On Wednesday, the Senate Appropriations Committee approved (29 - 0) its version of the supplemental appropriations bill. The Senate bill provides for emergency spending at $31 billion, which is slightly higher than the House bill amount of $29.4 billion. The Senate bill also contains language that stipulates that highway spending in fiscal year 2003 will be at least $27.7 billion, and no more than $29.9 billion. This approach guarantees the TEA-21 authorized amount of spending, and provides the Appropriations Committee with the opportunity to increase spending above that amount to the level included in the Senate Budget Committee-passed version budget resolution.

The Senate leadership had intended to bring the supplemental appropriations bill to the full Senate this week, but the Republican leadership objected and the bill will now be considered in June. Congress began a week-long recess for Memorial Day on Friday.

House Struggles to Pass Its Bill

The House began consideration of its version of the supplemental appropriations bill (which includes the language that sets revenue-aligned budget authority, or RABA, at zero in fiscal year 2003) on Wednesday night. After a protracted debate on a number of unrelated items that have been included in the supplemental, the House finally approved the procedural rule that will allow it to consider the bill. The House debated the bill all Thursday, and finally passed it early Friday morning.

Transportation advocates are hopeful that the Congress will act swiftly to stave off the proposed $8.6 billion cut from FY 2002 highway funding levels that was included in the President's budget proposal as a result of the revenue-aligned budget authority calculations. That mechanism ties highway spending to the level of Highway Trust Fund receipts collected -- dubbed the "look-back provision" -- and to receipts forecast, known as "look-forward." Since Highway Trust Fund revenues fell as a result of reduced travel and lower truck sales, the highway program took a double hit in both the reconciliation of past projections and reduced future projections. A number of proposals are being analyzed to revise RABA to smooth out the potential for radical swings. The House last week passed H.R. 3694 which contains "sense of the Congress" language recommending that RABA be repaired. It also states places the $4.4 billion in additional obligation authority for FY 2003 behind the budget firewalls to ensure the funds can only be spent for transportation.

Federal Highway Administrator Mary Peters told the House Transportation and Infrastructure's Subcommittee on Highways and Transit that "Unless we manage highway congestion, our nation will continue to incur economic costs in forgone productivity, wasted fuel, and a reduced quality of life. Strategic expansion of our transportation system capacity is necessary in certain instances to address our existing and growing mobility needs."

Peters said that from 1980 to 2000, highway travel increased 80 percent and the number of drivers increased by 30 percent, while highway mileage increased by only 2 percent. She added that 84 percent of the nation's $7 trillion in freight traffic travels on highways, and is projected to increase by more than 3 percent annually over the next 20 years. Passenger travel growth is projected to increase by more than 40 percent over that period.

A recent study by the Texas Transportation Institute estimated the cost of congestion in 68 urban areas amounted to $78 billion in 1999, wasting 6.8 billion gallons of fuel and triggering 4.4 billion hours of delay.

"Increased capacity, improved efficiency, and proper system preservation have positive effects on the environment, safety and security of our nation's highways," Peters said.

Njord Gives State Perspective

John Njord, Executive Director of the Utah Department of Transportation, told the subcommittee that it will take a variety of tools to reduce congestion, including improved operations, transit investment, advanced technology and smart-growth strategies. However, those initiatives alone can only address 25 to 30 percent of increased demand, he said, making capacity increases essential.

To meet the future demands of congestion relief, increased freight traffic, safety and system preservation, Njord said AASHTO has recommended that the next federal-aid highway and transit bill increase highway investment from $34 billion to $41 billion, and transit investment from $7.5 billion to $10 billion over a six-year period. He also noted that AASHTO supports maintaining current firewalls and amending the revenue-aligned budget authority provision to avoid sharp revenue swings.

In other testimony, Michael Toohey of the American Highway Users Alliance said that congestion can be reduced significantly by making even modest improvements at traffic bottlenecks. He stressed the need for streamlining the environmental review process to "reduce the current 10- to 12-year review timeline to a more reasonable pace."

