Surface Transportation: Moving into the 21st Century

Published by the Government Accountability Office on 1999-05-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Staff Study

May 1999
                  Moving Into the 21st


              The nation’s federal surface transportation policy has become increasingly
              complex, changing from a narrow focus on completing the nation’s
              Interstate highway system to a broader emphasis on maintaining our
              highways, supporting mass transit, protecting the environment, and
              encouraging innovative technologies. Surface transportation in the 21st
              century will differ from transportation today, and demographic
              changes will spark much of this change:

          •   The nation’s population will increase by 60 million through 2020, resulting
              in 60 to 70 million more vehicles using the nation’s surface transportation

          •   The rapid suburbanization of population and employment will continue.
              Since 1970, 86 percent of the U.S. population’s total growth and the
              majority of all retail space is now located in suburban areas.

          •   The population will age. From 1995 to 2005, the number of Americans in
              their 50s will increase by 50 percent, presenting different travel patterns
              and needs.

              These changes will move surface transportation in new directions that are
              likely to require new policies and approaches. According to a leading
              transportation expert, failing to respond to these new trends in the 21st
              century could send a negative ripple through the whole fabric of the
              American standard of living.

              To understand these new challenges and assess the potential directions
              that surface transportation policy could take to address them, we
              sponsored a conference entitled “Moving Into the Future: Surface
              Transportation in the 21st Century” on January 26, 1999. The conference
              brought together transportation experts from the Congress, academia,
              state departments of transportation, local planning agencies, research
              institutes, investment banks, other private companies, and the federal
              government to discuss the future of surface transportation in the United
              States. These experts offered provocative thoughts on the wide-ranging
              challenges and issues facing current policymakers. Their remarks also
              provided an early look at surface transportation issues that the Congress
              might debate when authorizing legislation succeeding the Transportation
              Equity Act for the 21st Century (TEA-21). This report summarizes the future
              surface transportation issues based on the views transportation experts
              presented at our conference.

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                            According to our conference participants, the nation’s surface
Challenges to Surface       transportation system faces significant demographic, lifestyle, and
Transportation              economic challenges and demands. In the future, busy passengers and
                            businesses will increasingly press for improved transportation services
                            that give them cost-effective means to move themselves and their goods
                            rapidly and reliably through the transportation system. For busy
                            Americans, the car will remain the dominant mode of travel and will
                            continue to be viewed not as a problem but as the solution to their
                            transportation needs. Our participants characterized Americans’ views of
                            cars as faster, safer, more comfortable and flexible, cheaper, and better
                            able to link scattered departure and destination points than other forms of
                            transportation. For the nation’s businesses, moving freight quickly through
                            the transportation system will be vital to their survival in a global market
                            that poses unrelenting productivity demands. In addition, commuters,
                            leisure travelers, just-in-time freight shippers, and older travelers all will
                            have different trip patterns and travel needs, thereby placing more
                            complex demands on the transportation system.

                            Conference participants had the following observations regarding the
                            challenges that the traveling public and transportation policymakers will
                            face in the 21st century.

                        •   The surface transportation network is aging, and the existing
                            infrastructure has not been adequately maintained. Traditional responses,
                            such as constructing new highways, are being foreclosed by public and
                            environmental pressures. In addition, state and local governments appear
                            slow in directing more dollars to preserving the infrastructure. Without a
                            significant change of direction, there will be a growing mismatch between
                            the transportation system and travelers’ needs.

                        •   Highway congestion—particularly in very large urban areas—will be a
                            continuing issue. Although average commuting times have not changed
                            substantially for years, several participants noted that the public perceives
                            congestion as worsening and producing adverse economic impacts.
                            Population growth and more households with multiple vehicles are likely
                            to outpace states’ efforts to expand highway capacity. One conference
                            participant concluded that congestion is not a problem that can be
                            solved—it results from the public’s travel and lifestyle choices. Families’
                            desire for a wide range of housing and work choices—often in low-density
                            areas—and the ability to combine several different purposes on a single
                            trip will continue to generate considerable traffic congestion.

                            Page 2                                    GAO/RCED-99-176 Surface Transportation

                     •   Social and environmental concerns are becoming greater constraints on
                         the system’s expansion than money. People increasingly are concerned
                         about how transportation investments affect their quality of life and
                         expect results that improve both their mobility and their local community.
                         The citizens who attend local planning meetings are looking for results
                         from transportation investments that differ from those in the past (such as
                         more bike paths or green space). However, reconciling transportation and
                         environmental policies is increasingly difficult—often producing gridlock
                         at state and local levels and delaying needed changes to the system.

                     •   Future mass transit policy may have to acknowledge that only a few large
                         urban areas contain the majority of transit users. For example, the 10
                         largest mass transit systems carry 60 percent of all the nation’s transit
                         riders; the other 5,000 operators carry 40 percent. Federal transit funding
                         does not correlate with this ridership concentration; established transit
                         markets where ridership could be increased do not receive proportional
                         funding. Mass transit also will be called on to address the needs of
                         low-income households that cannot afford cars as well as the needs of the
                         disabled and elderly.

                     •   Freight shippers are major transportation users and vital to the nation’s
                         economic competitiveness. Moving freight in and out of U.S. seaports will
                         grow about 6 percent annually and double or triple in total volume by
                         2020. The current surface transportation network does not allow freight to
                         move easily between highway, rail, air, and maritime transport. In
                         addition, the public sector often does not understand the needs and
                         problems of moving freight nationally or regionally. Freight and
                         intermodal problems will thus require considerably more attention by
                         transportation agencies in the future.

                     •   With few exceptions, the public cannot obtain information about the
                         quality and level of transportation services across states and regions.
                         Currently, states handle and report on highway accidents and incidents in
                         different ways that can have major impacts on travelers. The public needs
                         additional performance information so that it can develop reasonable
                         expectations about how public assets are expected to perform.

                         Our conference participants urged federal, state, and local policymakers
A New Paradigm for       and agencies that are responsible for surface transportation to adopt a
Surface                  new paradigm—one that focuses on the people who use the transportation
Transportation           system, including their needs and expectations. Unlike the 20th century

                         Page 3                                   GAO/RCED-99-176 Surface Transportation

    mission of constructing the transportation system that exists today, future
    transportation policies must shift transportation agencies’ focus to
    managing the system for greater efficiency and delivering better services
    for the users. Such focus will require transportation policymakers and
    agencies to rethink their strategies for achieving transportation goals and
    to collaborate more extensively with the private sector to meet travelers’
    complex transportation needs. These challenges are especially important
    because transportation and the ability to move goods and people will be
    vital to our economic survival in a global market.

    The conference participants provided several examples of how a focus on
    users would shape future transportation policies and services.

•   Surface transportation policy must reflect Americans’ heavy reliance on
    cars to meet their mobility needs. Rather than undertake complex,
    controversial programs to get people out of their cars, policies should
    concentrate on local experiments, such as greater ride sharing, new
    community designs, or enhanced emphases on urban mass transit or
    passenger rail. A participant observed that national mandates are
    unpopular and unproductive approaches for reducing problems associated
    with the automobile.

•   By linking transportation policies and services to customers’ needs and
    preferences, the primary mission of transportation agencies will change
    from building highways, bridges, and mass transit systems to moving
    people and goods. The measurement of performance success will also
    change. Instead of measuring the amount of additional capacity built,
    policymakers will focus on how transportation improves personal
    mobility, expedites shipping, and speeds the transfer of information.

•   Developing new services based on customers’ needs and input will be a
    substantial departure from the largely bureaucratic decision-making that
    characterizes transportation organizations today. In addition,
    collaboration among federal, state, and local transportation agencies will
    be important because no single transportation agency or level of
    government will be able to independently meet travelers’ complex
    transportation needs in the future.

•   Transportation managers will need to bring other public agencies into the
    policy and decision-making process. Transportation policy often involves
    other government entities—environmental, housing, education, and
    energy. However, these entities may not work together to meet common

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    objectives. For example, local agencies that provide water, sewer, and
    educational infrastructure are seldom involved in transportation decisions.
    As a result, infrastructure investments may not be coordinated and could
    often duplicate each other.

•   Other nations are using public-private partnerships to put their
    transportation systems in a better position to meet global competition,
    according to a participant who surveyed international practices. In several
    nations where the private sector already delivers transportation services
    and maintains facilities, public-private roles are being reassessed to
    provide greater efficiency. These nations are experimenting with increased
    private-sector involvement in transportation services. They are using
    competition to make the transportation system more efficient and
    cost-effective, reducing regulations to encourage innovation, retaining
    transportation policy and management as a government role and using the
    private sector for maintenance and services, and seeking accountability
    through performance measures. In contrast, the United States has made
    modest moves to enhance the nation’s global competitiveness by
    overcoming barriers that limit public-private partnerships. A participant
    characterized the public sector as superb at creating procedures and
    process but poor at deployment—the bottom line for private companies.
    Similarly, private companies are action oriented and do not understand or
    appreciate a funding process that requires 10 years to complete a surface
    transportation project.

•   Freight stakeholders must become full partners in making transportation
    policy so that surface transportation investments are linked to freight
    needs. In 1994, business and industry spent $421 billion to move 3.5 trillion
    tons of freight over transportation networks totaling 2.3 million miles.
    Facilitating freight users’ and suppliers’ involvement in transportation
    policy will enhance the nation’s ability to move freight seamlessly across
    different transportation systems. In addition, manufacturers and freight
    companies regard the Department of Transportation’s (DOT) “stovepipe”
    organization as a major obstacle to working with the federal government,
    a participant reported. They find it difficult to discuss intermodal projects
    or emerging issues—such as how the new megaships will access U.S.
    ports—with a single DOT agency that is responsible only for highway or
    maritime issues.

•   The conference participants stated that innovation is essential to the new
    transportation paradigm—its policy, management, operations, and
    services. Currently, ideas and innovation are generated at the state and

    Page 5                                   GAO/RCED-99-176 Surface Transportation

    local levels. Although bellwether states are experimenting with funding,
    services, pricing, and relationship innovations, this is not well known at
    the federal level and virtually never mentioned in national discussions, a
    participant indicated. Another participant proposed that the federal
    government reward well-designed state and local innovation with seed
    money and other incentives.

•   Federal policymakers need to renew their commitment to funding
    nationally important research. While TEA-21 substantially increased states’
    research funding, it considerably reduced funds for federal research, one
    participant stressed. While state research programs focus on short-term,
    practical problems, federal research must focus on long-term and high-risk
    research, intermodal problems, and transportation policies. For example,
    federal research to produce a “post-petroleum” vehicle propulsion
    system that would reduce pollution and energy consumption is
    increasingly important, a participant observed.

    Our conference participants provided considerably more comments and
    suggestions for transforming surface transportation policies to a user
    focus. Appendixes I through X provide summaries of their remarks.

    We would like to thank the staff of the National Academy of Sciences
    Transportation Research Board—particularly Robert Skinner and Dr.
    Suzanne Schneider—for their assistance in making our conference a
    success. Furthermore, we are extremely appreciative to Les Sterman,
    Director, East-West Gateway Coordinating Council, and Brian Taylor,
    Associate Director, Institute of Transportation Studies, University of
    California/Los Angeles, who served as expert discussion moderators for
    our morning and afternoon conference sessions. Should you require
    additional information on this report, please call me on (202) 512-2834.
    The conference was planned and this report was prepared under
    supervision of Phyllis F. Scheinberg, Associate Director, Transportation
    Issues. Other major contributors to this report are listed in Appendix XII.

    John H. Anderson, Jr.
    Director, Transportation Issues

    Page 6                                   GAO/RCED-99-176 Surface Transportation
Page 7   GAO/RCED-99-176 Surface Transportation

Summary                                                                1

Appendix I                                                            12

Presentation by Peter
“Jack” Basso,
Assistant Secretary
for Budget and
Programs, U.S.
Department of
Appendix II                                                           16

Presentation by Anne
P. Canby, Secretary,
Delaware Department
of Transportation
Appendix III                                                          23

Presentation by
Anthony Downs,
Senior Fellow, The
Brookings Institution
Appendix IV                                                           29

Presentation by James
A. Dunn, Jr., Professor
of Political Science
and Public

                          Page 8   GAO/RCED-99-176 Surface Transportation

Appendix V                                                             33

Presentation by
Stephen C. Lockwood,
Vice President,
Parsons Brinckerhoff
Appendix VI                                                            40

Presentation by Mr.
David Luberoff,
Associate Director,
Taubman Center for
State and Local
Government, Kennedy
School of
Government, Harvard
Appendix VII                                                           51

Presentation by
Bradley L. Mallory,
Department of
Appendix VIII                                                          56

Presentation by
Robert H. Muller,
Managing Director,
J.P. Morgan Securities

                         Page 9     GAO/RCED-99-176 Surface Transportation

Appendix IX                                                                                      62

Presentation by James
L. Oberstar,
Ranking Democratic
Member, Committee
on Transportation and
Infrastructure, House
of Representatives
Appendix X                                                                                       72

Presentation by C.
Michael Walton,
Department of Civil
University of
Appendix XI                                                                                      78

Profile of Speakers
Appendix XII                                                                                     83

Major Contributors to
This Report

                        DOT        Department of Transportation
                        FHWA       Federal Highway Administration
                        GAO        General Accounting Office
                        I-95       Interstate Route 95
                        ISTEA      Intermodal Transportation Efficiency Act of 1991
                        ITS        Intelligent Transportation Systems
                        PennDOT    Pennsylvania Department of Transportation
                        TEA-21     Transportation Equity Act for the 21st Century
                        TIFIA      Transportation Infrastructure Finance and Innovation

                        Page 10                               GAO/RCED-99-176 Surface Transportation
Page 11   GAO/RCED-99-176 Surface Transportation
Appendix I

Presentation by Peter “Jack” Basso,
Assistant Secretary for Budget and
Programs, U.S. Department of
                            “How we meet needs for transportation in the future is critical. It needs to be intermodal, it
                            needs to be international, it needs to be inclusive, and it needs to be well financed.”

