Federal Highway Administrator Mary Peters
Excerpts from remarks as prepared for delivery
Associated General Contractors of America (AGC) 85^th Annual Convention
Highway and Transportation Contractors Division Meeting
March 12, 2004, Orlando, Florida

The Federal Highway Administration values our close and productive working relationship with AGC. We value your industry leadership and your strong Washington presence that lets us know where you stand on the issues. AGC is the "E. F. Hutton" of our industry -- when you speak, people listen.

We appreciate the important role your Association plays as we work together in partnership to meet transportation needs across the country.

IMPORTANT WORK FOR THE COUNTRY

The member firms of AGC do important work for our nation. Transportation moves America's economy. You are vital to the success our nation has enjoyed for more than 200 years.

In 1792, the first long-distance, hard surface highway was authorized -- the Lancaster turnpike. From then on, there has been no turning back we went from a 62-mile highway in Pennsylvania in the late 18^th century to a four million mile network of streets, highways and interstates today. We've come a long way, BUT we have a long way still to go to assure future success.

EXAMPLES OF FORWARD THINKING

Before I discuss the Administration's position on reauthorization, I want to give you some examples of the long-term thinking -- the kind of future thinking that Secretary Mineta and the Bush Administration are advancing.

One that I am keenly interested in is: Future funding for surface transportation

Today, road building in the United States is overwhelmingly done by the public sector. Limited private sector involvement has shielded the industry from market forces and discouraged the type of innovation that brings efficiency and cost savings.

The public sector is often too prescriptive. As a result, while our nation witnessed revolutions in retailing, telecommunications, computers and finance, innovations in transportation have been more limited. Take the telecommunications industry, for example. Some of us are old enough to remember Ma Bell and the black rotary dial phone that every home had.

Some of us probably also remember "Mother's Day" calls or more accurately trying to make a Mother's Day call. Ma Bell controlled not only phone access, but even the telephone itself and if someone hooked up a phone that was not theirs to a phone line, they would not make repairs.

Deregulation and competition drove this industry to the point where cell phone minutes are quickly overtaking those made on land lines and increasing numbers of consumers are using the Internet for phone service. Today, we have many, many choices and competitive prices. We need more of those kinds of choices -- and fresh thinking on prices -- in transportation finance.

FHWA is also working on a number of innovations to help bring change to transportation finance.

• Innovative methods such as TIFIA and Private Activity Bonds.

• More support for tolling.

  • --  Under current law, tolling is generally not permitted on Interstate highways. The exceptions are the 15 slots under the Value Pricing Pilot Program and the three slots under the Interstate System Reconstruction and Rehabilitation Pilot Program.

  • --  We propose that the authority to use variable tolls to reduce congestion on any highway, bridge, or tunnel -- including Interstate facilities -- be available to all 50 states with certain conditions.

• Public Private Partnerships

  • --  We want to remove obstacles and encourage formation of PPPs

• Concern about future funding leads us to explore financing options beyond the "gas tax." We simply cannot continue to depend almost entirely on fossil based fuel taxes to fund transportation in the future.

  • --  Alternative and hybrid fuel vehicles use less gasoline.

  • --  We need to lessen dependence on foreign oil.

  • --  Hydrogen fuel cells may well be the automotive power choice in the future.

• What are possible funding sources in the 2010 reauthorization?

  • --  Revenue sources that focus on demand, not supply.

Maintaining and improving our infrastructure

Another example of future thinking is finding a ways to rebuild our aging highway infrastructure while minimizing traffic disruptions. The highway community will meet this challenge with a combination of strategies.

• --  Apply innovations to improve performance and durability (Long-Life Pavements and Bridges).

• --  Accelerate construction while enhancing safety and quality.

• --  Focus on system performance and customer satisfaction with an Asset Management approach.

Here's an example of future-oriented thinking on a "real-live" project.

In September 2003, the Texas Department of Transportation (TxDOT) hosted a workshop focusing on how to accelerate Project Pegasus, an initiative aimed at redesigning and improving the two major Interstate highways that serve downtown Dallas, I-30 and I-35E.

The heavily congested highways have outdated layouts. In many locations, ramps lack adequate acceleration or deceleration lengths, interchanges and ramps are too close together, and bridges have limited vertical and horizontal clearances. Challenges include having to weave construction around railroad tracks, major employment sites, four city parks, and the Dealey Plaza historic district.

Workshop recommendations included using design-build contracting, coordinating with utility companies early in the project planning process, using long-life pavements with a 50-year design life, improving materials specifications, setting up a dedicated incident management system at the project site, and a number of traffic flow strategies.

The goal of the accelerated construction plan is to complete the $760 million project in four years, shaving three years off the original estimate. (Shaving three years will certainly help customer satisfaction.) AGC members make this innovation possible.

