Statement
of Senator Jim Jeffords
Innovative
Financing
Beyond
the Highway Trust Fund
September 25, 2002
Welcome
to this, our thirteenth EPW committee hearing in preparation for renewal
of the nation's surface transportation program. I am pleased this morning to join Chairman Baucus and the Finance
Committee in sponsoring today's hearing.
Today
we will focus on money - a key to the future of America's transportation
system. By some accounts, the annual
level of investment needed to just maintain our transportation system is
nearly $110 billion per year. Our
current national program falls well short of that figure.
Over
the last fifty years, in our successful campaign to develop the Eisenhower
Interstate Highway system, we have used federal grants to states in a
pay-as-you-go program to build our national system. Today, that system is essentially complete.
We
are in the post-Interstate era. Our
federal-aid program is now focused, appropriately, on maintaining, operating
and enhancing the highway asset that we have built. But this federal-state partnership is now being overwhelmed by just
its asset management responsibility.
Unless we adapt, I foresee a continuing deterioration of our
transportation system.
We
are a nation with unlimited potential and boundless possibility. That spirit has propelled a range of
achievements unparalleled anywhere in the world. Our renewal of America's transportation program must reflect
this national heritage in meeting the needs of the next generation.
It
should be as bold as President Eisenhower's vision was, in its time. Our vision should not be hobbled by
artificial constraints or narrow thinking which would permit other nations to
gain a competitive advantage over us.
To fully compete in world markets, and to offer all American families
and businesses the full range of products in international commerce, we need
strategic investment in key new facilities, while reinvesting in those already
built.
We
have explored options to increase revenues to the Highway Trust Fund in
previous hearings. I will consider all
options for growing the Trust Fund. But
today, we will look beyond the Highway Trust Fund, beyond the grant-in-aid
program and beyond the federal-state partnership.
We
will hear today from two distinguished panels on a topic that has been referred
to for the last ten years as "Innovative Financing". We will look at the role of revenue streams,
private capital, special-purpose entities and intermodal facilities - in
meeting the needs of the next generation.
But
this is not innovative or radical or even new.
In fact, what we will explore today is really the pre-Interstate approach to financing roads
and bridges. It is the standard way
that our free enterprise system creates our means of production, through
private capital and return on investment.
I am
pleased that Councilwoman Hahn from Los Angeles is here to discuss a pioneering
effort in modern transportation finance - the Alameda Corridor. This prototype project is intermodal in
nature, provides both freight and passenger benefits, draws on new revenues to
retire debt and is sponsored by a special-purpose district.
In my
home state of Vermont, we have utilized a finance program called a State
Infrastructure Bank (SIB). A SIB is a
revolving fund mechanism for financing a wide variety of highway and transit
projects through loans and credit enhancement.
Vermont has taken hundreds of fuel delivery trucks off our roads by
financing bulk storage facilities in key rail yards.
Other
states have used this mechanism and others to provide earlier project
financing. In the state of South
Carolina, a variety of finance techniques coupled with public-private
partnerships has resulted in the construction of 27 years' worth of projects in
a seven-year time span.
On a
smaller scale, the state of Delaware has joined with the Norfolk Southern Rail
Road to renovate the historic Shellpot Bridge, with the railroad retiring the
project's cost over time through fees on its rail cars.
What
we discuss today is a complement to our traditional programs, not a replacement. Private capital represents a realistic means
to expand our buying capacity. The key
is revenue streams. When a project is
supported by dedicated revenues - whether it is tied directly to the use of the
facility as in the case of Alameda or Shellpot Bridge, or simply earmarked from
more general sources such as property rentals or operating revenues - then that project can retire debt.
The
freight community in particular will benefit from expanded use of
financing. Today, freight interests are
frustrated by their inability to compete when projects are ranked at the state
and MPO level. Through its capacity to
generate revenue, the freight sector can essentially create its own program. This will also reduce demand on the
traditional federal-aid grant program.
Let
me close by suggesting a vision for transportation finance. In the future, every responsible fund
manager, both here and globally, will have a fraction of his or her portfolio
invested in US transportation infrastructure.
They will do so with confidence in the investment and the bold nation it
supports. Over the next few hours, I
will listen for ways to make this vision a reality.
Thank
you.