                            “Even with record levels of investment at the federal and state level, we still fall short of
                            the projected need. The consequences of failure are extremely clear. Reduced economic
                            growth, loss of productivity gains, loss of jobs. And a negative ripple that passes through
                            the whole fabric of the American standard of living.”

                            I would like to divide my presentation into three segments. First, I would
                            like to address the environmental factors that we’re likely to face in the
                            future of the nation. Second, I would like to discuss the needs, as we
                            project them today, for at least the next 20 years for the future of
                            transportation. Third, I would like to suggest some financing mechanisms
                            that we might use to address those needs.

The Future Transportation   As we come to the new millennium—enter the new century—we are faced
Environment                 with economic trends that are global in nature. In the United States, we
                            also are enjoying an unparalleled economic expansion. Transportation and
                            effective logistics are vital to our economic survival as we compete in the
                            global market. Transportation today is about 11 percent of the Gross
                            Domestic Product. Therefore, how we meet needs for transportation in the
                            future is critical. It needs to be intermodal, it needs to be international, it
                            needs to be inclusive, and it needs to be well financed. We also need to
                            realize that the population of the United States will grow by 60 million
                            people over the next 30 years, adding substantially to the stress on the
                            transportation system. I would allow that Americans are really fed up with
                            the congestion that currently exists. We cannot apply the approach that
                            we used in the past—simply to build our way to transportation demand.
                            We need to deal with more than system expansion. We need to deal with
                            the efficiencies of the total system.

                            We are also faced with an aging population. That requires changes to our
                            transportation system, so that we can remain mobile and be well served as
                            a nation. Productivity demands are unrelenting, and we must meet those
                            demands to remain competitive in a global market. In that vein, freight
                            moving through our ports is expected to grow 6 percent annually, doubling
                            or tripling in volume by 2020. One of the points I want to make here—the
                            reason I’m touching on ports—is that there is “water surface,” and there
                            is “land surface.” We tend to think of highways. Highways are a part of
                            the total system, a key part. But there are other things we need to address
                            from a federal level. These ports can either be choke points in the future

                            Page 12                                             GAO/RCED-99-176 Surface Transportation
                        Appendix I
                        Presentation by Peter “Jack” Basso,
                        Assistant Secretary for Budget and
                        Programs, U.S. Department of

                        or they can be systems that flow smoothly. To flow smoothly, they need
                        much more overall infrastructure.

Future Transportation   To remain at the unprecedented level of economic growth and vitality we
Needs                   enjoy today, we must expand our transportation system’s capacity to keep
                        pace with that growth. We cannot do it by just building our way out. We
                        must rely heavily on technology and efficiency in our systems in order to
                        meet those needs. What are the needs? All forms of transportation are
                        growing. Passenger miles on domestic flights have doubled since 1980. In
                        the same period, vehicle miles of travel have increased 60 percent, and
                        ton-miles of freight, 25 percent. With the economy expected to grow
                        almost 30 percent by the year 2010, we expect these growth trends in
                        transportation to actually increase exponentially. Against that growth are
                        studies that show the need for total public investment in airports, air
                        traffic infrastructure to be about $9 billion annually. The highway system
                        will require an investment of $46 billion by all levels of government just to
                        remain at current conditions and get the current performance out of the
                        system. Our maritime, transit, and rail infrastructure will require even
                        more billions.

                        Today, public investment in all transportation infrastructure totals a little
                        over $60 billion a year. Even with record levels of investment at the federal
                        and state levels, we still fall short of the projected need. The consequences
                        of failure are extremely clear. Reduced economic growth, loss of
                        productivity gains, loss of jobs, and a negative ripple that passes through
                        the whole fabric of the American standard of living.

                        We need to begin by realizing that we do, in fact, need financing for the
                        future. In order to meet those needs and be a player in the world market,
                        the United States has to come to a new paradigm for transportation. That
                        is, we must recognize that financial resources for public and private
                        infrastructure cannot come from these sectors exclusively. In constructing
                        the Interstate system, we had a unitary purpose. And while it cost a lot
                        more than it was understood to cost at its conception, the accompanying
                        growth of user fees provided the revenues that were necessary to make
                        and get the job done. All of the need for transportation in the future cannot
                        be simply carved out of the fuel and other transportation taxes. The needs
                        are too great, and the range of needs too vast. They apply to all sectors of
                        transportation. That was then, and this is now.

                        Page 13                                   GAO/RCED-99-176 Surface Transportation
                            Appendix I
                            Presentation by Peter “Jack” Basso,
                            Assistant Secretary for Budget and
                            Programs, U.S. Department of

What Financing              So what are we going to do? We have already begun. So-called innovative
Mechanisms Will Address     financing techniques came in the mid-1990s in surface transportation.
Our Transportation Needs?   Steve Lockwood and others have talked about these techniques having
                            become a permanent feature of the surface transportation programs. The
                            Garvey bonds, as an example, are clearly catching on all around the
                            country in various places. Robert Muller has talked about Garvey bonds
                            and what they mean. Like him, I never thought you could sell air, but I
                            conclude you can. I differ a little with him on state infrastructure banks—I
                            think that they will ultimately play a significant niche role. What we have
                            now is a lack of legislative authority to continue to capitalize those banks
                            as probably the larger issue. Extensions, credit assistance, and expedited
                            federal procedures have enabled over $12 billion worth of infrastructure
                            projects to move forward. The new Transportation Finance Innovation
                            Act—known as the Corbett Act, over here—will be coming on line this
                            spring. I’m happy to announce that we actually have sprung the
                            regulations loose from the Office of Management and Budget and will be
                            coming out with those for comment within the next few days.

                            It’s change that the federal agencies are primarily looking for and the
                            source of change that we want to make come about. Contrasting with our
                            focus on the Interstate system, federal agencies have to change direction.
                            We have to be a patient investor. We have to be a junior investor, we have
                            to be an enabler in the process, and we have to understand where they
                            apply and in what markets. This is not a panacea for all needs, but it
                            certainly fits substantial niches across the country. This is clearly our time.
                            This is the time of public-private partnerships that will bring new capital to
                            the table and allow mega projects, such as the Alameda Corridor, that are
                            needed to be put in place to actually get off the ground and get built. In
                            fact, I noted yesterday that the Alameda Corridor has been named the
                            infrastructure-financing project of the year, which amazes me. When we
                            first financed it, I thought I was going be named the
                            infrastructure-financing fool of the year. But it didn’t quite work out that
                            way, which is good. It’s also about a realization that we need new parties
                            at the table. I share Brad Mallory’s view that we really do need to work on
                            readjusting and reporting those relationships. What this is really all about
                            is being an “out of the box” thinker. It’s a cliché—but it really is what it’s
                            about. It’s about what economic power can really do.

                            So what do we need to do? The needs I’ve discussed and what we have
                            done today expand upon and change the dynamics. Now we have to return
                            to adopting that new paradigm and making it work. We have to ask
                            ourselves three questions. Can we learn to give up the idea that public

                            Page 14                                   GAO/RCED-99-176 Surface Transportation
Appendix I
Presentation by Peter “Jack” Basso,
Assistant Secretary for Budget and
Programs, U.S. Department of

infrastructure financing is the exclusive domain of public agencies? Can
we learn to speak the language of the private financial community? Can
we really continue to be players in a global market?

To the first question, I submit we don’t really have a choice. We can either
go the way of the dinosaur or we can adapt to a new financial
environment—change is healthy. It’s also clear that we can learn to speak a
new language. Our innovative financing initiatives over the past 6 years
have begun to translate public-private financing into a real world result.
There are three major examples that come to mind: the Alameda Corridor,
the San Joaquin Foothills Transportation Corridor, and the Eastern
Foothills Corridor. I could go on and on with intermodal projects, but I
think you get the idea.

In the case of the global market, we must make changes if we’re to
economically survive as a nation. We need to continue to take the steps
that are necessary. These include establishing new partnerships,
developing new legislation as appropriate and where it’s appropriate, and
not developing that which is not appropriate or necessary. They also
include looking to how we can best make this world grow and prosper the
way we want it to.

In closing, we need to recognize the environment that we are in and
recognize that the players and their relationships are changing. Think
outside the box. Be ready to grapple with change and embrace it and make
it happen. Do not be afraid to find that things are different, and they may
be for the better.

Last, but not least, with GAO being a major player in all of this, those of us
who are in oversight roles or the national roles need to do two things.
First, we need to be advocates for those changes that are changes for the
good. Second, we need to be fair and substantial critics of the things that
don’t work.

Page 15                                    GAO/RCED-99-176 Surface Transportation
Appendix II

Presentation by Anne P. Canby, Secretary,
Delaware Department of Transportation

                          “The challenge is to bring together all the infrastructure decisionmakers and identify
                          vehicles for doing that. It’s insane to be putting the transportation investment in one place,
                          and the water and sewer investments some place else because you’re going to repeat both
                          investments in the other location. And that still happens.”

                          “One of the tools that we clearly need is technology and research—that’s a critical federal
                          role. It is absolutely critical for us to continue technology and research in terms of
                          materials, systems, and the kind of analytic work that helps frame problems for those of us
                          in the states.”

                          I’ve had my job for about 6 years—for transportation Secretaries,
                          somewhat of a long tenure. In our business, we deal with many different
                          things. Delaware’s transportation department is a bit unusual because we
                          act, in essence, as a county transportation agency. This is because the
                          three counties in our state have no transportation responsibility. So we
                          deal with the Interstate Route 95s (I-95s) of the world but also the
                          subdivision cul-de-sac. And you can guess where I spend most of my
                          time—it’s not on I-95. In addition, we operate all of the transit in the state.
                          So we are among the more integrated—along with Maryland, New Jersey,
                          and Connecticut—states in the aspect of jurisdiction. I will say that this
                          doesn’t make it a whole lot easier, except that occasionally, the Golden
                          Rule does help out.

Changing Transportation   As I thought about my talk with you, it was clear that transportation is
Roles                     changing very much. Our state transportation departments’ roles are in
                          some real transformation. Part of it is driven by some of the things that
                          Tony Downs described. Part of it is driven by other realities, particularly in
                          the Northeast, where we have aging infrastructures and mature systems
                          that are forcing us to do rethinking. As Les Sterman commented about
                          reaching out to our customers, this causes us to change as well.

                          Let me talk broadly about the roles in transportation because I think we
                          have some challenges. As we heard from David Luberoff, one of the
                          federal government’s main roles is—“where’s the money?” We’ve all just
                          been through that, we know it all very well, and we look to the federal
                          level for funds. But I think we also look to the government for a broader
                          set of goals. At the state level, we certainly do chase the money—we’ve
                          just submitted our Access to Jobs and our Livable Communities
                          applications. So the federal programs can indeed lead us in some
                          directions that we might not go on our own. I think there’s a very
                          important role there that needs to continue to be played.

                          Page 16                                            GAO/RCED-99-176 Surface Transportation
Appendix II
Presentation by Anne P. Canby, Secretary,
Delaware Department of Transportation

The need versus equity issue probably isn’t going to go away. Since we are
the 49th largest state, as our Governor likes to remind everybody, the need
versus equity issue is very important for us. One penny of our gas tax
raises $4 million and everybody knows that doesn’t get you too much
today, and our gas tax is 23 cents above the norm for states. Money is
always an issue as is the fact of our geographic location. Frankly, if you
want to get from Washington to New York, you’re going to go through
Delaware—and you’d like to have that experience be a good one. We hope
it’s just gotten better with the introduction of Easy Pass.

At the federal level, there are other policies and goals that involve
transportation. We’ve heard about some of them this morning—trade,
welfare-to-work, energy, and a whole range of environmental issues. These
all intersect with transportation in one way or another. So I think that at
the federal level, there clearly needs to be influence in those areas for
those of us in the transportation field.

I would say that more change is occurring at the state level of government.
We’ve had a lot of conversations in the American Association of State
Highway and Transportation Organizations about our role. With the
selection of a new executive director, I think that you will see much more
state movement to try to provide a bigger tent. We cannot do it all, but we
are in a position to articulate some issues both at the state and regional
levels. In Delaware, we have come together with the New Jersey Turnpike
Authority, the Garden State Parkway, the Highway Authority, Atlantic City
Expressway, and the Port Authority of New York and New Jersey on a
single toll system. This is amazing to me. When I was in New Jersey, we
hardly spoke to those independent authorities. The fact that we are now
talking to each other and have become business partners is an indication
of the changing direction that you’re going to see states moving at the
institutional level.

