November 4, 1997

Good morning. I am Paul Patton, Governor of Kentucky, and I am here today to present the views of the National Governors' Association on the critical issue of transportation funding. With me is Raymond Scheppach, Executive Director of the National Governors' Association. I would like to thank the Chairman, the Ranking Member, and the other Senators of this subcommittee for inviting me to testify on the potential impact of the current lapse in the authorization of the federal highway, transit and highway safety programs. I would especially like to thank the many Senators who have worked hard to increase federal transportation investment. Governors stand ready to work with you next year to ensure that transportation is fully funded.

Transportation is Critical to the Economy

Before I describe the impact on states of a continued lapse in highway, transit, and highway safety programs, I would like to take a moment to outline the Governors' position on transportation funding. Transportation is critical to the productivity of the U.S. economy and the competitiveness of our businesses. Governors have heard a clear, consistent message from all types of businesses -- large and small, manufacturers, retailers, and farmers. These businesses are investing billions of dollars in just-in-time production and distribution to speed their products to market. They fully understand that time is money. They can, through good management, control the cost of capital and the productivity of labor.

The public transportation systems are just as much a part of the system of production as labor and capital, yet businesses are powerless to remove congestion caused by a transportation facility whose use has exceeded its capacity. Businesses and individual citizens are paying the user fees necessary to build a much improved system but the system is not being improved. In fact, we are falling behind.

These businesses and individuals are relying on us in government to make sure the roads, ports, and airports are in good condition and free of congestion. We cannot let them down, not this year, not next year, and not in the years ahead. We must fully fund our transportation programs. Today's levels of transportation funding are inadequate to maintain current conditions. There is an $18 billion annual gap between current transportation spending by all levels of government and that required simply to maintain the current performance of our nation's highways, bridges and public transit systems.

As a percentage of Gross Domestic Product (GDP), federal transportation investment has declined from nearly 0.5% in 1977 to less than 0.3% today. This decline would continue through 2002 under the spending assumptions in the 1998 congressional budget resolution. At the same time that federal investment is declining, revenues from the federal gas tax have been rising. These dedicated transportation revenues will grow rapidly over the next several years, and are sufficient to support significant increases in federal transportation spending. If current revenue and spending projections hold true, the unspent balance in the Highway Trust Fund, which today stands at $24 billion, would increase to $90 billion by 2003.

Disinvesting in our national transportation system while the user-tax revenues are dramatically increasing will undermine the moral and legal commitment on which these taxes are based.

If we do not increase our federal investment in transportation the result will be deteriorating roads, increased congestion, lower economic productivity and profitability of U.S. firms, loss of employment for U.S. workers, and ultimately lower tax revenues to federal, state, and local governments.

Congress must pass a short-term funding mechanism prior to adjournment The importance of transportation to our growing economy is the reason the National Governors' Association has made it a priority to urge the Congress to significantly increase the federal investment in our nation's transportation infrastructure. To that end, Governors would like Congress to pass a multi-year highway, transit and highway safety authorization bill where contract authority is set equal to the revenues coming into the trust fund.

It does not appear that Congress has sufficient time remaining in this legislative session to accomplish this goal. Therefore, Governors respectfully request that Congress pass short-term legislation which continues funding for highway, transit and safety programs. If the current lapse in authorization continues into 1998 the impacts on state transportation programs could be severe. This is a serious concern for Governors from all regions of the country, regardless of party affiliation.

In the past week many Governors have written to Congress in support of short term funding for transportation programs. This morning NGA delivered the following letter, signed by 39 of my fellow Governors, to Senate Majority Leader Trent Lott and Minority Leader Thomas Daschle. I would like to share copies of the letter with members of this subcommittee. The text of the letter reads, in its entirety: "It is imperative for the Senate to consider and pass short-term legislation providing funding for highway, transit, and safety programs and to complete a conference on that legislation with the House of Representatives before adjourning for the year. Such legislation will minimize the interruption in funding to state and local governments, and would avoid the disastrous effects that a several-month lapse in authorization would have on many states' transportation programs."

The Potential Impact of a Continued Lapse in Transportation Funding

Let me now turn to the impact on state transportation programs of a continued lapse in authorization of these federal programs. The impact of any lapse will vary among states and will greatly depend on the length of time without a reauthorization. While a few larger states would not be significantly affected by a delay in authorization well into 1998, such an extended lapse would have a severe impact on most states' transportation programs, resulting in:

* Delays in thousands of highway and transit construction projects valued in the billions of dollars;

* Increased project costs as delayed projects are extended into two construction seasons;

* Layoffs among truck and bus safety inspectors, and reduced enforcement of impaired driving laws; and

* Potential increased accident losses.

The American Association of State Highway and Transportation Officials (AASHTO) conducted a recent survey to determine the impact on state transportation programs of a lapse in authorization of the federal highway program. AASHTO found that in the first quarter of the federal fiscal year nearly two thousand projects nationwide, valued at over $3 billion, could be affected. If the lapse continued through the second quarter of the year an additional 2,926 projects, valued at $4.4 billion could be affected. If the lapse in authorization continued through the third quarter of the fiscal year an additional 2,729 projects valued at $3.8 billion could be affected. Finally, if the lapse continued for the entire fiscal year yet another 2,130 projects valued at over $4 billion could be affected.