Innovation

• We have developed a new legislative initiative to encourage building roads that not only last longer, but that can be built significantly faster than is being done today.

  • --  Bring together our good ideas and USE them.

• We've all seen examples of excellence -- things being done faster, such as in Oklahoma.

  • --  53 days to replace an interstate bridge

  • --  The contractor for the reconstruction was Gilbert Central Corporation and, yes, Gilbert Central is a member of AGC.

• It begs the question -- why can't we do that all the time, everywhere?

The Secretary is excited about this new initiative. It is what the public wants and needs. We feel that we can make it a reality only through a strong partnership with AGC and the entire highway industry. Supported, of course, by our long-term vision for the nation's surface transportation programs, as expressed in the Administration's SAFETEA proposal.

PRESIDENT'S BUDGET FOCUS

To put surface transportation reauthorization in context, I want to outline the President's FY '05 Budget request. The Administration's budget proposal focuses on four key priorities:

• Winning the war on terror.

• Protecting America by securing our homeland.

• Strengthening our economy.

• Supporting key priorities such as education and health care.

There's no question that we are encouraged by economic growth in the second half of 2003 -- the fastest growth in nearly 20 years. The cumulative effect of tax relief on the economy has been strong, laying the groundwork for increased economic growth and job creation.

The economy is moving in the right direction and transportation plays an important role in our nation's economic recovery. But it is essential that we look at the entire economic spectrum in determining funding for transportation. Certainly reauthorization of TEA-21 is at the forefront of our interest in that analysis.

GETTING THE JOB DONE

The Administration's SAFETEA proposal (Safe, Accountable, Flexible, and Efficient Transportation Equity Act) as modified by the President's 2005 budget, contains a historically high level of investment for highways and transit, providing $256 billion over six years. It ensures the creation of thousands of jobs as well as the continued growth of our nation's economy, without imposing costly new taxes, impacting the deficit, or taking money from other important priorities.

On February 27, the Congress acted to avoid the unnecessary shutdown of important highway programs and the furlough of almost 5,000 workers. Now, with the issue of a temporary extension behind us, we can return our attention to the passage of a fiscally responsible, six-year surface transportation bill.

Secretary Mineta and Federal Highways urge Congress to use the time provided by this second extension to give America a bill that allows states and local communities to plan and construct critical highway and transit projects. Each day that we don't have a full, six-year reauthorization is another day of inaction on crucial investments in our future.

SAFETEA PROVISIONS

SAFETEA provides:

• --  $45 billion in additional funding, or a 21 percent increase over TEA-21.

• --  More than $14 billion is specifically designated to support the President's, the Secretary's and my top priority, safety.

• --  It gives state and local decision makers more flexibility to solve the transportation problems of their communities.

• --  It provides funding for unclogging bottlenecks, to allow American workers and American businesses to save time and money . . . to get where they need to go.

Most important, SAFETEA gets the job done, without raising taxes, without increasing the deficit, and without taking money from other important programs. We feel SAFETEA strikes the right balance between the need to make a substantial Federal investment in the nation's transportation infrastructure and the need to maintain fiscal discipline. Congressional proposals that would increase gas taxes and deficit spending would dampen the opportunity for lasting economic growth.

In contrast, the President's plan means solid investment in the economy through better roads and transit systems, good construction jobs, and most importantly, more money staying in taxpayers' pockets. It is a responsive, responsible and sustainable investment in surface transportation.

Not only do we need this legislation passed sooner rather than later, but also we need to make sure that it is a bill that gives states the ability to plan for the future. That means a six-year bill.

Some are advocating a stopgap measure of a year or two, rather than dealing with a six-year reauthorization now. They say it won't make a difference. As someone who has devoted nearly her entire career to transportation, at the state level and now as Administrator of Federal Highways, I know as well as each of you that this is not true.

• --  Many projects are on hold awaiting the certainty of reauthorization.

• --  Industry and supplier groups are seeing project bids and orders for materials and equipment drop off already.

• --  Senate Finance Committee Chairman Charles Grassley of Iowa rejects the idea of a two-year bill. He said recently, "Highway construction is a long-term project. You need long-term planning and you need it in order to have efficiency in offering contracts."

• --  We risk losing a construction season in many areas if decisions are not made soon.

States and state DOTs, counties, cities, and the American public all depend on the certainty of a multi-year reauthorization. We further need the important policy reforms that would not happen with a short-term extension -- things like environmental streamlining, and improvements to planning and air quality conformity requirements.

CLOSE

The American people deserve the safest, most secure and most efficient transportation system in the world.

• --  Businesses large and small depend upon it . . . especially with just in time delivery replacing warehousing for so many firms.

• --  America's workers and families depend upon it too.

We have before us the opportunity to reach agreement on a responsible transportation bill. I hope all of us -- the transportation community working together -- can get it done!

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