourist traffic. The NHS is the 21st Century successor to the Interstate System and has the potential to build dramatically on the national contributions made by the Interstates over the past 40 years. To maintain these vital interstate connectors, the FHWA estimates we should be investing $18 billion annually and $24 billion annually if we want to improve their condition. Yet the current federal highway program provides only $6.5 billion per year for NHS improvements.

--Bridges _ Both on and off the NHS, bridges are high-cost, crucial links in our nationwide highway network. The FHWA reports the country would need to spend $5.1 billion annually to maintain current bridge conditions and $8.9 billion to improve them. The current federal highway program budgets only $2.8 billion per year for bridge work. If the Administration and Congress seriously wish to build a bridge to the 21st Century, they will have to provide more adequate funding.

--Safety _ For reasons I have already discussed, we must make a renewed commitment to safety if we hope to curb the tide of rising highway deaths. The federal government currently invests $700 million annually in highway safety programs. As Americans continue to travel more miles than ever by highway, we must focus more attention and resources on safety improvements. It's a nationwide challenge requiring a greater financial commitment from the federal government.

--Research and Development (R&D) _ The federal government currently invests approximately $400 million annually in R&D activities to develop new technologies, construction materials, and construction techniques that will ease congestion, make travel safer, and prolong the usable life of roads and bridges. By providing up-front financing, coordinating research activities at sites around the country, and transferring information and technologies among interested parties in the public and private sectors, FHWA programs reduce the cost and enhance the benefits of the nation's highway-related R&D activities.

--Roads on Federal Lands _ The federal highway program provides approximately $500 million per year to improve roads on federal lands, such as national parks. This program is essential to provide public access to these areas and should be retained.

By targeting at least 85% of federal highway funds to the above five program accounts, The Highway Users believes Congress would significantly improve both safety and interstate mobility. Such a federal highway program would ensure we made investments in projects of truly national significance.

FLEXIBILITY

While The Highway Users seeks to target federal highway funds on programs of national interest, we also advocate giving state and local officials the latitude to plan for their regional transportation needs and the flexibility to direct federal highway dollars towards the programs they identify as priorities. The Surface Transportation Program (STP) was established in ISTEA to provide state and local governments that flexibility. While ISTEA is more flexible in terms of expanding the opportunities to use federal highway funds on non-highway projects, two of the new funding accounts established in ISTEA_ transportation enhancements and the Congestion Mitigation & Air Quality improvement program (CMAQ) _ are quite inflexible in terms of the discretion granted to state and local officials to set their own transportation priorities.

Specifically, 10% of STP funds must be set-aside and used only for transportation enhancement activities, such as pedestrian or bicycle facilities, landscaping and beautification, rehabilitation and operation of historic buildings, or other non-highway projects. The CMAQ program directs highway money, $6 billion over six years, towards urban areas that do not meet Clean Air Act requirements. These funds generally cannot be used for highway construction, except High-Occupancy Vehicle (HOV) lanes.

The Highway Users recommends that Congress continue the eligibility of CMAQ and transportation enhancement projects under a streamlined Surface Transportation Program account. The streamlined STP would allow state and local officials to weigh all transportation needs _ air quality, highway capacity, historic preservation, mass transit capital, safety, etc. _ and establish priorities without the current funding constraints of ISTEA. By continuing the eligibility of CMAQ and transportation enhancement projects but eliminating the specific funding categories, Congress would allow those local projects to be funded in areas where they are truly a priority.

In addition, we have two specific recommendations about CMAQ and transportation enhancement eligibility requirements. First, the CMAQ program to date is focused almost exclusively on air quality projects with very little emphasis laid on congestion mitigation. Federal highway funds certainly ought to be available to improve freeway interchanges and other traffic bottlenecks and for simple projects such as lane widening or shoulder improvements that can substantially improve traffic flow and reduce congestion. We urge you to consider allowing the states to more fully utilize their federal highway funds for congestion mitigation projects.

