Statement of Rolf Lundberg on Comprehensive Reauthorization Proposals before the House Subcommittee on Highways and Transit

Statement of Rolf Lundberg, Senior Vice President, U.S. Chamber of Commerce
before the House Subcommittee on Highways and Transit on Comprehensive Reauthorization Proposals

September 19, 2002

Mr. Chairman, Ranking Member Borski, members of the Subcommittee, thank you for allowing me to appear before you today to discuss our reauthorization proposals for the next TEA-21. I am Rolf Lundberg, Senior Vice President of Congressional & Public Affairs at the U.S. Chamber of Commerce. The United States Chamber of Commerce is the world's largest business federation representing more than three million companies and organizations of every size, sector and region. My testimony will address reauthorization proposals that are critical to the business community and vital for a national, seamless transportation network.

The Importance of Transportation Infrastructure Investment

For the nation, the importance of investment in our nation's transportation system is critical to our future economic growth, international competitiveness, quality of life and national security. Throughout our nation's history, economic growth, prosperity, and opportunity have followed investments in the nation's infrastructure. For example, between 1980 and 1991, almost one-fifth of the increase in productivity in the U.S. economy was attributable to investment in highways.

Our nation's highways, transit and rail systems not only provide the backbone of our economy by moving people and goods, they also employ millions of workers and generate a significant share of total economic output. Transportation services generated 11 percent of our total Gross Domestic Product in 1999. Our "just-in-time" supply chain mindset demands that we move our people and freight faster than any country in the world. Unfortunately, our transportation infrastructure system is ill-prepared to handle the higher and higher volumes of freight and people.

In just a twenty-five year span — 1970 to 1995 — highway passenger travel in the U.S. nearly doubled. But improvements to and expansion of our highway system are not keeping up. Since 1970, vehicle miles traveled have soared 123 percent while road capacity has increased just five percent. To keep congestion from growing between 1998 and 1999 would have required either 1,800 new lane-miles of freeway and 2,500 new lane-miles of streets, or 6.1 million new trips taken by either carpool or transit. These events did not happen, and congestion increased.

On the mass transit system, there are almost 3,825 route miles of commuter rail service in operation in the U.S. An additional 134 miles are under construction and 300 miles in design, with over 2,300 miles in planning and 1,100 additional miles under consideration for commuter rail projects. Over the past six years, ridership on the nation's public transportation systems has grown faster than the population. 14 million Americans use public transportation every day and 25 million people use transit on a regular basis. Supplementing commuter rail, the passenger and intercity bus industry serves more than 4,000 communities directly with scheduled service.

There are many consequences of a sub par system — congestion, decreased productivity, more accidents and diminished global competitiveness. The cost of road congestion to the U.S. economy was nearly $78 billion in 1999 — more than triple what it was 20 years ago! Billions and billions more are lost to companies when their products don't reach their destinations on time.

Funding Requirements Not Meeting Demand for Surface Transportation

U.S. Department of Transportation (DOT) data show that a minimum $50 billion per year federal investment in highway improvements is necessary to simply maintain the current physical conditions and system performance of the nation's highway and bridge network. To actually produce improvements, DOT reports that a $65 billion per year federal investment is needed. Currently, we spend $30 billion a year. On the transit side, DOT estimates that $17 billion in capital investment is needed annually just to maintain and improve current public transportation services. We currently spend $7 billion a year. To meet these current challenges, we must invest our limited resources in a better, more efficient manner. We must look at innovative financing and public-private partnerships to supplement the federal user fee system.

Chamber's TEA-21 Reauthorization Policy Principles

Over the past year, the U.S. Chamber's Transportation and Logistics Committee has formulated its TEA-21 reauthorization policy principles. A copy of our nine-point agenda is attached. The Chamber strongly advocates that TEA-21 reauthorization recognize the multi-modal nature of the nation's transportation network and strive to improve mobility and competitiveness within the network.

