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April 15, 2009 - ASCE Statement - FY 2010 Surface Transportation Programs

Statement of
The American Society of Civil Engineers
On The Fiscal Year 2010
Surface Transportation Programs
United States House of Representatives
Subcommittee on Transportation, Housing and Urban Development, and Related
Agencies
Committee on Appropriations

April 15, 2009

The American Society of Civil Engineers (ASCE)1 is pleased to present to the Subcommittee our views on the proposed budget for the nation’s surface transportation program.

ASCE’s 2009 Report Card for America’s Infrastructure graded the nation’s infrastructure a “D” based on 15 categories (the same overall grade as ASCE’s 2005 Report Card), and said that the nation needs to invest approximately $2.2 trillion over the next five years to maintain the national infrastructure in good condition. Even with the current and planned investments from federal, state and local governments in the next five years, the “gap” between the overall need and actual spending will exceed $1 trillion in 2014.

The following are the grades and the five-year investment needs in the surface transportation area:
*Bridges received a grade of C;
*Roads received a grade of D-, and combined with bridges, have an estimated five-year investment need of $930 billion;
*Rail received a grade of C- and has an estimated five-year investment need of $63 billion; and
*Transit received a D and has an estimated five-year investment need of $265 billion.

As the Administration is in the process of developing a comprehensive approach for the 2010 surface transportation authorization, its Fiscal Year (FY) 2010 Department of Transportation proposed budget contains no policy recommendations for programs subject to reauthorizations, including Federal-Aid Highways. Instead, the budget displays baseline funding levels for all surface programs. 

To reflect the growing imbalance between projected Highway Trust Fund (HTF) revenues and baseline spending, the budget shows only the HTF funding that can be supported while maintaining positive annual cash balances in the HTF. The remaining spending compared to the baseline for the program is shown as discretionary budget authority from the General Fund. The Budget includes $5.0 billion in new contract authority and obligation limitation in the existing Federal-Aid Highways account and $36.1 billion in a new General Fund share account. The following represents our understanding of the Administration’s proposed FY 2010 Transportation Department budget.

The FY 2009 obligation limitation for the Federal-Aid Highways program was $40.7 billion. With the baseline increase, the total FY 2010 funding level for the program proposed in the budget is $41.1 billion. The budget proposes cutting the 2010 obligation limitation to $5.0 billion and making a direct general fund appropriation for the remaining $36.1 billion to bring the total to $41.1 billion.

The total program level for the Formula and Bus Grant program will increase from $8.26 billion in FY 2009 to $8.34 billion under the proposed 2010 budget. But only $5.0 billion of that will be in the form of an obligation limitation on funding from the Mass Transit Account of the Trust Fund – the remaining $3.34 billion will be a direct general fund appropriation. The appropriation for Capital Investment Grants (new start rail and BRT projects) is $1.827 billion.

We would note that proposed General Fund appropriations which are used to replace HTF funding are conditional, as the budget proposal states that the General Fund appropriations will be provided unless other legislation is enacted that authorizes a change that results in a positive cash balance in the HTF, projected through the end of fiscal year 2010.

The budget proposes $1 billion for Capital Assistance for High-Speed Rail Corridors and Intercity Passenger Rail Service and funding for Amtrak would increase from $1.490 billion to $1.502 billion.

The Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration programs would receive a one percent baseline increase and would continue to receive full support from the HTF.

We believe that the Administration’s proposed budget reflects a reasonable level of funding but have concerns that the systemic problems with the Highway Trust Fund (HTF) are not being addressed. While the estimates vary, there will be a deficit in the HTF of between $8-10 billion by the end of FY 2009. Congress must take the lead in addressing this problem to ensure continuity in the nation’s surface transportation program. In the long term, we are concerned that the Administration and the Congress are not addressing the urgent need to upgrade the nation’s aging infrastructure or improve the safety and mitigate the congestion on our nation’s roads, by making a strong commitment to the nation’s surface transportation system.

The longer Congress waits to enact a properly funded and re-designed surface transportation bill, the greater the problem will become. Inaction will lead to a further deterioration of the nation’s surface transportation assets, a continuation of high levels of traffic fatalities and more wasted time and fuel due to increased congestion creating a further drag on the economy.

