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Public Statements

Hearing of the Senate Committee on Environment and Public Works - The Need for Transportation Investment

CHAIRED BY: SENATOR BARBARA BOXER (D-CA)

WITNESSES PANEL I: RAY LAHOOD, SECRETARY, U.S. DEPARTMENT OF TRANSPORTATION; PANEL II: EDWARD G. RENDELL, GOVERNOR OF PENNSYLVANIA; KATHLEEN M. NOVAK, PRESIDENT, NATIONAL LEAGUE OF CITIES, MAYOR OF NORTHGLENN, COLORADO

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SEN. BOXER: Good morning, everybody. Sorry for running a little late. I was on the floor this morning, Senate floor.

Today's hearing focuses on the need for transportation investment as we move forward with the next highway transit and highway safety authorization. The current legislation, SAFETEA-LU, will expire on September 30, '09. The new bill, we are calling it MAP-21, Moving Ahead for Progress in the 21st Century. This legislation will impact all Americans, because it sets the policy and provides the funding for transportation nationwide, and this committee will be taking the lead to authorize the new legislation.

We held several hearings in the 110th on issues including bridges, goods movement, safety, and the federal role in transit. I also held field hearings in several California cities to hear directly from my constituents on their ideas for a new bill.

At this time I would ask unanimous consent that all the statements which were submitted as part of my California field hearing be inserted in the record, without objection. We will continue to hold hearings, meetings, and listening sessions to make sure all points of view are considered. We continue to hear loud and clear that the need for investment is great.

Congress passed and the president recently signed into law the American Recovery and Reinvestment Act of '09, H.R. 1, which provided a total of $48 billion for transportation improvements. Of that ($)48 billion, ($)27.5 (billion) was included for the highway program. These funds are currently being used to improve our nation's infrastructure and are already creating jobs. And the committee does plan to oversee the use of those funds informally and formally.

The funding provided in H.R. 1 was a good start, but certainly not enough. We must have continued investment to maintain these jobs and make additional needed improvements to our infrastructure. The National Surface Transportation Policy and Revenue Study Commission, which released a congressionally mandated report in January of '08, called for investments of up to -- at least ($)225 billion annually over the next 50 years at all levels of government, to bring our existing surface transportation infrastructure to a good state of repair and to support our growing economy.

All combined, our states, our cities, and the federal government are spending 40 percent less than that amount. The more recent February '09 report, of the National Surface Transportation Infrastructure Financing Commission, estimates that we need to invest at least $200 million per year at all levels of government to maintain and improve our highways and our transit systems.

According to the U.S. Department of Transportation's '06 Conditions and Performance Report, the cost at all levels of government to maintain our current highway system is ($)78.8 billion a year, that's just to maintain, while the cost to improve the system would be $131 billion per year. This same report shows that the backlog of needed improvements to simply maintain the current highway program is ($)495 (billion).

Today's witnesses will further highlight the need for investment in transportation at the Federal, state, and local level. I appreciate each of the witnesses, because they took time out of their busy schedules to be with us today, and I look forward to hearing their testimony.

I'd like to give a very special welcome to Secretary LaHood who is making his first appearance before this committee as the Secretary of Transportation. I appreciate his being here today, and I look forward to working with him and all of my colleagues on both sides of the aisle on MAP-21. And we are very happy to have Governor Rendell with us and Mayor Novak who will be on the next panel, and the final panel.

So at this time I'm happy to turn it over to Senator Inhofe for his opening statement.

SEN. JAMES M. INHOFE (R-OK): Thank you, Madame Chairwoman. I would like to defer my opening statement to Senator Bond who has a conflict and then if you'd wind me back into the system after that.

SEN. CHRISTOPHER S. BOND (R-MO): Thank you very much, Madame Chair, and Senator Inhofe, I very much appreciate it. I unfortunately do have another hearing I have to attend, but this hearing is an extremely important opportunity to examine the transportation investment needs throughout our system. And also to develop a proper transportation infrastructure that fosters economic development and produces the greatest return to taxpayers.

I thank all the witnesses for appearing today. Your perspectives will give us a unique glimpse into our nation's transportation needs at the local, state, and federal levels, to give us a more accurate understanding of our systems' deficiencies, develop a better insight into how transportation dollars are best spent, and examine how all of those needs can come together to move our country forward.

It needs to be said again and again, that quality infrastructure connects people and communities with one another. And it is this connection that attracts and sustains businesses, jobs, and high quality of life for our constituents.

One of the toughest questions that we are going to face is funding for the Federal Highway Trust Fund. We all know the decline in road miles has really hurt that fund. I was very disappointed that we could not add in the stimulus bill, a withdrawal of the rescission scheduled for September 30th of this year, $8 billion. That is $8 billion worth of work that would be underway, that will be cut off if we are unable to deal with that in the time between now and then.

In my home state of Missouri, we have seen a significant improvement over the last decade, but obviously like all states, we have a long way to go. We are maintaining our current infrastructure better, we have seen the major percentage of our major highways in good condition go from 47 to 83 percent over four years. Structurally deficient bridges have decreased by 5 percent over the same time period.

That being said, obviously there is a lot of work yet to be done. We've made great strides. But to continue forward, we must make investments to bring our infrastructure up to speed. There is a growing concern in Missouri -- is in the capacity of the system.

We are at the crossroads of the nation. Right in the middle of the country traffic North, South, East, and West goes through our state. We are beginning to bust at the seams. Our vehicle miles traveled are at historic highs, congestion rates are up with more and more Missourians, and interstate travelers tied up in traffic next to trucks carrying products that are necessary for commerce.

Congestion is a real problem. It is taking an economic toll at a time when we simply cannot afford more burdens on our system. Moving forward, we have to invest more in good roads, but we cannot rely on roads alone. We have to look towards rail and river transport as efficient ways to move goods at each check points.

River transportation is the most economical, energy efficient and environmentally friendly way of transporting large commodities. We have to start to think in a comprehensive manner that stresses flexibility of one entire transportation system, rather than just the separate several ones. There will be a tendency just to throw money at it, but we remember that it won't necessarily fix our problems. We have to be diligent in creating an authorization bill that makes infrastructure investments in a wise way and provides taxpayers a good return.

One issue that has -- is going to have an enormous impact on our needs for transportation investment return is project delivery time. And we worked with the Department of Transportation in the past and look forward to their guidance on this in the future.

As we speak, the cost of transportation projects across the country are increasing while contractors, municipalities, state DOTs, wade through the mass of bureaucracy that is our current project development process. Simply put, we cannot afford to continue down the path of 10 to 15 year delivery times for transit in the highway projects.

It doesn't take a mathematician to figure out such an impediment means project costs doubling or tripling for congested highways, decreased productivity, and compromised road safety. We have difficult decisions before us, Madame Chair, but understanding both the challenges ahead and establishing a clear path can make those decisions more informed and more effective.

I thank you, Madame Chair, Senator Inhofe, Senator Baucus, Senator Voinovich, for your hard work. I look forward to hearing perspectives from our witnesses and from you on how together we can craft a new authorization bill that will move us forward in solving our infrastructure needs and thus our economic needs. Thank you, Madame Chair.

SEN. BOXER: Thank you so much. We are so fortunate on this committee, we have such -- so many senior members of the Senate, and you know, not the least of which is the chairman of the Finance Committee. We are so fortunate, because we have to work so closely with the Finance Committee as we move forward.

Here is the order of arrival on the Democratic side -- Cardin, Baucus, Lautenberg, Klobuchar, Merkley. So if there is no disagreement, I'll call you in that order. And on the side -- the Republican side would be Inhofe, Barrasso, and Voinovich, if that is okay.

So we will hear from Senator Cardin.

SEN. BENJAMIN L. CARDIN (D-MD): Well, thank you very much, Madame Chair, and let me thank you for holding this hearing. There is no question, and I would ask that unanimous consent that my entire opening statement be placed in the record.

SEN. BOXER: Without objection.

SEN. CARDIN: And I wanted to just underscore some brief points. There is no question that our national transportation system is in dire need of repairs and investments. We've heard the dollar amounts of what it would take in order to get our transportation infrastructure up to date.

Let me just share with you the frustration of motorists in the Washington area and the Baltimore area. I commute every day between Baltimore and Washington, so I see first hand, the frustration of motorists and those who are trying to commute back and forth to work. It has been estimated that we spend 4.2 billion hours a year stuck in traffic. Now, that translates to about $78 billion lost to our economy, and $3 billion -- 3 billion gallons of fuel wasted every year. So this is a huge issue, a huge challenge for America to try to get this right to invest in our transportation system.

I think the American Recovery and Reinvestment Act was a good first start. It provided significant investments in transportation, in the right way for our country. It provided $48 billion of investment in transportation, and did it in a way that would be friendly towards energy independence and towards our environment.

So I think our challenge Madame Chair is to craft the Surface Transportation Reauthorization Act that you referred to as MAP that will meet our investment needs in a fiscally responsible way. That means, it's nice to talk about the dollar amounts that we need, but let's talk about how we are going to pay for it.

And I understand that Senator Baucus is here and he has probably the greatest burden of any of us, as Chairman of the Finance Committee. And I know it's not easy to figure out how we can do what we need to do in our economy without jeopardizing our economic growth. But I think we need to make sure that what we do in the Surface Transportation Reauthorization Act is consistent with our overall responsibility to balance the federal budget, and I hope that we will take up the revenues as part of the way that we go about a realistic reauthorization bill.

Secondly, I think we need to make sure this is done in an environmentally friendly way. We talk about that. The transportation can play a huge role in reaching our goals on our responsibility to future generations towards our environment.

This committee has heard me talk frequently about public transportation, and how our investments in public transportation will help us deal with energy independence, will help us deal with reducing green house gases. It will help us deal with quality of life. I think these are important points and need to be part of the policies that we look forward to in our next effort on reauthorization.

And let me just mention anther area where I think we can make incredible progress on our environment. And that deals with the quality of our order. The way that we do transportation construction can have a major impact on run-off issues and quality of order in this country, which is another coordinated policy that I hope we will use as we look at the reauthorization.

So, yes, it's critically important that we make the right investment. And my colleagues will be giving numbers of how America is behind the rest of the world in the investments that we make, the public investments we make generally, as well as what we make in transportation. And we need to increase that. We need to increase our investments for our future.

Well, let's make sure it's not done in tunnel vision that our only priority is to see how many roads we can build. Let's take a look at the overall problems that we have in America in dealing with quality of life, and our commitment to our environment, and our commitment to energy independence. And if we get this right, I think we truly will be making the right investments for America's future.

I look forward to hearing from our witnesses today and I really do look forward to the work of this committee in giving constructive suggestions along with our president to meet these goals.

SEN. BOXER: Thanks, Senator, very much.

Senator Inhofe.

SEN. INHOFE: Thank you, Madame Chairman. And we all appreciate the opportunity to get into this thing. We've talked about it now, since we saw the expiration coming. This will be my fourth reauthorization. My first one was when I was serving in the House. So it's something that I am very, very much concerned about.

There is a direct link between a robust economy and a strong transportation infrastructure. And that is one of the problems we are having right now. We started this system way back in the Eisenhower days, relying on the proceeds to revenues from a -- the gas tax. And this just really hasn't worked.

I think that today, the witnesses that we have, Governor Rendell, I remember meeting you up in Philadelphia during -- when we had -- not that you were attending the Republican convention, but I was -- we were up there together. And Ms. Novak, it's nice to have you here. And of course --

I called up the president, when he nominated Ray LaHood to be the Transportation secretary. And I said this is by far the best nomination that you have made. And then I thought afterwards, am I destroying his career? So I'm glad to see you've made it through confirmation, and just look forward to continue to work with you.

