The American Society of Civil Engineers
On Investment Needs for
Federal Surface Transportation Programs
United States House of Representatives
Subcommittees on Oversight and Select Revenue Measures of the
Committee on Ways and Means
June 25, 2009
The American Society of Civil Engineers (ASCE)1 is pleased to present to the Subcommittees our views on the investment needs facing the nation’s surface transportation program in the coming years.
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 categories:
• 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.
The lack of improvement in grades is caused by many factors, including deferred maintenance on the nation’s aging surface transportation systems and insufficient funding from all levels of government, as well as from a lack of compelling national leadership.
Currently, most infrastructure investment decisions are made without the benefit of a national vision. That strong national vision must originate with strong federal leadership and be shared by all levels of government and the private sector. Without a strong national vision, infrastructure will continue to deteriorate.
While the Report Card points out serious deficiencies in the nation’s infrastructure as well as the need for focused and visionary leadership and adequate funding, these can be addressed. The key solutions offered by ASCE are ambitious and will not be implemented overnight, but
Americans are capable of real and positive change. The five key solutions are:
• Increase federal leadership in infrastructure;
• Promote sustainability and resilience;
• Develop federal, regional and state infrastructure plans;
• Address life cycle costs and ongoing maintenance; and
• Increase and improve infrastructure investment from all stakeholders.
Transportation infrastructure has a direct impact on the nation’s personal and economic health, and without a sustained commitment to improve and maintain the current system, we jeopardize our future prosperity. With a combined need of $1.2 trillion just for surface transportation, there is a compelling case for dramatically increasing federal investment levels.
Congress must take the lead in addressing this problem and reforming the nation’s surface transportation program. Congress must address 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.
ASCE applauds the investment made by the American Recovery and Reinvestment Act (ARRA) of 2009 towards restoring and upgrading the nation’s surface transportation system. This much needed down-payment represents a significant first step towards enhancing the nation’s deteriorating surface transportation system while simultaneously creating thousands of jobs. The new surface transportation authorization must continue to build on the investment foundation laid by ARRA.
The longer Congress waits to enact a properly funded 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.
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. (See Figure 8.1) Once Congress works to address these problems in the 2009 authorization of the Surface Transportation Program, it should establish a goal that less than 15% of the nation’s bridges be classified as structurally deficient or functionally obsolete by 2013 and should provide the funding needed to accomplish this goal.
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 $10.5billion 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 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, that is, 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.
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 most likely attributable to people driving less. Still, in 2007, 41,059 people were killed in motor vehicle crashes and 2,491,000 were injured. 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 costs, 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%. And as a result of increased congestion, total fuel wasted climbed from 1.7 billion gallons in 1995 to 2.9 billion gallons in 2005.
Poor road conditions lead to excessive wear and tear on motor vehicles and can also lead to increased numbers of crashes and delays. According to the Federal Highway Administration, while the percentage of VMT occurring on roads classified as having “good” ride quality has steadily improved, the percentage of “acceptable” ride quality steadily declined from 86.6% in 1995 to 84.9% in 2004, with the lowest acceptable ride quality found among urbanized roads at 72.4%. These figures represent a failure to achieve significant increases in good and acceptable ride quality, particularly in heavily trafficked urbanized areas.
Compounding the problem is steadily increasing demand on the system. From 1980–2005, while automobile 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%. (see Figure 11.1) The increase in freight traffic is of particular concern because of the increased dependency of commerce upon the efficiency of the roadways and the added wear and tear caused by trucks. Without adequate investment and attention, the negative trends will continue, as will the adverse consequences.
It is clear that significant improvements and system maintenance will require significant investments. 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; and
• $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.
The challenges imposed by our highway infrastructure require a large increase in capital investment on the part of all levels of government and other sources as well. The failure to adequately invest in the nation’s highways and roads will lead to increased congestion and delays for motorists and the further deterioration of pavement conditions and will pose increased safety concerns. An overstressed infrastructure will also slow freight delivery, create unpredictability in supply chains, diminish the competitiveness of U.S. businesses, and increase the cost of consumer goods. There must also be a significant change in the way we manage the system, which should include the use of emerging technologies and innovative operational strategies.
Legislation to replace SAFETEA-LU must address the following issues if it is to set the stage for the major reforms needed to ensure the viability of our surface transportation system. First, it must more clearly define the federal role and responsibilities, and from that definition, the framework for a performance-based and fully accountable system can emerge.