Currently, most infrastructure investments are made without the benefit of a national vision. To ensure that the 2009 surface transportation bill is one which addresses the nation’s Twenty first century transportation needs, we propose five key solutions:
*Increased federal leadership;
*Promoting sustainability and resilience;
*The development of federal, regional, and state infrastructure plans;
*Addressing life cycle costs and ongoing maintenance; and
*Increased and improved infrastructure investment from all stakeholders.

Freight Mobility
As the U.S. economy has expanded to global markets, the movement of goods and services has concurrently increased its reach. Freight must now move across vast distances, usually through a combination of modes. The Interstate Highway System was built on a truckdependent model, and thus goods do not always move seamlessly from one mode to the next. To meet the demands of the global economy, the surface transportation authorization must enhance and improve connectivity and level of service to the major intermodal terminals including seaports, airports, rail terminals, ports of entry, and inland intermodal terminals.
Inherent in the authorization must be a paradigm shift that focuses on the movement of people, goods, and services, rather than simply cars and trucks.

The volume of freight being moved on the nation’s roadways continues to increase and is expected to double by 2035 requiring an estimated $148 billion in improvements to accommodate the projected rail freight demand increase. Freight and passenger rail generally share the same network, and a significant potential increase in passenger rail demand will add to freight railroad capacity challenges. Interstate commerce remains the historic cornerstone in defining the federal role in the nation’s transportation system. The authorization of the surface transportation program must provide for a strong federal role in freight mobility and intermodal connectors. This should include the creation of a program funded with new dedicated revenue to provide new capacity and operational improvements focused on securing safe, efficient movement of freight.

Bridges
Usually built to last 50 years, the average bridge in our country is now 43 years old. According to the U.S. Department of Transportation, of the 600,905 bridges across the country as of December 2008, 72,868 (12.1%) were categorized as structurally deficient and 89,024 (14.8%) were categorized as functionally obsolete. While some progress has been made in recent years to reduce the number of structurally deficient and functionally obsolete bridges in rural areas, the number in urban areas is rising.

To address bridge needs, states use federal as well as state and local funds. According to the American Association of State Highway and Transportation Officials (AASHTO), a total of $10.5 billion was spent on bridge improvements by all levels of government in 2004. Nearly half, $5.1 billion was funded by the Federal Highway Bridge Program--$3.9 billion from state and local budgets and an additional $1.5 billion in other federal highway aid. AASHTO estimated in 2008 that it would cost roughly $140 billion to repair every deficient bridge in the country--about $48 billion to repair structurally deficient bridges and $91 billion to improve functionally obsolete bridges.

Simply maintaining the current overall level of bridge conditions, meaning not allowing the backlog of deficient bridges to grow, would require a combined investment from the public and private sectors of $650 billion over 50 years, according to AASHTO, for an annual investment level of $13 billion. The cost of eliminating all existing bridge deficiencies as they arise over the next 50 years is estimated at $850 billion in 2006 dollars equating to an average annual investment of $17 billion.

Roads
Our nation’s economy and our quality of life require a highway and roadway system that provides a safe, reliable, efficient, and comfortable driving environment. Although highway fatalities and traffic-related injuries declined in 2007, the drop is likely attributable to people driving less. Motor vehicle crashes cost the U.S. $230 billion per year—$819 for each resident in medical costs, lost productivity, travel delays, workplace costs, insurance and legal costs.

Next to safety, congestion has become the most critical challenge facing our highway system. Congestion continues to worsen to the point at which Americans spend 4.2 billion hours a year stuck in traffic at a cost of $78.2 billion a year in wasted time and fuel costs—$710 per motorist. The average daily percentage of vehicle miles traveled (VMT) under congested conditions rose from 25.9% in 1995 to 31.6% in 2004, with congestion in large urban areas exceeding 40%. As a result of increased congestion, total fuel wasted climbed from 1.7 billion gallons in 1995 to 2.9 billion gallons in 2005.

From 1980–2005, while automobile vehicle miles traveled (VMT) increased 94% and truck VMT increased 105%, highway lane-miles grew by only 3.5%. From 1994–2004, ton miles of freight moved by truck grew 33%.