As I mentioned, the Highway Trust Fund has always had surpluses until just recent years. And this is something that is very difficult to deal with because others noticing the surplus, they started hitchhiking, putting different things that were not really roads and bridges, and other interests in there, because the money was there.

And I can remember back in 1998, when the then President Clinton took a very large amount of money, $9 billion out of the Highway Trust Fund, and put it back into the general fund. And it was 10 years later that we were able to get that reversed back over. So we had to be kind of patient they say. Nonetheless, we have greater needs and we are going to have the money and the conventional sources to get it done.

While the chairman and myself philosophically differ on a lot of things, we are together. It really bothers people on how much we like each other, when we talk about transportation. But we tried. We tried to put an amendment on the stimulus bill to triple the amount of money that would have gone.

Out of $787 billion only ($)27 billion was going to go to this -- 3 percent -- and that is not adequate. We tried to triple that amount, and we were unsuccessful in being able to get the bill out. So we are going to -- I think -- and I want to hear from Senator Baucus on this. I think we are going to have to get a little more creative. If we are going to be able to do what we have to do, it's going to be close to $400 (billion) to $500 billion to do the job that needs to be done.

I know in my state of Oklahoma -- and I notice that the senator from Missouri had to leave, but he used to be dead last in terms of the condition of the bridges interstate. And now my state of Oklahoma is dead last. And we want to do something about that. We have that obligation.

So we are going to get together. We've had several Big-Four meetings. And we are going to try to get this done. And as I say, Madame President -- you and I -- Chairman -- we tried, we've talked about this for so long now, about whether it's a VMT or what we have to do to deviate from what we've done for the last 50 years, that we are going to have to do something. So let's get creative.

SEN. BOXER: Thank you so much, Senator. And you certainly speak for me. We are partners on this effort and it's a very good thing for the country, I think.

Senator Baucus, we are thrilled you are here.

SEN. MAX BAUCUS (D-MT): Thank you, Madame Chairman, and thank you for calling this hearing on the needs. Really we have many needs for our transportation system. One definition of "need" is in the Webster's Dictionary, and I quote it, and I repeat it here. "It's a lack of something requisite, desirable, or useful."

Transportation infrastructure has always been requisite, desirable, and useful to our economic growth and our national security. Whether it was Treasury Secretary Albert Gallatin, building the first national road at a cost of about $13,000 per mile, which was a staggering sum for a country steeped in debt in 1911.

Or was it the 1862 passage of the Pacific Railway Act that connected the Missouri River to the chairman's home sate of California. Or it was the first authorizing legislation for Federal Highway, such as the Federal Aid Road Act of 1916, and the Federal Aid Highway Act of 1921. All of these things and others have combined to make our country the safest and most prosperous place on earth.

And we can still see the fruits of those efforts. As Governor Rendell might know, Gallatin's National Road runs close to South- Western Pennsylvania, which they called U.S. Route 40. The president who led the passage of the Pacific Railway Act was Lincoln, from Secretary LaHood's home state of Illinois. And his efforts resulted in what we now refer to as the Union Pacific Railroad.

And our current interstate network is based on maps developed as far back as that 1916 authorizing legislation. My state of Montana depends on federal infrastructure deeply, especially, on federal investment infrastructure. We are a vast rural state. We have more miles per -- federal miles per capita than any state in the nation.

However, we have a small population with one of nation's lowest rates of per capita income. Back after the World War -- World War II Montana ranked 10th in the nation's per capita income. We now rank about 40s -- 48th, 49th per capita income. Big state, lots of highways, low income. That makes it difficult to meet the needs by ourselves, although we are on the top one-third in the country in state gasoline taxes.

Like many other near-by rural states, Montana serves as a key bridge state for freight movements moving through the state. Montana is 10th of all the states in terms of interstate miles. Over nearly half of our primary roads are nearing the end of the 50-year design life.

And Montana is not alone. Other rural states, such as Idaho, Wyoming, Vermont, and New Mexico also have needs that can only be addressed through a national highway program. And finally, it would be very easy just focus on urban needs, to the detriment of rural needs. And that is one of the major concerns, although I have several, that there are ideas that some people have, such as, the national infrastructure bank.

I fear that a national infrastructure bank will serve urban areas at the expense of rural. And I'm afraid there are a lot of money in a national infrastructure bank, again proposed by some, will go to fund non-transportation matters, such as urban water treatment systems and public housing, rather than addressing our highway, bridge, and road needs.

Instead, I think that bank idea will rob the future growth of the highway program. And that will destroy the national scope of our highway program. The key strength of our highway program is that it's national -- the interstate program is based on the premise that we are one country. It links various parts of our country together. Some could pay for highways more easily than can others. Rural states clearly cannot.

And I also want to point out that we've got lots of financing mechanisms to pay for surface transportation. The mechanisms is not the problem. The problem is the funds. It's the money that flows through those mechanisms. So we don't need new mechanism, if we don't have the fund, don't have the money. And that is why I urge all of us to figure out ways to make this surface transportation program really work and address our future needs.

I've sometimes mentioned probably to the -- ad nauseam to maybe members of this committee, how a couple years ago, when I was in China, I got off a plane in Chongqing, China, and I -- to say nothing of Shanghai, and other parts of China. They just call it Chongqing, fly to Chongqing -- wonderful, big new airport, fancy big airport.

And -- when I arrived there, the council there, over in Chengdu met us, and he is very angry. He said, why couldn't the Americans help build this airport. Why couldn't American engineers help build this airport? It was German and other engineers over there.

Then, we got into the car and drove on the highways. I could not believe it. The best fanciest interstate highways I've ever seen. They are better than those in the U.S. Nice big ribbons going through Chongqing. Chongqing has nearly a 33 million people. And that's just one part of China. That is just one part. And there are many other parts of the world that are building wonderful infrastructure programs.

Not to -- I try to not to talk too long here, but it was just an example here. Several years ago, I was meeting at the business round table, here in the Capitol Hill. And we were just trying to figure out what is it really that gets our country moving again in terms of infrastructure, get it going again?

This country responds to crisis. We responded to Pearl Harbor. We responded to Sputnik. You know, we respond to crisis.

The trouble is that the competitive crisis we are facing from competitor pressures overseas is not well defined. It's not like a Sputnik; you can't see it in the sky immediately. Nor is it like a Pearl Harbor, or the Great Depression, we did respond to a crisis.

Well, there is one fellow in the room here, who is as the CEO of a major railroad, he said, Senator, I've seen Sputnik. Sputnik is the Shanghai harbor. All of you should go to Shanghai if you haven't already. Look at that harbor; look at the massive infrastructure spending China is undertaking, up-to-date, modern. It far surpasses that of the United States -- far surpasses.

I have been to Vietnam not too long ago. Vietnam is building a huge, huge sea port that's going to rival Singapore and Hong Kong. And I've been to Dubai. Dubai is doing the same thing about air and air transportation, big brand new airport, and a brand new port.

So all I'm saying, and Madame Chairwoman, I'll stop here, that we have to, in the United States, get our act together and address infrastructure in a big way. We can't just authorize another highway bill.

We've got to, big time, figure out a way to reauthorize our transportation system with many new funding mechanisms and relying basically upon the current highway system, because that is a formula which allocates dollars to states and gets away from big political fights that otherwise occur in infrastructure bank. Frankly the bank just -- this is for project deals, it is not just for a system approach. And so I just urge us to, you know, keep our eye on the ball, let's get a very good transportation system program passed.

SEN. BOXER: Well, Senator Baucus, I know how hectic you are, and what's on your shoulders. I really want to thank you so much. I'll take just 60 seconds or less to say that your being here today is very important. And your message and your challenge to us is, equally is important.

I just for the -- the public should know that for the last, well, I would say 6 months even before the election, we were meeting, the four of us, who will deal with this as a first child. And the rest of the committee will soon enter the negotiations. We've been looking at all of the possibilities that have been laid out by the various commissions on how to do what Senator Baucus says, which is to look at how we are going to do this in the future.

I think that statement about, I've seen the new Sputnik -- and it's this -- it's public works that we are falling behind, is a brilliant point. And it does challenge us.

And I know Senator Voinovich if I could maybe say something about you, sir, you know, Senator Voinovich, a senior member of our committee, who is now part of the big four, has said to me that he wants to solve this problem. Because he -- as you know, he comes from state government.

"We have to do our share, the states have to do their share, but we can't do our share with an ever dwindling Highway Trust Fund." Now, President Obama at first in the budget took this whole trust fund idea and basically said it's not working. And we don't accept that.

We are going to make sure that there is a stream of fundings. So I guess what I want to say is my commitment is to do everything in my power working with my friend Jim Inhofe. We are going to look at, along with Senator Baucus, Senator Voinovich, and every member of this committee, every idea that has come before us.

And we welcome more ideas, I say to our panelists as they come up, because this is our challenge. And we cannot walk away from it, because we will be walking away from the future, and none of us wants to do that.

So it's my pleasure now to call on Senator Barrasso. I know colleagues have to run off to other places, but your words will not be lost on us.

Senator Barrasso.

SEN. JOHN A. BARRASSO (R-WY): Thank you very much Madame Chairman. Thank you Senator Inhofe, thank you Mr. Secretary for being here. Enjoyed visiting with you prior to this hearing. I also want to thank you Madame Chairman for trying to get Governor Freudenthal of Wyoming to testify today and requesting -- do invite him in the future.

Because -- just as Senator Baucus has just testified, there are huge issues in terms of the rural states, great miles and long miles and not many people in between. So as we look forward to this new Highway Reauthorization Bill, it's important that this committee and Congress not to lose sight of the importance of a national interconnected system of highways that includes access for rural America, with Wyoming and Montana are bridge states as Senator Baucus has mentioned.

And these are states that allow the flow of commerce to move from coast to coast. The great majority of the truck traffic in the states of Montana and Wyoming doesn't originate in those states, doesn't terminate in those states, but yet, they travel through. And it is those large trucks for which we must make sure that the roads are maintained for the trucks and the national commerce. Not just for the folks that live within the states. So we must ensure that the next highway bill enables transportation between major cities by connecting rural areas with well-maintained roads.

Mr. Secretary, as you know, you can't drive from Illinois to the chairman's home in California without driving across Wyoming and Interstate 80. So again I want to thank you for coming up here to testify and I look forward to your testimony today.

Thank you, Madame Chairman.

SEN. BOXER: Senator Lautenberg, we are so happy you're here, you are such a leader on this. Welcome.

SEN. FRANK LAUTENBERG (D-NJ): Thank you. Coming from the State of New Jersey, which is the most densely populated state in the country, you can predetermine my interest in transportation.

Secretary LaHood, good to see you here. We continue to have discussions along the way, and we are happy that you have your heart as well as your mind in investments in transportation. I focus a lot on rail, but highways and air are all necessary places for attention.

Each year we need $250 billion just to meet our country's transportation needs according to the federal commission. And yet, we are investing less than half of that amount. Now is the time to change our priorities and our plans for the future. Now is the time despite the hardship, the economic hardship that we face as a country for a policy that will renew and vitalize our transportation infrastructures, because it will create jobs, reduce congestion, reduce our dependence on foreign oil, and fight global warming.

