[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HOW THE FINANCIAL STATUS OF THE HIGHWAY
TRUST FUND IMPACTS
SURFACE TRANSPORTATION PROGRAMS
=======================================================================
(113-31)
HEARING
BEFORE THE
SUBCOMMITTEE ON
HIGHWAYS AND TRANSIT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JULY 23, 2013
__________
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina ELEANOR HOLMES NORTON, District of
JOHN J. DUNCAN, Jr., Tennessee, Columbia
Vice Chair JERROLD NADLER, New York
JOHN L. MICA, Florida CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana STEVE COHEN, Tennessee
BOB GIBBS, Ohio ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York JOHN GARAMENDI, California
DANIEL WEBSTER, Florida ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida JANICE HAHN, California
JEFF DENHAM, California RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky DINA TITUS, Nevada
STEVE DAINES, Montana SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
(ii)
Subcommittee on Highways and Transit
THOMAS E. PETRI, Wisconsin, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERROLD NADLER, New York
JOHN J. DUNCAN, Jr., Tennessee EDDIE BERNICE JOHNSON, Texas
JOHN L. MICA, Florida MICHAEL E. CAPUANO, Massachusetts
FRANK A. LoBIONDO, New Jersey MICHAEL H. MICHAUD, Maine
GARY G. MILLER, California GRACE F. NAPOLITANO, California
SAM GRAVES, Missouri TIMOTHY J. WALZ, Minnesota
SHELLEY MOORE CAPITO, West Virginia STEVE COHEN, Tennessee
DUNCAN HUNTER, California ALBIO SIRES, New Jersey
ERIC A. ``RICK'' CRAWFORD, Arkansas DONNA F. EDWARDS, Maryland
LOU BARLETTA, Pennsylvania ANDRE CARSON, Indiana
BLAKE FARENTHOLD, Texas JANICE HAHN, California
LARRY BUCSHON, Indiana RICHARD M. NOLAN, Minnesota
BOB GIBBS, Ohio ANN KIRKPATRICK, Arizona
RICHARD L. HANNA, New York DINA TITUS, Nevada
STEVE SOUTHERLAND, II, Florida SEAN PATRICK MALONEY, New York
REID J. RIBBLE, Wisconsin, Vice ELIZABETH H. ESTY, Connecticut
Chair LOIS FRANKEL, Florida
STEVE DAINES, Montana CHERI BUSTOS, Illinois
TOM RICE, South Carolina NICK J. RAHALL, II, West Virginia
MARKWAYNE MULLIN, Oklahoma (Ex Officio)
ROGER WILLIAMS, Texas
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
BILL SHUSTER, Pennsylvania (Ex
Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Kim P. Cawley, Chief, Natural and Physical Resources Cost
Estimates Unit, Congressional Budget Office.................... 4
Hon. Polly Trottenberg, Under Secretary for Policy, U.S.
Department of Transportation................................... 4
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Hon. Elizabeth H. Esty, of Connecticut........................... 34
Hon. Nick J. Rahall II, of West Virginia......................... 35
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Kim P. Cawley.................................................... 38
Hon. Polly Trottenberg........................................... 45
SUBMISSIONS FOR THE RECORD
American Society of Civil Engineers, written statement........... 52
Commercial Vehicle Safety Alliance, written statement............ 57
Gregory M. Scott, President and Chief Executive Officer, Portland
Cement Association, written statement.......................... 61
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
HOW THE FINANCIAL STATUS OF THE
HIGHWAY TRUST FUND IMPACTS
SURFACE TRANSPORTATION PROGRAMS
----------
TUESDAY, JULY 23, 2013
House of Representatives,
Subcommittee on Highways and Transit,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2167, Rayburn House Office Building, Hon. Thomas E. Petri
(Chairman of the subcommittee) presiding.
Mr. Petri. The subcommittee will come to order. Today's
hearing will focus on the financial status of the Highway Trust
Fund and discuss the impact its pending insolvency will have on
our surface transportation programs. Federal highway transit
and highway safety programs are administered by the U.S.
Department of Transportation in partnership with States, public
transit agencies and with localities.
While the U.S. Department of Transportation provides
financial and technical assistance, the grantees are
responsible for implementing the programs on a day-to-day
basis. Federal share of the programs are funded almost entirely
from user fees collected and deposited into the Highway Trust
Fund. When the Highway Trust Fund was established in 1956, the
excise tax rates for fuel were 3 cents per gallon. Since then,
the tax rate and structure have been revised several times.
Currently, the tax rate of 18.4 cents per gallon is levied
on gasoline and 24.4 cents a gallon on diesel fuel. Fuel taxes
represent approximately 90 percent of net revenue into the
trust fund, but other sources include taxes on tires and heavy
trucks.
A separate mass transit account within the Highway Trust
Fund was created in 1982, which receives a portion of the fuel
taxes collected. In 2008, for the first time, the Highway Trust
Fund had insufficient revenues and cash balances to meet its
obligations. As a result, the Congress authorized an $8 billion
cash infusion from the general fund of the Treasury into the
Highway Trust Fund. By the end of 2014, a total of $54 billion
will have been transferred from the general fund into the
Highway Trust Fund to maintain its solvency. This includes an
$18.8 billion transfer authorized by Congress last year in MAP-
21.
As the purchasing power of the Federal fuel taxes continues
to decline year to year and vehicles become more fuel
efficient, current spending levels will continue to outpace the
money collected from fuel taxes. Over time, the gap will only
widen. MAP-21 is set to expire on September 30th, 2014, and
current projections show that the trust fund will, once again,
become insolvent and unable to meet its obligation starting in
budget year 2015. Without changes in spending levels or
additional revenue, the trust fund will continue to be unable
to meet its obligations over the 10-year budget window.
Today, the committee will receive testimony from the
Congressional Budget Office outlining the financial status of
the Highway Trust Fund and its pending insolvency. In addition,
we will hear how the U.S. Department of Transportation and its
partners would be impacted if and when the Highway Trust Fund
can no longer meet its commitments. Many of our Members were
not in Congress when previous funding shortfalls were
addressed, and it is important that all of us understand the
fiscal reality we face and the measures this department will
need to take. So I look forward to hearing from our witnesses
and call on the ranking member of the full committee, Mr.
Rahall of West Virginia, for his statement.
Mr. Rahall. Thank you, Mr. Chairman. I appreciate your
calling today's hearing. The sobering testimony that our
witnesses have already submitted should be a wakeup call for
Congress and the administration to step up to address the
looming crisis in highway and transit financing. MAP-21
provided 2 years of relatively flat funding. While this gave
State departments of transportation some assurances to move
forward with projects, it simply did not allow the investments
necessary to maintain our infrastructure, let alone build what
we need to compete in the global economy. Yet even this
insufficient amount of investment is significantly greater than
what the Highway Trust Fund can sustain.
This hearing makes clear that in fiscal year 2015, the
Highway Trust Fund will go off a cliff. Stopping this crisis
facing the Highway Trust Fund will require action and difficult
choices to address this shortfall. While Washington has avoided
the difficult choices, many States have not. States are
increasingly coming up with their own plans for raising
additional transportation revenues. Over the legislative years
2010 through 2013, seven States enacted significant
transportation revenue raising measures. This includes a
diverse group of States taking steps to increase transportation
and infrastructure investment by generating additional revenue
from a variety of sources.
For instance, in February this year, Wyoming raised its tax
on gas and diesel fuels by a whopping 10 cents per gallon, from
14 cents to 24 cents, and this is a fairly conservative State,
as we all know.
Maryland's $4.4 billion 6-year package enacted this past
March includes indexing the gas tax to inflation and adding a
3-percent sales tax paid at the pump. Prior to enactment, the
State motor fuel gas was 23.5 cents per gallon for gasoline. It
is estimated that under the package, that rate may rise to 43.7
cents per gallon by fiscal year 2017. And Virginia's $3.5
billion 5-year package enacted this past April completely
eliminated the State cents per mile gas tax and adds a
wholesale tax on gasoline and diesel fuel.
Each of these States was confronted with different
challenges, yet each stepped up to begin addressing their
infrastructure investment deficits and made the hard choices on
how best to do that.
But the message we should take from this is not that the
States can take care of their situation on their own. Yes, the
States must and are stepping up, but as we on this committee
know very well, there is a significant Federal role necessary
in surface transportation. Unfortunately, over the past several
years, we have neglected our responsibilities in this regard.
That concludes my opening statement.
I thank you for having this hearing again, Mr. Chairman.
Mr. Petri. Thank you. I now recognize the chairman of the
full committee, Mr. Shuster.
Mr. Shuster. I thank the chairman, thank you for holding
this hearing and thank the witnesses for being here today. The
chairman and the ranking member certainly laid out the
landscape that we have to--we have to face, and there is a
problem. I think we all know that. We have got to find
solutions to it. Money is not the only solution. It certainly
is a big part of it, but also, we have to continue to make sure
we are streamlining, getting these projects moving faster.
Instead of a major project taking 15 years, we need to be able
to work to cut that time in half. That significant savings and
inflation savings alone, you would save on some of these
massive projects millions and millions of dollars.
So, again, we need to continue to streamline. I know that
MAP-21 was passed last year. I don't believe they have
implemented all the streamlining that we put into MAP-21. I
think that is going to be of some assistance, but again, we
have got to figure out how to fund it. We need to consider all
the--all the sources we possibly can in the ways we have done
it in the past and new ways. I know that several Members have
come up with innovative ideas that we need to take a look at. I
don't know that they solve the entire problem, but they
certainly add a tool to the toolbox to help us with this
significant challenge that we face.
And as the ranking member pointed out, there are a number
of States that are addressing this. I don't know if he
mentioned Arkansas, but Arkansas, the citizens of Arkansas, 81
percent, I was told, 81 percent of the citizens of Arkansas
voted to increase their sales tax by half a percent dedicated
to funding, so that the people of Arkansas, I think the people
of States all across this country know that we have a problem.
It is the--it is the veins that carry commerce, the blood life,
the blood of commerce is on those highways and byways and
bridges, and we need to make sure that we continue to make the
improvements and increase the capacity where necessary so that
we can continue to be competitive in the world and create jobs.
This is about jobs. Not just the jobs, certainly if we
build a significant road project, there are jobs, but I am
talking about the jobs that come after that, the 10-, the 20-,
the 30-year jobs that are created by the efficiencies and that
come about by having a first-class, world-class transportation
system. So I look forward to working with all my colleagues and
all of you here today listening in. It is going to take a big
effort, not just by us on the committee and Congress, but a
grassroots effort across America, making sure the American
people, like the folks in Arkansas, obviously, came to the
conclusion that something has to be done. But I look forward to
working with all of you and the stakeholders to make sure that
message gets out, make sure the American people are pounding on
our doors saying we have a problem, we have to face it, and we
have to find a solution to solve it.
