Remarks as prepared for delivery
Rick Capka, FHWA Administrator
AASHTO Washington Briefing
Wednesday, March 7, 2007, Washington, DC

NEAR-TERM SITUATION
I want to divide my talk into two parts.

First, short-term -- the outlook is pretty good.

And then longer-term, where the outlook is more guarded.

Concern about funding is on everyone’s mind. Thankfully, the uncertainty arising from a series of short-term extensions for 2007 is finally over. The full year continuing resolution provides funding for 2007 at the SAFETEA-LU authorized level, and that’s good news. The President’s 2008 budget request of $40.3 billion for highways also reflects SAFETEA-LU funding.

Keep in mind, however, that total funding in SAFETEA-LU represented a compromise between the President’s fiscally-constrained proposal and the higher levels endorsed by Congress. The compromise was based on the concept of spending more than current receipts each year, thus “spending down” the balance that had accumulated in the Highway Account.

That was the plan -- to spend it down. This allowed a higher level of investment in surface transportation without adding a corresponding burden on taxpayers. This was never intended as a long-term approach. It was a short-term tactic, based on projected revenues.

Now, however, it looks like we’re going to fall about $230 million short. The Administration proposal to cancel RABA for FY 2008 represents another short-term action, this time to partially address the projected cash shortfall.  I believe it is a prudent step.  We just can’t wait to 2009 to hold back obligations.  

LONGER-TERM
This financial scrambling makes it clear how important it is to finance surface transportation long-term. I want to work with the Congress on serious reform of our approaches to both financing and managing our transportation network.

As you know, SAFETEA-LU provided for the establishment of the National Surface Transportation Policy and Revenue Study Commission to develop a conceptual plan, with alternative approaches, to ensure that the surface transportation system will continue to serve the needs of the nation.

The Revenue Commission is to develop specific recommendations regarding design and operational standards, federal policies and legislative changes. The Commission, which Secretary Peters chairs, will be reporting its findings at the end of the year. It’s not my role to speculate on their recommendations.
I can say that we are in the later stages of a slow motion crisis.
Congestion is like a slow-growing cancer that left untreated, will surely kill you. Congestion is simply costing us far too much, and we have become far too complacent about addressing it.  As Secretary Peters has said, “Congestion is endangering our freedom, our economy, and our independence.”
When the performance of our ports, highways, and railways breaks down, they not only become a chokepoint for our economy, they can literally choke the communities surrounding them.
A few days ago, John (Horsley, AASHTO Executive Director) shared with me the report AASHTO is releasing later today, “Future Needs of the U.S. Surface Transportation System.”  I agree with AASHTO that, “Investment in highways and transit needs to increase significantly to meet national needs.”
That is why it is so important that we begin to fundamentally re-think how we finance and manage transportation systems.  We need new approaches that will provide economic benefits, relieve the stress of commuting on family life, improve safety, and, of course, protect our natural environment and air quality.

CONGESTION INITIATIVE
The President’s budget request redirects $175 million in DOT funds to a new congestion relief initiative, to help state and local governments demonstrate innovative ideas for curbing congestion.

Here are some elements of the initiative that are part of the long-term solution.

Urban partnership agreements (UPAs)
USDOT is seeking proposals from metro areas that agree to implement a comprehensive policy response to urban congestion.  USDOT will select up to five “Urban Partners,” and will support them with available financial resources, regulatory flexibility, and expertise. Applications are due by April 30. We hope to announce Urban Partners by sometime in August.

Public private partnerships (PPPs)
We are working to reduce or remove barriers to private sector investment in the construction, ownership, and operation of transportation infrastructure.
Because all states don’t have laws that allow governors and state DOTs to take full advantage of opportunities, U.S. DOT has developed model legislation to help states craft their own . . . and to show what a PPP agreement might look like.

Freight congestion initiative
USDOT is bringing together federal, state, local, and private-sector officials to forge consensus on solutions (both immediate and long-term) to reduce freight congestion at vital trade gateways . . . most importantly, Southern California.
Investment is critical. But even with the very best intentions, federal funding is unlikely to meet future needs, and new financing mechanisms such as public-private partnerships can help fill the gap.

Corridors of the Future
Five finalists will be selected this summer.
The goal is to identify projects that have the greatest potential to relieve traffic congestion and target them for long-term investment.

REVENUE COMMISSION
I mentioned the Revenue Commission earlier. My hope is that the 12 members lead what will be an historic transition in the way that highway and transit projects are funded and managed.

They have traveled to key parts of the country -- most recently Los Angeles, Atlanta, and Las Vegas -- where they listened to the people who are actually using, building, and maintaining transportation systems every day.  Everything is on the table and that’s as it should be.

REACH OUT
I would like to ask for your help.

We need to educate state and local governments, chambers of commerce, and business leaders who know the importance of transportation and the financing problems we confront . . . but assume that the traditional funding approach is the only option.

Let political leaders know that if they don't come up with effective ways to address their transportation problems, bottlenecks and delays will become a drain on their state's economy.

Let the public know that there are potential solutions and there are states around the country that are moving aggressively to address these problems in new and effective ways.

We in USDOT look forward to working with AASHTO and your state in coming months. The Bush Administration is committed to keeping the economy strong and growing.

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