For several months, Department of Transportation officials had conceded the possibility that the RABA provision -- that had over three years added a $9 billion bonus to highway funding above the obligation limits set in TEA-21 -- could turn negative. But no one had envisioned the magnitude of a $9.4 billion cut.

"A reduction of this size in our highway program at this low point in our economy could be devastating in terms of job losses," said AASHTO Executive Director John Horsley. "I can't imagine that Congress and the Administration will allow this to occur," he said.

The dramatic reductions are a result of new estimates issued by the Treasury Department regarding the revenue collected in the Highway Trust Fund. First, the Treasury Department concedes that instead of the $30.368 billion it projected would be collected in highway tax revenue in 2001, the actual collections were only $26.9 billion, a shortfall of some $3.468 billion.

Secondly, Treasury projects that Highway Trust Fund receipts for FY 2003 -- the so-called "look-ahead" factor of RABA -- will amount to only $27.974 billion., rather than the $29.471 billion it had forecast in TEA-21. That represents a shortfall of another $1.49 billion.

The impact, according to AASHTO's Director of Management and Business Development Jack Basso, former Director of Budget for the U.S. Department of Transportation, is that the highway obligations in FY 2003 have to be "adjusted" by some $4.9 billion below the guaranteed level of TEA-21. When compared to the FY 2002 spending level of $31.8 billion (which had included $4.5 billion in RABA) the total impact is a cut of $9.4 billion.

The longer-term impact on the highway program could extend for a number of years, since the FY 2003 funding numbers would serve as the baseline for the calculations of the next reauthorization legislation (AASHTO Journal, January 11).

Efforts are already underway to determine the accuracy of the Treasury Department's estimates. The House Transportation and Infrastructure Committee has requested that the General Accounting Office examine the estimating process, and that review has begun.

Job Losses Projected by ARTBA

An analysis by the American Road and Transportation Builders Association (ARTBA) concludes that even if funds were restored in FY 2004, the magnitude of the $9 billion funding drop would result in the loss of some 295,000 jobs over three years. Hardest hit would be California, with the loss of more than 26,000 jobs, followed by Texas, with projected losses of 22,000 jobs and New York with losses of 15,000 jobs.

ARTBA has also produced a state-by-state breakdown of funding reductions in FY 2003, should the $9 billion funding cut take place. California is projected to lose $741 million; Texas, $626 million; New York, $414 million; Pennsylvania, $405 million; and Florida, $376 million. A copy of the table is attached.

Accuracy of Calculations Questioned

Transportation observers were stunned and skeptical of the Treasury Department projections that are to be used to calculate the RABA decline.

Brad Mallory, Secretary of the Pennsylvania Department of Transportation and AASHTO President, said, "Motor fuel tax receipts in our state, and other states around the country, continue to be steady. The turn-around in Treasury Department estimates for the federal Highway Trust Fund needs to be examined."

Reports from California, Pennsylvania and Illinois all indicate that motor fuel tax receipts increased during FY 2001, drawing into question the accuracy of the Treasury Department's estimates.

Preliminary estimates from the Federal Highway Administration through November show that vehicle miles traveled increased by .8 percent on the national level over the previous year.

John Horsley, AASHTO Executive Director, said, "We are particularly appreciative of Chairman Don Young (R-FL) and Ranking Minority Member James Oberstar (D-MN) of the Transportation and Infrastructure Committee for initiating the GAO review of the estimating process. It's critically important that those figures are accurate."

DOT officials indicate that three factors contributed to the downturn in Highway Trust Fund revenues:

• A roughly 50 percent drop occurred in truck and trailer sales, which accounts for about $1 billion of the decline;
• An increase of more than 25 percent in the sale of gasohol occurred between 2000 and 2001. Since gasohol is taxed at only 13 cents per gallon, compared to 18.4 cents per gallon for gasoline, continued growth in its use would also impact Highway Trust Fund revenue; and
• Commercial traffic grew in 2001, but not at previous rates. Diesel fuel is taxed at 24.4 cents per gallon.