So again, thank you, Mr. Chairman, for having this hearing
and thank our witnesses again.
Mr. Petri. Thank you. And I thank our panel for the written
statements that were submitted and would invite you to
summarize them in approximately 5 minutes. Our witnesses today
are Mr. Kim P. Cawley, who is chief, natural and physical
resources cost estimates unit of the Congressional Budget
Office, and the Honorable Polly Trottenberg, Under Secretary
for Policy of the U.S. Department of Transportation. Welcome to
both of you, and Mr. Cawley, would you like to begin?
TESTIMONY OF KIM P. CAWLEY, CHIEF, NATURAL AND PHYSICAL
RESOURCES COST ESTIMATES UNIT, CONGRESSIONAL BUDGET OFFICE; AND
HON. POLLY TROTTENBERG, UNDER SECRETARY FOR POLICY, U.S.
DEPARTMENT OF TRANSPORTATION
Mr. Cawley. Thank you, Mr. Chairman, members of the
subcommittee. I appreciate the invitation to testify on the
Congressional Budget Office's projections for the Highway Trust
Fund.
Mr. Shuster. Will you bring your mic closer. Thank you.
Mr. Cawley. The authority to obligate new funds from the
trust fund expires at the end of fiscal 2014, and the authority
to collect most of the taxes dedicated to the trust fund
expires in 2016. But all of CBO's projections assume that laws
are enacted to enable the current trends and trust fund
spending in revenues to continue. Specifically, CBO's
projections assume that spending authority continues after 2014
at roughly $50 billion per year and grows at the rate of
anticipated inflation and that revenues continue to be
collected at current rates after 2016 yielding about $40
billion a year.
I think those two amounts, Fifty billion dollars in
spending and forty billion dollars in receipts, illustrate why
continuing on the current path of trust fund spending and
revenues is unsustainable. CBO's projections indicate that in
2015, the trust fund will have insufficient amounts to meet all
of its obligations. That means that at some point in 2015, the
Department of Transportation will be unable to reimburse States
for all of the Federal highway and mass transit expenses that
they have already incurred.
How States will respond to that situation is really
unknown. They might patiently wait to be reimbursed by the
Federal Government, or they might slow down their construction
and maintenance programs, or they could even accelerate their
spending in an attempt to receive reimbursements earlier than
other States. It is clear, however, that without some change in
policy, there won't be enough money to go around.
This is not a new situation. The Congress has faced this
problem before. For over a decade, trust fund spending has
outpaced revenues. In the past, to avoid any shortfalls in
making reimbursements to the States, the Congress has
authorized nearly $55 billion to be transferred from general
fund for the Treasury to the Highway Trust Fund over the 2008
to 2014 period.
This morning I tried not to repeat every number in my
written statement, but I would like to conclude by focusing on
just three more figures that illustrate the size of the problem
that Congress faces when MAP-21 expires if the trust fund is
going to avoid the shortfall that we have been discussing.
To avoid the projected shortfall we see in 2015, the
Congress could eliminate all highway and mass transit spending
in 2015 or raise the tax on motor fuels by about 10 cents per
gallon, or transfer about $15 billion from the general fund to
the Highway Trust Fund. Of course, those three measures to
control trust fund balances could be used in any combination as
well. The additional measures needed to maintain adequate
balances in the trust fund beyond 2015 are outlined in my
written statement, and I would like to stop here and would be
happy to answer any questions about CBO's trust fund
projections.
Mr. Petri. Thank you.
Ms. Trottenberg.
Ms. Trottenberg. Thank you, Chairman Petri, Chairman
Shuster, Ranking Member Rahall, members of the subcommittee,
thank you for the opportunity to appear before you today on
behalf of the Obama administration and Secretary Anthony Foxx
to discuss the future of the Highway Trust Fund.
As the chairman noted, for nearly five decades, we had a
very successful model for funding transportation that served
the Nation well, but in recent years, the number of trends have
converged such that the authorized spending levels have greatly
outpaced available funds. As the chairman mentioned, since
2008, we have relied on periodic infusions of general funds to
cover program needs, and at times, the trust fund has come
perilously close to insolvency. I think we can all agree, in
the transportation community across the country right now,
there is an agreement that a more permanent solution is needed.
There has been, as many of you know, a long tradition of
bipartisan agreement when it comes to transportation and
revenue issues. In 1982, Congress, working with then-President
Reagan, raised the gas tax to 9 cents per gallon and dedicated
a portion of those revenues to fund mass transit. In 1990 and
1993, Congress, working respectively with President George H.W.
Bush and President Bill Clinton, raised the gas tax to its
current level of 18.4 cents, with much of the initial increase
going for deficit reduction. After that, the gas tax has not
been raised again for 20 years.
In late fiscal year 2008, the Department, for the first
time, announced that there is insufficient cash in the Highway
Trust Fund to fully cover payments due to States. The Federal
Highway Administration ceased the practice that it had at that
time of paying twice daily bills to State DOTs and moved to
paying them weekly. Then-Transportation Secretary Mary Peters
asked Congress for additional funds to restore solvency of the
trust fund, and Congress subsequently transferred $8 billion in
general funds.
While this resolved the immediate shortfall, it did not
resolve the long-term structural deficit. And as we heard here
by the year 2014, the Highway Trust Fund will be nearly
depleted again and Congress will have transferred, over the
course of the recent years, $54 billion in general funds to
keep the program afloat.
Two fundamental shifts have occurred that are projected to
continue the shortfall for the foreseeable future. First, the
Obama administration is proud of our accomplishments in raising
CAFE standards, but those improvements in fuel efficiency, 10
percent over the last 24 years for light-duty vehicles have
reduced contributions to the trust fund. Second, per capita
vehicle miles traveled, which increased by large percentages
for decades in the United States, peaked in 2005 and have been
falling ever since, particularly as the millennial generation
and baby boomers are driving less.
In addition, highway and transit construction, labor, and
material costs have increased by around 70 percent from 1993 to
2013. So as we mentioned here, by the end of fiscal year 2014,
DOT estimates that the highway and mass transit account cash
balances will be $4.6 billion and $300 million respectively,
and we will once again be facing a shortfall.
Although the exact response would be depending on the
specific situation, in the case of a shortfall, the Federal
Highway Administration would implement established cash
management procedures, Federal Highways would only be able to
cover some fraction of State DOT reimbursement requests, and
that would clearly affect States' abilities to invest in
infrastructure, including critical, safety, and state-of-good-
repair projects. Likewise, the Federal Transit Administration
would have to implement cash management procedures that would
slow down payments to grantees in order to stretch out the
available cash on hand. Many of the Federal Transit
Administration's 1,300 rural transit providers would be
especially devastated by a shortfall in funding.
The administration has consistently supported
infrastructure investment, including the President's $50
billion ``fix-it-first'' initiative to create jobs for economic
investment and rebuild our transportation network. The
administration is also leveraging hundreds of millions of
dollars of private investment through our TIGER, TIFIA, RIFF,
and private activity bond programs. But we are also focused on
how we can bring more productivity and efficiency out of our
existing system and continue to perform--improve its
performance at current spending levels.
We are working to streamline project delivery, as the
chairman mentioned, program management, and make better use of
collaboration, integration, technology, and operational
improvements. Ultimately, we know that any resources provided
to the Highway Trust Fund are paid for by the American people,
and we owe them the best value we can deliver for those tax
dollars.
Over the past 5 years, a variety of solutions have been
proposed to address the long-term use of our surface
transportation programs, but clearly none have yet been
universally embraced. The Obama administration looks forward to
working with Congress and transportation stakeholders
throughout the country to find a bipartisan solution to this
urgent challenge. I thank the committee and am happy to answer
any questions you have.
Mr. Petri. Thank you.
And we appreciate both of you helping us address this. It
is not necessarily a pleasant task, but it is an important task
because we ask for these jobs, so we are going to have to deal
with it as responsibly as we can.
In that connection, does the administration have any
position on what we should be doing about the default as we
move forward to fund our transportation needs?
Ms. Trottenberg. We have proposed in our budget using the
funds available from the drawdown of our commitments in
Afghanistan and Iraq to help fund the program in the short
term. It has been proposed in our budget for the last few
years, and it would enable us to not only continue the program
at current levels, but grow the program and fund a new rail
title as well.
Mr. Petri. So that would mean basically taking money that
would otherwise go into the general fund and using it to fill
in the shortfall in the Transportation Trust Fund for the next
few years?
Ms. Trottenberg. Yes.
Mr. Petri. And would that drawdown be anticipated to be
adequate to meet the----
Ms. Trottenberg. Yes. In fact, the drawdown actually
provides, my understanding, more revenue than would be needed
to continue the program and grow it. The administration, as I
mentioned in my testimony, is also looking at ways of getting
more private sector investors into our transportation program
and looking for ways we can run the program more efficiently,
both run it more efficiently at DOT, but also work with our
partners, State DOTs and transit agencies, so that we do
squeeze as much value as we can out of every dollar that we are
spending.
Mr. Petri. Could you sort of expand on the thinking of is
it because of historic low interest rates that it makes sense,
in your view, to borrow money for the next few years to pay for
the transportation investment necessary rather than doing this
maybe as a State search, and fund it upfront?
Ms. Trottenberg. At the moment, I think the thinking in our
budgets is as we reduce our overseas military commitment, it
makes sense to take a portion of those savings and invest them
in infrastructure here at home. There is, I think, the general
view right now that interest rates are low and it is a good
time to invest in infrastructure, and clearly the country has
some pretty profound infrastructure needs at the moment.
Mr. Petri. So, if we didn't do that, the money would be
used to reduce the deficit, but you feel it is a better
priority to fund transportation at this time with the borrowing
rather than the deficit reduction?
Ms. Trottenberg. I would say, Mr. Chairman, if you look at
the administration's overall budget proposal, a portion of
those funds would go to transportation infrastructure
investment. Overall, the budget proposal has a number of
suggestions on ways to also reduce the deficit. We do also
think that is a priority.
Mr. Petri. OK. Thank you very much.
Mr. Rahall.
Mr. Rahall. Thank you, Mr. Chairman. Let me just follow up
on the chairman's questions, Madam Secretary, in regard to the
cash management procedures both at FHWA and DOT. Based on your
current estimates, what is the timeline when you think that
this scaling back of reimbursements through our States will
take place?
Ms. Trottenberg. I want to preface my answer by saying
these estimates are a moving target. We revise them fairly
frequently. It can----
Mr. Rahall. Right.