It is clear that significant improvements and system maintenance will require significant investments. Current spending of $70.3 billion per year for highway capital improvements is well below the roughly $200 billion estimated to be needed annually to improve conditions. The National Surface Transportation Policy and Revenue Commission studied the impact of varying investment levels (medium and high) and produced the following ranges of average annual capital investment needs (in 2006 dollars):
*$130 billion–$240 billion for the 15-year period 2005–2020;
*$133 billion–$250 billion for the 30-year period 2005–2035;
*$146 billion–$276 billion for the 50-year period 2005–2055.

The lower end of the ranges reflect the estimated costs of maintaining key conditions and performance measures at current levels, while the higher end ranges would allow for an aggressive expansion of the highway system, which would provide improved conditions and performance in light of increasing travel demand. Even at the lower range of estimates, an enormous gap exists between the current level of capital investment and the investment needed to improve the nation’s highways and roads.

Rail
As regional and intercity transportation corridors in the United States become increasingly congested, investments in intercity passenger rail systems, including high speed ground transportation (HSGT), are increasingly attractive as part of an overall transportation mobility strategy to provide added capacity and high quality service. Investments in this technology are cost effective, environmentally responsive and energy efficient and should be considered as companion investments to traditional highway and air modes. Other nations, in Europe and Asia in particular, have invested heavily in the development and construction of new HSGT systems and intercity passenger rail networks over the past four decades. While the U.S. has spent substantial sums in highway and air passenger networks, North America has lagged in the development and implementation of efficient, relatively non-polluting, and high-capacity intercity passenger rail and HSGT networks. The $13 billion for HSGT investment, ($8 billion in The American Recovery and Reinvestment Act and $1 billion annually for the next five years), will provide the foundation for advancements in the HSGT area.

The Passenger Rail Working Group (PRWG) estimates that an annual investment of $7.4 billion through 2016, totaling $66.3 billion, is needed to address the capital cost of a proposed intercity rail network. It is further estimated that an additional $158.6 billion is needed between 2016 and 2030 and, and that an additional $132.2 billion must be invested between 2031 and 2050 to achieve the ideal inter-city network proposed by PRWG.

Therefore, a federal rail trust fund should be developed to fund rail improvements, using the 80/20 match formula to encourage state participation. Revenues for this trust fund could come from sources such as a tonnage fee, mileage fee, ticket tax, and/or general treasury funds. ASCE also encourages the use of innovative financing methods like revenue bonds and tax exempt financing at the state and local levels, public-private partnerships, and state infrastructure banks.

Transit
In recent years transit use has increased more rapidly then any other mode of transportation. Ridership increased by 25% from 1995 to 2005—to 10.3 billion trips a year, the highest number of trips in 50 years. The increased popularity of the nation’s transit sector has led to growth in both the number and size of transit systems in the U.S. While both demand and new investment bring badly needed transit service to more Americans, existing systems continue to require investments to replace aging infrastructure; thus, the revenue that is available must be spread further than ever before. At the same time, dwindling revenues in the Highway Trust Fund impact the transit sector's financial health at a time when more Americans are relying on it for travel.

Last year, federal transit contributions equaled $9.8 billion. However, the Federal Transit Administration has estimated that an annual investment of $ 15.8 billion is needed to maintain the current conditions and performance of transit systems, and that $21.6 billion is needed to improve conditions and performance. These estimates are supported by the recent findings of the Federal Surface Transportation Study and Revenue Commission. Assuming a constant level of investment relative to 2006 dollars, transit ridership will continue to increase unimpeded to between 18 and 20 billion trips annually. However, if funding is increased, transit ridership will be able to increase more rapidly and the physical condition of the nation's transit systems will improve, while resulting in reduced congestion on the nation’s roadways and the increased development of local economies.

Transportation is a critical engine of the nation’s economy. It is the thread which knits the country together. To compete in the global economy, improve our quality of life and raise our standard of living, we must successfully rebuild America’s public infrastructure. Faced with that task, the nation must begin with a significantly improved and expanded surface transportation system, which requires that the 2009 surface transportation authorization legislation be signed into law prior to the expiration of SAFETEA-LU on September 30.

ASCE stands ready and looks forward to the opportunity of working with Congress as it develops a well funded and financed progressive surface transportation authorization bill which is founded on a strong national vision, adequate funding and new technology which creates a world class integrated, multi-modal national transportation system, second to none.