Second, it is clear that the current funding model for the Highway Trust Fund (HTF) is failing. The latest projections by the U.S. Department of Treasury and Congressional Budget Office indicate that by the end of FY 2009, the HTF will have a negative balance if no corrective action is taken. While acknowledging the need to move to a new, sustainable funding system in the long term, the National Surface Transportation Policy and Revenue Study Commission has recommended an increase of 5–8 cents per gallon in the gas tax per year over the next 5 years to address the current projected shortfall. And the recently released report of the National Surface Transportation Infrastructure Financing Commission calls for a 10 cent per gallon increase in the federal gasoline tax and a 15 cent per gallon increase in the federal diesel tax while also acknowledging the need to transition to a mileage-based user fee. We cannot continue to rely upon gasoline and diesel taxes to generate the HTF revenues when national policy demands a reduction in both our reliance upon foreign sources of energy and our nation’s carbon footprint. An increase in the gas tax is necessary in the short term, but our national policy must move toward a system that more directly aligns fees that a user is charged with the benefits that the user derives.
Finally, the legislation must encourage innovative thinking and solutions from all sectors: public, private, and academia.
In recent years, transit use has increased more rapidly than 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. An estimated 34 million trips are taken on public transportation each weekday and of those trips, 59% are taken by individuals commuting to and from work, 11% by individuals traveling to and from school, and 9% by individuals traveling to and from leisure activities. Between 2000 and 2004, the number of passenger miles traveled by all transit passengers increased at an annual rate of 1.3%. Passenger growth on transit rail lines grew at an even greater rate, 4.3%. By moving workers and shoppers, transit is increasingly becoming a major economic factor.
SAFETEA-LU, authorized more than $45 billion in transit investments. However, the increased popularity of transit, as evidenced by robust increases in transit ridership and strong support for local funding initiatives, has led to growth in both the number and size of transit systems in the U.S. While new investment brings 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 (HTF) impact the transit sector’s financial health at a time when more Americans are relying on it for travel.
While mass transit can be an affordable and environmentally friendly travel alternative to automobiles, the American Public Transportation Association (APTA) estimates that approximately half of Americans do not have access to reliable transit systems. A 2005 survey conducted by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau found that only 54% of American households have access to bus and rail transit and only 25% have what they consider a good alternative to such transit.
Funding for transit increased modestly between 2000 and 2004. Indicating an increase in service demand, 23 of 32 (72%) of local ballot initiatives for public transportation—or initiatives with a public transit component—were passed in 2008, authorizing nearly $75 billion in expenditures. Much of this local revenue is intended to match federal investments. Total capital spending from all sources was $12.6 billion in 2004, up from $12.3 billion in 2002, and up more than 140% during the past 15 years. Federal contributions totaled $9.8 billion in 2008.
The FTA estimates that an additional $6 billion should be spent annually to maintain current conditions; however to improve conditions, a total of $21.6 billion needs to be spent annually. 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. If funding is increased, however, transit ridership will be able to increase more rapidly and the physical condition of the nation’s transit systems will improve. With a “medium” level of funding—between $14 and $18 billion a year—the Commission estimates that between 26,000 and 51,000 new vehicles could be added to the system and that between 1,100 and 1,500 additional miles of rail track could be laid. In addition, the system will be able to accommodate between 12 and 14 billion trips annually by 2020. During that same time period, with a “high” level of funding—between $21 and $32 billion annually—between 51,000 and 96,000 new vehicles could be added to the fleet and between 3,000 and 4,400 miles of track could be laid.
The number of annual trips could increase to between 13 and 17 billion.
The 2008 State and National Public Transportation Needs Analysis, commissioned by APTA and AASHTO, estimated the total funding requirements for various growth percentages. Assuming a moderate annual passenger growth rate of 3.52%, $59.2 billion must be spent annually by all levels of government in order to improve both infrastructure condition and service performance. Total expenditures by all levels of government in 2007 were $47.05 billion.
Approximately 42% of all intercity freight in the United States travels via rail, including 70% of domestically manufactured automobiles and 70% of coal delivered to power plants. As of 2006, Class I railroads owned and operated 140,249 miles of track. However, most traffic travels on approximately one-third of the total network, which totals 52,340 miles.
After years of shedding excess capacity, railroads have been increasing infrastructure investment and spending in recent years. In 2006, overall spending on rail infrastructure was $8 billion, a 21% increase from 2005. More specifically, spending on construction of new roadway and structures increased from $1.5 billion in 2005 to $1.9 billion in 2007. Increased spending on maintenance of railroad networks and systems has become necessary as investments are made in more costly signaling technology, heavier rail, and the improved substructure necessary to accommodate heavier trains.