Ms. Trottenberg [continuing]. Be very determined by
economic conditions, gas prices, et cetera, so you have to take
that with a grain of salt.
Mr. Rahall. Let me add also, how much notice would the
States be given?
Ms. Trottenberg. I think we learned in 2008 that we need
to, as soon as we start to get concerned with the cash balances
are going to run low, that we start to talk to States well in
advance so that States can have a sense of what might be coming
and they can plan as well, because obviously they need to think
about what a slowdown in cash disbursements would mean for
them.
As I testified, it looks to us, the rule of thumb has been
that you want to have in each account, in the highway account
and the mass transit account about a month's worth of potential
disbursements, which is, give or take, $4 billion in the
highway account, $1 billion in the mass transit account. And as
I testified, according to our estimates, which differ a bit
from CBO's, we will be down to $4.6 billion at the end of
fiscal year 2014 on the highway side, and for the transit
account, down to only $300 million.
As we start to get to the end of next fiscal year, we are
clearly going to need to start thinking about what the trust
fund looks like and talking to States about what might happen.
Mr. Rahall. Do you think the fear of waiting to get
reimbursed by the States will cause them to front load their
spending?
Ms. Trottenberg. It is a good question, and actually, it
turns out----
Mr. Rahall. Around the bank, so to speak?
Ms. Trottenberg. It turns out, in 2008, that is actually
not what happened. There was a concern that States would try
and quickly get to DOT for disbursements, but I think at that
time the States had confidence that Congress and the
administration were going to come together and plug up this
hole in the trust fund. Whether States would think so now, I
don't know.
Mr. Rahall. Good question. Let me ask you about the peace
dividend. You know, that sounds good, and that has been the
line from administration for quite some time, taking the
drawdown from expenses of two wars and spending it here at
home. It still requires congressional appropriating action,
does it not?
Ms. Trottenberg. Yes.
Mr. Rahall. Which means you are going to reduce defense
spending and then increase spending for the Department of
Transportation, and so you are still going to have that battle
here on Capitol Hill, are you not?
Ms. Trottenberg. I would think you would, yes. I would say,
Congressman Rahall, I think clearly, as you are hearing from
our testimony today, we have a big challenge here with what we
are going to do long term in the transportation program.
Mr. Rahall. And the peace dividend is not a long-term
solution. That is still a Band-Aid approach.
Ms. Trottenberg. And, I think, again, that is one idea that
we have put on the table. We know there are a lot of other
ideas here in Congress, and clearly, it is going to take the
work of a lot of the leaders here in Washington to come up with
a solution. It is not going to be an easy problem to fix for
sure.
Mr. Rahall. Thank you. Thank you, Mr. Chairman.
Mr. Petri. Mr. Shuster.
Mr. Shuster. Thank you. Just to follow up on Ranking Member
Rahall's question on the acceleration, the States. You don't
see any of that occurring now? I would think that maybe States,
based on when the shovel-ready projects, where other States are
going to be looking at this with the anticipation that we are
going to run out.
Ms. Trottenberg. The only thing I have seen so far, Mr.
Chairman, we have talked to a lot of State DOTs and transit
operators, and obviously they are all keenly following what is
happening here in Washington and wondering what the long-term
situation is going to be. This is one thing that we have often
talked about, States need to take a long time to plan these
projects. Big ones can take many years, and I do know that some
States are starting to look at what their long-term list of
projects is and think about, if we start to have a funding
shortfall, what might we postpone? I haven't heard yet that
they are thinking of accelerating, but that doesn't mean that
some of them aren't thinking of it.
Mr. Shuster. Right. Right. Mr. Cawley, the accuracy of the
projections over the past years on the Highway Trust Fund, is
it--have they been accurate or they been off or they----
Mr. Cawley. Well, CBO's projections, I think, have
certainly been close. We are rarely spot-on with the actuals. I
think, on the revenue side, there is some difficulty in
accurately predicting the change points, if you will, in the
economy. For example, the 2008 financial crisis is something we
certainly couldn't foresee, and that caused quite a change in
revenues, but our most recent estimates have been pretty
accurate.
Mr. Shuster. Is there any difference in the accuracy in the
highway account versus the transit account? Are they all pretty
close to what you project?
Mr. Cawley. I don't think there is a significant
difference. I know we have some technical differences with the
Department about the exact pace of spending for transit
activities in past obligations, but it is not too large.
Mr. Shuster. And Secretary Trottenberg, if we--if it is
significantly reduced, spending, radically cut during fiscal
year 2015, can you talk about the impacts it will have on our
ability to maintain and what the effects will be on the States?
Ms. Trottenberg. I think it is quite clear that the effects
would be dramatic. I think you will start to see, if we draw
close to what appears to be a bit of a crisis point, that State
DOTs and transit agencies will start to look at the list of
projects they have and potentially start to postpone some of
them.
One thing I would note for the committee is, and the
effects would be different for different States and different
transit agencies. As I mentioned in my testimony, particularly
for smaller States or districts or rural areas, they are
actually much more dependent on fairly frequent infusions of
Federal dollars, so if there is a slow down, a larger transit
system like in New York perhaps could float along for awhile,
but some of the smaller rural transit providers, they would run
out of money pretty quickly, so the effects will not be even
across the country.
Mr. Shuster. And you mentioned in your testimony, as I
mentioned in my statement about implementing the streamlining
in MAP-21. I know--I think that the chairman has had some
hearings on that, and can you sort of update us on where we
are?
Ms. Trottenberg. We are meeting the deadlines as we go
along. We have implemented the first categorical exclusion,
which was for projects, emergency projects, and existing right-
of-ways. I am happy to say we already got to exercise that
authority with the temporary replacement for the Skagit River
Bridge in Washington State, so I think that was a tremendous
success. We have out for comment now the categorical exclusions
for projects with minimal Federal dollars and projects within
existing right-of-way.
We are very excited about the provisions within MAP-21 and
they dovetail well with some of the things the Department has
already been pursuing through our Every Day Counts initiative
where we have really been trying to look for ways to speed up
the environmental process, make the reviews concurrent, and
work with all our sister Federal agencies. We thank Congress
for those provisions, and I can assure you Federal Highways and
Federal Transit are implementing them aggressively.
Mr. Shuster. And in Sandy, the money that went out to the
Sandy, wasn't there some--some of MAP-21's streamline, were you
able to utilize that to get money out much quicker?
Ms. Trottenberg. I think the emergency provision in MAP-21
is going to prove very useful all over the country whenever,
unfortunately, disaster strikes.
Mr. Shuster. Thank you. Yield back.
Mr. Petri. Representative Edwards.
Ms. Edwards. Thank you, Mr. Chairman, and thank to our
witnesses today. I think this is the thing that we just
struggle with. I mean, I happen to be from the great State of
Maryland, which I think did something both spectacular and
really politically difficult over this last session of our
general assembly in terms of spending--that as a State, we have
State transportation needs that are not being met and dwindling
ability to expect that the Federal Government is going to be
the partner that it needs to be, particularly for some of these
large projects. And so, one of the ways that we wrestled with
that, of course, was around the gas tax. Still, not without
controversy. Although, as I go around my district and talk to
people about this, you know, the--you know, some of the folks
who are understandably angry because they seem to be paying
more and more at the pump, but these are the same people who
have great complaints about the--about our infrastructure and
whether we are able to meet those needs adequately.
And I think many of us have just come to the conclusion
that in the same way that we had to absorb the fact that 20
years ago we paid 50 cents for a candy bar, that same candy bar
costs $1.25 now.
And I look at, you know, the gas tax as, you know, a
revenue source, although not one that we can count on for the
future for reasons that you have described in your testimony.
And I wonder if there is some hybrid solution--for example,
implementing a CPI, which we seem to do on just about
everything, and adjusting that CPI so that it is, in effect--I
mean, as I think, Mr. Cawley, in your testimony, I think you
pointed out that, had that consumer price index been in place
at 18.4 cents, it would be about 29 cents today.
And I am not saying doing that, but, you know, perhaps even
implementing a CPI and, you know, from day one, from today
going forward, and then some sort of temporary, one-time
adjustment so that we could bring the fund up to some
acceptable point. But at least we would have, then, that
structure in place for the future rather than having to
continue to revisit this question and spending dollars today
that don't hold the same value as a dollar would, you know, a
year or 10 years from now.
And so I wonder if you could talk to us about just, you
know, explore the alternatives. I know we are afraid to mention
that sometimes on this committee, but it seems to me a
realistic approach to try to deal with what is a truly
structural problem that is impacting job creation and impacting
our ability to meet our infrastructure needs.
Ms. Trottenberg. I would just say, it is interesting, we
actually had for many decades a de facto indexing, because fuel
usage just increased fairly naturally for so many decades,
after 1956.
Clearly, this is something I know that has been much
debated in Congress. I think it is--in my time, because I
worked on Capitol Hill for many years, it is sort of a
perennial debate with a lot of different programs about whether
you maintain control by voting regularly to increase revenues
or whether you decide to just put some kind of an index in and
let it go on autopilot. I think it is a difficult decision.
To some degree, we had de facto indexing for a long time.
Part of why we are where we are now is because fuel usage has
essentially flattened out. We no longer have that de facto
indexing.
Mr. Cawley. I think the option you outline, to start
indexing to CPI perhaps in the near future, is certainly
something we could work with your staff and try to analyze the
numbers on. I can't do it here, but it is a possibility we
could look into for you.
Ms. Edwards. Thank you.
I will just conclude. I think, Mr. Chairman--Chairman
Shuster, Mr. Chairman, it is really incumbent on us to figure
this out. I mean, we put an obligation--for example, when the
base reorganizing was done, there are facilities all across
this country, two of them in my district, where we also weren't
able to make the kind of transportation structural changes that
were needed to accommodate what were increased numbers of
employees at those facilities. There is a greater burden on our
bridges, greater burden on our roads, and we haven't been able
to meet those needs. And I just hope that we can find a
solution to this.
And I would just say that, you know, finally, it makes
sense to me that in this environment we have to create a
process where we can come to the kind of bipartisan solution
that Secretary Trottenberg pointed out over the history of the
transportation fund. And when we do that, I think we will get
to one that the American people can respect and enjoy.
Thank you.
Mr. Petri. Thank you.
Mr. Coble?
Mr. Coble. I thank the chairman. Good to have the panelists
with us today.
Mr. Cawley, your testimony states that the revenue from the
gas tax is in decline while revenues from the taxes on diesel
fuel and truck and truck sales are increasing. What trends do
you expect to see as it relates to the remaining excise taxes?