Intelligent Transportation Systems (ITSs) are another area of state change
that relates to all of the Northeast’s transportation agencies in managing
our transportation systems and their operation. It is very much a change in
terms of exchanging information. And it’s not just highway
information—it’s also customer transit and train information. I think there
will be a lot of change, and states are really leading in that arena.

The local governments have a range of responsibilities, and we deal with
them differently in all of our states. In my state, we don’t have any money.
But there are entities that have road, transit, aviation, and port authority

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Appendix II
Presentation by Anne P. Canby, Secretary,
Delaware Department of Transportation

that the states don’t all participate in. We all have different structures in
that arena, and I think that’s where one of our challenges lies as we move

On the private side, the Northeast presents some interesting examples
because of the sale of Conrail to Norfolk Southern and CSX. We have two
railroads now taking over. States’ discussions when that whole deal was
put together were very much on an individual state basis, but the impact is
clearly regional for us. My Governor and I made it very clear to both of
those carriers that we wanted trucks off our roads and that they’d better
be organizing in a way to make sure that that happened. We were talking
about how you allocate limited capacity: is a truck that’s hauling orange
juice from Florida to New York better on I-95 or the railroad? We’d
certainly like to see it on the railroad, although there are some people in
my department who disagree with me because they see the toll revenues
going down.

We need to be figuring out how to come together and make these
trade-offs. For example, we never think about pipelines because we can’t
see them—they’re out of sight, out of mind. They are very much a part of
our transportation system, but one that the public sector has hardly
thought about. Aviation, water, and truck issues all have significant private
components—the same for all of us who own and operate automobiles. So
there’s a huge mix and Amtrak is somewhere in between public and

Transportation has a mix of ownership and operating responsibility—this
makes for what I call the silos of the transportation network. We do not
yet have a totally integrated system, which is why I think we’ve had so
much conversation about intermodal transportation over the last years.
But users are not thinking about all these pieces. They are just trying to get
from some place cold to some place warm—if they’re trying to go to
Florida for a vacation. They don’t care that there’s 10 different people
operating the different pieces of the transportation system that they’re
using; they just want to get there without a hassle.

It seems to me that those of us who are on the operating and the providing
side have got to start figuring out what trips mean from the customer’s
standpoint. There are many different pieces to that. In the transit business,
we don’t think enough about our customers. One of my professors at the
University of Delaware showed pictures of some bus stops. I’d be
embarrassed to ask anybody to get on my service if the bus stops were the

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                       Appendix II
                       Presentation by Anne P. Canby, Secretary,
                       Delaware Department of Transportation

                       front door to my service—the bus stops were pathetic, especially because
                       the alternative was walking 20 feet and getting in your car. You might sit in
                       traffic, but you’d be by yourself, you would have whatever radio station
                       you wanted on, you could smoke a cigarette and nobody would scream at
                       you or whatever it is you wanted to do. It’s a whole different travel
                       experience, and you probably don’t have to go outside. When you ask
                       somebody to change their travel experience, they must go outside, wait, sit
                       with people they don’t know, and go through an experience that’s totally
                       different. So thinking about the whole trip and the complications that our
                       institutional structures pose make this a challenge for us.

                       We need to find ways to think about the user’s travel experience. Is
                       Delaware’s the right way? I don’t know. We’re small and probably not the
                       best example because you couldn’t pull off our institutional structure in
                       most other states, and it might not even make sense. But, we may be
                       showing a way—without destroying our institutional structures—to bring
                       together partnerships in new business ventures. We’ve joined
                       Pennsylvania on a submission to the Federal Transit Administration on
                       some new fare media. We’ve contracted with the Southeast Pennsylvania
                       Transit Authority to operate commuter service along the Northeast (rail)
                       Corridor. This means that travelers can park their car, get on the train or
                       transit service, and pay using the same medium, making it easier for them.
                       There are all kinds of arrangements that will break down the jurisdictional
                       issues and lead us to some new places.

                       Metropolitan Planning Organizations also will be a place that will see some
                       transformation. Although I don’t think we’re ever going to get anybody to
                       give up their land-use authority, these organizations are the table around
                       which these issues can be brought together. In most cases, land-use
                       agencies are members of these organizations; if not, they should be.
                       Transportation providers are also there. The people who provide other
                       elements of infrastructure—water and sewer—are missing. Schools are
                       another critical piece, but they don’t tend to participate. The challenge is
                       to bring together all the infrastructure decisionmakers and identify
                       vehicles for doing that. It’s insane to be putting the transportation
                       investment in one place and the water and sewer investments some place
                       else because you’re going to repeat both investments in the other location.
                       And that still happens. It’s a challenge that we have to address.

Changing State Roles   In the transportation business, we are asset managers. Although we don’t
                       always know it, I think we’re getting much wiser to that. State after state is

                       Page 19                                     GAO/RCED-99-176 Surface Transportation
Appendix II
Presentation by Anne P. Canby, Secretary,
Delaware Department of Transportation

coming forward with a “preserve it first, fix it first” approach. We are
recognizing that role, but it is clearly a balancing act because you’re never
going to have preservation at the exclusion of expansion. In Delaware, we
are moving aggressively to restore and repair the assets that we use every
day. About 5 years ago, a beam on I-95 cracked, and we had to take two
lanes out of service for a short period of time. It was chaos—a nice
warning. It gave us an opening to say that this is important—you
absolutely have to take care of what you’ve already built.

Coupled with that is figuring out ways to utilize what we already have as
efficiently and effectively as possible—hence, the ITS initiative that all
states are involved in. In our statewide initiative, we just finished putting a
new traffic signal system in our university town of Newark. One state
legislator commented to me that the traffic works better today than it did
20 years ago. That could mean that our signal systems have been so lousy
in timing for the last 20 years that we’re making up for inadequacies of our
own operation. Although there are some real benefits, we are just buying
time—this is not going to fix the problem. But there are opportunities to
make the traffic flow better and to give our customers better information.
Kiosks and websites will allow you to pull up a map in your car; with the
Global Positioning System, you’ll know exactly where you are and you’ll
have someone telling you how to get there. That’s going to be a nice thing
to look forward to, and it will allow us to make better use of our whole

In Delaware, we are attempting to help our citizens understand their
transportation choices. It’s a long, involved process, but in a democracy it
is the people who benefit by their own choices. By taking time up-front to
help people understand, we’re going to come up with projects that we can
build and that help with some of our livability issues.

Let me touch on a couple of other issues. Environmental issues clearly are
part of the transportation lexicon these days, and we need to deal with
them. The Transportation Equity Act for the 21st Century (TEA-21) is giving
us the incentives to do that, by streamlining. TEA-21 is not to get us away
from addressing our environmental responsibilities—quite the opposite. It
is finding better ways to do that.

Also, the lack of pricing mechanisms is somewhat unreal, both on the
transit and the automobile sides. It is similar to health insurance: we have
no idea how much it costs because the price is so well hidden. Tolls,
which are an anathema, are one way to help people understand a little bit.

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Appendix II
Presentation by Anne P. Canby, Secretary,
Delaware Department of Transportation

Other ideas don’t seem to get off the ground—for example, paying for
insurance at the pump. Finding ways to directly associate the cost of trips,
whatever the trip may be, is very important as we move ahead. Tolls are
not a very popular idea in Delaware, so we need some help to convince
people that tolls are something that we should try. We’re very good in the
transportation business at rolling out problems. When you get into
term-limited governorships, you begin to think—I’ve got 2 years, let
whoever comes next worry about it. So you cobble together ways to avoid
reality because people don’t like to raise taxes.

It’s very hard to get the total cost of transportation and other
infrastructure issues together in one place. This is an area where we could
use some help in understanding costs and helping our customers
understand what we’re doing to ourselves. One of the tools that we clearly
need is technology and research—that’s a critical federal role. It is
absolutely critical for us to continue technology and research in terms of
materials, systems, and the kind of analytic work that helps frame
problems for those of us in the states.

Training is another area that needs attention—we absolutely have got to
teach our people differently about the transportation system. I gave a
presentation at the Transportation Research Board on pedestrianization. If
we’re ever going to have legitimate consideration of pedestrianization, the
design standards have to be integrated into books that our people use so
that it becomes second nature. It’s not an amenity; it’s part of what we do.
Right now it’s a separate chapter, but it’s got to be an integrated book. As
we improve a road, it’s not just for automobiles. I’ve got kids walking up
and down the side of roads with no sidewalks—that’s a crime, and it
shouldn’t be that way. We need to be taught how to integrate pedestrian

There are institutional challenges to integrating the modes and enhance
the roles of regional bodies—possibly, restructuring the trust funds that
support the transportation investment. We now have modal trust funds,
and in many, many states we have constitutional limitations on their use.
Delaware is not one of those, we’re very flexible, which is very good. Our
future revenue sources are going to be severely threatened if current
automobile research is successful at getting 60 miles to the gallon—and
there is no reason to think that the research won’t be successful. That’s
something for us to think about.

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Appendix II
Presentation by Anne P. Canby, Secretary,
Delaware Department of Transportation

So, I think that there is very much a federal role. I also think the states are
in many ways in the catbird seat and beginning to recognize the
opportunities that we have and the need to make some changes. Clearly,
there are going to be changes at all government levels, and the private
sector also is going to change—fairly dramatically. So, there certainly is a
lot out there. I hope I’ve given you at least a few thoughts and that we can
get into a good discussion. Thank you.

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Appendix III

Presentation by Anthony Downs,
Senior Fellow, The Brookings Institution

                           “The most important thing to understand about traffic congestion is that it is a problem that
                           cannot be solved. There is no remedy for traffic congestion.”

                           My assignment was to orate on the future of ground transportation over
                           the next few decades. I’m going to use the technique I call proof by
                           assertion. I will describe my 10 conclusions.

Population Will Continue   The first point is that a crucial consideration for the future of ground
to Grow                    transportation is the expected growth of the United States population over
                           the next 20 years. From 1995 until 2020, the Census Bureau estimates that
                           the population of the United States will go up by 60 million people—about
                           12 million every 5 years. Somehow, U.S. ground transportation systems
                           must expand their capacity to cope with this large increase in persons,
                           households, and goods. If we examine the ratio of increase in the number
                           of automotive vehicles—cars, trucks, and buses—to the population from
                           1980 to 1995, there was a 1.29-increase in vehicles for every 1 human being
                           added to the population. That ratio was a little lower from 1990 to 1995
                           than it was from 1980 to 1990. So somewhere between 60 and 77 million
                           more automotive vehicles will be added to our roads by 2020. That is a rise
                           of 30 to 38 percent over the number that was here in 1995. These data are
                           based on car registrations, and registrations slightly exaggerate the
                           number of actual vehicles, but not by all that much.

                           Thus, the sentiments of many existing residents who want to limit future
                           growth in order to reduce congestion are total delusions. There is no way
                           to limit growth at the regional level because no region can stop
                           immigration from somewhere else. True, growth at the local community
                           level can be limited by simply pushing it into two other places—peripheral
                           sprawl and in-city overcrowded slums for low-income households, as in
                           much of southern California.

Automobiles Will Remain    My second point is that privately owned automotive vehicles will remain
Dominant                   the dominant form of ground transportation for the foreseeable future in

                           Page 23                                           GAO/RCED-99-176 Surface Transportation
                   Appendix III
                   Presentation by Anthony Downs,
                   Senior Fellow, The Brookings Institution

                   the United States. Attempts to cope with rising traffic congestion by
                   shifting more people to public transit are not going to work. The
                   automobile is, and will remain, a better form of movement for most people
                   in spite of congestion. It’s faster, safer, more comfortable, more flexible in
                   timing and in linking scattered origins and destinations, and often cheaper,
                   especially if you get free parking. It will not be possible to lure any
                   significant portion of auto-driving persons into using public transit by
                   improving the quality, quantity, or service frequency of public transit. One
                   reason is that such a low percentage of all trips is now taken by public
                   transit—only 3.5 percent of work trips in 1995 compared with 90.7 percent
                   for private vehicles. Therefore, even if we could triple the percentage of
                   total commuters using public transit—which is extremely unlikely—that
                   would reduce the percentage of commuting by automotive vehicles by
                   only 11.6 percent. That reduction would be offset by the increase in
                   population, which is going to be much larger than 11.6 percent.

                   The only way to substantially increase the percentage of trips made on
                   public transit would be to make the use of automotive vehicles far less
                   convenient or far more costly—such as by quadrupling the cost of gasoline
                   or placing heavy taxes on automobiles, as in such countries as Denmark
                   and Singapore. But these steps will be so strongly opposed by a majority
                   of Americans that there is absolutely zero chance that they will happen.
                   Apologists for public transit say transit is necessary to cope with all this,
                   and we need more subsidies for transit, because the automobile is so
                   heavily subsidized. They should look at one number that I think is very
                   impressive. Transit now gets 25 percent of the public spending on
                   transportation in the United States at all levels and provides between 1
                   and 2 percent of the trips. That’s a fairly impressive subsidy.