The Amtrak reauthorization bill (H.R. 4545) was also pulled. Committee Chairman Don Young (R-AK) said, "Certain groups sought impossible goals that make the bill impossible to pass."

Edward Hamberger, the president and CEO of the Association of American Railroads, expressed AAR opposition to the labor provisions in a letter to committee leadership. He said that under the compromise agreement, any entity performing rail-related services would be subject to the Railroad Retirement Act and the Railways Labor Act, including non-railroad contractors.

Concerning the Amtrak bill, Young said, "We will not endorse a business-as-usual, flawed version of rail passenger service, while neglecting a $60 billion breakthrough initiative to make real improvements in this nation's rail transport system."

The conference brought together state transportation officials, utility regulators, environmental professionals and others with the goal of improving approaches to environmental, energy and transportation challenges. A special session focused on environmentally successful state programs.

Speakers said integration of transportation, energy and environmental elements is critical to achieving state and local goals. They also discussed how to better coordinate actions of state agencies. Sessions explored the empact of technology deployment in both energy and transportation, case studies of "real-world" integration projects, and the federal approach to integrating policymaking.

Several state transportation department officials participated in panel discussions, including John Carr of Kentucky, who provided a brief checklist of what needs to be done.

"Our customers want us to provide a cheap, reliable renewable energy source; safe, efficient, congestion-free, attractive transportation which provides personal and freight mobility and is immediately accessible; do this while improving our air quality and being good stewards of the environment; and at no or minimal taxes," Carr said.

"We know we need to be as flexible as possible to create liquidity and allow the market to work to maximize the proceeds for the highway and transit programs. We are definitely on the right track," said AASHTO Executive Director John Horsley.

Horsley, accompanied by the AASHTO financial issues team, held back-to-back meetings with six investment banks in New York to vet the Transportation Finance Corporation concept, to investigate the potential market for tax-credit bonds and to identify preferred characteristics of such instruments.

The widely circulated document alleges that "some" parties are proposing to eliminate public participation and to set deadlines on participating agencies to accelerate project delivery. It states that well over half of delayed projects are stalled due to lack of funding, local support and project complexity, and maintains that better planning and administration of current laws are needed -- "not changes to law."

The organizations specifically propose:

• Planning - to integrate "existing resource protection efforts into transportation planning to ensure future projects will avert impacts."
• Involvement - Promote more public involvement in transportation plans.
• Coordination - "Direct state DOTs to work collaboratively with state and federal resource agencies, municipalities and other interested parties to develop environmentally sound transportation projects and plans."
• Classification - "Properly classify projects for environmental review." Projects are delayed, the groups maintain, because critics must take legal action to "challenge a flawed administrative process."
• Alternatives and impacts - "Effectively consider a wide variety of alternatives, as well as secondary, induced and cumulative impacts on project planning, design and review. Many delays occur, the groups assert, because agencies have failed to "effectively consider" impacts of transportation projects.

However, the Washington Post reported on Friday that some lawmakers plan to push a measure that would arm pilots, have flight attendants carry a wireless "panic button" device to warn the cockpit crew of trouble elsewhere on the plane, and to provide defense training to flight attendants.

Some pilots have been pressing to be allowed to fly armed, to give them that option for repelling possible hijackers. Four commercial planes were taken over by hijackers September 11, 2001; three were flown into the World Trade Center in New York and the Pentagon near Washington, D.C., killing thousands. The fourth crashed into a Pennsylvania field after passengers apparently overcame the hijackers.

Magaw's remarks came in response to a question from the ranking Republican on the panel, Sen. John McCain of Arizona.

"Pilots need to concentrate on flying the plane," Magaw told McCain. Specially trained air marshals should be the only armed parties on board commercial flights, he said. "These marshals are trained, not only in the use of weapons, but all the things that build up to that." Magaw said it is important that use of a firearm not deteriorate the safety of people on board: "We don't want them shooting the firearm with the potential of bringing that airplane down," he said.