Mr. Cawley. Over the 10-year period, we project the
combined revenues from all of the various excise taxes that go
into the Highway Trust Fund will vary between about $38 billion
to nearly $41 billion. So, over the 10 years, there is not a
tremendous growth or variance in the receipts.
Mr. Coble. Will these trends that you may have suggested,
will these trends have any impact on the insolvency of the
Highway Trust Fund?
Mr. Cawley. Assuming that spending from the trust fund
keeps growing at the same pace it has been in the past, we will
have this shortfall that we have been discussing, yes.
Mr. Coble. I thank you.
Ms. Trottenberg, is the impending insolvency of the Highway
Trust Fund already having an impact on our Federal partners',
States', transit agencies', and local entities' ability to plan
and move forward with projects?
Ms. Trottenberg. I think we are just potentially starting
to see a little sign of that. I don't want to overstate it,
because I think, so far, the States and the transit agencies
are somewhat optimistic that we are going to find a solution.
But as we draw closer to the end of the life of MAP-21 and
it looks like the balances in the Highway and Transit Trust
Funds are going down, I think clearly our State and local
partners are going to start to perhaps pull some things off the
list of projects that they were planning to go forward with.
Mr. Coble. I thank you both for being with us.
Mr. Chairman, I would like to yield back.
Mr. Petri. Thank you.
Representative Eddie Bernice Johnson, any questions? No.
Mr. Sires?
Mr. Sires. Good morning.
Thank you very much for testifying.
You know, there are many gaps in what we fund, and one of
the gaps in the Federal funding I am finding in our freight
transportation network.
I was wondering if you think that we could specifically
have a tax and just dedicate it to freight transportation and
just not have the--not have it put in with the highway
transportation fund. How do you think that would work, since we
are heading for all this shortfall? Do you think that would be
something that we could consider, and just dedicate it to
freight movement?
I come from a district where I have two ports, New York.
Freight movement is extremely important. And I am concerned
that we are not funding it sufficiently. So I am trying to look
for a way to--Mr. Cawley, you don't seem too enthused about it.
Mr. Cawley. I think I am just trying to follow you. It
sounds like a new proposal. And it is not clear to me if you
mean freight movements, multimodal or just highway-type freight
movements. But, certainly, additional revenues directed to the
Highway Trust Funds, whether in another special account or not,
could certainly increase the amount of resources available for
roads.
Ms. Trottenberg. I will say a couple things on that
question, Congressman.
First of all, I would say the Department has now run four
rounds of the TIGER grant program, and one thing we noticed
is--and it was an open competition of all modes of
transportation, and freight projects did extremely well. Out of
the $3.1 billion that Congress gave us for TIGER, the
Department wound up awarding almost a billion of it to freight
projects. They scored very well in terms of economic benefits
and social benefits. So I think there is clearly a large
inventory of important freight projects that are worthy of
public investment.
At the same time, as you all know, in MAP-21, you have
charged the Department with doing a lot of new work on freight.
I think the goal of our implementation of the MAP-21 freight
provisions is to give you all here on Capitol Hill a good sense
of what are the freight needs around the country, what are the
different ways we might address them, and what new types of
programs might we need.
I am hoping that our MAP-21 implementation work will help
provide an answer to some of the questions I know a lot of you
Members who are concerned about freight have been asking.
Mr. Sires. All right. Thank you very much.
Mr. Petri. Thank you.
Mr. Crawford?
Mr. Crawford. Thank you, Mr. Chairman. I appreciate you
calling this important hearing today.
I thank the witnesses for being here, as well.
This is probably the most important issue that we will face
in this committee as we begin consideration of the highway bill
reauthorization next year.
And I understand the important role Federal funding plays
in our Nation's highways. In my home State of Arkansas, Federal
highway funds account for over 50 percent of the State's
highway program funding each year due to the size of Arkansas's
highway system and relatively small tax base.
It is critical that we find solutions for the long-term
solvency of the Highway Trust Fund, and this hearing is an
important step in that process. And, as has been pointed out
earlier today, Arkansas passed a tax that would help in funding
highway projects.
What advice would you have--I will start with you,
Secretary Trottenberg. What advice would you have for small
States, like Arkansas and others, as we anticipate a further
tightening of Federal funds geared toward investing in our
highways?
Ms. Trottenberg. Yeah, it is a good question. You are
certainly right, Congressman; there is a wide variation for
States in terms of how much they rely on Federal funds to make
up their transportation program. Typically, smaller States and
more rural States that, as you point out, might have a very
large highway network, relative to a small population base,
typically rely more heavily on Federal funds. That is, in a
sense, the way we designed the Interstate Highway System and
why we have been funding it, in part, at the Federal level.
I would say, increasingly, among States large and small,
there is an effort to, in addition to, as some States are
doing, looking at new revenue measures to also try and engage
in more innovative financing, to look to the private sector to
help where they can.
Although, I think, as this committee knows, to the extent
that you are using innovative financing, it is usually money
that is being borrowed, and it does have to be paid back with
some sort of a revenue source. That can often be a challenge
for more rural States.
Mr. Crawford. Talk about a possibly scaled-down State
version of TIFIA. I know that some States actually have that in
place. Is that a viable option for States to implement?
Ms. Trottenberg. It is certainly a viable option, and a lot
of States have been looking at it. Again, you do need a revenue
source to repay the loan. TIFIA provides a financing mechanism,
and one that is increasingly very popular because it enables
project sponsors to access very low-interest loans and pay them
back over a very long timetable.
But you do have to pay them back. And, typically, at the
Federal level, that is meant through some kind of a toll, a
sales tax, or what is called an availability payment, which is
just a stream of revenues from the State or local government.
Mr. Crawford. Mr. Cawley, your thoughts on either of those
questions?
Mr. Cawley. I guess I would just observe that States have
for a long time had safe drinking water funds and wastewater
treatment, water revolving funds, which are along the lines of
what you are talking about for transportation. But there,
obviously, there is a dedicated revenue source available for
the treatment of sewage and supply of drinking water, so
transportation is a little bit different for that model.
Mr. Crawford. Thank you. I appreciate it.
Yield back.
Mr. Petri. Representative Hahn?
Ms. Hahn. Thank you, Mr. Chairman.
I am from California, from Los Angeles, where we have done
very well, I think, in passing our own increased tax measures
to help fund transportation projects. So I am really always
proud of the voters in particularly L.A. County, who always
seem to agree to tax themselves to fund transportation
programs.
You know, we talk a lot about the gas tax, and that seems
to be sort of the common theme about raising the gas tax,
finding some index that automatically does that. So I am one of
two Members of Congress that drive an electric vehicle, so I am
proud of that. And we, too, drive the roads and the highways,
not as far as we would like to, depending on the charging
stations.
But what is your thinking on--you know, we are more and
more encouraging carpool lanes, which means people are leaving
their cars at home, which means they are buying less gas. We
are encouraging the use of alternative-fuel cars, electric
vehicles. I haven't been to a gas station in 2 years.
So what are we thinking? What are some user fees? What is a
different way to think about a revenue stream besides just a
gas tax? Because I think more and more Americans are looking to
avoid the gas station. So what is a concept that we might start
really looking at and analyzing to achieve revenue from those
of us who certainly use the roads but aren't buying gas?
Mr. Cawley. I think a lot of folks have talked about some
kind of technologies to charge people based on the amount they
use the roads, a vehicle-miles-traveled type of charge. And I
believe Oregon is looking into an experiment to try that type
of charge on users.
Mr. Nolan. Could you say that again?
Mr. Cawley. I believe that Oregon is investigating how this
might work. I think it requires a lot of technology to track
vehicles, where they actually go and how they use the roads.
But that has been discussed quite a bit as an alternative to a
fuels tax.
Ms. Trottenberg. I would take a step back and say, there is
a larger question that I think we are potentially still
grappling with, which is, there are three approaches on the
table or some combination of mixing and matching. There is the
current approach, which is we are using general funds to plug
up the trust fund. We could also let expenditures out of the
Highway Trust Fund match revenues, which would obviously, I
think, have big impacts on transportation across the Nation.
And then there are potential other revenue sources. I am not
sure we have gotten to number three yet, let alone getting into
the details of what we would specifically choose.
Ms. Hahn. Well, I appreciate that. I certainly think we
ought to be looking at something other than just a gas tax. I
always feel like raising the gas tax is also inappropriate--you
know, affects low-income folks, and would like to really find a
way that it could be more fair on who is using our highways.
And just because you are buying more gas doesn't necessarily
mean you are using the highways more than someone who is not.
So, you know, the technology exists. We really ought to
look at that. I know in Los Angeles we track--we have some fast
lanes that folks buy the little tracker they put in their
windshields, and it is very easy to track. And we are charged
every time we drive in a certain lane on the freeway in Los
Angeles. It is not that difficult then to charge the person in
that way.
So I think that is--we really ought to, I think, be looking
outside of the gas-tax box as we go forward.
Thank you.
Mr. Petri. Mr. Hanna?
Mr. Hanna. Thank you.
Along Ms. Edwards and Ms. Hahn's point, it seems to me the
general paradigm of funding highways through the gas tax or the
notion of a highway use tax have relevance and have had
relevance but that, in many ways, they are both becoming
somewhat arcane; that, in fact, young people between the ages
of 16 and 34 have driven 23 percent less, from something around
10,000 miles a year to 7,300 miles a year.
And mass transit and urbanization and the fact that we are
not funding mass transit the way, frankly, I think we should
is, in fact, the case to consider the general fund as a way to
allow everyone to pay in a system, that even if you don't own a
car and you drive a bike, you would use a road. If you order
through Amazon.com, you use the road to get things to you. The
notion of not going to the general fund for this money for
something is maybe fundamentally flawed.
And I don't say that as a criticism, just a general
observation that, increasingly, roads haven't lost their
relevance or importance, but the people who enjoy the benefits
of those roads are, frankly, not paying a fair share. And I
worry that all the conversation around highway use taxes,
distance-mile taxes, may already be becoming irrelevant. Ms.
Hahn here escapes taxation.
I don't know how you do it.
I want to know what you think about that. Thank you.
Ms. Trottenberg. I think, Congressman, we certainly are
seeing and thinking about the trends you are talking about,
which have a lot of different implications. Implication number
one, with young people and retiring baby boomers increasingly
driving less, obviously it is having an effect on the bottom
line of the trust fund.
It also has an effect on the transportation policy side. If
the demand for alternative forms of transportation--transit,
biking, walking, et cetera--is rising at the same time that
revenues to the trust fund are going down, then that is a real
challenge, because there is a big demand for other forms of
transportation.