In a series of recent appearances in the Midwest, President Bush has begun to emphasize his domestic agenda, which will be formally presented in the State of the Union address on January 29th, and in his budget proposal to be sent to Congress on February 4. Bush is reiterating his support of the tax-cut package enacted last year, which Democrats are attacking as a factor in the dramatic shift of the federal budget status from trillion-dollar surpluses to potential deficits. He said on January 14 he would push to make the tax cuts, slated to expire in 10 years, permanent. But his strongest rhetoric has been devoted to insisting that a repeal of the tax cuts would take place "over my dead body."

While Democrats have been reluctant so far to call for an actual repeal of the tax cuts, Senator Edward Kennedy (D-MA) has urged a delay in the tax cuts slated to take effect in 2004 and 2006, as well as retaining the current estate tax. Kennedy said that times had changed dramatically since the tax cuts were approved last year, and that the nation is unable to meet its obligations to Social Security and Medicare -- as well as other domestic priorities -- if the tax cuts are retained.

Meanwhile, President Bush also is stepping up pressure for enactment of energy legislation, telling workers at the Port of New Orleans that dependence on foreign oil is a threat to the nation's economy. He also stressed the need for enhanced trade authority, emphasizing that international trade generates jobs in every sector, from agriculture to manufacturing.

Enactment of energy legislation in the Senate is likely to be complicated by the attention being focused on the bankruptcy of the giant energy company Enron. Congressional hearings are being scheduled by five different committees, and the deliberations of the administation's Energy Task Force, which have heretofore been private, are also being scrutinized.

Transportation Issues

Transportation observers believe that one of the first issues likely to draw Congressional attention this year will be the potential economic effects of a $9 billion cut in federal highway funding, which many fear may be contained in the administration's budget. The reduction would result from adjusting highway funding in accordance with the Revenue Aligned Budget Authority provision of the Transportation Equity Act for the 21st Century (TEA-21). For the past three years, higher income to the Highway Trust Fund has triggered a total of some $9 billion in extra highway obligations. For the first time, however, it appears that reduced revenues will force a cut below the authorized TEA-21 levels (see related article).

States are particularly concerned about the impacts of such a cut on transportation programs, at a time when state coffers are also being hard-hit by the economic recession. The National Governors Association has estimated that states are facing a combined financial shortfall of at least $40 billion, and possibly as much as $50 billion. Shortfalls are being reported in 36 states, according to the NGA.

Aside from the level of highway funding in FY 2003, another possible issue is whether Congress will act under the Budget Enforcement Act to retain the "firewalls" it contains that guarantee highway revenues cannot be used for other purposes. The expiration of the domestic budget caps this year give Congress the opportunity to revisit that law, and transportation interests fear that the hard-won firewall provisions might prove a target for budgeteers who have long opposed them.

Yet another transportation issue that could have significant financial impacts on the states is the future of Amtrak. The Amtrak Reform Council faces a February 7 deadline to deliver Congress a plan for the dissolution of the passenger-rail system. Transportation interests are concerned that such action could leave states holding the bag for the continuation of heavily used commuter-rail services. (See related article).

"We consider the law's tight deadlines as promises made to the American people, and we will do everything humanly possible to keep these promises," Mineta said. He also outlined a new program in which the new TSA will borrow senior private-sector executives as security advisors at the meeting, which was attended by more than 8,000 delegates.

"We are building an airline security system staffed by dedicated and competent federal aviation security agents, led by highly experienced senior security and law-enforcement professionals," he said. "The system will be robust and redundant, and we will be relentless in our search for improvements. It is better today than yesterday, and it will better still tomorrow."

Security Steps Outlined

Mineta - who declined to talk about some steps because discussing them might compromise security - nonetheless noted that the congressional mandate to screen all checked passenger bags will be met, through the deployment of all machines available for that use and, where they are not available, by use of other allowable methods. More bags will also be sniffed by dogs trained to detect explosives, "wiped" for explosives residues or manually checked, and passengers should expect more personal screenings for weapons, Mineta said.