Second, the transportation enhancement eligibility requirements have been written and interpreted so broadly that many projects funded to date have no transportation elements or connection. We think these eligibility standards should be tightened considerably. We hope to have completed a report in April that will highlight the extent to which transportation enhancement funds have been spent on non-transportation projects. We will deliver the report to members of this subcommittee as soon as it is available.

SAFETY

I want to return for a moment to a topic that should be of overriding concern to everyone involved in highway transportation: safety. As I indicated previously, highway fatalities have increased in recent years, and highway accidents result in millions of injuries annually. Those traffic crashes also drain over $150 billion per year from our economy, primarily by increasing medical costs and lowering productivity.

The Roadway Safety Foundation (RSF), chartered by the American Highway Users Alliance to reduce the frequency and severity of crashes by improving the safety of roadways, will release a report later today that we hope will focus attention on roadway safety problems and potential solutions. The report cites four major roadway safety problems, including poor quality pavements and surface conditions, narrow lanes and shoulders, narrow bridges, and numerous roadside hazards.

Those problems can be mitigated in a variety of ways _ widening lanes and adding or widening shoulders; ensuring that bridge widths are commensurate with the width of approach lanes; better pavement marking, traffic signs, and reflective devices; creating open space adjacent to the roadway (clear zones) that will allow motorists to regain control of their vehicles. Some of these safety improvements are relatively simple; others are more complex. All of them cost money.

We will provide copies of the RSF report to members of the subcommittee. We hope you will agree that it makes a strong case for a substantial increase in funds devoted to roadway safety improvements and programs designed to improve our knowledge of safety problems and effective solutions.

ADMINISTRATION PROPOSAL

Since the Administration's reauthorization proposal has not yet been released, I can comment only on the elements of it that are foretold by the President's FY-98 budget request. That makes it possible to be very succinct.

The Administration proposes to cut federal highway funds at a time when its own report indicates that the nation is already investing $20 billion less than the amount needed just to maintain current road and bridge conditions and performance over the next 20 years. Under the Administration's plan, the cash balance in the Highway Trust Fund would rise to $44-48 billion in just five years. We believe that will be unacceptable to most members of Congress, to state and local elected officials, and particularly, to highway users who are asked to foot the bill for a smoke and mirrors form of deficit reduction.

In addition, Amtrak should not be subsidized out of the Highway Trust Fund. We strongly oppose this proposal and believe highway users across the country will fight it vigorously to the extent that it is seriously considered on Capitol Hill.

SUMMARY

Again, Mr. Chairman, The Highway Users commends you and the other members of this subcommittee who are seeking to boost highway funding. Our primary recommendations for reauthorization legislation are:

--Fund the highway program at the highest level the Highway Trust Fund will support (currently $26 billion per year); --Deposit the 4.3 cents per gallon fuel tax in the Highway Trust Fund and increase highway funding to invest the additional revenues in road and bridge improvements; --Target most federal highway funds toward the National Highway System, bridges, safety, research and development, and roads on federal lands; --Streamline the STP program to give state and local officials greater authority to set their own transportation priorities without the funding constraints of the current CMAQ and transportation enhancements programs.

Thank you for the opportunity to present this testimony.