Commutes Are Not   Traffic congestion is widely perceived as a worsening problem across the
Worsening          nation, especially in fast-growth suburban areas. But the perception is
                   worse than the reality. I do think congestion is getting worse in many parts
                   of the country, particularly in very large metropolitan areas. But the
                   average length of time spent commuting each day has not increased very
                   much over the past 12 years, except in a few very large metropolitan areas.
                   The average commuting time across the country was 18.2 minutes in 1983,
                   19.7 minutes in 1990, and 20.7 minutes in 1995. That’s an increase on the
                   average of only 2.5 minutes, or 13.7 percent in 12 years. The average
                   distance traveled rose a little more, from 8.5 miles in 1983 to 10.6 miles in
                   1990 and 11.6 miles in 1995. That means that commuters are actually
                   traveling faster than they were before, although it takes them a little longer

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                       Appendix III
                       Presentation by Anthony Downs,
                       Senior Fellow, The Brookings Institution

                       to get where they’re going. But in most parts of the country where
                       residents think they have very bad traffic congestion, they really don’t. It
                       may have gotten worse, but it’s really not all that bad.

Congestion Cannot Be   The most important thing to understand about traffic congestion is that it
Eliminated             is a problem that cannot be solved. There is no remedy for traffic
                       congestion because traffic congestion is essentially a balancing
                       mechanism that enables people to pursue six objectives other than
                       minimizing their commuting time. Two of these objectives are held by
                       employers and the other four by households.

                       The first objective that employers seek is having most firms use similar
                       work periods during the day. Then when you call up somebody at another
                       firm, that other person is at work. Therefore, almost everybody has to go
                       to work and come home from work at about the same time. There are
                       some staggered working hours, but they don’t really have much effect,
                       because they aren’t staggered all that much. Second, the owners of
                       businesses want to operate mainly in low-density work places, which
                       means they are widely scattered across each metropolitan area. Those are
                       the key objectives that employers want.

                       The first objective that households want is to have a wide range of choices
                       of where to work and where to live in different types of communities,
                       especially if they have more than one earner in the household. Second,
                       they want to be able to combine several different purposes on each
                       individual trip to be efficient. Third, they want to live in a relatively
                       low-density community. And fourth, most households want to separate
                       their own family dwellings spatially, and, particularly, regarding public
                       schools, from other families with much lower incomes and social status
                       and often from people who are in different racial groups.

                       It is not possible to pursue all these objectives effectively without
                       generating a lot of traffic congestion. In reality, traffic congestion is the
                       balancing force in rationing road space that emerges from pursuit of those
                       objectives. Yet most Americans do not want to give up any of these
                       objectives enough to change their behavior. They would rather endure a
                       certain amount of traffic congestion than change these objectives. It’s true
                       that the more traffic congestion they encounter, the unhappier they are.
                       So, the amount of traffic congestion they are encountering is bad enough
                       to make them complain, but not bad enough to make them change their
                       behavior. If congestion becomes unacceptable, they can move closer to

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                              Appendix III
                              Presentation by Anthony Downs,
                              Senior Fellow, The Brookings Institution

                              where they work or work closer to where they live, which many of them in
                              fact do. But this means there is no such thing as a solution to the traffic
                              congestion problem. Traffic congestion is not a disease that can be cured.
                              It is an inherent connection in the quality of life that embodies those
                              objectives that I described.

Letting Existing Roads        In the recent past, peripheral low-density growth in most metropolitan
Deteriorate Is Not            areas has been accommodated by financing enough new streets and roads
Sustainable                   to cause only moderate increases in traffic congestion at the periphery.
                              However, the maintenance of previously existing streets and roads has not
                              been kept up adequately. This arrangement is not sustainable because too
                              many older streets and roads will deteriorate into very bad condition. It is
                              a fact of life that many of us getting on in years do not want to recognize,
                              but older things do deteriorate as time goes on.

                              Thus, we are allowing our existing infrastructure to deteriorate in order to
                              add more on the periphery to accommodate new growth. This means we
                              can’t accommodate projected future peripheral growth without either

                          •   underinvesting in maintaining existing systems to a dangerous degree,
                          •   failing to service the new growth adequately with new streets and roads,
                          •   increasing the densities of the new growth so we don’t have to build so
                              many roads to service, or
                          •   hugely increasing the share of national production we devote to building
                              and maintaining streets and roads and other transportation.

                              The first two alternatives are at least theoretically unacceptable. However,
                              in fact, places like Florida are engaging in both of those as a means of
                              accommodating their rapid growth. Hugely increasing the allocation of
                              resources to streets and roads seems unlikely in light of competing budget
                              pressures and the present diversion of so many public resources to transit,
                              even though it provides a very low percentage of all trips and travel miles.
                              So this leaves increasing density in new growth areas as a theoretical way
                              to accommodate future transportation needs.

Forms of Ground               But changing the land-use patterns embodied in future metropolitan
Transportation Will Not       growth and development will not substantially alter the basic forms of
Change                        ground transportation now in use. After all, 85 percent of the developed
                              portions of the country that will exist in 2020 already exist now. Even if
                              radical changes in the form of the to-be-added 15 percent could be

                              Page 26                                    GAO/RCED-99-176 Surface Transportation
                             Appendix III
                             Presentation by Anthony Downs,
                             Senior Fellow, The Brookings Institution

                             achieved, which I don’t think is the case, that would not substantially
                             change the patterns already in place today. They will necessarily dominate
                             the overall picture of transportation in 2020.

Increasing New-Growth        Raising average densities in new growth areas and emphasizing in-fill
Densities May Help           development to a maximum degree might somewhat reduce the cost of
Address Future               accommodating future population growth with adequate infrastructures.
                             New growth suburban densities might have to rise from about 2,500
Infrastructure Needs         persons per square mile, which is the density of the city of Phoenix, to
                             about 7,500 persons per square mile, which is the density of the city of Los
                             Angeles, to make any difference. But this will not reduce traffic congestion
                             much, because higher densities generate more local congestion, since
                             almost as many vehicles are concentrated in a smaller space.

Local Governments Not        Even if it were desirable to use higher-density land use for new growth,
Equipped to Handle Higher    existing governance arrangements in most metropolitan areas are not
Densities                    capable of managing regional growth to achieve any rational policy of any
                             kind whatsoever, particularly higher densities in new growth areas. In fact,
                             existing governance structures tend to lower densities in those areas to
                             protect the environments of affluent households who live there. This is
                             explained and discussed at length in one of my books called New Visions
                             for Metropolitan America,1 which was published by Brookings in 1994.

                             It is not politically likely that we can develop some type of regional
                             planning and authority over land use and transportation over local
                             governments. Doing so, however, is the only way to achieve consistently
                             higher densities in new growth areas, something like what Portland,
                             Oregon—and almost no place else—has done. Most states will not do this
                             because large majorities of citizens refuse to reduce the authority of local
                             governments or to accept even moderate-density multifamily housing
                             nearby in any significant quantity.

Congestion Is Here to Stay   Traffic congestion is not going to decline in the future. In fact, it will
                             probably increase as the total population rises and real incomes rise
                             enough to enable more people to afford private vehicles. This is not a
                             problem confined to the United States. In fact, traffic congestion is much
                             worse in many parts of the world. It is a worldwide phenomenon of rising

                               Anthony Downs, New Visions for Metropolitan America (Washington, D.C.: The Brookings Institution
                             and Lincoln Institute of Land Policy, 1994).

                             Page 27                                              GAO/RCED-99-176 Surface Transportation
Appendix III
Presentation by Anthony Downs,
Senior Fellow, The Brookings Institution

real income and the desire to use private transportation. There is no such
thing as a solution to the traffic congestion problem because it’s not really
a problem. It is the result of our pursuit of other objectives, which we do
not want to give up. True, some improvements can be made, but they will
only be marginal. They will likely be swamped by rising metropolitan
populations and the use of multiple vehicles by more households.

As I say in the final paragraph of my book, Stuck in Traffic,2 congestion is
here to stay. So you’d better learn to like it. Get yourself an air-conditioned
car with a stereo radio, a tape deck, a portable computer, a television set, a
microwave and commute with somebody you’re really attracted to. Regard
commuting as part of your leisure time. You might as well learn to enjoy it.

 Anthony Downs, Stuck in Traffic (Washington, D.C.: The Brookings Institution, 1992).

Page 28                                                GAO/RCED-99-176 Surface Transportation
Appendix IV

Presentation by James A. Dunn, Jr.,
Professor of Political Science and Public
Administration, Rutgers University/Camden
              “Certainly there are true problems associated with the automobile. But for most
              Americans, it’s a solution.”

              One of the themes in my recent book—Driving Forces: The Automobile, Its
              Enemies, and the Politics of Mobility3—is the difference in perception
              about the automobile and what it means in our society. What I try to do in
              Driving Forces is to explore the great gulf in perceptions and policy
              prescriptions between the mass of Americans, for whom the automobile is
              the solution to their transportation needs, and a group that is growing in
              importance in the transportation policy community that I call the
              “antiauto vanguard,” for whom the automobile is a problem—a big
              problem. They truly see themselves as a vanguard of people who know
              where the masses need to go and see themselves as leading the masses in
              the right direction, in spite of the masses’ false consciousness. They are
              increasingly organized and self-conscious about their role of saving the
              masses from themselves. They have a whole agenda of policy
              prescriptions that are not designed to address the problems of the
              automobile but to address the problem of the automobile itself. Basically,
              they say that we need to somehow get rid of automobility as we
              understand it today—not to get rid of all automobiles but to get people out
              of their cars, to require drastic reductions in the amount of vehicle miles
              traveled that the automobile produces. They want to get people using
              more collective means of transportation, rather than individual means of
              transportation. Certainly there are true problems associated with the
              automobile. But for most Americans, it’s a solution.

              In the book, I look in some detail at the kinds of policy proposals that they
              have put forth. I conclude that essentially, it’s not going to work; they’re
              promising much more than they can deliver. As people like Anne Canby
              know, it’s hard to get people out of their cars and onto buses or trains. It’s
              hard to get people to form car pools and share rides. And given the kinds
              of policy incentives and disincentives that are within the mainstream of
              American politics, it’s very, very difficult. And with that kind of parameter,
              it’s going to be a great disappointment to the vanguard that they’re not
              going to achieve their goals, even though they feel this so urgently.

              But then, you say, why even bother looking at their prescriptions in detail
              and debunking them because they’re just not going to happen. And here I
              have to refer to Anthony Downs and his concept of the “issue-attention
              cycle.” There are times when “a window of opportunity” opens up in a

               James A. Dunn, Jr., Driving Forces: The Automobile, Its Enemies, and the Politics of Mobility
              (Washington, D.C.: The Brookings Institution Press, 1998).

              Page 29                                                 GAO/RCED-99-176 Surface Transportation
                            Appendix IV
                            Presentation by James A. Dunn, Jr.,
                            Professor of Political Science and Public
                            Administration, Rutgers University/Camden

                            particular area. People then start searching and grabbing off the shelf
                            ideas that have been hanging around for years, and trying them out: “Hey,
                            we’ve got a problem—all of a sudden, let’s go get some policies, hook
                            them up to these problems and see if they’ll solve the problems.” You can
                            look down the road in a few years and see that it’s quite likely that there
                            will be this kind of a window of opportunity opening up in the
                            policy-making process toward the automobile and its problems.

                            What I’m saying is that now is the time to start examining the policy
                            proposals that are being put forth by the antiauto vanguard. They are
                            calling for dollar-a-gallon gas tax increases, bans on new highway building,
                            massive spending on new rail transit systems, and federally mandated ride
                            sharing. We need to look at them very, very carefully, to make sure we
                            don’t make some rather expensive and unpopular mistakes when the
                            issue-attention cycle brings the automobile to the fore again.

                            Obviously, I have a lot of colleagues and friends who are card-carrying
                            vanguard types, and I’m not very popular with them right now. But for 30
                            years they have been criticizing the establishment—criticizing the
                            automobile. And turnabout is fair play. If they have an agenda, then they
                            have to be ready to take some criticism in return. They’ll say then, “well,
                            you’re just defending the automobile and the status quo.” No, nobody in
                            academia certainly gets very far by just saying “keep the status quo.”

The Paradigm of the         I have my own paradigm, which I call the “automobile plus.” My
Automobile Plus: It’s       suggestion is you start with the automobile and you go on from there. You
Better to Experiment Than   don’t try and attack the automobile head on. You don’t try to get people
                            out of their cars when they don’t want to get out of their cars. You look at
Mandate                     reality and you improve around the edges with incrementalism. I don’t
                            really object to a lot of innovative ideas and new thinking, as long as they
                            are carefully vetted.

                            So it’s the automobile plus: well thought-out initiatives in urban transit or
                            inter-city passenger rail, democratically chosen “new
                            urbanist”community designs, and car pools that people want—not ones
                            that are imposed by outside regulations, particularly federal regulations.

