Testimony – TEA 21

Chairman Petri, Ranking Member Borski, and members of the Subcommittee, I thank you for inviting me to testify before your committee on the reauthorization of the Transportation Equity Act for the 21st Century (TEA-21) as we enter the last fiscal year guaranteed by that act. I’d like to applaud the hard work of this committee.

Let me first introduce myself. I am Paul Patton, Governor of Kentucky and currently the Vice-Chairman of the National Governors Association (NGA).

By way of further introduction, I know roads! I know how to build them; I know how to use them; and I know what the lack of them can mean to people.

I’m a life-long resident of Appalachian Kentucky, a region of our nation destined to wilt on the vine of poverty because it had been by-passed by the modern highways of the last half of the 20th century; until our Federal government rescued us with the Appalachian Developmental Highway program.

I know the horror of friends and family deprived of life because of antiquated mountain trails used as highways.

As a businessman I know what a competitive disadvantage obsolete roads can create. As an engineer I know there is only one solution; safe, modern highways serving all of America, keeping our industries competitive in a world economy, our children safe on the way to school, our communities connected to that larger world that we all want to be a part of some of the time, even as we value the serenity of our own neighborhood.

I was fortunate to be able to retire from the business world at 42 and pursue a life of public service which I have found to be extremely rewarding. My first public service job was in 1979 in the administration of Kentucky Governor John Y. Brown, Jr. where I had the choice of several positions. I chose to be Deputy Secretary of the Kentucky Transportation Cabinet because I knew the need for roads all over Kentucky and especially in Appalachian Kentucky.

I later served for ten years as the county executive in my native Pike County where my main focus was improving our residential and arterial roads.

As governor, I have been personally involved in improving the efficiency of our road building and maintenance programs and working with my fellow governors to secure the appropriation of all the funds in the Highway Trust Fund to the construction of roads and other transportation purposes.

I know roads!

During the reauthorization of the Intermodal Surface Transportation Efficiency Act (ISTEA), I, along with my fellow governors at the time, led the T.R.U.S.T. (Transportation Revenues Used Solely for Transportation) Coalition which succeeded in working with your committee to secure one of the most comprehensive highway spending bills ever enacted by Congress. TEA-21 provided a greater rate of return to the states of our citizens’ motor fuel and user taxes while increasing the equity of distribution among the states. It is my intention to work closely with you in order not to lose the ground that was hard-won nearly six years ago and hope to again work with this body to build upon those achievements.

I realize that the President’s budget proposal follows the mandate of TEA-21 and as you well know, the funding level of the next fiscal year as calculated using the criteria for the TEA-21 legislation will result in a 27 percent reduction in Federal spending in the next fiscal year, which for most states begins in little more than four months.

I know that the Federal fiscal year doesn’t begin until October 1, but Kentucky, and I believe most other states, begin planning their state and Federal Highway Construction Program about this time of year, going to contract near the beginning of the construction season, spending state money to prefinance federally funded projects, getting reimbursed very early in the Federal fiscal year. For example, beginning last October 1, Kentucky has been reimbursed $60 million for work actually performed before October 1. The point I’m trying to make is that, if states have to absorb a 27 percent cut in federally funded highway construction next year, they will begin reducing expenditures in July of this year or even before. The lack of rapid action by the Congress on this subject will mean a dramatic reduction in spending in a critical sector of our economy which will have an adverse effect on what appears to be a recovering economy.

The Congress may very well not be able to pass a stimulus package; but to not act on this issue will have the opposite effect and result in the reduction of about $8.6 billion of expenditures that will cost the economy as many as 360,000 jobs. That translates to over 5,000 jobs in Kentucky and that’s a serious problem, especially considering the fragile nature of what we hope is an economic recovery. These are good-paying jobs, among the best in the state. I’m sure that is true of the other parts of the country.

One of the goals in TEA-21 was to secure the expenditure of all of our transportation dollars on transportation projects. As to current revenue, TEA-21 has done that. It did not address the approximately $19.3 billion unappropriated balance in the Highway Trust Fund.

Another objective was to maintain relatively consistent funding from year to year so that the construction industry could operate efficiently without dramatic swings, up or down, and so that construction workers could have relative job security. Up until next fiscal year, funding levels have been fairly consistent since 1997 with an average increase of about nine percent a year.

Next year the chickens will come home to roost, as we used to say on the farm. Through a combination of several factors, which could not be foreseen when TEA-21 was enacted, the formula results in this unprecedented 27 percent reduction for Fiscal Year 2003.

One response to the governors could be, “that’s what you asked for, that’s what you got.” If it were only the governors who would be affected by this reduction, that response might be justified. But it’s not the governors who will suffer. It’s the workers; and the infrastructure our businesses need to stay efficient. And I’m not just talking about construction workers. The construction industry won’t be buying much new equipment when they have 27 percent excess capacity. The workers in the factories which build that equipment will be affected. And the workers in the retail establishments which serve those construction and factory workers will be affected. The results will ripple through the economy and touch the lives of the constituents of every members of the Congress, and of every governor. Those are the people I appear on behalf of.

