Mr. Chairman and Members of the committee, I appreciate this opportunity to submit testimony concerning the positive benefits that the state of New Mexico has received through innovative financing for transportation, and how our State has leveraged ordinary resources into extraordinary successes.
Flexible and stable revenue from Congress has enabled the New Mexico State Highway and Transportation Department the ability to deliver dramatic results for our citizens through improvement and enhancement of our transportation system. We have developed and implemented new ways to finance and contract highway construction projects.
Since 1998 we have used innovative financing techniques to bond $1.2 billion that advance highway construction projects by as much as 27 years. We are building quality projects that provide enormous returns on investment for the taxpayers and deliver economic benefits today.
New Mexico’s strategy is to connect our communities to regional and national economic opportunities by building four-lane corridors. This access has historically been limited to our Interstate system, serving less than 70% of our population. Today we have added 653 miles of new four-lane highways that link 96.7% of our citizens to these vital economic opportunities.
As well as adding 653 miles of four-lane highways, we have built 4 urban relief routes, 15 interstate interchanges and the Big I, which is the intersection of the Interstates 25 and Interstate 40- that serves as a bridge for regional, national and global commerce. Our efficiency, combined with stable and flexible federal funding, provides a seamless regional transportation system to serve this commerce and continue the movement of products to market. Our urban citizens are moving more quickly and safely to work, school and medical care.
Innovative finance enabled us to use Grant Anticipation Revenue Vehicle Bonds (GARVEE Bonds) to construct four-lanes on NM 44 from central to northeast New Mexico. Because of Federal revenue stability, both Standard and Poor’s and Moody’s rated our bonding proposals at “A” level investment grade. We were able to construct a 118-mile four-lane highway corridor in 28 months with a 20-year warranty that will save the taxpayer $89 million in maintenance costs. This 118-mile corridor would have taken 27 years to construct under traditional methods.
We have also improved the road quality of our Interstate and State Highway system through our innovative financing program. We have reversed a twenty five-year trend in our deteriorating state and interstate highways. Since 1998, we have improved 3,035 miles highways-- a 51% decrease in our deficient status highway miles. In 1999 only 81.8% of our Interstate highway system was rated in good condition-- today 98.7% of this system is in good condition.
In addition to major improvements to our system, our citizens have benefited through economies of scale. In 1995 New Mexico’s cost per mile of four-lane construction was $1.3 million. In 2002, through our large bonding program, we reduced that cost to $740 million per mile. This economy of scale construction saves our state over $182 million in four-lane corridor construction.
Investment in the nations transportation infrastructure yields high returns. Based on information generated by the National Highway Users Alliance, the Big I will save personal and commercial users $8.1 billion in time; $870 million in fuel; $460 million in safety; and another $670 million in environmental impacts. This $286 million investment by Congress will realize a $10.1 billion return on investment. This $10.1 billion return on investment for one project is 34 times greater than the interest paid on our entire bonding program.
It is critically important that we understand and acknowledge our innovative financing program would not be the success that it is without the provision for flexible, stable and reliable funding. States across the country have invested in the national infrastructure based on the guaranteed funding levels. These guarantees have enabled us to program and deliver projects in a predictable financial climate. In fact- based on the FHWA highway construction inflation rate of 4.5% -- our entire bonding program, with an interest rate of 4.47%, delivers $1.2 billion of transportation improvements to New Mexico at a lower cost and the benefit of being used today rather than years in the future.
We can assure our citizen’s that all user fees directed to the Highway Trust Fund are being spent for its designated purposes, and we can speak with confidence about the federal transportation-financing picture over a multi-year period. Strong budgetary mechanisms, balanced planning and streamlining program delivery have made innovative finance work for New Mexico.