In addition to President Bush's appointment of John Magaw of the U.S. Secret Service to head the TSA, Mineta said a new loaned-executive program will bring top staff from such firms as Fluor, A.T. Kearney, Disney, Solectron, Marriott, Intel, and FedEx into U.S. DOT to help establish the new agency, which will take in some 30,000 employees and cover 429 airports.

"These senior advisors will work side-by-side with members of our leadership team, for an average of six to nine months," Mineta said.

He also asked members of the Transportation Research Board to rise to the nation's post-September 11 challenges "with advanced technology to meet our national needs. Once again, I know we can count on you to answer the call," Mineta said.

Questions Remain

Peters provided her remarks during the Road Gang's annual awards luncheon on Thursday. Along with outlining the top priorities of the Administration, Peters provided insights on the reauthorization of the Transportation Equity Act for the 21st Century (TEA-21) and the funding situation for FY 2003.

Through a series of meetings, the top staff of FHWA developed a set of core themes and priorities that will guide the primary activities of the organization, Peters said. The three organizational areas are:

• Safety and Security - FHWA will look to improve the analysis of crash data, and there will be increased communications efforts with regard to highway safety counter measures coupled with a specific focus on work zone safety. Regarding security, Peters said that a new position was created to report to her the agency activities related to improving the security of the highway system. FHWA will also work with states and localities on identifying vulnerabilities, preventing future terrorist attacks, and developing contingency plans should an attack occur. Peters pledged to work closely with AASHTO's Security Task Force on these activities.

• Environmental Streamlining and Stewardship - Peters said that FHWA will focus on protecting valuable natural resources while looking for ways to make the environmental approval process less onerous. She said that the agency will make improvements through administrative actions, and will work with Congress this year and next on making reforms to Section 4(f) and select portions of NEPA. Peters noted that "we have to be realistic on time schedules," and said that possibilities to improve the process should be evaluated on a project by project basis, not on a macro level. She added the Secretary of Transportation Norman Mineta will soon make a decision on whether to move forward with the proposed planning and environmental rules or not.

• Congestion and Bottleneck Mitigation - Peters remarked that congestion is a serious problem. She said that while adding capacity is an important part of the solution, it is not the only solution, and new technologies and transit play a vital role.

Peters added that more flexibility should be provided to allow states and localities to make choices, and also called for improved oversight of projects.

Reauthorization - Evolution, Not Revolution

Peters also provided some general thoughts on the reauthorization of TEA-21. Calling TEA-21 and ISTEA a "solid base," Peters said that reauthorization will likely be an "evolution, not revolution." Among the likely themes to be addressed in reauthorization are continued involvement of cities and state DOTs in the planning process; stable and predictable funding; firewalls; minimum guarantees; and enhanced flexibility for states and localities, thereby allowing "decisions to be made closer to the people."

Peters added that the administration's framework for reauthorization will be included in the president's FY 2004 budget, which will be released next February.

The determination, made with concurrence of FHWA's Office of Chief Counsel, will add flexibility to state transportation departments' use of federal funds. However, FHWA official King Gee noted in his memo that "I want to emphasize that routine maintenance remains the responsibility of the State and is not eligible for HBRRP or other Federal-aid highway funding." Activities deemed routine, and therefore ineligible for such funding, would include bridge cleaning, concrete repairs, repair and lubrication of bearings, sign maintenance, and removal of vegetation such as roots or the cutting of grass, FHWA stated.

According to Gee's memo, "Under the legislation establishing the HBRRP, Congress intended the funds to be used to replace or rehabilitate deficient highway bridges so they would no longer be deficient. We implemented the program in accordance with this concept. However, in 1995, Congress added subsection (d) to 23 U.S. C. 116:

(d) PREVENTIVE MAINTENANCE - A preventive maintenance activity shall be eligible for Federal assistance under this title if the State demonstrates to the satisfaction of the Secretary that the activity is a cost-effective means of extending the useful life of a Federal-aid highway.'"

Described by Corps officials as a compromise, the new regulations eliminate references to "compensatory mitigation" to give the Corps greater flexibility in mitigating wetland losses according to the aquatic needs of the area. John Studt, regulatory chief for the Corps, told the Washington Post, "When we don't review projects with minimal effects on the environment, we have more time to focus on projects that really do have an impact." According to the Post, the Corps must consider some 80,000 permits per year.

