Senator James M. Inhofe
Environment and Public Works Committee
September 25, 2002
Thank you Mr. Chairman. As we work on the drafting of this reauthorization, I think it is safe to say that all the members here recognize that this is a time of extraordinary challenge and opportunity in the transportation sector. The world of surface transportation is changing. It is now our job to work together to ensure adequate funding for investment in the nations transportation system and preserve state and local government flexibility to allow the broadest application of funds to transportation solutions.
TEA-21 dramatically altered transportation funding mechanisms. It provided greater equity among states in Federal funding and record levels of transportation investment.
For most Federal-aid projects, the law requires that 20 percent of the costs be derived from a non-Federal source. In order to maximize the use of all available resources, states now have a range of options for matching the Federal share of highway projects
. By providing flexibility in the form that the non-Federal match might take, Federal dollars can be leveraged more effectively.
What we have been taking advantage of in Oklahoma is the toll credit match. We apply certain toll revenue expenditures to build and improve our public highway facilities as a credit toward the non-Federal matching share on particular projects.
However, transportation officials at all levels of government still face a significant challenge when considering ways to pay for improvements to transportation infrastructure. It is apparent that traditional funding sources are insufficient to meet the increasingly complex needs.
I remember when I was Mayor of Tulsa, we worked diligently trying to focus on public private partnerships. I recognize that the implementation process is a complex undertaking with the wide range of organizational and financing options but its important for public agencies to evaluate all their alternatives.
Despite the record levels of investment, funding is not keeping pace with demands for improvements to maintain the vitality of the nation’s transportation system.
Some transportation projects are so large that their costs exceed available current grant funding or would consume so much of these current funding sources that they would delay many other planned projects.
ARTBA proposed a number of options for enhancing the Highway Account revenues. Some included indexing the motor fuels excise taxes for inflation, crediting the Highway Account with gasohol tax revenues that currently go into the General Fund, and expanding innovative financing programs. I might also mention that since the enactment of TEA-21, interest accrued on any obligation held by the fund does not get credited to the Highway Trust Fund, the interest earned goes to the General Fund. This is obviously something that we need to rethink during reauthorization. These are all revenue enhancements that would increase the fund substantially.
With the Energy bill pending in Conference, the Trust Fund will recoup an additional 2.5 cents per gallon of ethanol currently being deposited into the general revenue. The Senator from Montana has been very aggressive at trying to make the Trust Fund whole with respect to the current 5.3 cent per gallon ethanol subsidy. Although he and I do not agree on how to best address this issue, we are in agreement that the Highway Trust Fund should not pay to subsidize any fuel source. Our surface transportation infrastructure needs are such that we cannot afford to forego any revenue source.
Certainly one of the key factors in the economic engine that drives our economy is a safe, efficient transportation system. If our economic recovery is going to continue to expand, we cannot ignore the immediate and critical infrastructure needs of highways, bridges, and state/local roadway systems.
Finally, I would encourage our witnesses to address the current issues with funding dilemmas and how the use of innovative finance can generate real economic returns by expediting project construction.
Thank you Mr. Chairman. I look forward to today’s hearing and want to welcome all of our witnesses.