Thank you for your introduction, Roy, and the warm welcome from all of you. It's wonderful to be back in the Valley of the Sun, the second home to a lot of people from my state. The snowbirds from North Dakota love Arizona* especially after you got NHL hockey here.

Spring has arrived back home, and I think we have faced our last snowstorm. As we were coming in from the airport I noticed a lot of familiar-looking license plates headed in a northerly direction, and I realized what tomorrow's headlines would say: Gov. Ed Schafer arrives in Phoenix, ten thousand North Dakotans leave!

I bet some of those ten thousand are flying back in their own private planes. We have a high percentage of licensed pilots in our state. Some of them are Air Force people who stayed in North Dakota after their years of duty at the Minot and Grand Forks Air Force bases. Of course, long distances in a rural and lightly populated state also encourage aviation.

And aviation plays an extremely important role in agriculture, our state's biggest industry. Four and a half million acres of our crop land -- that's about 20 percent of the total -- are sprayed annually by our 323 aerial applicators based in rural facilities. It's a common experience in North Dakota to drive down the road and have a biplane fly across you about 100 feet off the ground.

It has been a while since I have been in a spray plane, so I asked my friend Dennis Rohlfs to fly low for a little while on our way down here, so I could remember what it's like. We were crossing the Rockies, though, so he declined.

Oh, this is an FAA conference, isn't it? We're not allowed to make those kinds of jokes here, are we?

By the way, Dennis owns Executive Air in Bismarck. Executive Air is one of eleven air charter companies that provide on-demand air taxi service in North Dakota.

Let me see if I can get any other plugs in for North Dakota before I turn to the main topic. Oh yes. I was interested to see that the famed radio announcer Paul Harvey has an amazingly beautiful house here in Phoenix.

Paul is an investor in Cirrus Design, the Duluth company that also operates a manufacturing plant in Grand Forks, North Dakota.

You are all probably familiar with Cirrus. The company is building the SR-20, which will be the first certified production aircraft equipped with an airframe parachute as standard equipment. A few of you might think a parachute encourages a little carelessness in a pilot, but I welcome the ultimate in redundancy systems. And the plane's cockpit design is remarkably simple. As company president Alan Klapmeier says, "Making it hard to fly is not good value."

Cirrus' test pilot died in a tragic accident earlier this month, and I know that Scott Anderson's death has shaken the company. Nevertheless, I am convinced Cirrus is going to be a major part of the revival of civil aviation and aircraft manufacturing in the United States.

Pricing a plane at $150,000 or so makes it affordable and attainable.

The renewed vitality of civil aviation and continued presence of commercial air service in rural communities means there will be growing pressure placed on infrastructure, and in particular those rural airports that are often strapped for funds. All of us must make an effort to change public policy so the infrastructure is strengthened and expanded. Economic growth and public safety demand it.

How can we achieve these goals? Two ways, above all: Regulatory flexibility and spending dollars where they were meant to be spent.

Well, regulatory flexibility and spending tax dollars appropriately I of course believe are Republican principles, but more importantly, they are principles that will serve aviation well. Let me talk a little bit about them:

States with rural communities under 15,000 served by small regional airports must have the flexibility to prioritize their funding decisions. They need freedom from federal mandates to best serve their communities. Rural aviation programs are unique; they struggle with limited funds and resources for maintenance, repair and security. Because the large carriers do not service these airports, they must rely on Aircraft Improvement Program dollars and local taxes.

As a governor, I always say let the states do it. They know best. It's true with aviation, too -- at least in the rural context.

Out of approximately 19,500 recognized airport facilities, states oversee 16,000, while the FAA only 3,500. As you can see the states are closer to the airports and can best determine the needs and priorities under their control.

In many cases, the FAA should also allow the use of state highway specifications for construction of runways at airports serving smaller aircraft. That's a real-world approach that offers local flexibility.

On the tax component, I strongly support Chairman Shuster's legislation that calls for the continuation and full use of the Airport and Airway Trust Fund for airports and their development. Dedicated taxes should be invested for their intended purpose and not diverted for other spending projects or to make the budget look balanced.

Congress must keep its promise to the American people this year. The federal government must invest all the transportation user taxes for their intended purposes -- to repair and improve our nation's transportation infrastructure. That's what taxpayers agreed to pay their taxes for, so that's how they should be spent.

Allowing the federal Airport and Airway Trust Fund's unspent balance to reach $60 billion while crucial aviation safety, security and airport construction needs go unmet is short-sighted policy and is unfair to American taxpayers.

I serve as co-chairman of the TRUST Coalition, which stands for Transportation Revenues Used Solely for Transportation. Governor Patton of Kentucky is the other co-chairman.

The group is affiliated with the National Governors

Association, and brings together the Chamber of Commerce, National Association of Manufacturers, the AFL-CIO, farm groups, contractors, highway safety officials, cities and legislatures.

We had great success last year influencing the passage of the highway spending bill, making sure those fuel tax dollars were spent where they should be -- on transportation.