And first America needs more, not only passenger rail service, but to expand our freight rail systems as well. Goods move more efficiently -- people and goods on rail than they do on congested highways, and Amtrak, for instance. So ridership hit historic records last year and that was the sixth straight year in the row that ridership on Amtrak increased. And as a user of the Acela train, I find out that the airplanes seem to be getting slower.

It takes longer to get where you want to go on an airplane these days. Last Thursday night, I went to the airport to get a (train ?) to the New York area. I can fly either to New York or New Jersey, because I'm midpoint between there on Jersey side.

And I got on the airplane, 6:30 flight, shuttle to the La Guardia Airport.

They closed the door on the airplane, almost concurrent was an announcement by the pilot who said, I'm sorry to tell you we have a two-hour wait. That was just after announcing flying time was 40 minutes; a two-hour wait. They've got to get better airplanes.

Anyway, and to see Governor Rendell, our distinguished governor of our neighboring state here, and see what progress he has made in the State of Pennsylvania with a new line that he was very happy to talk to me about some time ago on the success in Atlanta. It gets spilled off into Pittsburgh. It has been evidently successful.

And in getting cars off the road, getting people on the trains saves time, money, energy. Last year, we passed the law that I wrote, to revolutionize Amtrak and passenger rail. Combined with new funding in the economic recovery law, it will lead to more reliable service and major improvements in rail service throughout the country.

And as an aside, if we make the update, the changes that we need for high-speed or rail, high speed rail we can relieve significantly, the congestion in the skyways. One out of four flights that take off today, as determined by 2007, one in four flights was late. And if we can get more people on the trains, in the shorter distances, we can improve conditions even up in the air.

Second, we need transit options for our commuters from subways, buses, to commuter trains. More people are riding America's public transit options than ever before. In 2008, Americans showed the highest ridership in 52 years. Mass transit reduces our dependence on foreign oil release, stress, and congestion on our already crowded roads and bridges, and saves commuters' money on gas and other costs associated with commutation by car.

And thirdly, we need to repair our highway infrastructure, and we heard it from Senator Baucus just now, about how our country is far less advanced, far less developed than we -- having improved our highway system. He talked about China in particular. Twenty-first century economy cannot be built on collapsing bridges. Nearly 25 percent of our nation's bridges are still deficient. We've got to be able to repair them to carry the cars, trucks, and buses that will continue to be part of our transportation network. To meet the demands of tomorrow, we need to make major changes and commit to investments in our surface transportation programs today.

And this hearing, as that was noted, marks the beginning of our committee's work in correcting a new surface transportation bill. And I sit on the commerce committee as well as the environment committee. I'm chairman of the surface transportation subcommittee here.

I welcome the opportunities ahead of us. I look forward to working with our energetic chairperson and my colleagues in the new administration to rebuild our roads, our tunnels, and bridges, while also expanding our rail, subways, and bus service.

In the past, this legislation, Madame Chair, has been called the highway bill, but our future needs call for a true surface transportation bill that encompasses all modes of transportation. I thank you very much.

SEN. BOXER: Thank you, Senator, very much.

Senator Voinovich.

SEN. GEORGE VOINOVICH (R-OH): Thank you, Madame Chairman. I want to publicly thank you for your leadership in getting our staffs together to begin trying to make sure that we get this transportation bill done on time.

I experienced two of the transportation bills when I was governor from the State of Ohio and I'm glad that Governor Rendell is here, and Mayor Novak. I think it's important that we have the perspective of both state and local government. And I've lobbied here as the president of your group and as chairman of the national governors. And I think so often your perspective isn't adequately heard here and you indeed are our partners.

And I think it's important that you emphasize how important it is that we get this done on time, because even though we have the stimulus bill, we need to know where we're going, not only in terms of our infrastructure, but also in terms of the economy. And I know in my state, and I'm glad that the chairman and the ranking member encouraged more money in the stimulus bill, but my state, we have $2.7 billion worth of shovel-ready projects. And we, out of the stimulus bill, got less than $1 billion. So the need is there and I think it's important that we get this done on time.

Second, I think we all know that the national surface transportation infrastructure financing commission came back and said that we need overall, another $234 billion between the federal government and the role that state and local government plays. I think it's important that we decide what the number is, and what we're capable of doing, so that there is a consensus there. And then the second, it's just like working with your legislators.

It's nice if the governor sits down with a legislator and says here's the budget. You guys agree with the number. Okay. Fine. We agree on the number, then, how do we get the money to take care of getting the job done? So I think that's important, Madame Chairman, that we decide on what that number is, and second of all, on how are we going to pay for it.

And there's a lot of discussion about how we should do it. The thing that I know this doesn't ring a bell with too many people, but I'm absolutely surprised when I met with the Chamber of Commerce people and all the other groups that in the past have been just adamantly opposed to seeing an increase in the gas tax. And then, coming on board, saying this is necessary for us to get the job done, understating that that isn't the sole source of revenue that there's other revenues that will be available to you -- to us.

So Madame Chairman, I'm just anxious to work with you and see if we can get a consensus and move forward to get this done on time, and get the money on the street, and put people back to work.

SEN. BOXER: Well, Senator, that's music to our ears. I think this is one area where we're going to see tremendous cooperation. And I'm so thrilled to see all the attendance here.

It is slowing us up so, if we could move to 4-minute opening statements now, if you can and if you don't -- if you can't, you can add another minute -- Amy, you can add your other minute if you want.

Senator Klobuchar.

SEN. AMY KLOBUCHAR (D-MN): Thank you very much, Madame Chairman. Thank you to our witnesses, mayor, and governor. I wouldn't have gotten to Washington without having driven on the Pennsylvania turnpike. Thank you.

Secretary LaHood, who just visited our state with the vice president during the past week, I think you saw that people cared about transpiration not just in densely-packed New Jersey, but in St. Cloud, Minnesota, where at the town meeting, I would say they were very result-oriented. Especially about the route of the rail from Big Lake to St. Cloud. And thank you so much for spending the time out there.

The need for transportation investment in our state, and I think you could feel it when you were there, became tragically clear to us when the I-35W bridge collapsed in the middle of the Mississippi River, killing 13 people, injuring scores of others. And as I said that day, a bridge just shouldn't fall down in the middle of America. It was a tragedy that shocked our country and exposed our deteriorating transportation infrastructure.

For far too long, we have neglected our roads and our bridges, and according to the federal highway transportation administration, more than 25 percent of the nation's 600,000 bridges are either structurally deficient or functionally obsolete. I think, we talked about the bill that Congressman Oberstar and I have, which mandates the bridge repair money be used for bridge repair money. Because we found that was an issue in our state and others as there's a natural tendency to want to build new bridges and open new infrastructure, when in fact, some of our infrastructure needs to be fixed.

It's not just a safety issue. It's also an economic issue, congestion, and inefficiencies across our transportation network limit our ability to get goods to market. They exacerbate the divide between urban and rural America, and they constrain economic development and competitiveness.

Our state is ninth in the country for Fortune 500 companies, from 3M, to Target, to Best Buy, to Medtronic, to General Mills, and our business community actually has been very focused on trying to get more transportation funding on the state and the federal level, because they see this connection. And if we're going to move into a 21st century economy, we need a 21st century transportation system.

The recovery act, the stimulus package was a good first start toward bolstering our investment in our transportation system. But it's just a start. As we've all discussed, there's going to be challenges with funding, but we also see this as an opportunity. Every billion dollars of highway spending creates 35,000 new jobs.

And as we've discussed today, it's not just about the roads and bridges, and I know you understand this from our meeting; rail, rapid transit, high occupancy lanes, pedestrian walkways, other options. Smart planning decisions at the local level will also serve to broaden options for many Americans while helping to reduce our dependency on foreign oil. Research and innovation, something we haven't talked about is much -- can stretch our transportation dollars even further.

IBM in the twin cities and Rochester, Minnesota, is looking to partner with the University of Minnesota to examine how advancement in intelligence transportation solutions can solve some of our most pressing transportation needs. So whether it's predicting a traffic jam before it happens, or using smart cards to provide a paperless transit system, public-private partnerships all across America will play a key role in leading us into the 21st century.

So those are some of the things that I'm going to be focusing on as we debate this bill, but I want to thank you for recognizing, which I clearly saw when you came to Minnesota, how important this is to our economy's future. Thank you very much.

SEN. BOXER: Thank you so much, Senator.

Senator Specter, welcome.

SEN. ARLEN SPECTER (R-PA): Thank you, Madame Chairwoman. The good news is that there are 10 senators here to listen to you. It's a lot of senators considering what's going on this morning. Bad news is that everybody is going to speak.

(Laughter)

But not for too long, at least, here. But I wanted to come by and pay my respects to the new secretary of transportation and the longstanding governor of Pennsylvania, two very distinguished public servants tackling very, very important issues. I'm pleased to hear that you were in Minnesota. I know that you've been in Pennsylvania. You've probably been in all 10 states represented here today.

(Laughter)

And as the saying goes, if you haven't been, you probably will be, and sooner rather than later. But I appreciated the chance to talk to you on the train ride when Vice President Biden came to Philadelphia to join Governor Rendell, Senator Casey, Lee, and others on the stimulus package and the important needs of our region.

And I'm glad to have had an opportunity to discuss those with you, Mr. Secretary, and Ed Rendell, and Arlen Specter, and others who are going to be following here. And you have a big, big, critical, critical, important job and it applies in two ways.

One is to make the stimulus package work, and right now we have in America, which is not enthusiastic, about spending $787 billion, in fact, very unenthusiastic. Lots of political payrolls for those of us -- those few of us -- those very few of us, who were voted for in a certain context, but it's necessary for America and now we have to make it work.

And we have to make it work to put people to work. And an early conversation I had with Governor Rendell was how fast, and after we negotiated a while, he said, as early as six months, on a lot of the transportation matters. And there are big projects on infrastructure highways, bridges, and mass transit; and we've already given you a long list. So it's putting people to work and it's also putting people to work on very, very important items which will last and which will promote economic development.

As we speak we have director -- FBI director, Mueller in judiciary and then in another committee we have a former Supreme Court Justice Sandra Day O'Connor, and others. So I'm going to yield back the balance of my minute and nine seconds. Thank you.

SEN. BOXER: Senator, thank you for coming.

And I also wanted to note Senator Gillibrand had to go to another committee as well, but she will submit her statement for the record, so we will turn to Senator Merkley.

SEN. JEFF MERKLEY (D-OR): Thank you very much, Madame Chair, and thank you, Mr. Secretary.

I can't go to a town meeting in Portland or anywhere else in the state of Oregon without hearing about transportation issues. So there's a great deal at stake here. Certainly, I'm interested in how our transportation policy and how this bill will affect our strategy to fight global warming, our ability to take on congestion and develop livable communities, to improve our approach to multimodal transportation and to strengthen our economies, particularly, our rural economies. And so I look forward to your testimony. Thank you.

SEN. BOXER: Senator, thank you very much.

Senator Sanders.

SEN. BERNARD SANDERS (I-VT): Thank you, Madame Chair.

And Mr. LaHood, welcome. And we look forward to working with you and Vermont has not been one of the states that you visited, so we want to get you out there. The weather is clearing. I want to tell you, it's -- we look forward to having you if we could work that out.

Madame Chair, Congress and this committee deal with the enormously complicated issues such as global warming and so forth. But the truth of the matter is that transportation and infrastructure are not all that complicated. The bottom line is, and I say this as a former mayor, that I think it will not surprise anybody is, if you allow your infrastructure to deteriorate, year after year after year, you don't put funding in it. You know what, it's going to get worse, probably will not get better.

