SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1944 words

COMMITTEE: SENATE ENVIRONMENT AND PUBLIC WORKS

SUBCOMMITTEE: TRANSPORTATION, INFRASTRUCTURE AND NUCLEAR SAFETY

HEADLINE: FISCAL 2003 BUDGET: TRANSPORTATION AND INFRASTRUCTURE

TESTIMONY-BY: THOMAS E. STEPHENS, P.E., DIRECTOR

AFFILIATION: NEVADA DEPARTMENT OF TRANSPORTATION

BODY:
TESTIMONY OF THOMAS E. STEPHENS, P.E. DIRECTOR NEVADA DEPARTMENT OF TRANSPORTATION

ON BEHALF OF THE AMERICAN ASSOCIATION OF STATE HIGHWAY AND TRANSPORTATION OFFICIALS

REGARDING THE HIGHWAY TRUST FUND AND THE FISCAL YEAR 2003 BUDGET

BEFORE THE TRANSPORTATION AND INFRASTRUCTURE SUBCOMMITTEE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS UNITED STATES SENATE

February 11, 2002

Mr. Chairman and Members of the Committee, my name is Tom Stephens. For the past seven years I have been the Director of the Nevada Department of Transportation, and I am here today to testify on behalf of the American Association of State Highway and Transportation Officials (AASHTO). I also am President of the 18-state Western Association of State Highway and Transportation Officials.

I want to thank you for your leadership in scheduling a series of hearings over the coming year to address key policy, program and funding issues in preparation for the reauthorization of the Transportation Equity Act for the 21st Century (TEA-21). I am also honored that you invited me to testify before your Subcommittee. I believe that I can offer some real world experience from the field, especially on the subject of today's hearing - funding the federal-aid highway program. Mr. Chairman, I would like to start by giving your colleagues a brief picture of the great Silver State. Nevada is the fastest growing state in the nation. Since 1970, the state's population has quadrupled from 500,000 to more than 2 million residents. A majority of this growth has taken place in just five urbanized areas - Las Vegas, Reno, Sparks, Carson City and Elko. In Clark County alone, where Las Vegas is located, we estimate that by 2010 we will have 400,000 additional residents. Along with this population growth, we have seen a steady increase in the number of miles of congested highways.

We are also a large state - with roughly the same land area as all the New England states combined. Our state-maintained highways and bridges spread out across many rural miles as well as in the metro areas. Twenty-six percent of all Nevada's improved roads are on the state-maintained system. However, this 26 percent carries 61 percent of the total vehicle miles of travel. The remaining 39 percent is on systems maintained by county, city or other governmental agencies. Vehicle miles of travel on all Nevada roads more than quadrupled from 3.5 billion in 1970 to 17.4 billion in 2000. The state-maintained system also carries 84 percent of all truck traffic. With more cars, additional heavy trucks, and more vehicle miles of travel, our biggest challenge is preservation of our highways.

However, as the fastest growing state in the nation, and with much of that growth concentrated in just two counties - Washoe and Clark, we have an added capacity challenge. In our metropolitan areas, we are working with our local officials to try to keep pace with our population growth and new demands on the system. In Nevada, we are investing in new multi-modal strategies. These include a privately funded $600 million monorail people mover system and a bus rapid transit system in Las Vegas which will feature low-floor, electric powered buses with an optical guidance system. We will invest in innovative ITS technologies such as dynamic message signs, ramp meters, closed circuit television and traffic detection systems. Other efforts include "low-tech" car-pooling, telecommuting and new bike and pedestrian facilities. We will still need substantial additional highway capacity.

With the growth in the federal-aid highway program provided by TEA-21, we have been able to make progress in our preservation and highway capacity needs. At the beginning of fiscal year 2001, there was a $483 million backlog of highway and bridge preservation work. This is significantly lower than the $670 million backlog we had at the beginning of fiscal year 1999. We were able to reduce the backlog by investing significantly greater amounts in pavement preservation. During fiscal years 1999 and 2000, our department spent $329 million on overlay and reconstruction work - our biggest pavement preservation program ever.

TEA-21's highway program increases have also enabled us to undertake an aggressive effort to keep pace with our growing population and make a real difference in addressing congestion. For example, the $99 million "Spaghetti Bowl" I-15/U.S. 95 interchange in Las Vegas opened in March, 2000, six months ahead of schedule. The revamped interchange will reduce the congestion caused by the 330,000 vehicles using it each day. It is now capable of accommodating 500,000 vehicles per day.

Mr. Chairman and Members of the Committee, let me now address how the funding of the federal aid highway program for FY 2003, and beyond, can be sustained at levels required to meet this nation's needs.

Mr. Chairman, we in the states are stunned by the FY 2003 budget proposal which, in the midst of a recession, would cut the federal aid highway program by $8.6 billion because apparent reductions in revenues to the Highway Trust Fund have triggered a Revenue Aligned Budgetary Authority (RABA) reduction. To avoid a disastrous cutback in highway improvements, reducing our ability to meet basic highway needs, and to avoid the loss of thousands of jobs, we strongly support the bill you introduced last week to restore highway assistance to no less than the $27.8 billion level for FY 2003 authorized in TEA-21. We commend you for your appreciation of how important sustained highway investment is to the country and thank you for your leadership in putting this legislation forward.