                            The role for the federal government should be in the nature of promoting
                            experiments and letting States and local communities see what works.
                            Federal support for limited local experiments should also have a built-in
                            evaluation component so we can see whether an experiment is working

                            Page 30                                     GAO/RCED-99-176 Surface Transportation
                            Appendix IV
                            Presentation by James A. Dunn, Jr.,
                            Professor of Political Science and Public
                            Administration, Rutgers University/Camden

                            and if so, why, and if not, why not. Then the federal government can
                            disseminate this information. I suggest that it’s better to experiment than
                            to mandate—to experiment with well-thought-out, well-designed local-ride
                            sharing programs, rather than to mandate nationwide programs that are
                            bound to be unpopular and probably unsuccessful.

Now Is the Time to          But the biggest part of “automobile plus” is not so much with people’s
Consider Potential          individual behavior but rather with the technology of the automobile itself.
Solutions to the Problems   Part of the problem with the automobile is pollution and energy
                            consumption—energy dependence. Rather than trying to come up with
                            various kinds of complex and controversial programs to get people out of
                            their cars, let’s make the cars better. Americans are pretty good at solving
                            technology problems. Let’s move toward what I call the “post-petroleum
                            propulsion system” for automobiles. We’re not going to do that overnight.
                            We’re not going to be able to do that without some controversy. But it’s
                            time now to start thinking about deploying incentives and perhaps,
                            mandates—not against the citizen voter but aimed at the auto
                            manufacturers who are producing a product that the citizen voter is, I
                            think, going to continue to demand far into the foreseeable future, unless a
                            better product comes along. We need not necessarily expect the return of
                            Ralph Nader in all his adversarial glory. I think both Washington and
                            Detroit have learned that adversarial confrontation is not necessarily the
                            way to go. We need to be thinking about new and innovative ways of
                            moving toward new automobile propulsion systems, so we get cleaner,
                            more fuel-efficient automobiles, not trying to get people out of their

                            Anne Canby mentioned vicious cycles in automobile dependence. If in fact
                            we move toward a 60-mile-per-gallon car or even toward a zero emission
                            vehicle that’s not based on propulsion technology with petroleum fuel, we
                            may create a kind of a “virtuous cycle.” That is to say, as cars need to
                            burn less and less petroleum, it would be possible to increase the rate of
                            taxation on petroleum. People would be paying roughly the same amount
                            of taxes because they’d be burning less petroleum. As that creates
                            incentives for auto manufacturers to have even more fuel-efficient vehicles
                            or vehicles for which the fuel is not petroleum, that then creates
                            opportunities for new financing mechanisms for roads and streets that are
                            based perhaps on electronic-toll-collection technology. This puts a tool in
                            the hands of traffic and transportation planners, who then can begin to
                            address some of the peak-hour congestion problems. It’s a virtuous cycle,
                            not a vicious cycle.

                            Page 31                                     GAO/RCED-99-176 Surface Transportation
Appendix IV
Presentation by James A. Dunn, Jr.,
Professor of Political Science and Public
Administration, Rutgers University/Camden

To conclude, the way to the future is exploring innovations that build on
the automobile—that make the automobile better for the environment but
also better for the individual because the individual is not going to want to
give up the automobile. I suggest that the vanguard types who want to roll
back automobility haven’t thought through the consequences for the
democracy and personal empowerment of their extreme antiauto stance.

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Appendix V

Presentation by Stephen C. Lockwood, Vice
President, Parsons Brinckerhoff

                            “The tax-funded public monopoly was appropriate for the mid-20th century mission of
                            building basic infrastructure. But providing a variety of non-standard services to a range of
                            customers who have varying needs is not compatible with tax based funding and
                            bureaucratic decision-making. Highway finance must evolve in new directions based on
                            more direct customer input, an increased role for private enterprise in service provision,
                            and the addition of markets and prices, technology and capital.”

                            “Certain important segments of the highway-using community appear ready to pay more
                            for better service; for example, just in time freight shipments, time-short commuters, and
                            business travelers may be prepared to spend more for “guaranteed speed limit” trips.... But,
                            for the most part, premium service can’t be purchased anywhere at any price. And that is a
                            curious phenomenon in a free enterprise economy.”

                            I’m going to discuss moving toward a financial system that supports
                            improved services by focusing on the financial implications of some
                            institutional issues that have been raised during the conference. My
                            particular perspective is the relationship between finance and
                            transportation service and how the two interact.

A Financing System Linked   In a mixed economy like ours, the financial mechanisms supporting
to User Needs               infrastructural services for surface transportation have to perform two
                            functions. One is raising capital—generating funds. But an effective
                            financing system should do more than simply raise revenues. It should also
                            incentivize service providers and their customers/users to evolve a
                            transportation system that meets contemporary needs. My central thesis is
                            that the existing system of transportation finance does the former job
                            quite well but tends to inhibit evolution toward a more performance-based
                            customer-driven, service-oriented approach to transportation
                            infrastructural services.

The Changing Mission of     The basic mission of highway owners (states and local governments) is
Surface Transportation      changing. We have a largely mature network and significant constraints to
Institutions                significant additions (funding, environmental and community
                            considerations, etc.). At the same time, we are faced with increasing
                            congestion and customer demand for improved service levels. As a result,
                            today’s surface transportation mission increasingly is to provide the best
                            possible service through the most efficient use of the available capacity.

                            Exploiting the existing infrastructure more effectively requires actively
                            managing the facilities and networks in response to demand variations so

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                             Appendix V
                             Presentation by Stephen C. Lockwood, Vice
                             President, Parsons Brinckerhoff

                             that service levels are maintained and travelers are supplied with
                             maximum information to make travel decisions with full knowledge of the
                             transportation systems’ conditions. Such an aggressive approach to
                             management and operations has been conceived within the transportation
                             profession around both new technology and new institutional concepts. ITS
                             represents a systematic approach to managing transportation facilities and
                             services in real time both for maximum efficiency and to provide services
                             appropriate to congested systems. To improve reliability and offer
                             knowledge of existing conditions, ITS builds on the applications of
                             advanced technology in sensing, communications, computation, controls,
                             and information dissemination. First-generation communication and
                             control systems are new being deployed for advanced traffic operations,
                             and a range of new information dissemination approaches is being
                             developed to provide travelers with a new level of information about
                             conditions and options. Capitalizing on the promise of these systems will
                             require not only new concepts and technology but also additional capital
                             and new operating arrangements.

                             At the same time, new institutional concepts are emerging that capitalize
                             more directly on the private sector to access technology, capital, and
                             innovation. New public-private partnership arrangements include those
                             that can provide capital for private toll roads; introduce new technology,
                             such as improved construction material and techniques, and new services,
                             such as the premium toll roads; and advanced traveler information.

                             These new technical and institutional approaches share in common that
                             they are service-oriented, performance based, and focused on real time,
                             active exploitation of the existing infrastructure. In addition, they address
                             the needs of special market segments and introduce service and
                             technology innovations. Fundamentally, they are driven by an increased
                             focus on performance and markets.

The Current System and Its   The existing financial framework was designed for an earlier era of basic
Constraints                  infrastructure construction. Monopoly ownership and legislatively
                             determined tax-based funding with bureaucratic decision-making are not
                             well suited to capitalize on private enterprise nor tuned to expressions of
                             customer demand. I’m not going to describe the key characteristics of our
                             current financing system—they are well known to this audience. I would
                             point out that with a substantial preservation backlog burden, the sector is
                             chronically underfunded and is ill equipped to embark on the development
                             of a new generation of transportation system improvements. You may not

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                            Appendix V
                            Presentation by Stephen C. Lockwood, Vice
                            President, Parsons Brinckerhoff

                            be aware that, as a nation, we spend less than 3 cents per vehicle mile on
                            infrastructure—out of an average of 40 cents for full operating cost (less
                            than the operating cost of car air-conditioning). With these institutional
                            and financial constraints, there is very little focus on what a first-class
                            road operation might actually require.

The Challenge of Evolving   The emerging context for transportation and the need for a greater focus
the Financing System        on management, operations, and the installation of new technology
                            suggest a need for evolution to a new financial mix. There are two
                            principal challenges. First, there is the 20th-century legacy financial
                            agenda, namely making the existing financing system more efficient than it
                            is today and sustaining the revenues that are part of that system. There’s
                            also another agenda, which I think of as the 21st-century challenge:
                            evolving new mechanisms that contribute to the effectiveness of the
                            transportation service itself.

                            The first challenge tends to dominate discussions of innovation in
                            transportation finance. I’m going to conveniently ignore a lot of very
                            thorny issues, including the revenue erosion due to inflation and vehicle
                            efficiency as well as tax evasion and diversion. Nor will I discuss several
                            exciting innovations to maximize the leverage of the existing revenue
                            stream, such as commingling private investment, innovative finance,
                            public-private partnerships, et cetera. I’m going to concentrate on the
                            second challenge—effectiveness. This is based on the thesis that a
                            competitive high-tech service economy has different needs from its
                            transportation infrastructure from those for which the inherited financial
                            arrangements were intended—and that this inheritance must be modified
                            if it is to support significant improvements to transportation service in a
                            new era.

                            Needed modifications to the existing financial/institutional arrangements
                            would include approaches that would generate new revenue sources, new
                            project and service sponsors, and new mechanisms that will encourage
                            more customer-specific and customer-responsive service innovation.
                            Three examples illustrate some of the relationships between customers,
                            services, costs, prices, and revenues that need to be addressed.

                            Congestion continues to grow, which, in most sectors, is a clear signal that
                            service improvements are needed. Yet, the necessary capital facility
                            preservation preoccupation of our state departments of transportation,
                            together with inherited conventions and the lack of customers’ voice,

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                   Appendix V
                   Presentation by Stephen C. Lockwood, Vice
                   President, Parsons Brinckerhoff

                   limits incentives to shift to very intensive congestion management and
                   enhanced operations orientation for state and local transportation
                   agencies. There is simply not enough money, not enough resources, and
                   not enough attention to have this entire agenda under the current system.

                   The increasing prevalence of incidents, breakdowns, and crashes now
                   cause about 50 percent of the delay we experience in metropolitan areas.
                   There is no way for the inconvenienced traveler “market” to express its
                   demand (through willingness to pay) that priority be given to the kind of
                   investment in operations in technology and systems that can more
                   effectively minimize that kind of a problem.

                   Certain important segments of the highway-using community appear ready
                   to pay more for better service; for example, just-in-time freight shipments,
                   time-short commuters and business travelers may be prepared to spend
                   more for “guaranteed speed limit” trips. This seems to be the lesson
                   learned in the so-called High Occupancy Toll lanes in California where
                   users are paying up to 40 cents a mile to bypass peak period congestion.
                   Reliability is as important as time savings in the kind of economy that we
                   have today. But for the most part, premium service can’t be purchased
                   anywhere at any price. And that is a curious phenomenon in a free
                   enterprise economy.

What Changes Are   We are at a point in the evolution of our surface transportation systems
Needed?            where we need to shift from a financial system that is oriented to
                   construction to one that fosters effective, customer-responsive, innovative
                   service. This must include financial arrangements/mechanisms that will
                   detect, support, and promote customer-related service improvements. This
                   is not a new issue for a private enterprise economy. Other networked
                   infrastructure sectors (power, telecommunication, and water) exhibit
                   dramatic changes in organization and financing that are fostering
                   substantial improvements in service quality. These sectors are increasingly
                   deregulated, competitive, and investor owned. They have private-sector
                   style management that focuses on customer service (as well as
                   constructing and maintaining physical plant) and offering priced services
                   with premium options. Dramatic changes in organization and finance have
                   brought with them substantial improvements in service quality.

                   The United States is the international model on institutional/financial
                   structure for progressive public infrastructural services. Yet, the transport
                   sector remains uniquely on the static fringe of the spectrum with regard to

                   Page 36                                     GAO/RCED-99-176 Surface Transportation
                           Appendix V
                           Presentation by Stephen C. Lockwood, Vice
                           President, Parsons Brinckerhoff

                           the provision of public infrastructural services. Perhaps the 21st -century
                           agenda for surface transportation finance needs to focus on introducing
                           elements of the financial mechanisms that characterize the norm in other
                           networked services. The same types of transition may be necessary

                       •   from a revenue-constrained priority on the preservation of basic
                           infrastructure to increased resources focused on real-time service,
                       •   from public monopoly ownership and operations to an increased role of
                           the private sector through outsourcing public-private partnerships
                       •   from “one size fits all” services and facilities to market-related
                           price-based premium and discount options,
                       •   from arms-length relationships with customers/users to market-related
                           relationship through prices,
                       •   from tax dependency to a new mix—with commercialized self-supporting
                           service components, and
                       •   from public agency bureaucracy to an enterprise-style management of
                           transportation agencies with performance incentives.

                           It is obvious that major institutional changes would be involved: political,
                           professional, and even cultural. Therefore, any change must be
                           evolutionary and politically practical: a transitional approach
                           incrementally adding enterprise features where and as appropriate, and
                           retaining existing systems appropriate to the components of networks.