And that is precisely what we have done as a nation. And the irony there is it costs more money to rebuild a crumbling infrastructure than it does to simply maintain it. So we have been really dumb and we have wasted enormous sums of money.

In my state of Vermont, we are one of the smallest states in this country. We need an additional $1 billion over the next five years just to keep our roads and bridges in the same poor shape they're in, right now. Now, I'm embarrassed about the condition of our roads and bridges in the state of Vermont, and I suspect that's true all over this country.

So, Madame Chair, number one, as others have said, we need -- the American Society of Civil Engineers has estimated that we should be investing over $2 trillion in infrastructure. So we're going to have a major debate on how we raise that money, but we must raise that money.

Because if we're not investing in infrastructure, we're only going to see more deterioration, and I hope that every member of this committee shares the embarrassment that when we go to so called third- world countries, whether it is China, Vietnam, or countries, we're seeing transportation technology that we don't have in the United States of America.

I was in China some years ago. We were going from the airport to Shanghai, and suddenly this thing whizzed by, we couldn't see it. It was a magnetic levitation train -- China. We don't have them in the United States of America. As I think, Senator Lautenberg pointed that out, people are crowding into airports, because we don't have fast rail to get from one city to another, et cetera, et cetera.

So Madame Chair, our committee has the responsibility for not only rebuilding the infrastructure in this country, but also creating millions of good jobs as we do that. You understand better than anyone that infrastructure is also related in terms of mass transportation, the greenhouse gas emissions, and cutting back on that.

So infrastructure plies a whole lot of issues together and I hope very much that after years and years of neglect, this committee will rise to the occasion, rebuild our infrastructure, our mass transportation, and in that regard, Mr. Secretary, we certainly look forward to your leadership and working with you.

Thank you very much.

SEN. BOXER: Senator, as usual, you made it very simple and straightforward.

Senator Udall.

SEN. TOM UDALL (D-NM): Thank you very much, Madame Chair. And it's great having you hold this hearing today and Secretary LaHood, great to see you again. You're a great service to our nation and your position is very much appreciated.

You know, we know from government studies and reports by respected organizations such as the American Society of Civil Engineers that much of our nation's transportation infrastructure is crumbling, which was just emphasized by my colleague, Mr. Sanders. And all of us remember, as Amy Klobuchar said, the Mississippi River Bridge in Minneapolis collapsing in 2007.

In my state there are over 100 structurally deficient bridges according to the U.S. Department of Transportation. This is just one example that illustrates the overall problem that exists across the country. It seems to me we face two fundamental challenges with our transportation infrastructure. First, much of it was built more than 50 years ago.

And second, we know today about the dangers of global warming and our dependence on foreign oil, and we must do more to encourage alternatives to automobiles. Given the grave transportation infrastructure challenge, we need better coordination at the state, local, and federal level, and it's great to see Governor Rendell here, and Mayor Novak, so that you can engage with us in this conversation. I'm going to focus my questions on the transportation needs of my state of New Mexico, but I also -- I'm looking forward Governor Rendell to hear you talk about, and Secretary LaHood talk, about this whole issue as we try to develop a transportation system that's going to be lower carbon and carbon neutral, and move in that direction.

How -- what are the wise ways to do that? How do we -- I know you're going to talk about competitive bids and things like that, but I think it's very, very important that as we move forward with transportation, we look at the issues of global warming, our dependence on foreign oil, and how we move to a low-carbon future. And so with that, because I'm very excited about hearing you testify, I'm going to yield back one minute and 46 seconds and move forward.

Thank you, Madame Chair.

SEN. BOXER: Well, that's great. Well, finally, I think -- if I could just say this, I think it's important that so many people came here. So for those of you who were saying, why, do they want to put their statement on the record?

I think it's very key and very important that on both sides of the aisle we heard unanimity here. We want to get this job done, and by the way you don't hear that on all the issues we take up, as you know. This is important and I want to also say the dynamic of having Senator Voinovich in this important position as he really builds a tremendous legacy in politics, is very, very helpful.

So don't -- so you should be complimented, I say to the panel, that so many folks wanted to get their ideas out here. And it's a signal to the public that we're very serious on this.

So with that, we want to hear from our honored guest, Ray LaHood.

SEC. LAHOOD: Madame Chair, my statement is not any more enlightening than what's already been said. I'll be happy to suspend with it and go to questions.

SEN. BOXER: We'd like to -- just give us a five-minute, off the top.

(Laughter)

SEC. LAHOOD: Then you want me to read it, is that right?

(Laughter)

SEN. BOXER: Well, I feel like it's important that we know where you're coming from, where the administration is coming from on the highway bill, because --

SEC. LAHOOD: Sure.

SEN. BOXER: And then we'll go to questions.

SEC. LAHOOD: Chairman Boxer --

SEN. BOXER: I think it's worth taking five minutes of your time.

SEC. LAHOOD: Thank you. Chairman Boxer, Ranking Member Inhofe, and members of the committee, thank you for holding this hearing to discuss transportation investment needs. Today, I would like to focus primarily on the funding required to maintain and improve the condition and the performance of our nation's highway system.

America's transportation systems are the lifeblood of our economy. They allow people to get to jobs and allow businesses to access wider pools of labor, suppliers, and customers. Without efficient transportation routes, economies stagnate.

We need to protect, preserve, and invest in our transportation infrastructure to ensure it can meet our present and future demands. Above all, we must make our roadways safe for all travelers. Where public safety is concerned, there is no room for compromise.

As you know, less than one month after taking office, President Obama signed into law the American Recovery and Reinvestment Act of 2009. The resources made available for transportation infrastructure through the recovery act are significant and a good start on what we need to do to address some of the most significant challenges.

The challenges include; reducing fatalities, mitigating the impact of transportation on the environment, improving highway and bridge infrastructure, and enduring mobility and transportation choices for travelers in congested metropolitan region. These needs will continue to exist long after the recovery funds are expended, and dealing with them will help create and preserve many good paying jobs for years to come.

While we await the release of the 2008 edition of conditions and performance report, which is now being reviewed by OMB, we can draw some conclusions about highway and bridge infrastructure needs from data published in the 2006 version. At the heart of the report is an analysis of future capital investment requirements under different scenarios.

The cost to maintain highways and bridges scenario presents the investment required to keep future conditions and performance at current level. The cost to improve highway and bridges defines the upper limits of cost beneficial investments based on engineering and economic criteria.

Sharp increases in construction materials' cost since 2004 substantially increased the cost identified in the 2006 report. The average annual cost to maintain would now be at least $100 billion in investments from all sources.

The estimated average annual cost to improve level would now equate to at least $170 billion.

While we have seen some improvements in physical conditions of roads and bridges, particularly, on the NSH, their performance -- NSS -- their performance has deteriorated wasting the travelers' time and fuel.

Without renewable and restoration of our transportation infrastructure, this system will not be able to support the needs of a growing economy. The real challenge in addressing the needs I have outlined will be the availability of funding at the federal level.

We're looking at every option to solve this problem, but we will -- we are -- it will not be ready overnight. The new authorization bill for surface transportation programs is one of the highest priorities. We will be seeking changes and encourage more effective investments in an environmentally friendly and multimodal approach.

Taxpayers want to see results from infrastructure investments that directly benefit their lives. Better access to jobs and goods and improved mobility within and between communities. We need an increased focus on measuring the outcomes of infrastructure investments, such as improved safety, reduced congestion, improve payment and facility, life and better air quality.

Our transportation infrastructure is critically important to our nation's economic health. As this committee considers the next authorization, I ask you to work to maintain the safety and integrity of our highways and bridges while improving the overall performance and reliability of our transportation infrastructure.

This must be done in the context of striving toward the goals of livable and sustainable communities. This is a tall order, but we look forward to continue working with the committee, the states, and our partners in the transportation community to succeed.

Thank you, Madame Chair. I look forward to your questions.

SEN. BOXER: Thank you.

As we work to craft our new bill, our MAP-21, will you be available to work with us, because I think we need your expertise, and I know that you spoke about vehicle mass travel as the concept, and some folks in the administration said well, we're not interested in that.

You know, I guess, my question to you is, I hope the administration is open to working with us on every possible idea. Senator Inhofe and I have been talking just here this morning, but really for months about this.

There are many options in terms of how we can get a funding stream that meets our needs. So I guess my question is, do you believe the administration, despite whatever the back channels were that responded to you, do you think they are open to looking at all of our ideas and have not put anything off the table. Because I think as we meet -- and we're going to have another meeting today, we want to make sure that we are working with you.

SEC. LAHOOD: Well, I was at a meeting, which I think will explain in pretty good detail, last Friday, with Governor Rendell, Governor Schwarzenegger, and Mayor Bloomberg. They presented the president with a report; in his office we met.

And I can tell you there is a very, very strong commitment from President Obama to put everything on the table, to throw out all the ideas that we can throw out and see which one sticks, see which ones make sense. So I'm committed as a part of his team and a part of his cabinet to work with you.

Whenever you need me up here, I'll be here. When you need our staff, we'll be here. We're going to be full partners in trying to work through what resources we need and how to get those resources, and the president is committed to that. And I know Governor Rendell will talk to you about the work that he has been doing with other governors and mayors, and so forth.

But I think we came away from that meeting with a full commitment from the president. We have to talk about a lot of creative ideas to do all the things we want to do with infrastructure and roads, and creating livable communities, and other opportunities, and so will have a full partner.

SEN. BOXER: Well, that's really my only question, because I think that's what we need right now. None of us is ideological about all of this. We just want to be pragmatic and get this to happen.

And I think I want to thank Governor Schwarzenegger, Governor Rendell, who I will have a chance to formally thank again, and Mayor Bloomberg, because -- and yourself, because this is really, in a way a tri-partisan team, Independents, and Republicans, and Democrats. And that's what we need.

This is something we can get done, but nothing should be off the table. Even if at first blush, you know, we reject it, we just need to be very open to all the ideas. So thank you for that comment. I really appreciate it. With that I'll turn to Senator Inhofe.

SEN. INHOFE: Thank you, Madame Chairman. I -- it might be a good time just for any brief thoughts you have on some of the options that we're looking at. Let's start with public-private partnership. Have you developed any ideas you think might be something we might want to look at?

SEC. LAHOOD: Well, there is a lot of innovative public-private partnerships that we can model after. In Miami, they are building an intermodal facility that I had the privilege of being with Vice President Biden to make some announcements on, a couple of weeks ago.

There are some folks out west that are putting together a public- private partnership having to do with high-speed rail. There are lots of people in this country who want to work with us at DOT and all of you, to put some private dollars with public dollars, and really leverage what we can to make these things happen.

And it's not only just on high-speed rail, it's on highways, it's on intermodal facilities. And there are lots of examples out there that we can use to build on that.

SEN. INHOFE: You know, I'm glad to hear you say that, because all too often we want to reinvent something that's already been invented. We have a testing area out there that Governor Rendell and others have tried things, some things haven't worked, some have worked.

And I would hope that we could go and try to pick the very best of those and perhaps use them. One of the areas -- well, let me thank you again for your appearance at our chamber the other day --

SEC. LAHOOD: Sure.

SEN. INHOFE: One of the other areas that we've talked about up here that you've had, been there long enough that you probably looked, both Chairman Boxer and I have complained about some of the bureaucratic delays that might be eliminated. If you looked about -- looked at some of these and how we might be able to expedite some of the programs that we have.

SEC. LAHOOD: When we implemented the recovery plan, our part of it, the $40 billion plus at the department, we put together for the highway portion, the ($)28 billion, what we call -- well, for all of it, including transit, we put together a tiger team.