We also want to share with you our emphatic view that it is vital to sustain federal highway investment in FY 2003, at no less than the $31.8 billion level provided in FY 2002. With 36 state governors and legislatures already contending with severe budget shortfalls, and the nation in an economic downturn, cutting the program by $4.3 billion makes no more sense than cutting it by $8.6 billion. This is especially so when there are more than sufficient reserves in the Highway Trust Fund to provide funding for FY 2003. Let me outline what we believe the consequences would be unless current levels of funding are sustained.

As early as next month, state and local officials will begin the task of cutting billions of dollars in highway projects from their FY 2003 Transportation Improvement Programs. Final decisions will be made public in September affecting nearly every community in the nation.

Construction contractors throughout the country will start making business plans on how to cut back their equipment purchases and lay off tens of thousands of well-paid construction workers. The stock prices of several heavy equipment manufacturers and construction companies have already dropped. Engineering consulting firms, already hard hit by the recession, will almost immediately have to start laying off engineers and technicians as design work for next year's projects is delayed or canceled.

Yet since the tragic events of September 11, traffic is up all over the country. The most recent data shows a dramatic increase in annual traffic growth of nearly 3 percent. For example on I-15 at the California-Nevada border, our vehicle count for the last three months is up nearly 10 percent. This highway is really bottlenecked, especially in California where Interstate 15 and 40 converge into a single four-lane Interstate carrying the traffic from Arizona and Nevada to Los Angeles. While this bottleneck is scheduled to be widened, the cut in TEA-21 funding could cause project delays resulting in hundreds of millions of dollars in congestion-related costs.

Numerous other projects will be delayed in every state. This cut is proposed at a time of increasing need for highway preservation projects in every part of the country and capacity projects in rapidly growing states like Nevada.

State Impacts

AASHTO last week initiated a survey of state departments of transportation to assess the direct and indirect dollar and project impacts across all 50 states. While that survey is still in progress, here is an example of what we found:

- In Ohio, approximately $187 million worth of construction projects would be delayed or canceled.. $47 million in preconstruction, right-of-way and/or environmental activities would be impacted.

- In Oklahoma, a total of $120 million in construction and right- of-way projects would be delayed or canceled. This could also impact the state's proposed $1 billion GARVEE Bond Program, with the construction let dates for the proposed projects being delayed.

- In Montana, $66.8 million reduction would result in a loss of 2,805 jobs - roughly equal to 25 percent of the new jobs created in Montana in 2001. This drastic reduction will have significant impact on the many small construction and design firms in Montana.

- In Alaska, even if the program recovers in 2004, the reduction in design efforts in FY 2003 will translate into future delays in construction contracting of nearly $50 million.

- In Florida, a reduction of $324 million is equivalent to approximately 24 percent of the FY 2003 capacity construction program. Implementation of these reductions would negate gains in jobs and transportation improvements achieved from recent transportation initiatives of the Governor and legislature.

One serious concern that must be addressed is the accuracy of the process used by the Department of the Treasury to determine the revenue estimates used in calculating RABA. The correction of a $600 million error by the Department of Treasury has already reduced the proposed highway cutback to $8.6 billion. Recent information on FY 2001 truck sales and fuel tax revenues at the state level call into question the Treasury forecasts, and leads us to believe that other adjustments in RABA could occur.

The public policy questions Congress needs to address are these. First, to assist in the nation's economic recovery does it not make sense to sustain highway funding at $31.8 billion? Second, are there reserves and cash flow in the Highway Trust Fund to make this possible in FY 2003? The answers are "Yes" and "Yes!"

Funds Are Available to Sustain FY 2002 Levels

Four years ago we agreed to the fundamental principle that all the receipts going into the Highway Account would be fully used for transportation purpose, and not be used to offset other government expenditures. But today there is a $20.3 billion cash balance in the Highway Trust Fund. We seek to provide $8.6 billion in obligations which will restore the highway funding to the FY 2002 level. The budget impact of this increase will only require $2.3 billion in outlays for FY 2003. Because highway funds are spent over a period of about seven years, $2.3 billion in additional outlays in FY 2003 will allow us to continue the momentum we have achieved in FY 2002.

The table displayed below shows receipts and expenditures for the Highway Account of the Highway Trust Fund for Fiscal Year 1998 thorough Fiscal Year 2003. Even accounting for unpaid obligations, it is clear that there is a substantial balance in the Highway Account with receipts exceeding outlays over the six- year period. Mr. Chairman, we respectfully urge the Congress and the Administration to honor their commitment to spend all the receipts going into the Trust Fund, unlock the balances that have built up and make a positive contribution to the current economic recession.



LOAD-DATE: February 13, 2002