Changes Taking Place       Some of these changes are already visible. The American Association of
Today                      State Highway and Transportation Officials recently completed a survey of
                           the 50 state departments of transportation, called “The Changing State
                           DOT.” This report describes a wide range of innovations that are going on
                           in many state departments. Some of the innovations are financial—such as
                           increased reliance on nonfederal funds, leveraging and commingling State
                           Infrastructure Banks, increased tolling, private finance, and so on. There is
                           also some experimentation with new services for different markets. I’m
                           sure you all know about providing single-occupant vehicles the
                           opportunity to pay a premium for the space left over in high-occupancy
                           vehicle facilities. There are a few experiments with pricing, and a few state
                           departments are beginning to think in an asset-management
                           perspective—focusing not only on the capital assets but also on operating
                           the assets they have to maximum customer-related effectiveness. And
                           there are a variety of experiments with new institutional

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                               Appendix V
                               Presentation by Stephen C. Lockwood, Vice
                               President, Parsons Brinckerhoff

                               relationships—vertically and horizontally—between the public and private
                               sector and among levels of government.

                               But these changes are not widely known or discussed. There’s very little
                               dialogue among states and local governments on these issues. At the
                               national level, the discussion of these issues is virtually invisible–no think
                               tank white papers of professional conferences. The consciousness level is
                               low and inertia–as we have remarked in several contexts today–is high.
                               Yet, there is an opportunity to begin to connect some of these innovations
                               that are going on to give them visibility and to give the pioneers and
                               champions some cover, some support, and some incentives. The changes
                               taking place need to be focused and consolidated with debate and

                               These developments suggest some elements in a tentative agenda that
                               links institutional to finance and supports progress in service terms. Some
                               of these elements include the following:

                           •   Continued programmatic devolution to state and local levels (some
                               suggest partial tax devolution as well).
                           •   An increased focus on system performance in customers’
                               terms—including support for real-time active systems operations.
                           •   Additional incentives to state and local governments to form public-private
                               partnerships in the development of technology and the delivery of service.
                           •   Shifting to direct charges to finance service upgrades (tolling interstate
                           •   Incentives for increased commercialization of premium and special
                               services and enterprise-style approaches.
                           •   Credit support for private investment (including securitization of debt).

Bring the Future Forward       As the role of highway finance moves beyond simply constructing and
Faster                         preserving capital facilities, key financial arrangement issues move beyond
                               “how much” the legislatures–federal and state—will grant. The
                               tax-funded public monopoly was appropriate for the mid-20th century
                               mission of building the basic infrastructure. But providing a variety of
                               nonstandard services to a range of customers who have varying needs is
                               not compatible with tax-based funding and bureaucratic decision-making.
                               Highway finance must evolve in new directions on the basis of more direct
                               customer input, more private enterprise in service provision, and adding
                               markets and prices, technology, and capital. Other infrastructure sectors

                               Page 38                                     GAO/RCED-99-176 Surface Transportation
Appendix V
Presentation by Stephen C. Lockwood, Vice
President, Parsons Brinckerhoff

have evolved ways that incorporate such free enterprise arrangements. We
must find a parallel path suitable to surface transportation.

Page 39                                     GAO/RCED-99-176 Surface Transportation
Appendix VI

Presentation by Mr. David Luberoff,
Associate Director, Taubman Center for
State and Local Government, Kennedy
School of Government, Harvard University
                               “Transportation policy centers on four challenging issues—mobility, environment and
                               community enhancement, and benefiting the economy.”

                               “Although we’ve made some historic decisions about what’s a public responsibility and
                               what is a private responsibility, those lines are not fixed; they move. One of the great
                               underlying debates of U.S. economic and political history has been the question of what is a
                               federal responsibility, what is a state responsibility, and what is a local responsibility.... We
                               need to remember that the policies have changed dramatically over the years at varying
                               points in time.”

                               The purpose of this conference is to think broadly about new directions in
                               transportation policy for the 21st century. I’d like to begin this
                               conference by providing a framework for the conversations and
                               discussions that will follow. Whenever we think about transportation
                               policy, we should think about the following three questions:

                           •   What are the problems we’re trying to solve?
                           •   What norms govern the choices that we can make?
                           •   Which solutions are political decisionmakers, particularly elected officials,
                               most likely to support?

What Are the
Transportation Problems
We’re Trying to Solve?
Meeting the Challenge of       Transportation policy centers on three challenging issues—mobility,
Mobility                       environment and community enhancement, and benefiting the economy.
                               In thinking about these issues, we should remember three trends.

                           •   As Tim Lomax and his colleagues have shown,4 there is growing
                               congestion in urban areas and an astonishing rate of congestion growth in
                               smaller areas. The congestion is getting worse in big cities, such as Los
                               Angeles and New York, but it’s also getting worse in small cities, such as
                               Buffalo and Las Vegas. Congestion also is getting much worse in suburban
                               areas as they become major commercial centers.

                                Tim Lomax and David Schrank, Urban Roadway Congestion Annual Report—1998 (College Station,
                               Tex.: Texas Transportation Institute, The Texas A&M University System, 1998).

                               Page 40                                             GAO/RCED-99-176 Surface Transportation
                                   Appendix VI
                                   Presentation by Mr. David Luberoff,
                                   Associate Director, Taubman Center for
                                   State and Local Government, Kennedy
                                   School of Government, Harvard University

                               •   As Alan Pisarski has shown,5 transit’s market share has been declining,
                                   particularly as the nature of those who drive changes and because of the
                                   introduction of women into the workforce in the 1980s, the growth of link
                                   trips, and the increased decentralization of businesses and residences.

                               •   Many key transportation facilities are nearing the end of their useful life,
                                   and we’re faced with the challenge of rebuilding facilities that are already
                                   badly congested. Fixing a central artery for a major city, such as the
                                   Gowanis Expressway in New York City, generally requires closing it for
                                   awhile, but that wreaks complete havoc on the city’s transportation

                                   To meet this challenge of mobility, we should recall that the average
                                   length of commuting times has not changed substantially for decades.
                                   People somehow make adjustments between work and home to
                                   accommodate the time consumed by their commutes. While some people
                                   commute 3 hours a day in order to live in far-off rural areas, the average
                                   commuting time, according to all the surveys, has not changed

                                   It will be very interesting to look at the next census to see if this changes.
                                   If decentralization continues, the length of commutes will probably stay
                                   about the same. However, if travel times use up all the excess capacity
                                   that was built through the 1960s and 1970s, commuting times might get
                                   much longer. If that happens, the political pressure to deal with congestion
                                   will rise significantly.

Enhancing and Preserving the       The second major policy issue is environmental and community
Local Community and                enhancement and preservation. To what extent can we allow
Environment                        transportation to disrupt neighborhoods and natural environments? Is it
                                   okay for a highway to go through a local park? Should we think about the
                                   relationship between transportation policy and the reality or threat of
                                   global warming? If we conclude that such disruption is necessary,
                                   decisionmakers need to determine to what extent mitigation (e.g., design
                                   modifications) help make it politically, environmentally, and morally
                                   acceptable. Are there some forms of transportation projects that actually
                                   enhance and protect communities and natural environments instead of
                                   destroying or harming the environment? To what extent should we
                                   encourage them?

                                    Alan Pisarski. Commuting In America II : The Second National Report on Commuting Patterns and
                                   Trends. (Lansdowne, Va: Eno Foundation for Transportation, 1996).

                                   Page 41                                              GAO/RCED-99-176 Surface Transportation
                         Appendix VI
                         Presentation by Mr. David Luberoff,
                         Associate Director, Taubman Center for
                         State and Local Government, Kennedy
                         School of Government, Harvard University

Benefiting the Economy   Decisions on transportation policy need to consider their economic
                         impacts, which I group into three types according to their different
                         political dynamics. The first impact is the direct economic benefits that
                         public works projects provide for the people and the companies that build
                         them as well as the companies that supply them. Public choice theory
                         suggests that such groups may, in fact, dominate the transportation
                         policy-making process. The second is the regional impacts of highways
                         and transit systems, particularly on real estate values. Urban political
                         theory suggests that local decision-makers tend to give this issue great
                         weight. The third is the long-standing debate about transportation’s impact
                         on the national economy. About 10 years ago, David Aschauer asserted the
                         thesis that investment in transportation generally benefits the national
                         economy.6 Many economists—including Edward Gramlich, Henry Aaron,
                         and, most recently, the Congressional Budget Office—have criticized such
                         assertions,7 and the conventional wisdom now seems to be that
                         well-designed projects can have positive economic impacts while the
                         impacts of general highway on the economy are either mildly positive or
                         have no discernable impact at all.

What Norms Govern the    My second thematic question has three major components. The first is a
Choices That We Can      very fundamental political question about whose responsibility it is to
Make?                    make transportation decisions.
Who Is Responsible?      Although we’ve made some historic decisions about what’s a public
                         responsibility and what is a private responsibility, those lines are not fixed;
                         they move. One of the great underlying debates of U.S. economic and
                         political history has been the question of what is a federal responsibility,
                         what is a state responsibility, and what is a local responsibility. Although
                         we have a surface transportation system that dates back to some 40
                         years—in some respect an anomaly in American history—we need to
                         remember that the policies have changed dramatically over the years at
                         varying points in time.

                          David Aschauer, “Is Public Expenditure Productive?” Journal of Monetary Economics, Vol. 23
                         (1989) pp. 177-200.
                          See Henry Aaron, “Discussion of Why Is Infrastructure Important,” in A. Munnell, ed., Is There a
                         Shortfall in Public Capital Investment? (Boston, Mass.: Federal Reserve Bank of Boston, 1990), pp.
                         51-63; Edward Gramlich, “Infrastructure Investment: A Review Essay,” Journal of Economic
                         Literature,Vol. 23, No. 3 (Sept. 1994), pp. 1176-1196; and The Economic Effects of Federal Spending on
                         Infrastructure and Other Investments, Congressional Budget Office (Washington, D.C.: Government
                         Printing Office, June 1998).

                         Page 42                                                GAO/RCED-99-176 Surface Transportation
                               Appendix VI
                               Presentation by Mr. David Luberoff,
                               Associate Director, Taubman Center for
                               State and Local Government, Kennedy
                               School of Government, Harvard University

To What Extent Should          The second question of political norms is to what extent should policy
Transportation Policy          explicitly seek to shape behavior. Is it an explicit goal, for example, to
Explicitly Seek to Shape       encourage the use of transit? Is it an explicit goal to discourage the use of
Behavior?                      the automobile through mechanisms such as pricing? This question about
                               the use of incentives and disincentives is very important. The underlying
                               politics change depending on whether you’re merely trying to encourage
                               somebody to do something or you’re actually making their life miserable if
                               they do something that you don’t want them to do.

How Do We Balance Societal     The question of how to balance societal versus individual needs is the old
Versus Individual Needs?       question, “Can we make omelets without breaking eggs?” While
                               policymakers were able to balance the competing needs of society and
                               individuals through the 1950s and 1960s, through the 1970s and the 1980s,
                               this challenge became increasingly difficult. I actually think that this is an
                               area that may be in flux. I see some interesting trends that say that we may
                               be interested in making some more omelets, albeit trying to make the egg
                               whole again.

What Options/Choices Do        There are eight general approaches to addressing transportation problems
Policy Makers Have?            that policymakers have before them. The first three reflect historical
                               patterns of action over the last 20 or 30 years. The fourth reflects the
                               current regime, and the last three are the most interesting or important
                               alternative courses of action.

Diminishing the Federal Role   The first is that we can imagine a world in which the federal role greatly
                               diminishes. It is important to recall that as late as 1956, the federal share of
                               transit spending was virtually nothing, and the federal share of highway
                               spending was only about 12 percent of total spending. At the height of the
                               interstate movement in the 1960s and 1970s, this percentage peaked in the
                               high 20s. Then, with the passage of the Intermodal Transportation
                               Efficiency Act of 1991 (ISTEA), it started to slowly decline around 1991 or
                               1992. Those percentages are creeping back up as the federal share of
                               transportation spending increases.

                               Moreover, total spending on transportation in constant dollars (that is,
                               dollars adjusted for inflation) has been increasing since the early
                               1980s—which means that until ISTEA, the bulk of the increase in spending
                               was at the state and local level. My point here is that you can imagine a
                               world in which the federal government decided that it should not have a
                               significant role in surface transportation but highway spending did not fall

                               Page 43                                    GAO/RCED-99-176 Surface Transportation
                     Appendix VI
                     Presentation by Mr. David Luberoff,
                     Associate Director, Taubman Center for
                     State and Local Government, Kennedy
                     School of Government, Harvard University

                     significantly because highways are critical to local and regional

A New Federal Role   In contrast, imagine if the federal government were to decide to return to
                     the heyday of the highway policies from around the 1950s and 1960s.
                     There was a clear delineation of a federal role—there was a policy decision
                     that we wanted a national system of Interstate highways to link major
                     urban areas and to alleviate traffic problems in cities (as well as
                     sometimes also providing money for slum clearance and downtown
                     revitalization plans). Two features of the Interstate era are particularly
                     significant. The first is that very little account was taken of the disruption
                     caused by highways. The second, and perhaps most important, is that the
                     Interstate system was an entitlement program. If a road was eligible for
                     Interstate funding, the federal government was going to pay 90 percent of
                     the cost, regardless of the total cost. At first, the national highway program
                     had rigidly defined standards about what was and was not eligible.
                     However, as the program emerged and the political process worked in the
                     way that the political processes work, the definition of what became
                     eligible for federal highway expenditures expanded, and expanded, and
                     expanded. Eventually, projects that happened to have a transportation
                     component evolved, such as the Central Artery in Boston or the Westway
                     in New York, which were actually projects about park land and urban
                     revitalization that happened to have a transportation component.