Mr. Hanna. Well, I am concerned, too, that going to the gas
tax--and, you know, frankly, the elephant in the room is that
somebody's taxes are going up if we are going to do what we
need to do someplace--going to the gas tax may be avoiding an
opportunity that we have to talk about this in a much broader
way.
And, either of you, I am just interested in your opinions.
Ms. Trottenberg. Well, in some ways, we are already there.
By the end of fiscal year 2014, we will have transferred $54
billion in general funds to use for transportation. And in the
transit program, a portion of that program has always been
funded through general funds.
So, even maybe without coming out and saying it, we have
been doing a little bit of that now for about the past 6 years.
Mr. Hanna. But the point is, we have stopped doing that.
And it is a tough conversation.
Ms. Trottenberg. Well, no, in MAP-21, we have transferred
$21 billion of general funds for these 2 years. So it has been
ongoing since 2008.
Mr. Hanna. Except that, my point is that the conversation
is a particularly difficult one in this Congress. And the
question isn't, what do we do for MAP-21? It is, what we do
beyond MAP-21 when we, as you pointed out, bankrupt the fund?
So my time has expired. I apologize. Thank you.
Mr. Petri. Representative Kirkpatrick?
Mrs. Kirkpatrick. Thank you, Mr. Chairman.
Under Secretary, we are talking about vehicle miles
traveled. And I represent a very large rural district in
Arizona where people drive lots and lots of miles. Have you
done a comparison on the impact of raising the gas tax versus
going to VMT on rural America?
Ms. Trottenberg. We have not, but I think, as Mr. Cawley
mentioned, there is an experiment underway in Oregon where they
are going to be looking at some of those very issues. So they
may provide some pretty interesting data, some folks will be
doing VMT, some folks will be paying the regular gas tax, and
they can compare the results.
Mrs. Kirkpatrick. Well, I think it is very important in
coming to a solution here that we don't have unintended
consequences and that we don't harm the rural areas of the
country, where they really don't have transportation choices. I
mean, it is clear as a Nation, yes, our transportation
preferences are changing, but that is more in the urban
centers.
But I just want us to keep in mind, Mr. Chairman, as we
talk about this, and Ranking Member Rahall, that we have rural
areas in this country where people use the roads, they travel
lots of miles, they consume a lot of gasoline, but they are not
getting back those tax dollars in terms of investment to make
their roads better. And I think it is very important that we
continue to keep that in mind as we try to come up with a
structure that is going to be fair.
Do you have any comments, Mr. Cawley, about that?
Mr. Cawley. It is not something that CBO has specifically
tried to look into yet. But, certainly, we should be thinking
about it.
Mrs. Kirkpatrick. Yeah, would you keep that in mind?
And I just have another question for you. In your report,
in the CBO report, you say that we have to come up with a 10-
cent-per-gallon gasoline tax increase if we are actually going
to put the Highway Trust Fund on a fiscally sustainable path.
Do you mean that on gasoline and diesel? It wasn't clear in
your statement.
Mr. Cawley. All motor fuels, right.
Mrs. Kirkpatrick. All motor fuels, 10 cents.
And in 1956, when we first enacted the tax, it was 3 cents
per gallon. Have you done a percentage of what that was per
gallon of gasoline at the time? I mean, are we within the same
range that we were in 1956 when we were taxing 3 cents per
gallon?
Mr. Cawley. I haven't done that particular calculation, and
I am not sure I can do it in my head.
Mrs. Kirkpatrick. OK. Well, maybe I can have my staff do
that. I was just curious about that.
Thank you, Mr. Chairman. I yield back.
Mr. Petri. Mr. Ribble?
Mr. Ribble. Thank you, Mr. Chairman.
I want to thank you both. I am over here to your left. Very
good. I know it is kind of hard to find. You have the sound
coming out of the air here.
Ms. Trottenberg, I am curious about your testimony today in
one respect. In your written testimony, on page 7, you have a
section entitled ``Administration Proposed Funding Solutions.''
However, in the three paragraphs that are contained in that
section, there are no proposed funding solutions.
Does the administration have solutions for us?
Ms. Trottenberg. Congressman, as I mentioned before, in the
President's fiscal year 2014 budget, we have proposed taking a
portion of the funds that were previously going for our
military engagements in Iraq and Afghanistan and using that to
invest in infrastructure here at home.
We are also increasingly looking at ways that we can get
more private-sector investment into our transportation system.
But I think we also acknowledge, for a long-term
sustainable solution, we are going to need to work with you all
here on the Hill and with stakeholders around the country to
look for some additional solutions.
Mr. Ribble. Yeah, because none of those solutions really--
they are very unstable. I mean, another war could pop up
tomorrow, and then that whole idea disappears. And we really
need to have some type of long-term solution. And conversations
like this, while helpful to identify the problem--and I think
the American people need to be brought aware of the problem--
are, like many hearings I am at, high on identifying problems,
low on identifying solutions. And what we really need do is
find that.
Mr. Cawley, I am curious, has CBO done any almost
macroeconomic evaluations on the impact of motor fuel taxes on
the trucking industry?
When I look at it, diesel fuel is taxed at about a 25-
percent premium, which is paid pretty much by them. There is a
12-percent excise tax not only on new truck purchases, which is
sometimes better for the environment, we also charge a 12-
percent excise tax on improvements to those vehicles. For
example, if you want to convert from diesel fuel to CNG, for
example, not only is that an expensive conversion, we charge
even more for that. Then there is an additional tax on the tire
weight ability, which goes heavily to the trucking industry.
Then we also have a heavy vehicle use tax, which is paid for by
the trucking industry. And then after the trucking industry
pays for all of those things, if they happen to go on a road
that has a toll, they pay that as well.
And it seems like it is a very simple thing for Congress to
just kind of make them pay the tax because there are fewer
voters associated with that. However, when I look at the
industry, it is not just the trucking companies, it is the
people who build those trucks, it is the people who maintain
those trucks, it is the people who load those trucks, it is the
people who unload those trucks, it is the people who grow and
make the products and build the products that go in those
trucks that are all affected by the higher costs.
And I am curious if we are not just shooting ourselves in
the foot. We are almost treating this as if it is a sin tax,
and typically you use sin taxes when you want less of
something, not more of it.
What are your thoughts on that?
Mr. Cawley. I don't believe CBO has prepared any particular
studies that look at the impacts on the trucking industry by
itself.
Mr. Ribble. Would you concur with my assessment?
Mr. Cawley. That we are increasingly putting charges onto
the trucking industry? It is not clear to me that under current
law there are going to be any increases in any of these
particular taxes.
Mr. Ribble. I am speaking more directly to the impact of
taxation on a particular taxpayer in relation to how they make
economic decisions based on taxation.
Mr. Cawley. I don't really have a conclusion for you on
that.
Mr. Ribble. All right. I appreciate that.
Ms. Trottenberg, regarding the reduction of the Highway
Trust Fund, particularly in revenue, between 2007 and 2010, we
do know that there was less diesel fuel used. Do you attribute
that to a reduction in miles driven due to the great recession,
or do you think this is a long-term trend?
Ms. Trottenberg. I think, as we were discussing at the
beginning of the hearing, although overall fuel usage is going
down, actually diesel fuel usage has been going up, with some
ups and downs in terms of fuel prices and economic conditions.
The trucking sector is a growing one.
Mr. Ribble. It is.
Ms. Trottenberg. I think, in terms of long-term trends, I
haven't looked at long-term projections over many years, but I
think for the foreseeable future there is some growth in that
sector.
Growth in the passenger side of fuel use is pretty flat.
And so what you see in terms of revenues to the trust fund is
it only goes up a little tiny bit if you look at the next 6
years' worth of revenue projections. Now, that is always
subject to change depending on economic conditions, et cetera.
Mr. Ribble. All right. Thank you very much.
And, Mr. Chairman, I yield back.
Mr. Petri. Representative Frankel?
Ms. Frankel. Thank you, Mr. Chair.
I want to follow up on Mr. Hanna's comments, which I
thought were well taken. Just first with a story. I remember
visiting another country several years ago; I won't name the
country. But what struck me was the condition of the roads. I
mean, this was a beautiful country, but you basically had to
inch to wherever you wanted to go. There were so many potholes,
it would take--I am from Florida, so what would take me maybe,
you know, 15 minutes in Florida literally could take 2 hours in
this other country.
Which leads me to my next question, which is--or my first
question, which is whether there has been an economic analysis
of the impact of not investing in our infrastructure, our
highway infrastructure, for example, the cost to the American
economy, to tourism, to individuals having to repair their
cars. Is there any type of analysis that you have?
Mr. Cawley. I am not aware of anything like that from CBO.
Ms. Frankel. You are kidding.
Mr. Cawley. No.
Ms. Trottenberg. I would say that there is a fair number of
reports and analysis looking at questions like how much does
congestion cost in terms of time spent in traffic and looking,
I think, at some of the economic impacts of those delays, which
are often very hinged on road condition and condition of
transit systems.
Ms. Frankel. Uh-huh.
Ms. Trottenberg. There is, I think, a fair amount of
literature. The Texas Transportation Institute does the report
that is most well-known, where they analyze every year
essentially what the costs are to the economy of time spent in
congestion. And it is tens of billions of dollars.
Ms. Frankel. The reason I asked that question is because I
am really, as I said, following up on Mr. Hanna's comments, is
that it is more than just someone who drives a vehicle that is
using the roads. I mean, I come from Florida. We have, you
know, thousands and thousands of tourists on the roads, and if
our roads were not smooth, then, listen, they would go--I mean,
the tourism industry is competitive. They would go maybe to
another State or another country. We have a lot of people
coming in from other countries.
So the point I am trying to make is that our analysis--just
to look at the user fee, you know, like a gas tax or whatever,
may not be the fairest way to go about this, because our roads
really--transportation drives our economy. Other than anything
that goes on the Internet, I mean, if you want to move
products, you want to have tourism, you want to get to work,
most people go on the road.
Do you want to respond?
Mr. Cawley. Well, I certainly agree with you,
transportation is very, very important. I am not aware of an
economic analysis that CBO has prepared that tries to
quantify----
Ms. Frankel. I guess----
Mr. Cawley [continuing]. All these benefits that you have
been talking about.
Ms. Frankel. Well, how about thinking outside of just maybe
a gas tax? What I am saying is, we have a lot more users than
someone driving a vehicle or just even a truck driver driving a
vehicle. I mean, what about the supermarket that is waiting for
the food to come in? I mean, doesn't that supermarket depend
upon food getting delivered on time?
Mr. Cawley. Right. I mean, I think the point was made
earlier that ultimately there are just two sources of money for
roads----
Ms. Frankel. Right.
Mr. Cawley [continuing]. The general taxpayers or the road
users.