In North Dakota, we are going to see a 47 percent

increase in highway spending because of its passage. That's a tremendous boost to our economy.

The TRUST Coalition is turning its attention to aviation this year. I have already outlined our goal -- to make sure the tax dollars are spent where they were meant to be spent.

But this will be a more difficult effort, I think, than with the highway spending bill. Everyone drives, but not everyone uses airports -- especially rural airports. The need for the Shuster legislation will not be as readily apparent to the taxpaying public.

So, not only do we need people like you making the case for the proper level of aviation spending, we need the local business owners, the economic development people, the contractors and perhaps even people in the hospitality industry.

Or, in the medical industry. In North Dakota, rural airports provide a critical link for emergency medical services. It's a lot easier to get an airplane or a helicopter into a strip 100 miles from a city hospital than it is to drive out and back in an ambulance. Lives really are at stake.

Economic development may be the strongest argument. In my state, sixty percent of passengers passing through our commercial service airports are from other places, visiting my state for business purposes. You all ought to think about visiting before 2004 when we will host the bicentennial celebration of the Lewis and Clark Corps of Discovery.

Airlines contribute about $30 million annually to North Dakota's economy, and the whole aviation industry produces more than $500 million in economic value. Eight thousand seven hundred jobs are attributed to aviation activity in the state.

I would encourage all of your to brush up on similar numbers for your state or cities, and to keep reminding the public of the importance of aviation to continued economic growth in their states and across the country.

To summarize, then, let me highlight what I see as an important legislative agenda for aviation groups, one that I hope is recognized and supported by the FAA. Congress needs to do three things by the end of this year for aviation:

No. 1: Again -- Passage of the AIR-21 legislation sponsored by Congressman Bud Shuster of Pennsylvania. At the risk of repeating myself -- aviation taxes should be used to improve our aviation system.

The FAA predicts that by the year 2010 nearly one billion passengers will travel by airplane. It is important that an infrastructure is in place that will make it a safe, secure, efficient means to travel.

No. 2: Regulatory reform - Washington must remove the costly bureaucratic red tape that inhibits the ability of rural and regional airports to reach their potential and value for rural communities.

Rural airports can play a greater role in the economic development of our small communities, if released from cumbersome rules and regulations coming from Washington.

And No. 3: Congress and the Administration must implement long-term reauthorization of the Airport Improvement Program.

Right now, the AIP program is funded only until the end of May. However, this short-term, piece-meal approach to AIP funding cannot continue. It is detrimental and counterproductive to the long-term decisionmaking.

Decisions being made today are based upon expectations of available resources in the future, but in order to make sound reliable decisions, we must know what to expect.

Let me give a real-world example of the implications of temporary reauthorizations. North Dakota has a short construction season based on our weather patterns. A lapse in AIP funding could seriously affect the maintenance, repair and development of our small rural airports. And, it drives up costs by starting and stopping projects based only on available funds.

Finally, let me comment on regional air service. It is a vital part of the national network of air service and is particularly important to small communities. The Essential Air Service (EAS) program has played a critical role in the response to deregulation of the airline industry by encouraging the evolution of subsidized routes towards self-sufficiency.

In addition to the EAS program, I support efforts to improve air service to undeserved rural communities and territories. We must not overlook the unrealized economic resources and potential of these communities and their impact in the global market place.

I see that Jim Coyne is moderating the next panel discussion. I want to cite the work of the National Air Transportation Association as an example of what aviation groups can achieve.

As a governor of a rural state, I have been especially impressed by the NATA's advocacy for programs and projects that will benefit rural airports and air service.

NATA supported the "American Aviation Access Initiative" that sees a greater role for turbine-powered aircraft serving rural airports. I see where your provision promoting the upgrading of facilities for turbine aircraft has been included in the House version of the FAA reauthorization bill. Congratulations.

But you're not alone in promoting forward-looking changes in aviation. The various associations do a tremendous job of lobbying, communicating and emphasizing the value of aviation in America.

And since I'm closing on a positive note, I appreciate the FAA's increasing openness to new initiatives and partnerships with the states.

It is important as air travel and rural air facilities grow and become more vital to our national economy that the FAA and state aviation officials maintain dialogue and lines of communication to collaborate on challenges facing a national air network.

In 1996, NASAO and FAA signed an historic Memorandum of Understanding in which the two bodies could develop improved and innovative systems for use by the aviation community. North Dakota Aeronautics Commissioner Gary Ness got the ball rolling on this, and Gary Adams, from Arizona, put his signature on the page. Bill Withycombe, Western Pacific regional administrator, brought the FAA to the table.

This is a very positive development that shows a real sense of partnership, and I appreciate that.

So, I hope the FAA and aviation industry can continue this open approach. And, for the associations, I will say, let's redouble all of our efforts, win passage of the Shuster legislation, and start building a positive future where aviation can grow with the new millennium.

Thank you.