Entitlement Plus     The third general policy area is related to the second. I might call this
                     “Entitlement Plus.” In the 1970s, the federal government began to give
                     regions some flexibility in deciding whether or not they wanted to build a
                     highway or trade some of the funds to improve mass transit. Although the
                     local government had some choice, the funding mechanism essentially
                     remained an entitlement program. And that, as you can imagine,
                     encouraged a certain form of decision-making.

Block Grants         That brings me to what the world looks like right now in ISTEA and TEA-21.
                     Both ISTEA and TEA-21 made an important shift away from categorical grants
                     toward more state flexibility. Essentially, the national highway program is
                     turning into a block-grant-funded program. There’s more than a modicum
                     of formula tweaking, and there’s always some pot of money that generally
                     is distributed to Members of Congress, usually on the basis of their
                     position on the authorizing committee and their general influence over
                     transportation legislation in Congress. What is critical is that the national
                     highway program has evolved from an entitlement program to a block
                     grant because we’re giving the states a fixed pot of money and telling them

                     Page 44                                    GAO/RCED-99-176 Surface Transportation
                              Appendix VI
                              Presentation by Mr. David Luberoff,
                              Associate Director, Taubman Center for
                              State and Local Government, Kennedy
                              School of Government, Harvard University

                              to distribute it among the projects on their list. This approach radically
                              changes the nature of the transportation planning process because it
                              forces the states to make important tradeoffs.

Discouraging Automobile Use   The fifth policy refers to the varying proposals put forward by what one
                              might broadly call the environmentalist community. In his important new
                              book,8 James Dunn calls this the vanguard strategy, and it has two
                              components. One is a fairly heavy investment in transit and other forms of
                              nonhighway transportation. The other is significant restrictions on the
                              investment in new capacity and possibly even disincentives on automobile
                              use and stringent controls on land use. The policy implies that the car is a
                              major problem for society and the land use patterns that it engenders—and
                              we have to stop it. Depending on the year or month, the reason we have to
                              do that is, global warming, suburban sprawl, wildlife habitat protection
                              and urban revitalization. This has captured both an investment strategy
                              and a strategy that says we may need to constrain people’s ability to use
                              their automobile. This is an important point, which I will come back to in a

Greater Use of Information    The sixth idea concerns the greater use information technology to improve
Technology                    our nation’s transportation system. Some people believe that various
                              forms of information technology—from its simplest traveler information
                              systems to its most imaginative and far-reaching electronic highways—can
                              expand the system’s effective capacity. There is, however, some
                              interesting controversy about whether or not expanding capacity will
                              encourage or discourage sprawl.

Rationalist Strategies        Next, there is the rationalist strategy, which is the economists’ continued
                              fascination with road-pricing schemes and their continued antitransit,
                              particularly federally subsidized rail transit, position in favor of market
                              mechanisms. In his new book, Clifford Winston,9 one of the most astute
                              writers in this field, estimates that a policy of efficient pricing and services
                              could generate $10 billion in annual net benefits over current practices.
                              Winston—and his coauthor, Chad Shirley —believe that if transportation’s
                              inefficiencies are recognized, we could construct a political dynamic that
                              would address the inefficiencies.

                               James A. Dunn, Jr., Driving Forces: The Automobile, Its Enemies, and the Politics of Mobility
                              (Washington, D.C. : Brookings Institution Press, 1998).
                               Clifford Winston and Chad Shirley, Alternate Route : Toward Efficient Urban Transportation
                              (Washington, D.C. : Brookings Institution Press, 1998).

                              Page 45                                                 GAO/RCED-99-176 Surface Transportation
                          Appendix VI
                          Presentation by Mr. David Luberoff,
                          Associate Director, Taubman Center for
                          State and Local Government, Kennedy
                          School of Government, Harvard University

Marketization             Related to this idea of rationalization is the question of whether or not we
                          should be looking at more marketization of the transportation system. This
                          decision turns on the question of whether or not you believe that state
                          departments of transportation are monopolies—are they capable of
                          engaging in the market-based schemes and undergoing the innovations
                          that we expect in markets? This situation is analogous to the deregulation
                          of most forms of infrastructure in the United States, such as
                          telecommunication, electricity, aviation, and trucking. I commend the
                          Pennsylvania Department of Transportation for attempting to become a
                          more customer-oriented agency and I imagine that Brad Mallory will tell
                          you some of the things that they are doing. The intellectual critique,
                          however, is that this scenario is unlikely without some form of

How Will Policy Options   I’ve given you a framework of the major transportation policies and three
Affect the Future?        major issues that we’re concerned about—mobility, community and
                          environmental protection and economic impacts—and discussed the
                          norms that govern our choices—whether or not we should encourage or
                          discourage behavior, whether or not we allow disruption, and who we
                          think ought to be responsible for making the decisions. Now I’d like to
                          share with you my thoughts on how different policy options might play out
                          over the next 5 to 10 years.

                          I don’t think we’ll see a major diminishment of the federal role. Why? As
                          George Peterson has written about over the years, people generally
                          support more spending on transportation.10 So for politicians, supporting a
                          major federal transportation program is something that their constituents
                          favor. In addition, the groups with a large economic stake in the current
                          funding structure —primarily road builders and those who build transit
                          systems, but also governors and officials from state departments of
                          transportation—are going to lobby assiduously against any effort to reduce
                          federal highway and mass transit spending. In contrast, no one is lobbying
                          that hard on the other side, except for a couple of states that may be
                          particularly upset by current formulas.

                          Second, I don’t see any return to any entitlement program, such as the
                          Interstate system. Such programs only emerge with the development of
                          fundamentally new technology—such as those that Bob Skinner touched
                          on briefly—even then, generally only after the general policy approach has

                           George Peterson, “Is Public Infrastructure Undersupplied?” in A. Munnell, ed., Is There A Shortfall In
                          Public Capital Investment? (Boston, Mass.: Federal Reserve Bank of Boston, 1990), pp. 113-130.

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                             Appendix VI
                             Presentation by Mr. David Luberoff,
                             Associate Director, Taubman Center for
                             State and Local Government, Kennedy
                             School of Government, Harvard University

                             been tested at the local and regional levels. The Interstate program, for
                             example, built on state and local experimentation with limited-access
                             roads. In addition, it took almost 20 years for the idea of a national system
                             of such roads to move from a general idea to something the federal
                             government would actively support.

                             Since we’re not going to diminish the federal role or have an entitlement
                             program, we are going to have a large program of block grants. With block
                             grants, the spread between the donor and donee states generally narrows.
                             With some variations, we’re basically going to see the states get back
                             roughly what they put into the system. This trend toward narrowing the
                             spread of grants is going to be interesting for transit policy over the next
                             10 to 15 years because the bulk of federal transit money historically has
                             gone to the relatively small number of locales with transit systems that
                             carry significant numbers of people. In the most recent debates over TEA-21,
                             the states that had been getting very little in transit funds compared with
                             the amount they had been paying in gas taxes grumbled about that. Transit
                             advocates were basically able to rebuff the attacks partly by making
                             alliances with environmentalists and partly because the Chair of the
                             Senate Committee that oversees transit came from New York. However, as
                             we in Massachusetts know all too well, if generous federal funding for a
                             program relies on having one politician in a particularly powerful position,
                             that system is probably unsustainable over a long period of time.

                             In addition, despite GAO’s criticisms, some form of pork barrel politics will
                             continue. I don’t mean that pejoratively; I mean that descriptively. As long
                             as there’s going to be a federal program, we should not be shocked or
                             surprised by this because Members of Congress are supposed to bring
                             something back to their districts; it’s how they demonstrate their success.
                             Moreover, as others understand that surface transportation programs have
                             money, they are going to try and make other endeavors eligible for
                             transportation money—through programs such as the ISTEA and TEA-21’s
                             transportation enhancement programs, which are basically ways of
                             tapping the highway and transit programs to fund things such as bicycle
                             paths, parks, and historic preservation.

Policy Impacts on Behavior   The likelihood of serious constraints on behavior as advocated by the
                             environmental community seems quite slim. As a country, we generally
                             don’t respond well to serious constraints. I say this in full awareness of the
                             most recent suburban antisprawl programs. If you look closely at the most
                             successful of these efforts they either involve the purchase of open space
                             or efforts to limit the provision of infrastructure in rural areas. In contrast,

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Appendix VI
Presentation by Mr. David Luberoff,
Associate Director, Taubman Center for
State and Local Government, Kennedy
School of Government, Harvard University

recent efforts to constrain behavior, such as using the automobile, are
either on the ropes or have died. For example, the transportation demand
command measures in ISTEA, which would have required some employers
to discourage single-occupant commuting, were repealed. Thus, it seems
likely that transportation programs will continue to support environmental
agendas with such measures as preserving open space and greater
investment in mass transit (even though most of the data suggest that the
new transit lines are accomplishing neither their mobility nor their
air-quality goals) but are not likely to try to constrain driving.

While highway capacity will continue to expand at a modest rate, we’ll
never see a building boom as great as the 1950s and 1960s. In most
growing urban areas, there is some pressure—sometimes coming from
congestion and sometimes coming from land development forces—to do
new construction. People are also trying to develop a strategy for getting
around the reconstruction question. The strategy for doing so has been
less disruptive but more expensive highway construction strategies plus
expensive mitigation.

To date, information technology has been driven much more by its
producers than its consumers. Most significantly, in the wake of the 1990s
Defense cutbacks, many industries were essentially looking to adapt their
products for new customers. Many of them, therefore, became part of the
surface transportation coalition to get access to some of the federal funds.
To date, however, it’s not clear that such efforts have produced noticeable
changes for drivers.

A couple of questions remain on the table. Why are we still investing in
mass transit despite 20 years of data showing that rail transit generally
does not have significant impacts on either mobility or air quality? Locally,
such projects are often driven by land use considerations. Certain property
owners will organize at the local level because they perceive that
proximity to mass transit will increase the value of their holdings.
Producers of transit want funding to build more transit lines. At some
point, however, the rest of the country either says to the few areas that are
getting the bulk of transit money, “That’s enough” or “We want to build
transit lines too.” It looks like it’s the latter.

I’m not sanguine about the future of marketization because I don’t see
who’s pushing it. In contrast, such industries as telecommunication,
electricity, and airlines had active groups of producers and consumers
who said that these markets were so inefficient that they could provide

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Presentation by Mr. David Luberoff,
Associate Director, Taubman Center for
State and Local Government, Kennedy
School of Government, Harvard University

those services at much lower costs. In the early 1980s, alternative forms of
long-distance service began, particularly for businesses. If you recall, in
the airline industry, those great anomalies of places not subject to airline
deregulation because they were in-state flights were beginning to
demonstrate that the system might be flawed.

Nor can I figure out how you get to Cliff Winston’s large-scale
prescriptions for change. However, there are four areas where market
pressures could produce change over the next few years. One is urban
transit, which is notoriously inefficient. In places like New York, some
private-sector and often-illegal minivan programs are providing services at
a profit, and perhaps they are going to slowly undermine the local transit
monopoly. In response, the pressure to redo some of the transit laws,
particularly the labor provisions, might increase. The current urban transit
system seems somehow untenable. I’m not antitransit, but I’m trying to
sort of predict its future, which seems an unsustainable trend.

My second prediction concerns freight movement between ports. The
Jones Act prohibits the passage of freight between U.S. ports unless it’s on
U.S.-flag and U.S.-built vessels. However, the freight industry is changing
with the emergence of mega-ports just outside the United States in the
Bahamas, in Halifax (Nova Scotia), and in Vancouver (British Columbia).
These ports could lead to circumventing the Jones Act by barging cargo to
a variety of feeder ports up and down either the West Coast or the East

Why is this a surface transportation issue? The increased use of barges
might affect surface transportation by taking freight off of highways. The
numbers are potentially significant because there are enormous
efficiencies that could be achieved. In its Conrail merger, CSX estimated
that the merger alone would allow it to take about a million trucks off the
East Coast highways each year. There are enormous efficiencies to be
gained here. Again, if the major U.S. ports begin to see a significant
slippage of business because someone has found a notch or a hole in the
system (like the airlines), there will be increased pressure to address the

The third area where marketization might increase is in private toll roads,
which are often tied to congestion pricing in fast-growing areas.
California’s S.R. 91 and a new road in New Mexico are interesting
examples. As state highway departments have to focus on the core
business of maintaining what they’ve got, they may be attracted to such

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Presentation by Mr. David Luberoff,
Associate Director, Taubman Center for
State and Local Government, Kennedy
School of Government, Harvard University

projects as a way to provide new capacity without having to seek
additional funds. However, while such projects are interesting, they will
make up only a small portion of total highway spending.