Ms. Frankel. Right.
Mr. Cawley. And you are making an argument that the general
taxpayers benefit, too.
Ms. Frankel. All right. Thank you very much.
I waive the rest of my time, Mr. Chairman.
Mr. Petri. Representative Rice?
Mr. Rice. Good morning, and thank you for being here.
Certainly, you know, we have to invest in infrastructure.
Our infrastructure is not keeping pace with the rest of the
world, and it makes us less competitive. Competitiveness is
something that I am really concerned about, keeping American
jobs here and bringing some of those jobs that have already
gone overseas back.
But we are sitting here talking about a fuel tax increase.
We just had a tax increase on January 1st with the fiscal cliff
deal. We are going to have another tax increase on January 1st
with the new healthcare rules. So, tax increases make us less
competitive.
I don't think that the average American knows what the fuel
tax is. I think that is not what they are concerned about. I
think what they are concerned about is the price they see at
the pump. And as late as 2009, the price they saw at the pump
was less than $2 a gallon, and now it is $3.50 a gallon. So if
there was a way that perhaps we could bring the fuel cost down,
it might not be as much of a hardship to raise the gas tax a
few pennies.
Because, you know, these people are suffering. The economy
is still in the dumps, dragging along. Unemployment is far too
high. And taxing them any more in any aspect is not a good
thing.
You know, we have all these proposals out here to bring the
cost of fuel down. We have this Keystone Pipeline proposal. We
have all these options for drilling on Federal property, ways
that we can use our domestic resources to keep from sending
money overseas and bring our fuel costs down. And the
administration doesn't want to have any part of that, but they
want more money for the highways.
You know, if we could employ some of these things and make
a meaningful drop in the fuel cost, then if you are saying you
need a 9-cent fuel tax rise, if that happened, then I don't
think 90 percent of the people would even know. But adding to
it on top of everything we have already put on them is just
almost unconscionable at this point.
So, you know, in terms of competitiveness, I think we need
infrastructure investment. In terms of competitiveness, I think
we need low fuel costs. I think taxes are generally
anticompetitive.
So, you know, the idea of adding another 10 cents a gallon
on people who are already stretched to the limit right now--you
know, the administration came out last week, said that they
were going to increase their emissions standards. War on coal,
shut down coal plants. That is not going to do anything but
drive everybody's utility costs up. It is going to make our
businesses less competitive. Everybody's home heating bill is
going to be higher.
And now we are sitting here talking about raising fuel
taxes at a time when people are just living paycheck to
paycheck and barely making it. If we would use the tools we
have and the resources God has given us, it wouldn't be so
hard.
Thank you. I give up the rest of my time.
Mr. Petri. Mr. Carson?
Mr. Carson. Thank you, Mr. Chairman.
Mr. Cawley, Madam Trottenberg.
I am interested in working on issues related to intelligent
transportation systems. I want us to build on the limited
language included in MAP-21 and see a better utilization of
smart technologies with our existing infrastructure and really
begin to implement new technologies. I think that the
utilization of intelligent transportation technology can
improve safety, lower highway fatalities, reduce congestion,
and help make our transportation system smarter and more
sustainable.
I am curious if either one of you see a role for new
technologies to help fix the funding deficit for the Highway
Trust Fund. Are there ways to improve highway funding through
new technologies at all? Are there any promising pilot
programs, perhaps, in the States that should be considered at
the Federal level?
Ms. Trottenberg. I would say a couple things on that,
Congressman Carson.
Thank you for your support of intelligent technologies. We
think that is a tremendously important, growing area in
transportation in two ways.
One, it offers the possibility of a lot of proven and low-
cost ways to improve the efficiency of the existing system. As
we are hearing, this is a very difficult question about how and
if we are going to come up with more revenues, but we have a
lot of intelligent transportation systems that can help use the
system better that we have right now--even the most basic
things like signalization, ramp metering. There are a bunch of
very low-cost technologies that I think States and transit
agencies can make use of that will get much more utilization
out of existing capacity. And that obviously will make our
whole system more cost-effective.
There are also, and I think Congresswoman Hahn mentioned,
increasingly a lot of technologies out there--E-ZPass, all
kinds of things--that, to the extent that at the State and
local level you are looking at different tolling mechanisms, et
cetera, there are technologies that can make it a lot less
intrusive and potentially, also a lot more cost-effective.
So that is an area of tremendous potential and one I can
tell you at DOT that we are doing a lot of research on and we
are very enthusiastic about.
Mr. Cawley. It is not a subject I know very much about, but
it sounds interesting, but I am sure it will be also expensive,
as well.
Mr. Carson. All right. Thank you both. Thank you for your
honesty.
I yield back, Mr. Chairman.
Mr. Petri. Mr. Mullin?
Mr. Mullin. Thank you for being here today. Thank you for
the opportunity to, well, just ask some questions. It seems
like there is a lot more unknown than there is known in this
room.
A lot of suggestions, but, you know, really, we run into a
situation that I don't know if we are looking far enough ahead.
Does either one of you have a projection of 20 years down the
road where we are going to be?
Because what I keep hearing from Mr. Cawley and Mrs.
Trottenberg is that we are just looking to put a Band-Aid on
something.
Does either one have an idea of where we are going to be in
20 years, the shortfalls we are going to have or the
infrastructure needs that we are going to be facing?
Mr. Cawley. I don't have a projection going out 20 years.
But I think, in our testimony, we measure----
Mr. Mullin. Well, if we----
Mr. Cawley [continuing]. The size of the shortfall in 10
years is enormous.
Mr. Mullin. Well, as slow as we move in the Government, if
we go just 10 years out, we are just going to be starting on
today's problems. And I don't mean that as a joke, but I am
being serious. Before we can get a project--we have to plan
today before we can get a project. It is 3 to 5 years before we
can get to see the dirt start moving.
Mr. Cawley. It is a difficult problem.
Ms. Trottenberg. I think it is a very fair question. And as
my colleague mentioned, I have seen 10-year projections.
Essentially, as we have mentioned, the revenues to the Highway
Trust Fund will flatten out around $36 billion, going up a tiny
bit.
And, there have been a bunch of different analyses out
there over what the needs are. I mean, the trend lines diverge,
and they continue to diverge in the long run. I think the
picture is even a little more dire 20 years out if we don't do
some interventions.
Mr. Mullin. Sir, you had mentioned a 10-cents tax on
gasoline and diesel. Have we thought about our natural gas
vehicles, which are just on the rise--they are going to
continue to rise--and our electric vehicles, how we are going
to plan on making sure that they pay to drive the highways too?
Mr. Cawley. CBO can't make any proposals about additional
taxes that you all might want to impose on different kinds of
alternative-fuel vehicles. But when I look at the----
Mr. Mullin. Well, it is not so much as wanting to propose.
It is just, if everybody is going to--you know, what we
continue to hear from this administration is pay their fair
share, if we are going to continue to go down that road, then
those that are using the infrastructure--which is every
American, every individual, every person that comes and visits
this country gets to enjoy the benefits of our infrastructure
that we have. So how are we going to pass it on to everybody,
other than just the individuals that are driving gas and diesel
vehicles?
Mr. Cawley. Presumably through a fuels-type tax for those
alternative kinds of fuels or some sort of vehicle-miles-
traveled charge for the use of the roads.
I don't know of any proposals out there to do those kinds
of things at the moment, but when I look at the projections
that Department of Energy has about the vehicle miles traveled
or anticipated to be traveled by these alternative-fuel
vehicles, they are not huge.
Mr. Mullin. Well, the trend that we are seeing with natural
gas and with electric vehicles, they are fueling at home, not
at the pump. And so, if we don't figure out a way to actually
capture that, then we are literally just doing what Government
continues to do and we just put a Band-Aid on it when we really
need stitches.
Ma'am, you had talked about this administration, the Obama
administration, wanting to use the revenues, or lack of
revenues, from our drawdown in our two wars that we have been
fighting. But this administration--and I believe you will even
admit that that is dead on arrival. There is no way that is
actually going to go anywhere. I mean, we are going to take
more money out of DOD when they are already struggling with the
cuts that we have already proposed to them, and we are going to
propose more cuts?
So does this administration actually have a true plan, or
are they just going to continue to throw out suggestions, what
we continue to see?
Ms. Trottenberg. I would note that that set of savings is
one that has been talked about a lot on Capitol Hill, actually
on both sides of the aisle, and I think people have different
opinions about what is really going to happen with it.
But, again, I would repeat what I said earlier, which is: I
think, clearly, the difficulty of this problem is going to
require Congress and the administration, House and Senate,
Republicans and Democrats, to work together. I don't think----
Mr. Mullin. I agree----
Ms. Trottenberg [continuing]. There is going to be a magic
solution that is going to just----
Mr. Mullin. And I do agree with what you are saying, but
the thing is, being a leader and being--you know, I have been
in the private industry or the private sector my whole life.
When you are at the head, which this President is, you have to
make tough decisions, not just suggestions. You have to come up
with real solutions to propose something, not just throw
something out and see if it sticks on the wall. And we continue
to see that lack of interest and that lack of suggestion and
that lack of leadership from this administration.
And I think what Congress is saying is, look, we are
wanting to work, you can tell, both sides. This isn't just a
Republican issue or a Democrat issue, but both sides are
willing to work together. But, at the same time, that is what
this country has continued to have done over and over again is
look to our President for some type of leadership, and we have
yet to actually see that.
I yield back.
Mr. Petri. Mr. Nolan?
Mr. Nolan. Mr. Chairman, members of the committee, a couple
of things.
One, Mr. Cawley, I have seen numerous studies over the
years on the significance and the importance of transportation
to the overall general economic development of a particular
region or constituency, as well as examples of individual costs
to people for the lack of good transportation. I strongly
suggest maybe have one of your summer interns do a little
research, get you up to date on that. Because that kind of
information would be very helpful to our committee.
And in response to Ms. Frankel, I can tell you, you know,
the Old Bridge Road in Mission Township, up where the Little
Pine and the Big Pine come together in northern Minnesota,
before we paved that road I went through two front ends on my
Ford F-150, but we got that road paved and I haven't had a
problem since. So that is going to save me several thousand
dollars in the future, going forward, and is a good specific
example of how good roads can make a dramatic difference.
I applaud the other members of the committee here who have
talked about the need to find other sources of revenue other
than just user fees. The shortfalls you have talked about are
obvious. The consequences are not good. And our roads are
getting congested, and our mass transit is nowhere near
adequate for what we need.
And there have been several mentions of, what is the
administration proposing? Well, they have been supportive of
the transfers from the general revenue fund, under the argument
that those are peace dividends.