Demand for freight transportation is projected to nearly double by 2035, from 19.3 billion tons in 2007 to 37.2 billion tons in 2035. If current market shares are maintained, railroads will be expected to handle an 88% increase in tonnage by 2035. However, as many look to rail as a more efficient and environmentally friendly freight shipper, rail’s market share could increase and lead to additional increases in freight rail tonnage.
An estimated $148 billion in improvements will be needed to accommodate the projected rail freight demand in 2035. Class I freight railroads’ share of this cost is estimated at $135 billion. Through productivity and efficiency gains, railroads hope to reduce the required investment from $148 billion to $121 billion over the period 2007 through 2035.
Amtrak, the nation’s only intercity passenger rail provider, carried 28.7 million riders in fiscal year 2008, an 11.1% increase from fiscal year 2007. Further, the 2007 ridership represented a 20% increase from the previous five years. Corridor services linking major cities less than 500 miles apart, such as Milwaukee-Chicago, Sacramento-San Francisco-San Jose and the Northeast Corridor are experiencing the fastest growth.
Increased ridership has led to increased revenue, and Amtrak received $1.355 billion in federal investment in fiscal year 2008. However, an additional $410 million in immediate capital needs have been identified, including acquiring new cars to add capacity. In addition, upgrades to comply with the Americans with Disabilities Act (ADA) and improve overall conditions of the 481 stations in its network are estimated at $1.5 billion.
Amtrak anticipates reaching and exceeding capacity in the near future on some routes. For example, approximately half of trains traveling on one northeast regional line were 85% full and 62% were at least 75% full during one week in July 2008. Even though the current economic downturn has dampened growth, trains will soon reach capacity as the economy rebounds and the growth patterns of recent years are reestablished, and the fleet of cars and locomotives continues to age.
In the long term, the Passenger Rail Working Group (PRWG), which was formed as part of the National Surface Transportation Policy and Revenue Study Commission, determined that an annual investment of $7.4 billion through 2016, totaling $66.3 billion, is needed to address the total 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 an additional $132.3 billion must be invested between 2031 and 2050 to achieve the ideal intercity network proposed by the PRWG. These costs do not include the mandated safety upgrades for freight rail lines that carry both passenger as well as freight traffic and for those routes that carry toxic chemicals as required by the Rail Safety Improvement Act of 2008.
While the investments set forth by the PRWG are significant, the benefits would be significant as well. The PRWG estimated a net fuel savings of nearly $4 billion per year by diverting passengers to rail if the proposed vision was adopted. In addition, the investments would reduce the need for even greater capacity investments in other modes.
Intercity passenger rail faces particular concerns not faced by other modes of transportation, such as the lack of a dedicated revenue source. Amtrak owns and/or operates 656 miles of track that are maintained and upgraded using funds from its general operating budget, impacting its ability to fund other projects. The annual congressional appropriations process has provided minimal funding in recent years, leading to a major backlog of deferred track maintenance on the track that Amtrak owns and operates, more than half of which is shared with commuter and freight railroads. For the remainder of its 21,095-mile network, Amtrak relies on freight rail lines that make maintenance and upgrade decisions on the basis of their own business models and shareholders’ interests while preserving Amtrak’s statutory rights for access. Freight and passenger rail interests are becoming more aligned as both require increases in rail network capacity, but successful alignment of interests will require both a public and private investment.
Rail is increasingly seen as a way to alleviate growing freight and passenger congestion experienced by other modes of transportation. In addition, rail is a fuel efficient alternative for moving freight long distances. Anticipated growth over the coming decades, as well as demographic shifts, will tax a rail system that is already reaching capacity in some critical bottlenecks. A substantial investment in rail infrastructure will maximize efficiencies and ultimately reap broad benefits for passengers, shippers, and the general public.
Expanding Infrastructure Investment
Establishing a sound financial foundation for future surface transportation expansion and preservation is an essential part of authorization. Despite increased funding levels in TEA-21 and SAFETEA-LU, the nation’s surface transportation system requires even more investment.
ASCE supports the following items for infrastructure investment:
• A 25 cent per gallon increase in the motor fuels user fee. To maintain the current conditions of the surface transportation infrastructure, as defined by the U.S. Department of Transportation’s Conditions and Performance (C&P) Report, a 10 cent increase is necessary. The additional 15 cent increase would go towards system improvement including congestion relief, freight mobility, and traffic safety.