Democratic Sen. Ernest Hollings, Chairman of the committee, said keeping the cockpit door locked during flights would prevent hijackers from getting in, and obviate any need for armed pilots. The Post reported that Hollings is a strong opponent of arming pilots.

Sen. Conrad Burns (R-MT), a co-sponsor of legislation to let pilots fly armed, asked Magaw to reconsider his position, saying the pilots who want to fly with guns would get training similar to that undergone by the air marshals. A House bill to allow pilots to fly armed is set for a hearing in the House Transportation Committee this week.

U.S. Transportation Secretary Norman Mineta and Tom Ridge, Director of Homeland Security, both have expressed opposition to the idea of arming pilots.

Senators also raised questions regarding the use of Airport Improvement Program funds for purposes other than airport construction and improvements. Senator McCain broached the issue by noting that projects needing AIP funding already exceeded funds in the program.

However, late this week executives of the airline were reported to be expressing concern to members of Congress about a measure that would suspend the airline loan-guarantee program US Airways is proposing to tap until October 1. The Washington Post reported that the provision was inserted by House Republican leaders in an attempt to offset some costs of a $29.4 billion emergency defense bill.

Executives outlined the plan to leaders of the airline's unions May 16, saying the carrier would have to be reorganized under Chapter 11 of the federal bankruptcy laws if the labor concessions and loan guarantees were not forthcoming, AP reported. The loan guarantees would be available through a $15 billion industry bailout fund Congress approved last year, as airlines struggled with lowered passenger counts following the Sept. 11 terrorist attacks on the U.S.

Jerry Glass, senior vice president for human resources at US Airways, said the proposed cuts would send the carrier's employees from highest-paid in the industry to about sixth- or seventh-highest paid. Employees would bear about 80 percent of the reductions, AP reported.

"The national recession and the economic fallout of September 11 combined with the explosion in Medicaid spending caused a $40 million-$50 million budget shortfall over 40 states - the most ever - in fiscal 2002," the NGA and NASBO announced at a news conference. "As a result, 39 states were forced to reduce their enacted budgets by about $15 billion, had to tap 'rainy-day' funds, and had to make transfers from other reserves."

Raymond Scheppach, NGA executive director, said recovery will not be just around the corner even if the national recession is easing, because state revenue growth "lags the recovery by at least 12 to 18 months." Further, he said, "Medicaid has reached the breaking point ... We need a short-term fix and a long-term strategy to reform the program. Fiscal relief from the federal government would help a great deal in the near term."

As the budgetary problems have crowded in, at least 11 states have had to hold special legislative sessions to deal with the shortfalls, while 26 have made across-the-board cuts, 22 have tapped rainy-day funds, 11 have laid off employees, three have offered workers early retirements, and 10 reorganized programs.

NGA supports a measure by Sen. Ben Nelson (D-NB) and Sen. Susan Collins (R-ME) to boost the federal share of Medicaid by 1 percentage point for each state, for an 18-month period starting April 1. That would raise about $3.8 billion for the states and territories. The proposal also includes a social-services and health-care block grant totaling $4.4 billion.

First Workshop Held by AASHTO's Project Finance Institute

The first workshop of AASHTO's Project Finance Institute drew 25 state transportation officials from around the country to the campus of the University of Southern California in Los Angeles for training in innovative financing techniques.

John Horsley, Executive Director of AASHTO, who addressed the group, said "AASHTO created this new technical service program to deliver training and technical services in project finance, backed up with the academic expertise of the University of Southern California (USC). With the critical transportation needs facing states today, we must find ways to maximize our resources, and this partnership shows the way." Among those attending were personnel from the investment banking community, state and local governments and staff of private sector engineering firms.

Program highlights include: Safety and Security in Local Transportation - The Effects of September 11th; Unlocking Funding for Local Roads; TEA-21 Reauthorization and Local Roads: Prospects and Impacts; and Reminding the Hill of Local Transportation Needs: How to Talk to Congress.