Well, we took all the modes and they meet everyday. And I meet with them once a week. And we talk about how we're getting the money out the door, how the money is being spent, making sure we're following the rules and regulations, and the law that was passed by Congress.

And this kind of approach has enabled us to get about $3 billion out the door to 33 states and over 800 projects in a very short period of time. So we've cut a lot of the bureaucracy, a lot of the red tape, no shortcuts, we're following the law, but we've done it with the tiger team approach.

And I'd like -- we're hoping to be able to use that kind of approach in getting dollars out the door as Congress passes a bill. We can do it. We know we can do it. We're doing it right now just by getting people in a room working together. And so it works. And we're going to take that model and use it to work with all of you as you, you know, put together the bill that will continue our successes.

SEN. INHOFE: Yeah, that's great to hear. That's great to hear. And I appreciate that very much. Mr. Secretary, a couple of times we've referred to the '06 report and the '08 reports out there somewhere. Where is that?

SEC. LAHOOD: It's at OMB.

SEN. INHOFE: Okay.

SEC. LAHOOD: And, you know, it was sort of suspended between the interim, between our administration and the previous administration, OMB is reviewing it. I think we'll have a report to you very soon.

SEN. INHOFE: Okay. Yeah, well, I didn't say that all critically, because you just got there --

SEC. LAHOOD: No, no, I know.

SEN. INHOFE: -- and I just think that might be very helpful to us. Now, as we look at what our job is and what we're going to be doing, it's kind of scary to think about the magnitude.

I can remember during the '05 bill, and at that time, I guess, I was chairman at that time, and it was a 286.4, I think, billion-dollar bill. And I remember going to the president at that time, President Bush, and he said, well, this is just too much, we'll veto it. And I said, I'll head the veto override, and of course, he didn't do it.

But that amount, at '05, was really just enough to kind of maintain what's out there. We're just not doing -- not keeping up. Have you given any thought to any top-line figures, that, as much as we hate to talk about them publicly, any thoughts that you might have, so --

SEC. LAHOOD: Well, we have -- we've put together some principles in the department for what needs to be done and how to pay for it. And we have sent those to the White House. As a part of the cabinet, we feel that we have to get the president and his team at the White House on board on these. And once they've signed off on them, we'll be happy to share them with you, Senator.

SEN. INHOFE: All right. That's good, that's fair enough. Thank you very much. Thank you.

SEN. BOXER: Thank you, Senator.

Senator Lautenberg.

SEN. LAUTENBERG: Thanks, Mr. Secretary. I listened with interest and watched with a degree of more than interest, perhaps even gluttony in terms of what it is that we need to get this job done.

You say in your remarks that if we look at the year 2004 that we approximated $170 billion in annual maximum economic investment. However, if we put this in perspective, when we look at 2006, what we spent was $78 billion. The shortfall is so dramatic that it's -- that it strikes one as -- that can't be true, there is got to be an arithmetic thing. Well, we know that's not the case.

Secretary, when it comes to the Highway Trust Fund, an important element, the current financial situation is simply not sustainable. What kind of plans does the administration have to address this crisis in the near term.

SEC. LAHOOD: Well, as I said, we've sent some principles to the White House for what the needs are and the way forward and we're waiting. But you know, I've been saying all along, Senator, that we need to think outside the box.

The Highway Trust Fund is simply not going to allow us to do all the things that we want to do in America and in developing our opportunities for the way forward. And so we need to think about public-private partnerships as much as, I hear what Senator Baucus says, we need to think about an infrastructure bank.

We need to throw a lot of ideas out there and see which ones stick. And you all are going to write the bill, but we're not going to be bashful about saying, look, if you do this, this is what you get, if you do this, this is what adds to it.

We need to build on the Highway Trust Fund. There is not enough money in the Highway Trust Fund to do what we need to do. So we've got to throw a whole bunch of ideas out there. And you all decide which ones you think are politically sound, or policy sound, and what kind of results we get from them in terms of new resources.

But you know, I was in Miami, and I rode on a lane that was built on Interstate 95 with tolls. That works. And they're very happy about it. They made that decision. They made the decision to build an extra lane on I-95 using tolls and they paid for it that way. And so that works. We know that works.

SEN. LAUTENBERG: That -- it's a state endeavor in all fairness, a state endeavor, but what do we do nationally. I hear a review of opportunities, but what specifically, I mean, Mr. Secretary, we're going to have to get leadership from the administration on these things.

I mean, we can battle it out here, but if we come up to OMB and they say, not possible, where are we? So we have -- we're asking you -- I'm asking you, to come up with particular, specific suggestions, on how we place and fulfill our -- the obligations of the Highway Trust Fund.

The -- we see transit systems, first to cut service, increase fairs, a couple of budget shortfalls. At the same time, Americans are taking public transportation record numbers.

The economic recovery law contained $8.4 billion for transit capitals across, but these funds and all federal funds cannot be used for operating assistance. Might we change the law, Mr. Secretary, to allow federal dollars to be used for operating expenditures?

SEC. LAHOOD: Well, I said to another committee, Senator, that I am very open-minded in these hard economic times to looking at the possibility of allowing transit systems to use part of their money for operating.

It's fine to provide a lot of new buses and a lot of new equipment. But if you don't have the drivers and you can't pay the drivers, it doesn't make any difference how many buses you have.

I think we're open-minded about that. We're going to look at that very carefully. And we think when the transit districts don't have enough money to pay bus drivers that it seems logical that we should be open-minded about that and we are.

SEN. LAUTENBERG: Well, and if we're talking about job creation, you just pointed out a place where -- suggested that there are lots of jobs available. Do we have the applicants, do we have the interest from the public to take these jobs? And if not, where -- show me the money to be absolutely -- the situation that we're in is one that is so difficult.

And Mr. Secretary, I wouldn't want to be in your position right now, because you are our flag bearer. You're the one that has to continue to fight for a share that will sustain us. And I think in that process, you've got to close your ears to the other appeals that are being made.

You have this mission. And this mission is critical to the World Bank and the ability of our country to get back on its feet. And so we'll give you some more stripes if you can do that.

SEC. LAHOOD: We're going to provide the leadership. Well, we take our cues from the president. And a big part of the economic recovery plan was the $40 (billion) to $50 billion to put people to work quickly, because the president knows that works.

And when you see people out building roads this summer, and you see transit districts buying buses, and you see people driving these buses, these are people that are in good paying jobs that are going to be working this summer. I think the president recognizes the value of a very, very strong infrastructure program. And you'll see the leadership.

But we need a little bit of time here.

The president has been a little bit pre-occupied with a few other things. We're trying to get his attention on these things. We will get his attention. He knows the importance of it. And we'll provide the leadership, Senator, I guarantee you of that.

SEN. BOXER: And I want to say we will as well. So I think this is -- we're ready to go. We're very close to being ready to go.

Senator Sanders.

SEN. SANDERS: Mr. Secretary, first of all, thank you very much for getting the money out quickly. I know people think that's an easy thing to do, but for many years that was not the case. So thank you for doing that. And thank you for your strong advocacy for the stimulus package, which I think is one of the most important pieces of legislation, for a dozen different reasons, that this country has passed in a very, very long time.

I want you to focus for a moment on rural transportation, you know. You know, I am aware of the problems in urban America. My state is a very rural state. And you know what, throughout most rural America you don't have the transportation system, you really don't.

I could tell you that in my state if you live in say Hardwick, Vermont, up in the northern -- Northeastern part of the state, and you're going to Burlington, a larger city, there really is no practical way for you to get there other than your automobile. So if we're talking about green house gas emissions, if we're trying to talk about saving people money, in many parts of rural America, you can't go from one town to another town other than with your automobile.

Can you give us -- share with us some thoughts about how we're going to make some very profound changes in rural transportation in America. What do you think?

SEC. LAHOOD: Well, I think that the way to do it, Senator, is to take some leadership on our own and take the ideas that you all have to try and persuade transit districts that are in areas that are not serving rural areas to begin to really look at those kinds of opportunities.

Now, obviously, they would need some dollars to do that. I think the other part of it is, you know, really trying to think of opportunities for perhaps some other modes of transportation other than just buses. And, you know, the idea of light rail, you have to be able to, you know, show that that can work and that you have the ridership. But we know that in some parts of the country, folks are planning those kinds of opportunities.

I mean, to me, those are the two things that we can really look at as opportunities, to work with transit districts, to determine their level of interest, and really providing the kind of service into rural areas. I met with a group of mayors recently that are big city mayors that have tried to reach out into the rural parts of the areas that --

SEN. SANDERS: And if I can interrupt you to tell you why that's important is, often in the urban areas, the larger towns, is where the jobs are. And you want to get people from the rural areas, the workers to get to the jobs --

SEC. LAHOOD: Correct.

SEN. SANDERS: -- through that transportation.

SEC. LAHOOD: Correct. When I was in Philadelphia, Chaka Fattah, the congressman from that area told me of a plan where he got the transit district in Philadelphia to actually take buses out to rural and suburban areas, to bring people in for jobs.

SEN. SANDERS: Right.

SEC. LAHOOD: That's the kind of innovative thing we need to be doing with transit districts, to provide the kind of transportation to people, who maybe are starting their first job and don't have a car, and have no way to get into the area where the job is at.

SEN. SANDERS: I think that's exactly right. Let me ask you this, do you see potential use -- and when we talk about buses, very often we talk about large expensive buses. Sometimes in rural areas you don't have the people to get on those buses. What about vans and smaller buses?

SEC. LAHOOD: You know, the example I used of Congressman Fattah was that it was actually a van. It wasn't a bus; it was vans that went out to these --

SEN. SANDERS: Right.

SEC. LAHOOD: -- rural and suburban areas to bring people into jobs. And, you know, I don't know if it was a program that Governor Rendell started when he was mayor or whatever. But the point is, there are innovative things that we can do with the dollars that we have, and there are systems available to do it. We have to get transit districts to think outside the box. And we have to, you know, just develop other opportunities.

SEN. SANDERS: Okay. Madame Chair, my only point here is that as we discuss the transportation and infrastructure crisis in America, we cannot forget rural America. That has to be part of the equation.

SEN. BOXER: Well said.

Now, Senator Voinovich, I owe you an apology. You should have been next and I missed that, I'm sorry. After you're done with your questions, we're going to move to the second panel. So go ahead Senator.

SEN. VOINOVICH: Mr. Secretary, a little Ohio problem. I brought Continental Airlines to Cleveland back when I was mayor. And Continental Airlines needs an international connection with the star organization. And they've had that application pending in your department since last year.

And I'd like somebody here that's from your staff to write that down and see if we can get that decision taken care of as soon as possible, because they are on hold right now, because they haven't had that decision made by the department. And we need to have that as soon as possible. So it is a job creator in our town, in Northern Ohio, so if you could take care of that.

SEC. LAHOOD: Yes, sir.

SEN. VOINOVICH: Second of all, you know, we had Mary Peters here. And Mary -- we asked her about how she was going to pay for a lot of this and she kept talking about principles and public-private partnerships, and so on, and so forth.

When we got to the legislation and the last bill, Senator Inhofe said we came up with ($)286 (billion). We knew we needed ($)320 (billion) or ($)300 (billion) and something like that. They said it was too much, and we couldn't do it. Many of us said that the money we made available wouldn't keep up with inflation that we'd fall behind.