• A maintenance of effort requirement to ensure that all levels of government are making comparable financial commitments to improve the nation’s surface transportation system.
• The user fee on motor fuels should be indexed to the Consumer Price Index (CPI), in order to preserve the purchasing power of the fee.
• All motor fuels should be taxed equitably.
• The Highway Trust Fund balances should be managed to maximize investment in the nation’s infrastructure.
• Congress should preserve the current firewalls to allow for full use of trust fund revenues for investment in the nation’s surface transportation system.
• The authorization should maintain funding guarantees.
• Tolling, vehicle taxes, state sales taxes, congestion pricing, container fees, and transit ticket fees must all be considered in the development of revenues for the maintenance and improvement of the surface transportation system.
• The current flexibility provisions should be maintained. The goal of the flexibility should be to establish an efficient multi-modal transportation system for the nation.
• The development of a freight mobility program to guarantee the efficient movement of freight and reduce system congestion.
• The creation of a permanent commission to determine the levels at which motor fuel user fees should be set, and when those fees should be increased.
• Efficiency in delivering infrastructure projects to shorten delivery times and decrease costs.
ASCE supports the need to address the issue of future sources of revenue for surface transportation funding. Congress should allow for the exploration of the viability of the most promising funding options that will maintain the viability of the HTF. In particular, the impacts of increased fuel efficiency and alternate fuel technologies such as fuel cells should be studied. A mileage-based system for funding our nation’s surface transportation systems also needs further study. A large scale demonstration project, to follow up on the work done on the pilot program in Oregon, should be executed to determine the practicality of such a program. The data will be critical in determining how to generate HTF revenue as the nation’s dependence on gasoline as a fuel source for automobiles is reduced.
While recognizing that innovative financing is not a replacement for new funding, ASCE supports innovative financing programs and advocates making programs available to all states where appropriate. Additionally, the federal government should make every effort to develop new programs. These types of programs include the Transportation Infrastructure Finance and Innovation Act, State Infrastructure Banks, and Grant Anticipation Revenue Vehicles. It should be noted, however, that innovative financing does not produce revenue, and should not be seen as an alternative to increasing direct user fee funding of surface transportation infrastructure. Innovative financing techniques can greatly accelerate infrastructure development and can have a powerful economic stimulus effect compared to conventional methods. This is the current approach in South Carolina, Georgia, Louisiana, Florida, and Texas, where expanded and accelerated transportation investment programs have been utilized.
ASCE recognizes Public Private Partnerships (PPPs) as one of many methods of financing infrastructure improvements. ASCE supports the use of PPPs only when the public interest is protected and the following criteria are met:
• Any public revenue derived from PPPs must be dedicated exclusively to comparable infrastructure facilities in the state or locality where the project is based;
• PPP contracts must include performance criteria that address long-term viability, life cycle costs, and residual value;
• Transparency must be a key element in all aspects of contract development, including all terms and conditions in the contract. There should be public participation and compliance with all applicable planning and design standards, and environmental requirements; and
• The selection of professional engineers as prime consultants and subconsultants should be based solely on the qualifications of the engineering firm.
ASCE supports the development of criteria by governing agencies engaging in PPPs to protect the public interest. Examples of criteria include input from affected individuals and communities, effectiveness, accountability, transparency, equity, public access, consumer rights, safety and security, sustainability, long-term ownership, and reasonable rate of return. In addition, ASCE supports the creation of a National Infrastructure Bank that would create a wholly-owned government corporation that would make loans for large scale infrastructure projects of national significance. An infrastructure bank has the potential ability to jumpstart projects that will contribute to meaningful and lasting improvements in mobility, capacity, or environmental restoration.
Transportation is the 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. The surface transportation system authorization must be founded on a new paradigm; instead of focusing on the movement of cars and trucks from place to place, it must be based on moving people, goods, and services across the economy. Beyond simply building new roads or transit systems, an intermodal approach must be taken to create a new vision for the future. Included in this new vision must be plans to deal with the possible effects of climate change, a strong link to land use, sustainability of the system, the use of commodities, and anticipation of the expected changes in the population’s demographics, especially age and urbanization.
ASCE looks forward to working with the Committee as it develops the funding mechanism for a progressive surface transportation authorization bill which is founded on a strong national vision, adequate funding and new technology, which creates an integrated, multi-modal national transportation system second to none.