March 13, 1997
Statement of
On ISTEA and Program Eligibility
Thomas J. Donohue
President and Chief Executive Officer

I. Introduction

Chairman Warner, Senator Baucus, members of the committee, thank you for the opportunity to express the trucking industry's priorities regarding reauthorization of the Federal highway program.

ATA Represents the Trucking Industry The American Trucking Associations, Inc. (ATA) is the national trade association of the trucking industry. ATA's membership includes nearly 4,200 carriers, affiliated associations in every state, and 13 specialized national associations. Together, ATA represents every type and class of motor carrier in the country. We are a federation of over 36,000 member companies and represent an industry that employs over nine million people, providing one out of every fourteen civilian jobs. We are a highly diverse industry, but we can all agree that a good system of roads is crucial both to our bottom line and to the safety of all drivers, including millions of truck drivers who deliver to all Americans their food, clothing, finished products, raw materials, and every other item imaginable. Actions that affect the trucking industry's ability to perform these services have significant consequences for the ability of every American to do their job well and to enjoy a high quality of life.

Current Spending Levels Cannot Support a Safe and Efficient Highway System The trucking industry contributes over $10 billion each year to the Federal Highway Trust Fund, about 43 percent of total receipts. As an investor, we expect a return on our investment. The user fees that we contribute to the trust fund should be invested in a manner that makes our highways both safer and more efficient.

Investing all revenues collected is especially important given the tremendous pressures our highways and bridges will face in the future, when economic growth will spur tremendous increases in the demand for freight transportation. In 1994 the revenue for trucking was $362 billion and is projected to reach $437 billion in 2004. By this same date, the total volume of freight carried by truck will reach 6.5 billion tons, 19 percent more than in 1994. Both the total number of miles driven and the total volume of ton-miles will grow 29 percent. More than half a million more trucks will be needed to meet these increased demands. This assumes that we will be successful in increasing intermodal business substantially to $12.9 billion-- 150% of today's levels. The safety and efficiency of the freight industry will depend in no small measure on the actions of this committee and the 105th Congress.

II.Current Funding Levels are Insufficient

I would like to thank the committee for the leadership it has given to restore integrity to the Highway Trust Fund. Both the Highway Trust Fund Integrity Act and efforts by 59 Senators to increase annual spending to $26 billion are laudable. Your commitment to significantly raise transportation spending sends a clear message that this country and this Congress can no longer make the inadequate investments that are failing to meet the critical needs of our nation's highway infrastructure. We also support efforts to move the 4.3 cents fuel tax now directed to deficit reduction to the Trust Fund. According to the Congressional Budget Office, this could help support an annual highway program of $34 billion.

Current Spending will not Sustain Highway Infrastructure

The trucking industry is prepared for the tremendous challenges posed by ever increasing demands for more efficient freight service. However, if under- investment in our highways continues, it will be impossible for the industry to meet these challenges. The resulting productivity losses will take a severe human toll as stiff competition from abroad wipes out existing jobs and reduces the ability of our economy to create new jobs for a rapidly expanding population. To simply maintain conditions and performance on the National Highway System (NHS), an annual Federal investment of $15.6 billion is needed. Despite the fact that the 160,000-mile NHS carries 40 percent of all traffic and 75 percent of truck traffic, the Federal government dedicates just $9 billion to these most important highways, 58 percent of the investment necessary just to maintain the status quo.

This dismal level of spending has contributed to the current situation now faced by users of the system. The NHS has been allowed to deteriorate to the point where nearly half of urban Interstate miles are congested during peak periods. Forty percent of travel on urban NHS routes takes place under such congested conditions that even a minor incident can cause severe traffic flow disruptions and extensive queuing. Congestion on urban Interstates increased from about 55 percent of peak hour travel in 1983 to approximately 70 percent in 1989, remaining relatively constant since then. Travel delays in the nation's fifty largest urban areas as a result of increased congestion costs society an estimated $43 billion every year. Congestion increases the risk of accidents and interferes with our ability to serve our customers' "just-in-time" delivery needs.

Highway Investment Saves Lives

Adequate highway funding allows states to make roadway improvements that increase safety. Improved roadway characteristics such as 12-foot lanes and ample shoulders, gentler curves, and improved median and median barriers, can significantly reduce the number and severity of accidents. One 1995 study estimated that full funding for the NHS over a 10-year period would prevent 720 fatal crashes, 55,000 personal injury crashes, and 120,000 property damage crashes on the NHS alone. The report estimated average annual societal savings of $800 million as a result of the accident prevention. Additional funding for other roads would increase these savings even more.