The Highway Trust Fund has a significant unobligated balance of $20 billion that that is not being spent for transportation projects. Our nation needs to spend all revenues collected into the Highway Trust Fund for surface transportation investment and look at public-private partnerships where feasible and equitable. The federal government collects user revenues into the Highway Trust Fund for transportation infrastructure maintenance and improvements. With our nation continuing its economic recovery, now is the time to utilize the unobligated balance to ensure the safety and security of our nation's transportation system as well as prevent the unnecessary loss of family wage jobs.

Furthermore, we need to find ways to accelerate project delivery once the decision is made to maintain and improve our transportation infrastructure. Due to the complicated permit review process, it takes an average of 15 years to complete the permit process for runways and about 12 years for a new highway. We want to see the permit process streamlined so that there will not be repeated delays in construction of roads and new runways.

During reauthorization of TEA-21, we will advocate that all transportation fuel taxes should be placed to the Highway Trust Fund that was set up to pay for the maintenance and improvement of the system. The U.S. Chamber believes that ethanol should be taxed at the same rate as gasoline and that the 2.5 cents per gallon of the ethanol tax that is currently paid into the General Fund should be transferred to the Highway Trust Fund. That is why it is of critical importance to ensure the investment of all Highway Trust Fund revenues into much needed surface transportation programs.

The Chamber will continue to review various proposals that could provide additional resources to the surface transportation program. We must fully utilize all current funding mechanisms before looking at new funding options but the Chamber's overall priority is to have the federal government invest in a surface transportation system that meets the demands placed by both business and the public at large.

Furthermore, TEA-21 reauthorization should include a repeal of the 4.3 cents per gallon diesel fuel tax that the railroads and barges currently pay into General Fund for deficit reduction. This tax on the railroads and barges is an unfair burden as no other mode of transportation pays a deficit reduction tax. The repeal of this tax would restore more than $170 million per year for freight railroads to invest in infrastructure and equipment.

U.S. Chamber North American Port Study

The Chamber is also undertaking a study, "Trade and Transportation — Study of North American Port and Intermodal Systems."

The study, due to be released at the end of the year, examines the projected growth in international trade and its impact on port capacity and related transportation infrastructure. Led by the National Chamber Foundation, the U.S. Chamber's public policy and research affiliate — the study forecasts imports and exports by major cargo types, and the future impact on the capabilities and operational effectiveness of North American ports and the associated rail and road systems. The study will include recommendations to enable the nation's transport infrastructure to keep pace with the projected growth in the economy over the next 20 years, along with possible funding sources. We hope that selected recommendations of the study can be incorporated in the TEA-21 reauthorization legislation.

Freight Stakeholders Coalition

The U.S. Chamber has also been a participant in the Freight Stakeholder's Coalition. The goal of the coalition is to highlight the importance of investing in the nation's freight infrastructure. We strongly endorse the principles articulated by the coalition: protecting the integrity of the Highway Trust Fund, dedicating funds for National Highway System connectors to intermodal freight facilities, and forming a national freight industry advisory group to provide industry input to DOT. The coalition also strongly advocates highlighting freight infrastructure projects of national significance and ensuring priority funding for these vital multi-modal projects that can relieve congestion at the freight "chokepoints." In addition, the coalition wants to see the "corridors and borders program" expanded to include a concept of gateways.

Americans for Transportation Mobility

Last summer the U.S. Chamber helped launch a new coalition called Americans for Transportation Mobility, or ATM. ATM is a broad-based organization of transportation users and providers, state and local organizations, and state and local government officials. The coalition has more than 350 organizations whose objective is simple: to build public and political support for a safer and more efficient transportation system. We hope to achieve our objective through a two-pronged approach: 1) Ensuring that Congress fully dedicates federal transportation trust fund revenues for their intended purpose, and 2) accelerate the project review process by removing redundancies. All the money in the world will not help if we are not efficient in the planning and approval for much-needed improvement projects.

For the first time, the business and labor communities have joined together in educating lawmakers on the importance of improved mobility and safety to future economic growth. Without meeting the mobility needs for the movement of people and goods, our nation will not achieve economic success and quality of life it demands. The ATM coalition looks forward to working with this subcommittee and the full Transportation & Infrastructure Committee in ensuring adequate investments are made over the next several years in our transportation network.