And I was wrong. It's worse than what I predicted because with the cost of steel and the cost of oil, we haven't been able to do what we thought we'd be able to do with the money. Now, the National Surface Transportation Infrastructure Financing Commission said that we need to enact a modest $0.10 increase in the federal gasoline tax, $0.15 increase in the federal diesel tax, and commensurate increases in all special fuels taxes.

And what they pointed out was is that these adjustments approximate the amounts required to recapture the purchasing power lost to inflation since 1993, that's the last time that happened, '93. The -- that they translate into approximately $20 billion per year or more, just keep us up to where we are if we got that money.

And the question I've got is how are we going to pay for all these things we're talking about. I think we need to level with the American people. It's going to take a gas tax, and it's going to take public-private partnerships, and it's going to take a lot of -- whole lot of other stuff to get the job done.

And I think the sooner we face up to it the better off we're all going to be. I know we were talking about doing it here in the Senate.

I think we'd have some votes in the Senate to pass a gas tax. But your colleagues over in the House, they took a Grover Norquist pledge that they wouldn't increase taxes, oh, no, we're not going to do that.

Well, let's get serious. We have a really awful infrastructure problem in this country. And you've heard the other Senators talk about other countries. It's time we looked the American people in the eye and told them, we're in bad shape. People complain to me all the time, the time that they spend on the road, the gas we burn, the pollution that is taking place, and I think that we've got to be forthright.

And I'd like to know, you know, how are you going to take care of this. And it can't be principles and other things. Let's get serious. Where are you going to get the money?

SEC. LAHOOD: We're going to get the money from Congress, Senator.

(Laughter)

Look, you all write the bill, I'm just telling you though, Senator, and you've heard me say this before, this administration and these hard economic times with so many people out of work can ill- afford to tell people we're going to raise the gasoline tax.

SEN. VOINOVICH: Well, then you can't -- look, you can't --

SEC. LAHOOD: We're not going to -- we are --

SEN. VOINOVICH: You can't --

SEC. LAHOOD: -- that's off the table for now, Senator.

SEN. VOINOVICH: You can't do it. You know it and everybody else knows it, it's about time we leveled with --

SEC. LAHOOD: Look, Senator, I respectfully I disagree with you. I think we can do it. I think we can take the Highway Trust Fund and do a number of other things that will help us raise the revenue to satisfy the needs that we want to meet here.

SEN. VOINOVICH: If you just did what I said, it would give us $20 billion that would put us even. It wouldn't deal with the gap of 43 percent in terms of maintaining or the 31 percent gap to improve the highway system in the country.

SEC. LAHOOD: Well, I think it's pretty difficult. I met with the governor of Michigan yesterday. And the governor of Michigan told me that their unemployment rate is 12 percent. And if the automobile industry continues in the decline that it's in, it's going to be higher than that.

How do you say to people you're going to raise their gasoline taxes when 12 percent of the people in Michigan are out of work? It's very difficult to do that and we're not in a mode to do that. We're in a mode to think about --

SEN. VOINOVICH: Well, then --

SEC. LAHOOD: -- a lot of other things.

SEN. VOINOVICH: Then what you're telling is, I'm sorry, folks, we're not going to be able to do the job that needs to be done in our country, to do the -- to take care of the logjams and other things which you have.

We're not going to do it, we're going to delay this for a couple of years or whatever it is. But we just have to be honest with people. It's time to level with them.

SEN. BOXER: Senator Voinovich.

SEN. VOINOVICH: Yeah.

SEN. BOXER: Thank you for that candor. I just think that before you said everything was on the table, now, you said the gas tax is not on the table. All I want to say is, I am averse to raising the gas tax. I -- but I'm not -- I've not signed a pledge, and that means I'm willing to see what we've got to do.

Now, we're going to have this meeting this afternoon; we're putting everything on the table. There are some proposals not to raise the tax, but to index it to inflation in the future.

Now, I would urge you to take a look at that, because if you index it to inflation in the future, you're not raising it today, and you're doing it in the future, and you're -- and by the way, if there is no inflation, it doesn't go up.

But I just think we all, including myself, you know, we have to be completely flexible here, because at the end of the day, you know, I think Senator Voinovich has been very forceful on the point. This is one of our constituent's biggest complaints. I don't care where you live, it's a problem congestion, pollution, congestion, pollution falling behind goods movement, business losing money, all this and that.

Now, Senator Udall did come in to ask a question to -- a couple of questions to the secretary, so I will allow that. But then, drum roll, we will hear from Ed Rendell and our head of the Conference of Mayors, yes.

SEN. UDALL: Okay. Thank you, Madame Chair.

SEN. BOXER: Well, the League of Cities, sorry.

SEN. UDALL: Secretary LaHood, the issue I wanted to have you focus on a little bit is, how we bring back the railroads. And you could invite, and I think all of us, but I understand that it's much more efficient to move goods and people on railroads than it is to move them in automobiles and trucks. And so if we're trying to be energy efficient we should be moving in that direction.

My governor, Governor Richardson, who I believe you served within the House, has been a real leader in terms of commuter rail. We have now built about 80 miles of commuter rail from Belen, New Mexico up to Santa Fe. And the ridership is going up.

I mean, when we hit $4 gasoline, they couldn't put enough cars -- railcars on the system in order to accommodate people at certain times of the year. And so, I really believe that commuter rail is the way to go and bringing back our railroads. And I hope that your Transportation Department will be at the front edge of that.

So I really -- and what my question is what actions will you pursue to provide funding or to encourage commuter rail and to move in that energy efficient area where you have rail being more efficient than some of our other modes of transportation.

SEC. LAHOOD: Well, Senator, let me say that the one -- couple of things we want to do is implement the Amtrak Program that was passed by Congress. It's a very good bill. And we want to be at the forefront in working with all of you to implement that.

The president personally put $8 billion in the recovery plan for high-speed rail to launch our opportunities in America for the first time to say to Americans that high-speed rail has a priority. And he also has put a marker down for the next five years, $1 billion in each of his budgets for the next five years for high-speed rail.

And we've identified corridors in the country where this can be implemented rather quickly. Some -- we are in all different iterations of high-speed rail, but there are some places that could begin rather quickly. And you have a president and his team in the White House that comes from the Chicago area, where people getting on trains every morning is a common practice, whether they live 25 miles from the city of Chicago or just a few minutes from downtown.

They have one of the best mass transit systems in terms of delivering people to jobs of any place in America. And so the president's vision is that we do get people on to alight rail, on to buses, on to mass transit, on to high-speed rail in order to get them out of their automobiles, and provide opportunities for people to use this.

When gasoline prices went up, ridership on transit, light rail, Amtrak went way up. And even when gasoline prices have fallen, the ridership has stayed up. People found that it was efficient, it was on time, and it was comfortable.

And we want to continue that kind of progress. And we know that Congress is committed through the Amtrak bill that you all passed. And I can tell you this president is committed to the idea that passenger rail is very, very important and a priority for this administration, and for the Department of Transportation.

SEN. UDALL: Thank you very much. And it's great to hear that you support that Amtrak bill and that the president has putt in his budget the kinds of funds that I think are going to allow us to do that.

One of the areas that is the most underserved, in terms of transportation, is the Indian reservations. And I have many in my state. And I know that there was a significant amount of money, I think it's to the tune of about $310 million for Indian reservation roads.

Apparently, much of that, because you have interstate highways and state highways is used on those that are within the Indian reservation, and then the other tribal roads are neglected. And so, I hope that you'll work with me to see that we can get money out to those other tribal roads. And I think one of the ways to do that would be the piece of legislation, SAFETEA-LU, established the deputy assistant secretary for tribal government affairs. And I hope that you will fill that position.

I don't believe that position has been filled. I think it would help you reach out to tribal communities, and bring them together, and figure out the best ways to provide transportation on the Indian reservations across the country. Thank you very much.

SEC. LAHOOD: Well, I take your point. But I would also tell you, Senator, that none of our positions have been filled, so it's not just that one. We're working on it.

SEN. UDALL: Yeah, if you send them over here, our chairman has been great at moving these positions along that she has jurisdiction on --

SEN. BOXER: Yeah, the ones that come through here, we'll try to do our best.

Secretary, thank you.

SEC. LAHOOD: Thank you.

SEN. BOXER: You've been more than kind and --

SEC. LAHOOD: Thank you.

SEN. BOXER: I think it's been very important. So thank you so much. If we can move very quickly, we're going to open it up with Governor Rendell, our long-awaited governor, and the Honorable Kathleen Novak, president of the National League of Cities.

We honor you. We welcome you. And I think the stage has been set now for you to give us that final push forward.

I'd ask people to leave very quickly and quietly, thank you, because we have a vote that starts around the noon hour. We want to get started. And Governor, I'm going to give you seven minutes. And I'm going to give Kathleen Novak seven minutes. So please, begin.

GOV. RENDELL: Good morning, everyone -- (off mike) -- there you go. Good morning. It's a pleasure to be here. I'm going to break my testimony into three parts.

Number one, defining the problem, and I think you've all asked that question what exactly is the problem. Number two, suggestions on how we can come up with the funds to deal with the definition of what the level of funding we need is. And number three, how we sell this in a very difficult economic time to the American people.

Let me start out by saying, I'm here wearing three hats as the governor of State of Pennsylvania. Senator Udall you have a 100 structurally deficient bridges. We have 6,000, despite the fact that I have tripled the state funding on bridge repair in my six years as governor.

I'm here wearing a second hat, and that is one of the co-chairmen of Building America's Future, an organization that is dedicated to revitalizing the American infrastructure, having a major infrastructure revitalization programs over the next five to ten years. My co-chair is Governor Schwarzenegger and Mayor Bloomberg.

And third, as the president of the National Governors Association. The governors this year have devoted as our project for the year infrastructure revitalization as well.

Let me start with the first question. When Senator Inhofe said he estimated the federal gap at ($)4 to $500 billion, he is correct. If you take what the American Society of Civil Engineers says, we have a $2.2 trillion gap just to put what we've got in good condition. They say that that needs to be spent over the next five years.

If you take, state, local and federal funding, we're destined to spend about $1.1 trillion over the next five years, so about a billion dollar or billion one gap. But the federal government isn't and shouldn't be expected to fill all of that. I would say $500 billion is the appropriate federal share of that gap. There should be state and local funding and private investment filling that gap.

The second report is your own surface transportation commission, which said you have a $160 or about -- excuse me, $140 million gap each year in just transportation infrastructure. The Society of Civil Engineers was all infrastructure.

You are spending -- we are spending, as a nation, $80 billion a year, that's federal, state and local. We should be spending $220 billion a year. So that would be over five years just for transportation a $700 billion gap.

So the definitions of the gap are pretty certain and pretty clear. And I think they are right on. Now, how do we fund that gap? There are a number of suggestions in the financing report of the surface transportation committee, they are all good. But they are death by a thousand cuts.

There is a little fee here, little fee there, but the time you're finished, you will have raised about 17 fees and taxes, including the gas tax, as Senator Voinovich recommends. That doesn't mean they are bad. But I think it's a very difficult way to sustain the dollars that we need. We support many of them as an organization. Well, we support for example, radically increasing TIFIA, the transportation financing agency.

In the stimulus bill TIFIA is given $200 million of additional authority to guarantee loans to do direct loans to projects to fill the bridge. These are projects that have private funding. We think TIFIA should be radically increased.

We want to lift the $15 billion cap on private activity bonds. It's all in here and they are good suggestions. And they all can total up to decent figure.

But in my judgment there is only way that we are going to come to grips with the financing problem that we need for infrastructure in this country. And that is for the federal government to do exactly what every state does, every city does, and every county does, and have capital budget. Plain and simple as that.