Highway Taxes Paid vs. Funds Received
State Federal Highway Use Taxes Paid* (1995) Federal Highway Funds Received^ (1997) The Difference Percentage Return
Alabama $672,065,000 $363,630,000 $308,435,000 54.11%
Alaska $67,533,000 $187,620,000 $(120,087,000) 277.82%
Arizona $538,386,000 $264,525,000 $273,861,000 49.13%
Arkansas $406,393,000 $284,521,000 $121,872,000 70.01%
California $3,151,839,000 $1,618,984,000 $1,532,855,000 51.37%
Colorado $411,451,000 $187,226,000 $224,225,000 45.50%
Connecticut $300,667,000 $345,243,000 $(44,576,000) 114.83%
Delaware $88,056,000 $72,464,000 $15,592,000 82.29%
Dist. of Col. $34,798,000 $79,776,000 $(44,978,000) 229.25%
Florida $1,556,936,000 $831,661,000 $725,275,000 53.42%
Georgia $1,152,783,000 $600,140,000 $552,643,000 52.06%
Hawaii $82,316,000 $115,119,000 $(32,803,000) 139.85%
Idaho $163,900,000 $129,520,000 $34,380,000 79.02%
Illinois $1,236,879,000 $662,750,000 $574,129,000 53.58%
Indiana $873,575,000 $447,415,000 $426,160,000 51.22%
Iowa $401,839,000 $205,735,000 $196,104,000 51.20%
Kansas $342,014,000 $205,214,000 $136,800,000 60.00%
Kentucky $579,624,000 $300,431,000 $279,193,000 51.83%
Louisiana $536,645,000 $267,672,000 $268,973,000 49.88%
Maine $157,542,000 $119,769,000 $37,773,000 76.02%
Maryland $511,622,000 $260,881,000 $250,741,000 50.99%
Massachusetts $564,693,000 $636,712,000 $(72,019,000) 112.75%
Michigan $1,098,213,000 $551,377,000 $546,836,000 50.21%
Minnesota $562,630,000 $265,496,000 $297,134,000 47.19%
Mississippi $391,533,000 $202,448,000 $189,085,000 51.71%
Missouri $798,763,000 $409,066,000 $389,697,000 51.21%
Montana $139,815,000 $140,824,000 $(1,009,000) 100.72%
Nebraska $260,124,000 $134,673,000 $125,451,000 51.77%
Nevada $201,871,000 $113,063,000 $88,808,000 56.01%
New Hampshire $125,241,000 $85,866,000 $39,375,000 68.56%
New Jersey $823,705,000 $484,311,000 $339,394,000 58.80%
New Mexico $275,703,000 $156,912,000 $118,791,000 56.91%
New York $1,333,990,000 $1,032,139,000 $301,851,000 77.37%
North Carolina $934,122,000 $498,319,000 $435,803,000 53.35%
North Dakota $110,420,000 $108,360,000 $2,060,000 98.13%
Ohio $1,296,482,000 $623,666,000 $672,816,000 48.10%
Oklahoma $498,818,000 $270,888,000 $227,930,000 54.31%
Oregon $320,006,000 $205,381,000 $114,625,000 64.18%
Pennsylvania $1,280,724,000 $824,980,000 $455,744,000 64.42%
Rhode Island $84,742,000 $85,452,000 $(710,000) 100.84%
South Carolina $538,713,000 $290,784,000 $247,929,000 53.98%
South Dakota $123,165,000 $107,459,000 $15,706,000 87.25%
Tennessee $749,318,000 $378,425,000 $370,893,000 50.50%
Texas $2,349,527,000 $1,250,657,000 $1,098,870,000 53.23%
Utah $246,720,000 $119,544,000 $127,176,000 48.45%
Vermont $85,930,000 $77,069,000 $8,861,000 89.69%
Virginia $849,026,000 $451,151,000 $397,875,000 53.14%
Washington $619,144,000 $318,123,000 $301,021,000 51.38%
West Virginia $240,895,000 $205,442,000 $35,453,000 85.28%
Wisconsin $629,491,000 $365,096,000 $264,395,000 58.00%
Wyoming $136,525,000 $107,662,000 $28,863,000 78.86%
Total $30,936,912,000 $18,051,641,000 $12,885,271,000 58.35%


*Estimated from state-by-state fuel consumption data (The Road Information Program) and an FHWA report on non-fuel highway excise taxes collected in 1995. Includes motor fuel taxes currently deposited in the General Fund, as well as all highway taxes deposited in the Highway Trust Fund.

^Estimated from FHWA reports on FY 97 obligation limitations, 90% minimum allocation funds, and congressionally designated projects.

Prepared by the American Highway Users Alliance