Based on the U.S. Department of Transportation's estimate that $1 billion of highway spending supports 42,000 jobs, more than 126,000 jobs could be lost during the first quarter of the year alone. More job losses would result from a lapse beyond December 31 of this year.

Highway and Truck Safety

Highway and truck safety programs have already been affected by the current lapse in authorization, as states have begun to curtail truck and bus inspections and impaired driving enforcement. Truck and bus safety and hazardous material inspection programs will come to a complete halt in most states by the end of this calendar year. A lapse in authorization through the end of March 1998 would result in 500,000 fewer roadside truck inspections nationwide. If highway safety programs are not reauthorized soon states will begin to lay off personnel, and drunk driving and speed enforcement will be jeopardized during a critical time of the year, Thanksgiving to New Year's Eve.

Individual examples of the impact of a lapse on state safety programs include:

* In my own state of Kentucky, all new highway safety projects are currently on hold. There is no funding for overtime enforcement of impaired driving, occupant protection, speed and other safety laws.

* The Nevada State Highway Safety Office has halted all highway safety programs as a result of the funding lapse, and will have to close down in early 1998 if no additional funds are provided.

* In Florida forty highway safety contractors have not been paid, none of the planned projects for fiscal 1998 are funded, and staffs of several highway safety contractors have been working the past month without pay.

Public Transit

Nearly $4.3 billion of federal transit funding for fiscal 1998 will be unavailable to transit agencies unless an authorization is enacted. A continued lapse in authorization would force transit agencies to defer new construction, the purchase of new equipment, and maintenance of existing equipment, and most transit agencies would not be able to fund new capital projects. Rural and smaller transit agencies will be especially hard hit, as they may not have adequate funding to operate their systems beyond December of this year, forcing reductions in service.

* In Kentucky, our rural transit agencies are already cutting back service. Particularly vulnerable are the new welfare-to-work services provided by our rural transit operators.

* New York City is already experiencing a detrimental impact on its Elderly and Persons with Disabilities transit program.

* In St. Louis, Missouri, funding for the expansion of that city's light rail system will be jeopardized by a continued lapse in the transit authorization.

Highway Construction

Many states will experience minimal impacts on their highway construction programs through the end of 1997. However, if no authorization is provided by early 1998, state transportation agencies will be forced to delay planning and bidding activities. Some Northern states could face the loss of an entire construction season if bid advertising is delayed beyond December of this year. Here are a few examples of the impact on individual states.

* Kentucky's unobligated balance of $134 million is equal to much less than half of our fiscal 1998 federal highway funding. If the current lapse in the highway program continues several months into 1998 many federal-aid highway projects will be postponed, including a $169 million modernization and safety improvement to US 119 in Pike County, as well as widening and safety improvements to Interstate 75 south of Cincinnati and the widening of the Paris Pike between Lexington and Paris.

* Connecticut has already suspended advertising of all new highway projects, and eight previously advertised projects totaling $52 million cannot be awarded until authorizing legislation is passed.

* Reconstruction of the Stevenson Expressway (I-15) in Chicago, Illinois may have to be delayed a full year if a reauthorization bill is not enacted by December.

* In Iowa, failure to reauthorize the federal aid highway program has already caused that state's transportation director to postpone by 30 days his decision to proceed with the February contract letting, while the decision to proceed with the March letting has been postponed indefinitely.

* In Nevada the planned widening of Interstate 15 in Las Vegas to provide congestion relief, and maintenance of Interstate 80 could be delayed or postponed if the current lapse continues well into 1998.

* A lapse in authorization into 1998 may force Oklahoma to delay or postpone reconstruction of several regionally significant congestion relief projects including: US-281 from Interstate 40 North, US-283 North of Altus, and state highway 99 from state highway 9 North.

* Oregon's unobligated balance of $91 million is $26 million short of the federal funding needed to carry out the highway projects scheduled through March of 1998. More immediate will be the postponement of eight local bridge projects totaling $3.4 million. Conclusion

In closing, I urge you again to enact short-term legislation providing funding for highway, transit, and safety programs. While I admire the dedication and commitment of the members of this committee to pass a full ISTEA reauthorization in early 1998, I must caution you that the effectiveness of state highway, transit and safety programs must not rest on that commitment alone. As Governors of the states we understand the difficulty and unavoidable delays of the legislative process, but as the executives responsible for the nation's roads, we are very concerned about the failure of the Congress to act, and the impact this inaction would have on such a vital government service.

We ask for a long term commitment to full funding for the national transportation program as quickly as possible, but until that program can be enacted we ask for short-term legislation providing funding for highway, transit, and safety programs. This interim program will not prejudice the outcome of the debate over funding formulas or program structure. But failure to enact a short-term funding mechanism will jeopardize program efficiency, hinder timely project development, unnecessarily increase the cost of repairing our roads, bridges and transit systems, and perhaps cost the economy tens of thousands of jobs.

Mr. Chairman, we cannot now afford these costs. I will be happy to answer any questions.