That $500 million share -- trillion dollar share, Senator Inhofe, you could do that if you had a capital budget for $45 billion a year in debt service. Now, I'm not saying $45 billion a year is easy. It isn't. It isn't easy. But it's doable. It's achievable. And that would produce the $500 billion -- of the billion dollars that needs to be done by state, federal, local and private sources of income.

So I think whether you do federal Garvey bonds, or you call it that, or you do an actual capital budget, it's time to do it. President Clinton convened a commission on capital budget. Then Jon Corzine, head of Goldman Sachs, and Kathleen Brown, the treasurer of California, were the co-chairs.

I testified before that commission as the mayor of Philadelphia and as head of an organization called Rebuild America, testified in favor of the capital budget. The commission took testimony and made a report with no recommendations.

The time has come for us to be deal honestly with the problem. Senator Voinovich is right. A gas tax increase on the federal level would help. But it's not in and of itself the long term answer.

Thirdly, how do we get public support, particularly, in this troubled times? I'm sorry Senator Baucus couldn't stay, because I know he's got a whole host of other responsibilities. But he couldn't be more wrong about the infrastructure bank.

We need something created, first of all, to deal with multi-state projects. We have no mechanism for multi-state projects right now. Each state gets its allocation from ISTEA.

There are earmarks, and I'm a supporter of earmarks. As Senator Lautenberg knows, he and I have done a few over the years. Most earmarks are good, they are right on the money, and they help transportation needs in this country. But the public hates them. And no matter what you do, no matter how good earmarks are, no matter how many controls you put in, earmarks will be a dirty word in the American political lexicon, going forward.

We, Building America's Future took a poll. We had Frank Luntz do the poll. I'm sure you're all familiar with Frank. And the poll found that 81 percent of Americans would pay one percent more on their federal income tax.

By the way, poll was taken in December, in the middle of the recession. Eight-one percent would pay more, one percent more on their federal income tax, and that was 90 percent Obama voters, 75 percent people who voted for John McCain, said they would pay more in taxes.

If they could be assured that the decisions on infrastructure spending were transparent, accountable and made not through the political system. Made by some balance that took into our account cost-benefit analysis, value to the nation, does it need other long- term goals like climate change, et cetera. So I think we need an infrastructure bank.

It shouldn't -- all federal funding shouldn't funnel through the infrastructure bank. Each state should get their own regular stipend, because we don't want to leave out the rural states. But for the major projects, the projects that are going to change the way this nation does its infrastructure, the way we transport goods, the way we move people, we need a facility that makes those decisions.

Now, just because it's an infrastructure bank it doesn't mean that there can't be any input into it by the Congress. You could fashion something that has certain amount of appointees form the administration, a certain amount of appointees from each caucus of the Congress.

So I think we need something like that for major projects. But most of all, we need to be able to sell this to the American people. And the good news is -- last thought -- most of these funding sources and the capital budget have relatively moderate impact on the operating federal budget.

Thank you.

SEN. BOXER: Senator -- thank you, governor.

The Honorable Kathleen Novak. Thank you for being with us.

MAYOR NOVAK: Thank you, Madame Chair, Ranking Member Inhofe, and members of the committee.

I am Kathleen Novak. I'm the mayor of Northglenn, Colorado, and president of the National League of Cities. The National League of Cities is the nation's oldest and largest organization devoted to promoting cities and towns as centers of opportunity and innovation.

We represent over 19,000 cities and towns from New York City, with eight million people, to Taos Ski Valley, New Mexico with 56. So when we come we speak with a collective voice that represents both urban and rural interest.

You have my written statement. So I'd like to just offer a couple of comments based on what I have heard so far today. I am pleased to be here with former Mayors Inhofe, Voinovich, Sanders, and Rendell.

So often my citizens come to me and see government as government. They don't really distinguish the federal, state, and local level. So I'm getting questioned every single day, what are doing about immigration? What are you doing about transportation? What are doing about homeland security?

And while local government is certainly a partner we need, I think, to do a better job of really working together in a seamless manner to serve the people that we all serve.

I was reminded by Senator Baucus' comments about the story, and he's talking about the crisis, and how we respond very well to crisis.

There is a story about boiling frogs, that if you throw a frog into a pot of boiling water, he immediately reacts and jumps out. However, if you put a frog in cold water and slowly turn up the heat he will boil to death because he doesn't realize the crisis that he is getting into.

That's I think how we have treated our transportation system. We make great investments in our national highway system. But we have been slowly turning up the heat, not investing the way we need to, and it is now at a crisis point.

I think this situation really requires sustainable revenue sources, as you were talking about, Senator Voinovich. One that is really dedicated to meeting our needs that is more than just throwing money at the process, or just money at the situation. And we really need a collaborative partnership between all levels of government to make this work.

Hometown America is where investments meet federal, state, and local policy goals. For our citizens, transportation is not an end in and of itself, but a means to an end. It's about getting our kids to school. It's about getting to work. It's about providing and accessing to goods and services that we need. It's critical to economic development and quality of life.

Transportation isn't just highways and bridges, but it's rail, and air, roads, pedestrian, bikeways, and transit. And all of these must work in a systematic way in sync with our environmental goals, our economic development goals, affordable housing goals and livable community goals.

According to the Brookings Institute, individual household's investment in transportation has risen. It is now the second largest expense for most Americans after housing.

As we better understand the impact of transportation systems and the impact that they have on environmental quality, economic strength, housing and public health, all levels of government need to think compressively about how we ensure that all transportation investments yield a greater level of returns for our residents.

In my region we often talk about driving till you qualify, that you have to drive further and further away from the Denver metro area in order to qualify and get affordable housing.

Well, people are just trading housing costs for transportation cost. And that is in direct conflict with our regional goals of increasing density, reducing congestion, improving our air quality and discouraging sprawl.

We encourage you -- we -- actually we want to work with Congress to develop a comprehensive national transportation plan that does a number of things. Strengthen our cities and towns as the centers of economic growth; create economic opportunities for all of our residents; recognize the links between energy consumption and transportation, and help us meet our goals for livable, vibrant, healthy and sustainable communities.

I think this partnership involves breaking down silence, not just between governments, but within the different levels of governments. For example, metropolitan planning organizations play a large role in bringing a variety of communities together in a region to make -- on making transportation decisions.

But often the federal programs aimed at helping communities are too siloed with different rules, different time frames, different sources of funding, and different regulatory frameworks that don't allow the local officials to integrate these programs efficiently to better serve our communities. And that's just within the transportation program.

I think Secretary LaHood's creation of the TIGER team to really help breakdown the bureaucracy work among the different departments and agencies of the country of the federal government. It will really help the local government.

National League of Cities applauds last week's announcement by Secretaries LaHood and Donavan to link federal housing and transportation programs. And we look forward to working with both of these agencies to develop an integrated planning and better coordinate these important programs.

This is, I think, the first step to help breakdown the complexities. It's often overwhelming. I have been in local government as a city council member and a mayor for 18 years now. And I still don't understand how it all works.

But when I look at a transportation program -- for example, in our area we are trying to develop fast tracks, a metro-wide system build out. And when I look at a project in my area, it could potentially involve affordable housing, senior housing, daycare, CDBG, transit funding, transportation enhancement funding, energy efficient street lighting, potentially brownfield sites, issues with access to credit, all of us trying to follow the principles of Complete Streets and NEPA requirements. There is so much there and so much energy, time and resources devoted to dealing with the bureaucracy that I don't think we're really leveraging the dollars as well as we could.

Local government is then a partner and has raised taxes in order to deal with us our transportation systems and fund them. And we need to continue to invest in both maintaining our current infrastructure as well as building a real system that works for all Americans.

We look forward to partnering with the federal government. Just last week we had over 2,500 local officials here for our Congressional City Conference. And really I think it launched a renewed inter- governmental partnership. And I'm here today to pledge NLC's support to work with you to collaborate in developing a forward looking infrastructure that encourages economic recovery and growth and sets the stage for the future success of our country.

I appreciate the opportunity to speak with you today. Thank you very much.

SEN. BOXER: Thank you very much.

Now, here is what we're going to do. I have a question for Governor Rendell. Each of us will have four minutes. I need to leave to do a presentation in five minutes. So I will hand over the gavel to Tom Udall and he will close us down around 12:15, whenever we have to vote.

I want to talk to you Governor, because I'm of the mind that pace you go is really a good thing. And I like the stream of funding that goes into the Highway Trust Fund that people say, okay, I'm paying this tax, and I know where it goes, and I know what it's for.

So I hope that as the four of us continue to meet the Big Four on this committee, we're going to be able to take from that potpourri of ideas that you held up because there are ways to generate some significant funding.

Now, the one thing Senator Inhofe and I agreed on is, we are -- and I'm not speaking for Inhofe. I speak for myself. I think he agrees. But I'll speak for myself.

The idea of vehicle miles traveled is very attractive because after all, I happen to drive a car that's a hybrid. So I don't fill up very much. I'm not paying my fare share frankly, you know, of the taxes here. And I'm going on the road a lot, but I get 50 miles to the gallon. I'm not filling up. That's a good thing. But at the same time the Highway Trust Fund now goes down.

So a way to go is for me to -- how many miles have I travel? The one thing I know we agree on is we don't like the intrusiveness of that type of system on, you know, a family. So that's a problem for us. We're going to look at some other ways to get at that, but that's the one area where I think we don't like the big brother aspect of that situation.

Now, in commercial vehicles, my staff said, they already have the mechanisms inside the vehicle, and they have to be used. So that may give us an opening there.

The point I'm making is to throw up our hands on getting a pay- as-you-go system and go to essentially, borrowing, which is what you are recommending gives me a little bit of trouble, because I like the notion of pay-as-you-go.

So let me ask you this. You did mention sort of at the end of your remarks -- on the remarks as an offhand way -- in an offhand way, maybe using the infrastructure bank for major projects. So I'm thinking, as I look ahead, in the last bill, SAFETEA-LU, we have a new item that's called, projects with major significance. And these -- so to say we can't do big projects in the highway bill, frankly doesn't hold up because we have done them and it's not really a problem.

But if we were to look at how to go about this, maybe for certain projects with major significance, those projects would be funded through that mechanism. Is that something that you think we ought to take a look at, instead of throwing out the whole notion of pay-as- you-go, just saying maybe for these big projects that, you know, are very visionary and will take years and so on so forth, a new mechanism for that. What's your feel on that?

GOV. RENDELL: Three quick points, one on vehicles miles traveled. I think it's inevitable that we go to that. But you are not going to be able to do that in this bill. What I would do is put some money in for a pilot project to do VMT. So the next time you look at this, VMT has a real chance, number one.

Number two. I'm for all of these pay-as-you-go things. One of things you should do is right now you limit tolling federal interstates, for the states to go in and toll federal interstates to three states. We wanted to toll I-80, we couldn't get permission. We were turned down by the Federal Highway Administration.

If you really want to pay-as-you-go-user fees let the states toll the infrastructures all throughout the country, that's a very important component, it will be very helpful to the states.

And you are absolutely right. You can craft this anyway you want. You could take the infrastructure bank to get the power to do federal Garvey bonds or capital budget and make the capital budgets much smaller. For $15 billion you get $180 billion of money for major projects.

But let me make one point -- and you should check with your governors, every one of your governors -- we can't do major projects anymore off of ISTEA. We cannot. Because construction costs -- and I think Senator Inhofe or one of the Senators said construction costs for building roads in Pennsylvania, gone up 38 percent in the last three years. The federal money that you give us now, it's impossible to do basically, anything other than fixing, and repair and maintain, which is not bad by the way. We ought to be doing that.

