Thank you Madame Chairman. As I said in last week’s hearing, anticipation for the Commission Report has been high. We must recognize that our nation’s transportation needs have outgrown our current transportation policy. The link between a robust economy and a strong transportation infrastructure is undeniable; yet when it comes to other spending needs in the federal government, transportation is often neglected as a priority. As we move into reauthorization in 2009, it is the responsibility of Congress to continue to ensure that American’s receive a full and effective return for the fuel taxes they paid into the Trust Fund. The results of the Commission’s study will be an important part of those deliberations.
First, I want to point out that although Secretary Peters along with two other Commissioners voted against the final report, there was much agreement on most of the policy recommendations. For the most part, all the Commissioners found agreement on the vast and unmet needs of our nation’s transportation network, but where they differ is in how to pay for it. I have long advocated for a decreased federal role, which I believe allows for greater flexibility for states to manage their own transportation funding priorities. It would appear those who wrote the dissenting views concur.
Public Private Partnerships or PPPs are a great example of innovative funding ideas we will need to encourage States to explore. When I was Mayor of Tulsa, we did several PPPs and were able to better leverage scarce public funds to accomplish many good projects. To date, our thinking on funding highways has been too limited. We need to acknowledge there are other options. Certainly, no one should assume that PPPs are the magic bullet, this type of financing is not appropriate in all cases, but it is certainly something that must be explored further by States and frankly this Committee. There are several larger policy issues that I think need to be discussed, such as the length of leasing options and whether there should be any restraints on how States use lease payments. Finally, before development of these long term lease agreements become more widely used, we should thoroughly examine the consequences of foreign investment in these leases. Many argue that the consequences of foreign investments is minimal since the asset is fixed, I would tend to agree; however some concerns have been raised about of the loss of possible future State tolling revenues when tolling proceeds are diverted outside the United States. There is still much to learn about these lease agreements, and although I support them in principle, I consider them only part of the solution to the highway financing shortfall.
I think the important lessons to take from the report are that if we don’t take dramatic action, growing congestion and deteriorating pavement conditions will choke the US economy. I am glad that there is consensus among the commissioners that modal specific decisions and the current program structure are outdated.
Finally, I have to comment on the proposed financing mechanism. I believe increasing the federal fuel tax by the amount proposed in the final report is neither politically viable nor economically sound. Furthermore, I am not convinced it is necessary. Certainly, given the balances in the Highway Trust Fund, an increase in the fuel tax must be considered, but not to the level that is proposed. I had hoped that the Commission would have considered in more detail alternative financing mechanisms that could eventually replace the fuel tax as the primary method to collect revenue for transportation. As vehicles become more fuel efficient, the existing funding model of paying per gallon of fuel will not be effective.
Again, I appreciate your efforts and thoughtful recommendations and look forward to discussing them further with you.