We need to remind ourselves around here that, as we work on
transportation and infrastructure, that is just one part of our
overall budget requirements. And we have spent trillions,
literally trillions, in Iraq and Afghanistan and other places.
And as the President has extricated us from Iraq and moving
toward getting us out of Afghanistan, there are some peace
dividends there. And other Members have made a good case for
drawing down from our general revenue funds to help support our
transportation system.
I would remind the members of the committee that recently
there was an inspector general's report on the money that was
spent in Iraq. And they identified $60 billion that ended up
not going anywhere: projects that were blown up before they
were completed, projects where the money disappeared before
they got a chance to go to work on them. You know, and that was
just, you know, just a little tiny share of the trillions that
have been spent there.
So I want to remind the other members of this committee and
the administration that we appreciate, number one, that the
President is drawing down on that so-called nation-building
abroad. And hopefully that will continue to produce peace
dividends that we can use for rebuilding America's
infrastructure, our roads, our bridges. We don't need to remind
ourselves, our bridges are falling down.
So I, for one, applaud the administration and I applaud the
other members of this committee who say, let's take a look at
some other sources of revenue, including general revenues.
So I thank you for your testimony and remind the other
members of this committee that we need to be as bold as some of
these other committees are in asking for money and for
revenues. When we see what China and other countries around the
world are doing, it is somewhat embarrassing to see the fact
that we are pulling back and drawing back. Our infrastructure,
our transportation system has been the foundation of our
economic greatness in this country, and we need to step up and
demand that we find a way to continue to finance it and advance
it and take care of the transportation needs we have in this
country. So, be bold.
Thank you. I yield the balance of my time.
Mr. Petri. Mr. Davis?
Mr. Davis. Thank you, Mr. Chairman.
It is always great to be a part of such a committee like
the Transportation and Infrastructure Committee because we
always see the differences in the geography that we each
represent. And I was taken by my colleague from California's
testimony earlier about her electric vehicle and the high-
occupancy vehicle lanes. And I look to my district, which, you
know, our lanes are right and left. I mean, much of my district
is a two-lane highway. We don't have the same issues that one
in an urban area does. And it is up to us as policymakers to
begin the discussions and the debate on how to craft a bill
that is going to work in every single part of America.
Like my colleague from Minnesota, I drive a Ford F-150.
Thankfully, I have not had the same problems he has had hitting
trees in Minnesota. But we do pay, in rural districts, a lot
toward the gas tax. And, unlike my colleague from California, I
feel like I have been at a--I haven't visited a gas station in
2 minutes, let alone 2 years. But those are the issues we deal
with, and those are the issues that my constituents deal with.
And I agree with you, Ms. Trottenberg, that--you know, I am
a realist, too--that, in this economic climate, the VMT might
not be the only answer. Raising revenue through an increase in
the gas tax may not be the only answer. You know, we need to
look at a diversified portfolio.
And, with that, I have some specific questions about the
VMT in particular. Because in my district, my single mother who
goes to work to make a living to feed her family drives 30
miles to get there. Similarly, under a VMT in an urban area,
that single mother may drive 3 miles. It may take her 30
minutes to get there. But under a VMT, my rural area, some of
the more poor areas in Illinois, where I serve, it seems like
they would be subsidizing projects in more urban areas.
So, with the VMT, who--does anybody have any idea who is
going to administer a VMT? Would it be up to the States,
Federal Government, what?
Ms. Trottenberg. I will take a crack at that. And,
Congressman, just to be clear, I am not proposing a VMT.
Mr. Davis. I know that.
Ms. Trottenberg. Far from it.
Again, I think the one State that is worth everyone taking
a look at is Oregon, because they are going to be going ahead
with an experiment. And just so you know, one of the ways I
think they are seeking to address the very issue you raise,
which is fairness for people in rural areas who drive long
distances, is potentially to give people a choice, which is you
would pay by the mile or you could pay a flat fee. So it
potentially attempts to at least, for people in rural areas or
people who drive long distances, cap what they pay.
But I think that is a pretty difficult issue. I think
Oregon is the only place that is really taking a look at it. So
how it would be administered in other parts of the country or
what might happen, there is no information on that yet. I think
we have one State that is going to be looking at it in earnest,
and, potentially, everyone can get a chance to look at their
experience and take whatever lessons they want from it.
Mr. Davis. And my question on that is, if Oregon is the
test case, I mean, how do we do a national VMT then? I mean,
are we going to have 50 different collections? That is what
concerns me about the discussion of a VMT. How are we going to
do this in a national plan?
So I have concerns about that. I also have concerns, is the
VMT the only option to bring revenue in from those who drive
electric and CNG vehicles, or are there any other options that
are out there?
Ms. Trottenberg. Yeah, just for the record, I don't see
there is any movement for a national VMT. So I think Oregon
seems about the only place that is really giving it a serious
look.
Mr. Davis. Well, we hear about the national VMT a lot from
different organizations that talk to us.
Ms. Trottenberg. I think here in Washington there doesn't
appear to be any appetite for it whatsoever.
I know that a couple of the States--I think Virginia is one
that has looked potentially for electric vehicles--vehicles
that don't use gasoline--to potentially come up with some other
fee structure. I think there are other ideas like that on the
table that the States are looking at.
Again, as Mr. Cawley says, I don't think there is anything
at the national level that is seriously being proposed or
looked at yet.
Mr. Davis. OK.
And, Ms. Trottenberg, I have one more issue. You know, I
agree, our roads and bridges are a priority. Very disappointed
that the stimulus bill that was passed before I came to
Congress only had about 8 percent of funds going to
infrastructure.
But on the Recovery Web site and in media reports, it seems
that there is still $5 billion in unspent funds. Are those in
infrastructure projects, or are those in other portions of the
stimulus bill that didn't have to do with infrastructure? Or
what is being done with those funds? Are they obligated?
Ms. Trottenberg. That is a good question. That is one I
would like to get back to you on.
And thank you for saying you wish more of it had been spent
on infrastructure. I think we feel the same way. We are pretty
proud of what we did at the Department of Transportation. We
got a lot of great projects built around the country.
I haven't looked at the Recovery Act Web site in a while,
so let me go back and make sure I get you the right
information.
Mr. Davis. No, I appreciate that, and I look forward to
your response. And thank you for your testimony today.
Ms. Trottenberg. Thank you.
Mr. Davis. I yield back.
Mr. Petri. Representative Titus?
Ms. Titus. Thank you, Mr. Chairman.
Madam Secretary, we have heard a lot this morning about how
to deal with the revenue problems, whether it is the miles
traveled or indexed gas tax or raising the gas tax or the
general fund. I would like to shift to the other side of the
equation; we haven't talked very much about that. And sometimes
an ounce of prevention is worth a pound of cure. If we could do
things that would make the need for additional investment less,
I think that would be a good thing to focus on. And maybe
Congress can be helpful with that.
Las Vegas, of course, depends a lot on tourism, like
Florida, like where Little Pine meets Big Pine. We need
tourists. So we have adopted a Complete Streets program, kind
of a holistic approach that reduces the need for a lot of
costly paving in some instances, also the need for additional
retrofits. That is bringing down the cost.
I know that some other States have done similar kind of
things. Washington State has a Complete Streets planning
project. They have estimated that it is going to save about an
average of $9 million, or 30 percent, on each project. Maryland
has got something similar going on. They are looking at
commuter programs for the disabled and have found savings of
about $32,000 for the service for each individual.
Could we talk a little bit more about what Congress can do
to encourage States to develop Complete Streets programs to
help bring down the costs?
And, at the same time, another one that distresses me that
I think also served kind of this same function were the TIGER
grants. TIGER grants help to provide more efficient, safer,
better transportation projects. I know in my district we did a
12-mile bus rapid transit down Sahara Boulevard. But now I see
that, in the fiscal year 2014 budget, you are not just reducing
funding, you are not just eliminating future funding, you are
rescinding past funding, and TIGER grants are going to be gone.
So aren't we being pennywise and pound-foolish, to use another
old adage?
Could you talk about those kind of programs?
Ms. Trottenberg. Sure. Thank you for those questions.
And I certainly think--you mentioned Complete Streets. It
is a great example. There are a lot of ways that we could
reduce costs in the way we build and maintain and operate our
transportation system. And there is no question that the
Complete Streets movement is one, particularly in a lot of
urban areas, where we have been building a lot of roads to
interstate standards and we have really been overbuilding the
roads. In fact, there are much less expensive alternatives.
Certainly, there are Complete Streets--a lot of the States have
adopted Complete Street policies, as have a lot of local
communities.
The one challenge has been, once the State or the local
community adopts that policy, how you see that it really gets
infused into the transportation planning as it is done at the
State and the MPO and the local level, because it is a real
culture change. But, certainly, States and localities that have
adopted Complete Street policies have often seen the dimensions
and the costs of the type of projects they need to build go
way, way down.
There are a whole host of other things that we could be
doing to lower the cost of our transportation system. We have a
procurement model which, compared to what some of our economic
competitors in Europe and Asia do, is a pretty expensive way to
do things. We design a lot of requirements upfront in the
procurement model instead of sometimes letting the private
sector come up with cheaper ways to do things.
So I think, increasingly, we in DOT are trying to work with
States and transit agencies to find those economies, and I
think it would be terrific to have Congress continue to
encourage us to do that.
And I am glad you mentioned TIGER grants. We are very proud
of the fact that, because the TIGER grant program was a
competitive program, one of the competitive dimensions we
looked at was how much the application was bringing non-Federal
dollars to the table and what kinds of efficiencies were they
using. And the TIGER dollars actually leveraged, even when they
were grants, in the case of grants, but TIFIA loans as well,
leveraged a lot of non-Federal and private dollars. So it has
proved a very good model.
And I think you all probably saw, the Office of Management
and Budget put out a statement last night about the House's
bill. Obviously, we really protest not continuing the TIGER
program. We think it has been tremendously important.
Rescinding those existing balances will potentially take money
away from grantees that are expecting to get those TIGER
grants. So we are very concerned about that.
Ms. Titus. Well, will you provide me some information so
you can help me to make the argument that we shouldn't lose
that program?
Ms. Trottenberg. We would be happy to do so.
Ms. Titus. Thank you.
Mr. Petri. Representative Williams?
Mr. Williams. Well, thank you both very much for being
here. I appreciate your testimony.
I am going to give you an idea that will work. I am a
small-business owner, and I am from Texas, and I also have been
in the automobile business for 42 years.
Now, Secretary Trottenberg, in your statement, you say
this, referring to CAFE standards: ``Improvements in fuel
efficiency contribute to a reduction in the trust fund
resources and our ability to continue improvement of the
Nation's transportation system.''