Security & Intermodalism

Today, as we continue to respond to the events of September 11, we should strengthen, not diminish, America's freedom of movement, and transportation systems to effectively grow the economy. Consequently, service interruptions — like accidents, congestion, driver shortages, labor strikes, late arrival of ships and trains, terrorism, and unpredictable systemic inefficiency — can quickly unravel today's tightly strung systems. That's why many of us in the business community are challenging proposals that are advanced to make us feel more secure, but which won't work. The U.S. Chamber believes that defending the homeland should be achieved without losing our openness and mobility, or slowing the engines of commerce. We also caution government to distinguish ideas that will work from those that won't, and balance the need for greater security with the requirements of international commerce.

And there's the rub. Many in Washington have been taught to think about transportation vertically – about each particular mode as an individual economic mechanism. Each, of course, has its strengths and its weaknesses, and its wants and needs … and those are legitimate characteristics of individual business. But in today's world, American economic efficiency requires that we rise above parochial thinking. We encourage TEA-21 reauthorization to continue the process of looking at our transportation network as an integrated system.

Fiscal Year 2003 Transportation Appropriations

Faced with a possible $8.6 billion shortfall in FY 2003 highway funding, the bipartisan, bicameral leadership of the House Transportation & Infrastructure Committee and the Senate Environment & Public Works Committee introduced the Highway Funding Restoration Act (H.R. 3694/S. 1917). The legislation would at a minimum restore $4.4 billion of the $8.6 billion reduction for FY 2003. This restoration would bring federal highway funding to the minimum level authorized in TEA-21 ($27.7 billion). With a balance in the HTF of over $20 billion, there has been overwhelming support in Congress to address the FY 2003 funding shortfall with 315 House members and 71 Senate members cosponsoring the legislation.

What would happen if the $8.6 billion reduction took place? Studies that link spending to jobs suggest the loss of up to 350,000 jobs for starters. These jobs are held by hard working men and woman who could ill afford to lose their job as our country is recovering from an economic slowdown. How about the impact on state highway projects? Several states have already frozen new projects until the federal funding situation is clarified. In Iowa, an $8.6 billion reduction would delay approximately $50 million -$60 million in state highway and bridge projects in FY 2003. South Carolina would be forced to delay $25 million in pavement and reconstruction contracts, $22 million in Interstate highway upgrades and $15 million in safety upgrades. A significant reduction in federal funding would put a great strain on state resources during a time when state tax revenues are declining.

The Senate Appropriations Committee has approved a FY 2003 Transportation Appropriations bill that would restore the entire $8.6 billion, as well as fully fund transit and aviation programs. We urge this Subcommittee to work with the House leadership and the Appropriations Committee to ensure this issue is addressed during the remainder of the FY 2003 appropriations process. A full restoration is critical to ensure continued strong growth in the surface transportation program and to serve as the baseline for TEA-21 reauthorization.

Conclusion

In closing, the U.S. Chamber will continue to advocate increased spending on transportation infrastructure and streamlining of environmental review process. We will play an active and aggressive part in advancing the idea of a transportation agenda that strengthens our national transportation system. We are living in a new world that requires new thinking and approaches to transportation that should be characterized by changed behaviors and measurable results. We will remind the public and Congress that infrastructure is not disposable — it is a strategic asset that must be renewed and protected.

Freight transportation can no long be taken for granted, and "seamless multi-modal trade corridors" are no longer the stuff of transportation fiction. Transportation — as an integrated system — is an essential component of America's global competitiveness, and, as such, it can no longer be relegated to the backbench of U.S. public policy. We need to continue to explore public-private collaboration such as the Alameda Corridor project in California that provides multi-modal solutions to the congestion of both moving people and freight.

The impact of doing nothing will be increased congestion, decreased safety on our roads, and setbacks in our ability to improve air quality. The U.S. Chamber and chambers throughout the nation look forward to working with Congress and the President to bring about continued, predictable investment in our nation's transportation system in TEA-21 reauthorization. Investment in our national transportation system will ensure we remain a leader in the global marketplace.

Thank you, and I am happy to answer your questions.