Among the changes from the regulations advanced by the Clinton Administration are the following:

• Individual permits must be obtained for projects affecting more than 300 feet of "year-round" streams;
• Compliance with state and local water quality practices will suffice to meet water quality requirements under the permitting process;
• Waivers of the one-for-one mitigation of adverse impacts requirement are allowed at the discretion of the Corps, although one-for-one "is often the most environmentally appropriate form of mitigation."

At an AAMVA press conference on Monday, Deputy Secretary for Safety Administration of the Pennsylvania DOT Betty Serian, chair of the association's ID Security Task Force, said "Our drivers' license has become the most requested form of identification. Because the American people depend on this one card, AAMVA has a responsibility and obligation to do whatever it can to enhance the security of this document to improve public safety and national security."

Serian added, "Unscrupulous individuals shop for the easiest and fastest way to get a license. They find the loopholes and they put you and me at risk. And without changes to our current business practices, we cannot be assured that everyone presenting a driver's license isn't who they say they are."

AAMVA has called for increased uniformity across the states in the issuance of drivers' licenses, and more uniform practices for issuing licenses to non-U.S. citizens. Among its recommended strategies are:

• Improving and standardizing initial drivers' license and ID card processes;
• Standardizing the definition of residency;
• Establishing uniform procedures for non-U.S. citizens seeking licenses;
• Implementing processes to produce a uniform, secure and interoperable drivers' license/ID card to uniquely identify an individual;
• Establishing methods for the prevention and detection of fraud and for auditing of licensing processes;
• Ensuring greater enforcement priority and penalties;
• Seeking federal support of the objectives; and
• Establishing public awareness and support.

Officials at the Maryland Department of Transportation, which has responsibility for building that portion of the new bridge as a joint project with the State of Virginia and the Federal Highway Administration, were surprised recently when only one bid for the work came in, and came in $372 million over budget, the Post reported. In its current cash-strapped condition, Maryland lawmakers said, the state can't afford to eat the difference, and re-bidding the job will add at least five months to the construction schedule at one of the region's worst traffic bottlenecks.

A panel of transportation experts is reviewing the bid in an attempt to determine why it came in so high. Its findings are expected by mid-February.

"This is the first time I've ever said to myself, 'This bridge is in jeopardy,'" Del. Peter Franchot, D-Montgomery County, chairman of the House Appropriations Subcommittee on Transportation, told the Post. Though Congress has capped its financial involvement in the project at $1.5 billion - leaving the states to absorb the remaining cost of the rebuilding the bridge - officials in Virginia and Maryland have assumed a total cost of $2.4 billion for the overall project. State and federal engineers had predicted the twin spans would cost $487 million; instead, the sole bid on that portion of the project came in at $859.9 million.

Franchot said he doesn't expect the federal government to make up the difference, "and I know we're not going to pay it ... unless something radical happens, that bridge is not going to be built," he said.

TRB also made awards to several transportation specialists, including awards for distinguished service and several awards to the authors of research papers in various categories.

Carlson has served as KDOT Secretary since January of 1995, following his retirement in 1994 as the Executive Director of the Federal Highway Administration, which is the highest career position in the agency. He served 36 years with FHWA in a variety of management positions; he also has been active in formal TRB activities for years, including service on the Executive Committee and holding its vice-chairmanship last year. Carlson was also honored at the Road Gang's annual meeting on January 17th. He received the group's Lester P. Lamm Memorial Award for 2001.

Lillian C. Borrone, who retired as Assistant Executive Director of the Port Authority of New York and New Jersey in 2000, received TRB's W.N. Carey Jr. Distinguished Service Award recognizing individuals who have given outstanding leadership and service to transportation research, and to the board, while Joseph M. Sussman, the J R East professor of Civil and Environmental Engineering at the Massachusetts Institute of Technology, was honored with TRB's Roy W. Crum Award for Distinguished Service for his research on railroads, ITS and other large integrated systems.