Now, my question to you is, if we were to eliminate the
EPA's CAFE and DOT requirements and let auto manufacturers
build cars and trucks that the consumers really wanted, would
we have more revenue for the Highway Trust Fund?
Ms. Trottenberg. I think I would have to unpack that
question a little bit, because I think we have--and I am sure
we are probably not going to agree with this--that, actually,
CAFE standards have proved very, very popular, and they have
saved consumers money at the pump. So I think, in that regard,
again, I think this administration is proud of what we have
done on CAFE standards.
There is no question, though, that for better or for worse,
one of the things that has resulted in that is less money going
into the trust fund. It is a tough balance. But I think, from
the Obama administration's point of view, we would rather have
a more fuel-efficient auto fleet, and that has been a priority
for us.
Mr. Williams. Well, that is in the Obama administration's
viewpoint, and I can tell you that is not from the consumers'
viewpoint.
Let me tell you about CAFE standards and what they do, OK?
If we go to where this administration wants us to go, we are
going to raise the average price of a new car by $3,000--
today's dollars. New cars priced under $15,000, which right now
are basically an entry-level-type vehicle, they will no longer
exist and force an estimated 7 million consumers--7 million
people will be out of the new car market. They won't be able to
buy a car. And no telling how many jobs that will cost in
America. And we get back to job creation again.
Now, it also forces auto manufacturers to downsize
vehicles. It makes them lighter and less safe, directly
affecting auto fatalities. The insurance companies will tell
you that.
So, despite CAFE standards and the DOT standards, the U.S.
continues to import an ever-increasing amount of foreign oil.
So, for both of your information, I have introduced a bill,
and I think you should read it. It is H.R. 2445. It is a bill
that would repeal the CAFE and DOT standards and would let the
auto manufacturers supply vehicles that the consumers want and
that consumers demand.
And, like you noted--you and I agree with this--like you
noted in your testimony, it will increase revenue for our
Highway Trust Fund and allow us to better improve our Nation's
transportation system. We will put more money in, we will
create more people, and let the open markets and let the
consumer get what they want and the auto manufacturers make
what people want.
So I would like for you to read that bill.
Thank you for being here, and I yield back.
Mr. Petri. The gentleman yields back.
Representative Napolitano?
Mrs. Napolitano. Thank you, Mr. Chairman.
And thank you both for staying and listening to all of our
questions and everything else and the comments. I think most of
the questions that I had had been addressed earlier. And I did
get here a little late, and I apologize.
But, you know, the issue of the States getting a fair share
of their taxes, the funds that go into your user tax--your
department oversees the maritime transportation. And I would
like to know how you feel, whether it is fair or unfair, that
maritime users at the ports of Los Angeles and Long Beach pay
$220 million a year to the Harbor Maintenance User Fee, which
is generally a tax, and receive $260,000 back in maintenance.
And we do support a gas tax that returned 0.1 to the State that
it collected it in. And is it fair that the industry has
disparity?
Ms. Trottenberg. Thanks, Congresswoman, for the question. I
know from you and your other colleagues who represent the west
coast ports, and, look, it is a frustration we hear from ports
all over the country, about the Harbor Maintenance Tax and what
ports are getting back in terms of what they pay in.
Look, I think rather like we are discussing today with the
gas tax, it is another area where there are a lot of difficult
questions on the table, and I am afraid I don't think we are
probably going to solve them here today. But this
administration, again, I think we understand the frustration
the ports have on this, and we would love to work with you all
to see if we can have some solutions. We have been big
supporters of the ports. And at least through the TIGER grant
program, we have particularly tried to do what we can to
provide support to all the California ports.
Mrs. Napolitano. And I understand that. But the disparity
there, we need to be able to ensure that whatever taxes are
collected are used fairly. So if you are talking about
disbursing the gasoline tax equitably, then we should look at
other fees also. That is my point.
The second question I have, Secretary Trottenberg, is you
mentioned the negative impacts of Highway Trust Fund solvency
problems on transit providers in small and rural communities. I
would like to hear specifically about the impacts on transit
systems that rely on Federal funds for operations.
While slowing down payments to grantees is very potentially
detrimental, not only inconvenient, to a system who was
planning to buy a new bus, a system that relies on Federal
funds for operations will be forced to cut routes or lay off
workers due to slowed payments.
I would like to know what you think DOT or Congress can do.
How much notice will FTA provide to small and rural grantees
prior to slowing the payments, one? What flexibility does FTA
to select how and in what order those funds will be rationed?
And, thirdly, does FTA have the ability or authority to avoid
slow payments to systems that use funds for operations?
Ms. Trottenberg. That is a good question. I had mentioned
at the beginning of the hearing that, as you point out, if we
find ourselves in a situation where our cash balances are
starting to go down in the transit account, we are going to try
and give transit systems as much notice as we can, so they can
start to think about how they would plan for potential
shortfalls.
There is no question that smaller transit systems will feel
the pinch sooner and harder than larger transit systems,
although ultimately, all transit systems rely to some degree on
Federal dollars.
But I think in my testimony I mentioned there are some
small transit systems around the country where close to 60
percent of their revenues are Federal. So it is not going to be
long before they are going to need to start, as you mentioned,
curtailing routes or slowing down on bus purchases.
Mrs. Napolitano. So what is the plan?
Ms. Trottenberg. Well, I think we want to be careful
because it is hard to know now what the circumstances might be,
and I think we want to make sure we keep our options open and
be working with Congress. If we found ourselves drawing close
to a time when we didn't have revenues to provide all the funds
that we would customarily provide to transit systems----
Mrs. Napolitano. But are you looking at a plan? Are you
looking at a solution to help them?
Ms. Trottenberg. Oh, absolutely.
Mrs. Napolitano. OK.
Ms. Trottenberg. I would say, back in 2008, when the
Highway Trust Fund was close to being insolvent, we basically
formed a task force within the Department and we worked with
Treasury to keep forecasting a lot of different scenarios and
think hard about how we would minimize the impact----
Mrs. Napolitano. And are you getting input from these small
urban areas?
Ms. Trottenberg. Oh, yes, we are in pretty perpetual
communication with our transit grantees and State DOTs. But
there is no question if, as the balances in the Highway Trust
Fund start to go down, at some point there will be real impacts
on the ground, and there will be only so much we can do to
potentially mitigate them.
Mrs. Napolitano. Thank you.
And the last comment I would like to know is whether or not
you are making any inroads on being able to cut fraud and
abuse.
Ms. Trottenberg. Well, we have a particularly talented
inspector general at DOT, and that is one of the things that he
spends a lot of time on. I am proud to say he is a pretty
rigorous analyst of a lot of our programs, as, by the way,
GAO----
Mrs. Napolitano. But is he funded properly to be able do
his job, or their job?
Ms. Trottenberg. I would say, actually, that the IG is very
well-funded. As you all may recall, in the Recovery Act I think
he was given $25 million and was able to really staff up. I
would say, also, with Hurricane Sandy, he was just given I
think it was another $6 million. So, I am sure he testifies in
front of this committee from time to time, and you can ask him.
I would also say that we at the Department also spend a lot
of time making sure that we are running our programs
efficiently. We don't just wait for the IG. We try ourselves to
constantly scrub our grant programs and our enforcement
programs and make sure that we are operating as efficiently as
we possibly can and that there is no wrongdoing and that we are
getting good value for taxpayer dollars.
Mrs. Napolitano. Well, appreciate your answers. And thank
you for your help in the our latest California saga.
Thank you both.
Thank you, Mr. Chairman.
Mr. Petri. Representative Hahn requests a second round, and
I recognize her.
Ms. Hahn. Thank you for hanging around for my last
comment--two comments.
One, I do continue to think that we need to look outside of
the gas-tax box, as we go forward, to fund the Highway Trust
Fund. I know my colleague from Texas thinks consumers, you
know, want to buy the biggest and most gas-guzzling vehicles
out there. There is an article in the Wall Street Journal today
that talks about incentivizing consumers for electric vehicles
by maybe offering them at no cost to get Americans to try out
electric vehicles.
So I think there is a move out there to incentivize. I know
in Los Angeles we allowed electric vehicles to park for free.
We have also--in California, we are allowed to be in the
carpool lanes with an all-electric vehicle. So I think that is
a trend that is picking up out there.
I just wanted to back up what my Congress colleague from
California talked about, the Harbor Maintenance Tax. And you
know that is an issue that I am really all about. I think we
ought to fully fund it. I think there ought to be some equity
and some minimum guarantee to go back to the ports that collect
those taxes.
But I am also advocating for a possible use of the Harbor
Maintenance Tax to fund transportation projects in our port
communities, sort of that last mile. I think as we are coming
up with a national freight policy, I think we are really going
to be looking at, how do we move goods in this country? And I
think one of those is to really--one of the policies hopefully
we look at is, how do we fund projects that really enhance
goods movement in this country?
So I think if a port has been fully dredged to its
authorized level, which is the first use of the Harbor
Maintenance Tax, I think there ought to be some allowable usage
for that last mile for transportation projects around our
Nation's ports.
How important, Madam Secretary, do you think that tool
could be for funding transportation projects in and around our
port communities?
Ms. Trottenberg. I mean, again, I think, obviously--and I
know you are a leader on the House PORTS Caucus, and we have
gotten to talk to you about this. And you have some colleagues
from California, Assemblywoman Bonnie Lowenthal and others, who
are part of our National Freight Advisory Committee.
Clearly, these are not easy issues because you are
balancing infrastructure needs that the country clearly has
with the difficult budget challenges that we face and the
administration and you face here in Congress.
I think the good news is, clearly, there is a lot of
interest now in freight and in ports. I think we are really
going to have a chance to grapple with some of these issues and
try and figure out, what do we do? How can we make sure that we
are making the critical investments we need to ensure that our
country is economically competitive?
Ms. Hahn. It is great that the President will be going to
Port of Jacksonville on Thursday. It is his second speech at a
port. I am always happy to see him highlight the importance of
our Nation's seaports, as it certainly does, I think, really
impact our economy and jobs and our competitiveness in this
country.
Thank you. I yield back my time.
Mr. Petri. Thank you.
I would ask unanimous consent that the record of today's
hearing remain open until such time as our witnesses have
provided answers to any questions that may be submitted to them
in writing, and unanimous consent that the record remain open
for 15 days for additional comments and information submitted
by Members or witnesses to be included in the record of today's
hearing.
Without objection, so ordered.
Mr. Petri. And, with that, I thank the witnesses for their
testimony, and this hearing is adjourned.
[Whereupon, at 11:46 a.m., the subcommittee was adjourned.]