It is important to keep in mind that 43 percent of the NHS includes two-lane roads. These roads often have no median separation to prevent head-on collisions. Although lanes, shoulders and clear zones can provide motorists with the critical space to recover if they lose control of their vehicles, these features are inadequate or nonexistent on many NHS routes. These two-lane roads may have very tight curves with few warning signs and poor visibility to alert motorists before it is too late to adjust. FHWA crash statistics confirm the danger posed by the hazardous conditions on these narrow roads. While the Interstate System has the lowest fatality rate per 100 million vehicle miles traveled (VMT), 0.74, NHS routes not on the Interstate have a death rate of 1.48, twice that of Interstates. Other Federal aid highways not on the NHS take an even higher toll, with a fatality rate of 1.81 per million VMT.

We cannot afford to become complacent. In 1995, 41,798 people died on our nation's highways. The vast majority of these fatal crashes involved cars, motorcycles, and pickup trucks. This is equivalent to a Valujet crash every single day! Safety must be given the highest priority, and the Federal commitment must be demonstrated through adequate funding and strong leadership.

Highway Investments are the Key to Economic Development and Employment Growth

According to a Federal Highway Administration (FHWA) report, investment in the nation's highways stimulates tremendous job growth. The report states that for each $1 billion in highway investment, 42,100 full-time jobs are created and supported.

United States productivity improvements are the key to global competitiveness, rising standards of living, and economic growth. Investing in the NHS results in significant, nationwide improvements in productivity. In fact, every dollar invested in the NHS results in a 24-cent reduction in overall production costs for U.S. manufacturing. These productivity improvements let U.S. industry sell more goods and services at lower prices both at home and abroad. More people can be employed at higher wages. Since salary increases are firmly tied to the increase in the amount of goods and services each worker produces, living standards are improved. In addition, these real wage increases result in elevated tax revenues.

Through new innovations such as just-in-time (JIT) delivery, the trucking industry has played a vital role in improving U.S. productivity. This would have been difficult, if not impossible, to achieve without an efficient network of good roads that connects markets, centers of industry, and multi-modal transportation facilities. A 1994 study of five diverse U.S. companies demonstrates the importance of transportation to American businesses' daily operations. For instance, a reliable system of roads allows Saturn Corporation, which has its manufacturing and assembly plant in Spring Hill, TN, to utilize a just-in-time strategy. Saturn's JIT approach to its inventory control system, combined with the company's advanced communications system and a safe, well-functioning highway network, has allowed the company to reduce order cycle times and inventory costs by holding down in-plant inventory to an average of two days' stock.

A Minimum of $34 Billion Annually Can and Should be Available for Investment

If all funds coming into the Highway Trust Fund are spent in a timely manner, a $26 billion program could be sustained. A slow drawdown of the existing balances in the trust fund would increase revenues by approximately $2 billion annually, allowing a $28 billion program. Ensuring that all highway user fees are dedicated to transportation improvements, including the 4.3 cents now deposited in the General Fund, would make a $34 billion annual program possible. This level of investment would stop the deterioration of our highways and bridges, allowing our nation's economy to move forward, renewing our commitment to safer, more efficient, and less congested highways, and improving our quality of life. Another important benefit of a higher funding level is that it would diminish the contentious and divisive debate over funding formulas. We all support a better surface transportation system, and this issue is a barrier to achieving our common goals.

Given the tremendous economic and social benefits of highway investment, it is illogical to fail to spend the highway user fees collected to correct the many deficiencies of our highways and bridges. Although the fees paid into the Highway Trust Fund are sufficient to improve conditions and performance on the National Highway System and related roads, not enough of the funds are being spent to even maintain the status quo. The status quo itself is unacceptable. By the end of the 1997 fiscal year, the unspent balances in the Highway Trust Fund will exceed $22 billion. Extending the Administration's budget proposal for FY 1998, that figure could reach nearly $50 billion in just five more years. For many years the trucking industry has been a steadfast supporter of the user fee system. Support for that system and the Federal program will erode if the balances in the Trust Fund continue to rise or if user fees are not invested in highways in a timely manner. We urge the committee to continue to heighten efforts to restore trust in the Highway Trust Fund, ensuring that the maximum amount is available for investment.

III. ATA's Proposal For Highway Reauthorization

ATA's proposal is a comprehensive plan which ensures that the national interest in a safe and efficient system of highways is preserved. We propose an annual $34 billion total funding level, which includes $25 billion for a Core Highway Program and $9 billion for a highly flexible State Block Grant Program (See appendix). We propose to invest highway user fees in a targeted set of programs which serve important national needs. Our proposal creates a flexible state Block Grant and ensures that the Trust Fund balances are spent down.

The Core Highway Program would include the NHS, a Bridge Program, a Federal Lands Program, a national highway safety program, and a Research & Technology Activity program. Investment in these areas ensures the preservation and improvement of a seamless national highway network that benefits all Americans. Funding distribution, therefore, would be based on national need, rather than on contributions to the Trust Fund.

ATA's proposed Block Grant Program gives states and localities the flexibility to select and fund highway and transit capital projects, as well as congestion mitigation and air quality projects. This flexibility allows them to address their unique needs in a manner best suited to their circumstances. Funds now available for suballocation would continue in the same proportion. Funds in the block grant would be distributed to states in exactly the same proportion as the dollars are collected from the states, so that there would not be any donors or donees.