I think Senator Klobuchar said that. But there hasn't been a new project started in Pennsylvania for two years because we simply don't get the federal money we used to get.

Earmarks, you know, earmarks are watched more closely than ever before. Do you think there will ever be big dig earmark again? I need to double deck Schuylkill Expressway coming in from the northwest suburbs into Philadelphia, that's a $2 billion project. Will I ever see that type of federal money to do this Schuylkill Expressway? Of course not.

So I think your suggestion is a good one. Just like I said, all of the federal money shouldn't go through the infrastructure bank we can pay for the basic federal ISTEA money; user fees, you know, gas tax, I'm for all of things that are included in there.

We got to make the tax code more attractive so that private investors can get in and we can do more projects with private money. And then lastly, you are going have to do major projects.

Let's just think for a moment. We all agree that a passenger rail system linking the big cities of this country would be a great idea. You go to Europe and Asia, nobody flies 500 miles or less. It's all high-speed rail.

How are we going to finance a high-speed rail system, building a high-speed rail system? That like when Dwight Eisenhower decided he was build the interstate road system.

How are we going to finance our high-speed rail system today, without some form of capital funding? You simply can't do it. So I think you are absolutely right Madame Chairman, we need an amalgam of different things. And they can go through different flows as well.

SEN. BOXER: Thank you very much.

Mayor Novak you have to leave soon to catch a flight. What time do you have to leave?

MAYOR NOVAK: I have about five minutes, unfortunately.

SEN. INHOFE: Let me ask you a question off the record.

MAYOR NOVAK: -- difficulty in --

SEN. BOXER: All right, here is what we're going to do. We're going to have -- Senator Inhofe will take his four minutes. I'm giving the gavel to Senator Udall and we will continue until we have a vote.

And thank you very much.

SEN. INHOFE: Okay, let me start. Thank you Madame Chairman. Mayor Novak, I'm not going to ask you to answer this question because it will be too long. But I'm going to ask you to answer it for the record, which means you will submit it in writing, we'll have a chance to look at it.

And that is, after your experience today in watching the trauma that we are going through right now, and the challenges that are almost insurmountable how do you suggest that we identify the appropriate federal role in addressing mobility needs of cities without spending limited Highway Trust Fund dollars on local projects and limited national or regional benefits?

So that's something for the record.

Now, Governor Rendell I -- let me make a couple of comments on your comments. First of all, when I became mayor of Tulsa, we didn't have a capital budget. We had to build one. That was what we did to overcome the problems that we had. So I understand where you are coming from.

Secondly, on earmarks, I have always said, if you define earmarks appropriately, then I would go along with all of the hysteria on earmarks. And that should be an appropriation that is not authorized. We in this committee, we set up criteria on a formula basis, about 30 criteria that these projects had to be -- meet that criteria. And then they go into the appropriation. I think that's an appropriate way to do it. But I just would like to get that definition cleared out now.

Lastly, I noticed that when I was talking to the secretary about the -- using the states as our test tubes, because so many good things are happening. You were smiling and nodding at that time. Well, I noticed that you had really done a lot of things in Pennsylvania in terms of -- you mentioned the --- trying to -- supporting the proposal of tolls on Interstate 80.

But you have also supported some of the privatization on the Turnpike. Would you take whatever time we have here and elaborate a little bit on that?

GOV. RENDELL: Well, again I think we have to look at every possible course.

SEN. INHOFE: And I agree.

GOV. RENDELL: And there is private capital. Even now there are funds, billions of dollars of funds being formed right now. Even with all the problems of getting money out into the market. And we got to take, have access to that private capital. Now, there are two ways to do it.

Number one is to let them come in, lease major toll roads or new concepts like the additional lane on 95 in Miami and toll that. There has to be revenue streams from there, from the transportation to get private capital interested and let them actually run it, but with appropriate government controls.

We are going to control when tolls could go up if the Turnpike had been leased successfully, and maintenance schedules, the two most important things.

With appropriate government oversight, leasing can work, it has worked in Chicago, you should certainly hear it form Governor Mitch Daniels, he has made it work in Indiana. Everyone said that people hated it in Indiana and there was fiasco which turned out to be a great success.

And Governor Daniel has got 58 percent of the vote last year in reelection even though President Obama carried his state. So apparently people didn't hate it as much as everyone thought they did. So there are instances where it has worked very effectively, it has to be part of what we do.

But that's one level of private investment. Level two is just make it easier for institutional and individual investors to invest in infrastructure. Tax credit bonds, tax credit federal bonds for infrastructure is the easy way to get individuals who are looking for a relatively safe return in their money, to contribute to helping build our infrastructure.

There were Flower Bonds, Patriot Bonds, all sorts of things that we can do. And we can improve them using the tax code to get the American people to pay for infrastructure repair and revitalization themselves. So there are many great ideas out there.

And I don't think is insurmountable. Particularly, I don't want to say how great it was hearing you and Senator Voinovich talk about your commitment to this, because this can only be done in a bipartisan way. If this becomes a political issue we are sunk.

So your leadership and Senator Voinovich's leadership is absolutely essential. I think we can do it. I think Senator Boxer's proposal, you all don't like capital budgeting. I know the OMB has always hated capital budgeting. I don't know why. But they do.

Well, let's do a limited capital budget for something like the infrastructure bank and let's do the same ISTEA formula so every state gets something. So the rural states are not left out. And let's continue our earmarks but have controls over earmarks. I agree with you.

The problem is perception governs reality so much in our country with our 24/7 media. And I don't think earmarks will ever regain the type of public support that they need.

And that's when I'm saying, we have to find a different way to fund major projects. There is never going to be another earmark for the big dig. It's never going to happen. And every state -- could New Jersey use big-dig type money, Senator? Of course you could. I have five projects in Pennsylvania. I could use big dig type federal money and use it well. But that's not happening. I think we got to realize it.

SEN. INHOFE: Well, let me just thank you very much. I know how valuable your time is. You've given us some great ideas.

Thank you.

SEN. UDALL: Thank you.

And Senator Lautenberg we're trying to get three more Senators in here in a limited time, so we'll --

SEN. LAUTENBERG: I'll be real short, because Governor Rendell and I are neighbors, practically speaking. And I just want to say -- and I'll be informal Ed -- one thing I respect is your leadership. You are willing to step up to the tough problems. That's what made you so popular in Pennsylvania. And everything you did wasn't popular. But the total sum of things made you a reliable, strong defender of the public interest. And I -- my hats off to you.

And the -- just one thing that I had my staff produce for me, 25 percent of domestic flights are 250 miles or less. 2.3 million flights a year are less than 250 miles, 6,300 flights everyday are 250 miles or less. What would a reasonably speedy train do for that?

GOV. RENDELL: It would be unbelievable. Philadelphia Airport, New York Airport and BWI have similar worse waiting times congestion than anywhere. It's because of the New York to Washington shuttle.

If Amtrak had the proper track bed -- Amtrak now takes 2:40 or 2:37 to go from New York to Washington, Amtrak could go -- the Acela could go with a proper track bed -- New York to Washington in an hour and 30 minutes. If the Acela could go in an hour and 30 minutes --

SEN. LAUTENBERG: If it could go in two hours?

GOV. RENDELL: -- would anybody fly? Would anybody fly? You'd end the shuttle. And by ending the shuttle you'd end congestion in major eastern airports. We should have high-speed rails. And this is the time to do it because people know the problems, know what we are confronting, and I think if people support things that they can see -- I forget who said it, but one of the Senators said I think we are talking about Sputnik, you can see it.

Well you could see that building out of a high-speed rail system around this country. And by the way, not just for urban area, someone from Wyoming might go to Chicago and then take that train from Chicago to Pittsburg.

SEN. UDALL: Thank you.

Senator Voinovich.

SEN. VOINOVICH: The National Governors Association, when I was involved we had the Big Seven. And we'd do -- and I've talked to Ray Scheppach about this -- that if the governors got together with the National League of Cities and the Conference of Mayors and the Legislators Group and came down here, kind of united on what it was that you wanted you could have a major, major impact on what we're doing.

And I would suggest that you go back and talk to your colleagues. You've got great ideas. You're also building America's future. If you could say that the governor is building America's future and the other -- and local government on a bipartisan basis are coming here and saying these are the things that we need to do and are forthright about the fact that you know -- we know are going to have to pay for them, we may have gas tax, we may have the bank, the ideas. Please do that, will you? We really need your help.

The other thing is that you ought to be in touch with the National Chamber of Commerce and other groups out there. They are your allies. If you would come down here and be united I think we'd get this thing done, and it would be the -- be something great for our country. I thank you for your work already.

GOV. RENDELL: Well, I understand you, Senator. I've spoken to Mr. Engler (ph) and I've spoken to people in the chamber, NAM as well. Both of them are very high on infrastructure, and know we have to invest.

And I've spoken to each one of the Big Seven. And we've had joint meetings on this. And we're signing up members of the Big Seven as members of Building America's Future. And I've said that we need some time before ISTEA gets reauthorized. We need to have hundreds and hundreds, maybe thousands of mayors and county commissioners, and governors and people like that here in Washington with the chamber supporting and telling the American people the truth.

You know, it's funny. I tell the American people all the time. I said, you know, you spend $10,000 for a car, and you get a car that is serviceable. You spend $28,000 for a car and you expect to get a better car, right? You get what you paid for.

Well, the same thing is true in government. And what you have the right to do is demand that government spend your dollars wisely.

But they've got to spend them for certain things that are crucial to our future, and infrastructure is that. And I think the American people understand it. I would like to submit to the chairwoman -- and I hope she'll give every member of the committee the lunch poll -- it's very, very revealing. It is very, very revealing.

The American people do like and understand infrastructure. Interestingly, the number one thing that concern them, even more than highways and roads, well, it's energy infrastructure. People are very concerned about energy right now as well. And energy infrastructure is for building up the gird. And give President Obama lot of credit for having the foresight.

We should have been building out our electrical grid 10 years ago, 10 years ago. We're late to the game. We're late to the game. But we need to do that. And we need to get on the stick. And there is no way out but to pay for it.

Do I think we need an increase in the gas tax? Sure, we do. It can't be the only thing we do. But we need an increase in the gas tax. And we have to talk directly to the American people.

And you're right. If you think the Grover Norquist people are damaging here, you should come to state capitals. It is brutal in state capitals. I once said that if I had a cure for cancer, and I said if you guys give me an appropriation of $100 million, we can end cancer tomorrow, and have a fourth of my legislature voting against it.

SEN. VOINOVICH: (Off mike.)

(Laughter)

GOV. RENDELL: Absolutely.

But don't stop. I think the American people are -- will support commonsense infrastructure investment. You know, I was on a TV show last night they were mocking President Obama for saying in --

SEN. : (Off mike.)

GOV. RENDELL: They were mocking President Obama for saying investment instead of spending. But that's what it is. We're investing in our infrastructure. We're investing in our country's future.

SEN. UDALL: Governor, you have enlightened us today. You've been a great leader on these transportation issues. And I think because of your testimony we're going to be able to do a lot better job when we craft these bills. So we very much thank you for your testimony here today. We're all going to now run for a vote. But thank you for your service.

I ask your unanimous consent to submit testimony for the record from the American Society of Civil Engineers, the authors of the 2009 Report Card for America's Infrastructure.

The committee is now adjourned.

END.


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