Next year you will be considering, and I will be here talking to you about, the reauthorization of our surface transportation program. That will be the time to correct the problems with TEA-21 which have now become apparent. This next fiscal year is the immediate problem, and I do mean immediate. My solution is to begin the process of spending down the unappropriated balance of the Highway Trust Fund to maintain level funding for this one year until the quirks which have resulted in the reduced revenue have worked their way through the system and we can return to a “current revenue” expenditure program which will be stable and very near the $31.8 billion level of the current year.

Mr. Chairman, I cannot overstate the urgency of quick action. The vast majority of the states’ budgets commence on July 1 – three months before the new federal fiscal year. So, we are already in the final stages of our own budgets – the final stages of making determinations of which projects to halt, delay or not undertake – and how many jobs to lose.

We are grateful for your extraordinary leadership in moving so swiftly, and in such a bipartisan manner, to engage an early resolution. Timing is vital. Nothing could be more essential to meaningful economic recovery.

In less than one week, 45 governors have joined in a letter to the bipartisan leaders of the House and Senate urging speedy Congressional action. In addition, the NGA has joined with the U. S. Chamber of Commerce and other key labor and business organizations to urge prompt action.

The state and federal partnership that grew out of ISTEA and improved under TEA-21 has been one that has greatly benefited the surface transportation system throughout the nation. The governors are committed to maintaining a safe and efficient transportation network, and we strongly urge the reauthorization of the Federal surface transportation program and the extension of the transportation firewalls.

Our states are responsible for the vast majority of the maintenance of our nation’s roads and finance more than one-half of all public investments in surface transportation. My fellow governors and I are dedicated to maintaining a world-class transportation system and continuing the partnership with the federal government. But in order to do that, it is vital that each state be granted the flexibility and authority to make the key decisions that affect transportation.

The public transportation system is largely the responsibility of the states and local governments. It is important that the next authorization not dilute or pre-empt state authority. The governors oppose unfunded mandates and urge Congress not to impose new standards without a federal financial commitment to the states to offset any financial impact. Furthermore, the governors urge the use of incentives rather than sanctions to encourage the achievement of national goals.

The nation’s governors strongly support sound environmental protection efforts. It is important that the next surface transportation bill has a strong environmental component that is balanced with state flexibility to meet those environmental guidelines. It is possible for reasonable and sound environmental policy to be achieved without sacrificing improved transportation and economic development.

On average, projects requiring an environmental impact statement take almost five years from start to environmental approval. This is entirely too long. In Kentucky, we have the utmost respect for our environment. However, our citizens want us to improve our highway system, protect our environment and do it quickly.

In western Kentucky, an extension of our parkway was delayed while resource agencies disagreed over the value of a wetlands. The perplexing feature of this “wetland” was that it was wet one month out of the year and dry the other eleven months. In Central Kentucky we are often required to work project schedules around trying to identify an endangered plant species called “Running Buffalo Clover.” This type of clover is only distinguishable from regular clover when it is in bloom for one or two weeks out of each year. If you don’t locate it in those two weeks, you will need to wait until the following year.

Proposed rules released by the Federal Highway Administration and the Federal Transit Administration concerning environmental streamlining would not simplify the process. I urge Congress to not require new administrative guidelines that will hinder the process since it would be a waste of time and resources to delay projects for unnecessary and cumbersome administrative processes. There are already a multitude of Federal laws and regulations for which we must comply for our highway projects. In Kentucky we have initiated context sensitive solutions for our highway projects and smart growth practice for land use which we think is a better solution to providing good highways while preserving our environment.

The safety of our citizens on our nation’s roads is of paramount concern to Governors. Although modern transportation systems have greatly helped reduce injuries and deaths on our nation’s highways, safety programs should be strengthened. States should be allowed to direct safety resources to their most critical safety needs. Implementing any new national safety standards without state coordination will only muddy the process.

In Kentucky, we passed the “Point 08” blood-alcohol level and the “Open Container” laws two years ago and are benefiting from the incentives of additional highway safety funding. We are putting this incentive money to good use with increased enforcement on our roadways and the improvement of high-accident locations.

Currently, we are working hard to pass a primary seat belt law for Kentucky. We estimate that the lives of 75 Kentuckians will be saved annually by the enactment of this law. It is important to governors that the incentive “carrot” approach, not the “stick” approach be used for encouraging states to improve highway safety.

Over the years, this committee has ensured that an adequate transportation infrastructure existed to promote efficient and cost-effective movement of goods and people. Your actions have been vital to our country’s economic prosperity. That is why it is crucial that this committee enact a surface transportation bill that lays the foundation for economic recovery and growth in the next decade.

I thank you for the opportunity to be here today to raise these important issues. On behalf of the nation’s governors and the people of Kentucky, I look forward to the results of your hard work and eventual success in this endeavor and would be happy to answer any questions.