IV. The Administration's Proposal is Inadequate and Unacceptable

During Secretary Slater's most recent appearance before this committee, he declared that ISTEA's successor must be judged by how it affects "the lives of our people, the health of our economy, and the welfare of our Nation..." I am sorry to say that the Administration's proposal for reauthorization, which is called NEXTEA, will fall far short of meeting these laudatory criteria.

The Administration's FY 1998 $22.7 billion allocation to the Highway Account falls over $3 billion short of where it could be under current revenue circumstances and is $11 billion short of where it would be if the Administration made changes that restored the honesty and integrity of the user fee system. In addition, any potential for reducing highway infrastructure deterioration is obliterated by programmatic changes that further dilute highway investment. Instead of targeting limited funds where they can most effectively address national highway needs, NEXTEA diverts an additional 25 percent of user fees to programs, such as the Congestion Mitigation and Air Quality Program (CMAQ) and Transportation Enhancements Program (TEP), that will not reduce highway fatalities.

NEXTEA also includes funding for passenger and freight rail facilities and operations. ATA opposes funding Amtrak out of the Highway Account because Amtrak expenditures do not measurably help reduce highway fatalities. Moreover, Federal decisions to allocate funds to Amtrak create a new class of donors and donees-- with most of the states being losers.

Some short line railroads are proposing to fund private rail freight projects out of the highway account. The trucking industry has to pay for our vehicles, terminals and operating costs out of our pockets. Our competitors should not have their private costs paid out of the highway account. This is especially true since truckers typically earn two cents on the revenue dollar while railroads often earn 15 cents or more. If the railroads want public funding, they also should pay a reasonable fuels tax and create a railroad account. Each one cent would raise around $30 million dollars. We do not believe that these proposals have the support of the major railroads.

Finally, the administration has proposed turning its back on 40 years of history by allowing tolls on the Interstate Highway System. Charging highway users to rent what we have already bought is a travesty. We are already paying more in highway taxes than we get back. Moreover, putting tolls on free Interstate Highways will force cars to slow from freeway speed, adding to safety, congestion, air pollution, and noise problems. ATA urges the committee to adamantly oppose any effort to impose tolls on Interstates for which we have already paid.

V. Other Reforms Will Increase Safety and Productivity

Several other important issues are likely to be subject for discussion during reauthorization, and I will touch on them briefly. The freight planning process which ISTEA set in motion needs to be improved. Many Metropolitan Planning Organizations have not fully addressed the essential freight planning needs that are important to freight mobility both in their own communities and as a link in the national supply chain. Current hours of service regulations, many of which have been on the books since the 1930s, are too inflexible and outdated. While we are not sure at this point whether a legislative or regulatory approach is preferable, a new option should be developed that improves highway safety, as well as industry productivity and efficiency. Truck drivers suffered inequitably from the cutback in the meal deduction, and this should be corrected. Finally, states should be given more flexibility to determine the most appropriate regulations governing the size and weight of trucks on highways within their jurisdiction.

VI. Conclusion

A few weeks ago, Deputy Transportation Secretary Mort Downey told this committee that, given current investment levels and travel growth projections, 9,500 more people will die on our nation's highways in 2005 than in 1996. In the face of such a grim statistic, the Administration offers a proposal that would decrease funding for investment in highways and increase diversion of highway user fee revenues to non-highway purposes, further straining the highway system's ability to safely transport people and goods. This, despite the fact that sufficient revenue is readily available. ATA's proposal makes targeted, nationally significant investments which would both improve highway safety and spur economic growth. It also gives states and localities unprecedented resources and flexibility to address their unique surface transportation needs in the most creative and effective manner possible.

I look forward to working with the members of this committee as you strive to meet the many challenges ahead. I hope ATA's proposal can serve as a basis for discussion during reauthorization of the highway program. Thank you.


January 10, 1997 Funding Comparison ISTEA vs ATA PROPOSAL
ISTEA (billions) ATA PROPOSAL (billions)
CORE Program: 10.9 25
NHS and Interstate Maintenance 6.5 19
Bridge 2.8 4
Federal Lands .5 .5
Safety .7 1
R&D .4 .5
State Block Grant Elements: 6.06 9
STP (non-NHS) 2.5*
Transit Section 3 and 9 Capital 3.56**
Other Programs: 6.988 Folded into the State Block Grant
CMAQ 1.029
STP (NHS), State-built Interstates, Demonstration Projects, Funding Equity, miscellaneous small accounts. 5.959
Total FY 1997 Program Level 23.948 Annual Program Level 34

*$1.69 billion in STP funding was obligated to be spent on the NHS in FY 1995 and $4.09 billion was authorized. In FY 1997, it is assumed the same proportion of the FY 95 authorization will be obligated to the NHS.

**FY 1997 Appropriations Act, liquidation of the Highway Trust Fund contract authority only.