The last is some basic maintenance functions, which pass what
Indianapolis Mayor Steve Goldsmith calls the “Yellow Pages test.” If five
entries in the Yellow Pages are doing what some state employees are
doing, you ought to at least put that service out to bid and let the public
employees compete against the private employees. In Indianapolis, public
employees have actually won many of those contracts because they often
know the business better than anyone else does. I can foresee more of
this, particularly if and when budget pressures get too great. In general,
the academic analysis of transportation policy has underestimated the
importance of producers and consumers as compared with water policy or
regulatory policy.

Thus, as you listen to the remarks that follow, think not only about
whether the policies are efficient but also whether they can be crafted so
they are within the norms of American politics. It’s our challenge to craft
policies that somehow meet these twin tests.

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Appendix VII

Presentation by Bradley L. Mallory,
Secretary, Pennsylvania Department of
                            “What we do need to do, however, is to radically change the set of relationships that
                            transportation agencies have with their customers and virtually everyone else.”

                            “Once you get those sets of relationships right, the financing mechanisms and other
                            mechanisms will follow.”

                            I tinker at the margin of a large state transportation department which
                            some of its detractors would still call a highway department. We had one
                            great good fortune—that was to go financially and morally bankrupt in the
                            mid-1970s. I say that’s the best thing that can happen to a public agency
                            because then you get to start over again. You generate the political will to
                            set in motion a set of changes and events that can ultimately result in real
                            positive change. I think I can say with accuracy that many people refer to
                            our department today in bellwether terms from time to time, almost to the
                            exclusion of other state transportation departments. I must tell you, I find
                            that to be inaccurate. I find the general level of play among the state
                            transportation departments to be quite high. I would commend it to many
                            of you within the (Washington, D.C.) Beltway as an example, frankly, of
                            what can be done. It is a little understood secret, to use one of Steve
                            Lockwood’s terms. I think there are some good reasons for that. One of
                            the main reasons is that most state transportation departments have lived
                            with a checkbook just like you have, and just like most businesses do.
                            Most people in government don’t live with a checkbook. They have a
                            budget, but it’s not really theirs. If they save a dollar, the state budget
                            secretary or the legislature takes it back and spends it on something they
                            wanted to spend it on. Because of the existence of trust funds and
                            historical practice, state departments of transportation traditionally, if
                            they saved a dollar, got to put it somewhere else. So typically, I find them
                            to be relatively responsive in governmental terms to what the customer is
                            talking about because they’ve got a checkbook. I think this is little
                            understood—very little understood, in most quarters. But I think it’s vitally

Finance Is Not the Answer   When I first saw that I was going to be on this panel, I sort of recoiled and
                            I said, “Oh, my God, they put me on the wrong panel. I should have been
                            on the relationship panel.” Finance isn’t the issue. Then it dawned on me
                            that I am on the right panel because I ought to stand up and say that.
                            Finance is not the issue, in my judgment. That’s easy to say right now. Two
                            years ago, we got a $400 million state revenue increase. Reflect on that for
                            a moment. Our Governor raised the state gasoline tax 3.5 cents and
                            increased our state registration fees by 50 percent. Two years later, he got

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                             Presentation by Bradley L. Mallory,
                             Secretary, Pennsylvania Department of

                             56 percent of the vote. His opponent didn’t even show. The political
                             consequences of investment in infrastructure are almost always positive,
                             not negative. It’s relatively easy for me to sit here with an additional
                             $400 million of state revenue in one pocket and thanks, to Chairman
                             Shuster and Mr. Oberstar, $400 million a year in additional federal revenue
                             in the other pocket and talk about finance not being the issue. I concede
                             that point. However, I believe that even when the eventual downturn
                             comes, finance will still not be the issue. The reason I believe that is
                             because our real problems are not capable of being solved by vast
                             infusions of additional capital. We’ve heard a great deal about them today.

                             We have talked a great deal about traffic congestion. I would offer an
                             observation to you and that is that it is perfectly acceptable and polite to
                             talk about traffic congestion on an elevator. What things can you talk
                             about on the elevator? The weather and traffic congestion. They are the
                             only two safe subjects. Why? Because no one is responsible for them. You
                             stand little chance of offending anyone. People widely perceive traffic
                             congestion essentially to be an act of God and somewhat inevitable. I think
                             that Mr. Downs’ comments were right on the money. It is essentially the
                             price of not walking. It is largely inevitable, and I know of no one who has
                             proposed anything remotely approaching much of a solution to it. I’m
                             tinkering at the margins of it, as many are. ITSs offer some relief. They
                             principally offer the relief of giving the person sitting there enough
                             knowledge so that they won’t be furious. That’s the principal benefit. That
                             is a significant benefit. There is the potential, of course, to provide people
                             with alternative information or give them the information necessary to
                             choose an alternative. But that is no small benefit. And, yes, we can
                             increase throughput.

                             I think we all accept the notion that we cannot build ourselves out of
                             traffic congestion. The reason we cannot build ourselves out of congestion
                             is not due to money—not at all due to money. It’s due to the social and
                             environmental constraints. There is no place to put those roads, for the
                             most part. People would not put up with what we would have to do if we
                             tried to build those roads. We would not build the Interstate system today.
                             I think we all know that. We will not build our way out of congestion. So
                             we do not need a great deal of money to do that.

Improving Relationships Is   What we do need to do, however, is to radically change the set of
the Answer                   relationships that transportation agencies have with their customers and
                             virtually everyone else. Much is said about the differences between the

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Appendix VII
Presentation by Bradley L. Mallory,
Secretary, Pennsylvania Department of

public and private sectors. I think most of it is overstated. I’ve been in
both. The truth of the matter is, the public sector is actually quite a bit
better at some things than the private sector is; of course, the opposite
being true as well. They’re each good at different things. One of the things,
however, that the private sector is exceedingly good at is managing the set
of relationships—all the relationships—between supplier, customers, and
contractors. They set up these seamless webs, if you will, of customer,
organization, contractor, suppliers. They’re very good at it. We have none
of that in the government. In fact, we have a vast body of law and
regulation that’s been created to prevent it from happening. If one of my
employees set up a seamless web with a supplier, he’d go to
jail—seriously. We need to find ways to get those relationships right. Steve
Lockwood was touching on that a bit. We need to find ways to enhance
this set of relationships to remove the obstacles—legal, and even more
importantly, perceived obstacles between people cooperating with each
other in new and unusual ways. Once you get those sets of relationships
right, the financing mechanisms and other mechanisms will follow
because the market that you set in motion will demand that they be
generated. To try to do that in the abstract is impossible.

We’ve heard several times here today people talking about the inefficiency
in the system. Quite frankly, the inefficiency in the system is its salvation.
The redundancy in the system is the salvation. That’s why the system can
respond so well to unanticipated events. That’s why the nation’s
inventories moved from its warehouses to its roads and rails in a very
short period of time and no one noticed. It happened rather seamlessly.
That’s why we’ve been able to respond as we have because of that built-in
redundancy. Yes, it’s messy. It’s not pretty. It’s not intellectually satisfying
in any way, shape or form. But it makes a great deal of sense in a very real,
messy world, where you’ve got to be able to respond.

The critics of demonstration projects view them as inefficient. I don’t think
that anyone has more demonstration projects than Pennsylvania. The
cynic among you may say that I’m about to say this because of Chairman
Shuster. That’s a very good reason to say it. But I’ll say it for a second
reason: it’s the truth—demonstration projects are not a problem. They’re
not even a little problem. First of all, most of them are in line with the
long-term needs and wants of the people. Our Congressmen are rational
human beings, who are elected by their constituents for a purpose. And
they express themselves well and accurately. They have directed some of
our programs in certain directions. But the truth of the matter is that in
Pennsylvania, the vast amount of our resources is spent on the

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                         Presentation by Bradley L. Mallory,
                         Secretary, Pennsylvania Department of

                         preservation of our existing system. The split between maintenance and
                         new construction I find is almost always incorrectly stated because
                         people, I think, misunderstand the difference between new construction
                         and reconstruction—heavy maintenance, if you will.

A Modest, Incremental    Our program is almost exclusively maintenance oriented, as it should be.
Approach Is the Answer   There isn’t a need to build a great deal of highway capacity, and we
                         couldn’t anyway, as I’ve already described. What we need to do is move
                         beyond—we need to secure that maintenance philosophy and then move
                         on to Steve Lockwood’s point of an operational concern. That’s where the
                         interaction with the customer will generate a new set of relationships.
                         When we get those relationships right, the rest will follow.

                         This may sound relatively modest to you. I don’t know how many of you
                         heard Frank Francois’ speech at the Transportation Research Board
                         awards luncheon. He gave 10 predictions. I won’t go into them now, but I
                         think many people from outside the community would have sat there and
                         thought to themselves—that’s sort of modest forecasting. There’s nothing
                         too exciting there or earthshattering or new. And that’s exactly right, there
                         wasn’t. He was, to my way of thinking, entirely correct. It is a modest
                         incremental evolutionary approach, and I think that’s what’s required here.
                         I don’t think we need to do massive surgery on the system we have. I think
                         it’s going to produce reasonably good results. I think the environmental
                         issues are a thorny problem for us. I particularly enjoyed Mr. Dunn’s
                         presentation this morning because I think he has hit on a very important
                         point. This isn’t about bad cars. If cars are bad, we’re bad because they’re
                         part and parcel of what we are all about in this country. We may not like
                         that. Apparently some people don’t like it. But it is reality.

                         We’ve got to find ways to get that set of relationships right with the
                         environmental community so that we gain their trust and respect, so that
                         we can continue to provide our customers—our people—what they want.
                         What they want is to be able to get around. I think we have enough money
                         to do the job right if we’re very, very smart. I don’t think that we have the
                         relationships right yet. I don’t think that we’re quite clever enough about
                         how we marshal our arguments—marshal our assets and then apply them.

                         That’s why I make the proof by assertion that finance is not the issue. In
                         fact, what we need to be about is enhancing the set of relationships. I
                         would encourage those of you working on the Washington scene at every
                         turn to take the path that provides more flexibility. When the Governors

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Presentation by Bradley L. Mallory,
Secretary, Pennsylvania Department of

come and say they want more flexibility, people’s eyes glaze over—just
give us the money and run. I know that’s what you think. In part they mean
that too—of course they do. But on their better days, what they mean is,
“Give us more tools and options.” We live in a very messy world where
circumstances change four times a day. The more tools and options we
have, the more redundancy within the system—and yes, even some
inefficiencies—the better off we’re going to be, once that new thing comes
flying out of the blue at us. We’ll be able to scramble, pick one tool up, find
it’s got a whole new application, and use it to solve the problem.

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Appendix VIII

Presentation by Robert H. Muller,
Managing Director, J.P. Morgan Securities

                         “With all the talk about innovations in finance, not much as changed in the last 10 or 15
                         years. We are still financing transportation in about the same way we did in the past—at
                         least at the state and local level—for state highways.”

                         About 3 years ago, I published a study on the accuracy of toll-road
                         feasibility studies, which has permanently endeared me to feasibility
                         consultants. The conclusion of my study was that, on average, about one
                         of four toll-road deals will probably default if the accuracy of the studies
                         do not improve—most studies are done to about a 50-percent rate of
                         accuracy. The problem is that you don’t have a bell-shaped curve with
                         regard to accuracy—you have a curve that has almost no upside. There is
                         very, very little upside if you do a toll road, but a lot of downside. The
                         question is, how much downside?

Transportation           The flip side of what Steve Lockwood said about user charges is
Financing Is Little      interesting—with all the talk about innovations in finance, not much has
Changed                  changed in the last 10 or 15 years. We are still financing transportation in
                         about the same way we did in the past—at least at the state and local
                         level—for state highways. Taxes and bonds are only 7 percent of all the
                         money, and user charges are the rest. We are still in that world, and I don’t
                         think that it’s going to change for the foreseeable future.

                         The only part of the whole transportation world where there is private
                         funding is in railroads. I noticed in conversations at this conference that a
                         lot of people are asking, “What’s going on in freight railroads?” I think the
                         reason that we do not know is because we have nothing to do with it—the
                         equity analysts follow the railroads. We almost never talk about that piece
                         of the equation, but that may change as time goes on.

Maintenance Funding Is   We currently have $70 billion of outstanding debt at the state and local
Lagging                  levels for highway purposes, of which, about one third is supported by
                         tolls. Virtually all the increase in toll bonds sold by local governments have
                         come in the 1990s—this is where we’ve seen innovations on the financing
                         side. In addition, we have had a lot of financing. In the last 2 years, on the
                         basis of taxes and debt sold, there has been a big increase in state and
                         local government dollars going into highway construction. Have the
                         methods that we’ve used so far worked? I think we have to give a pretty
                         good grade—at least a “B.” Capital outlays on a real basis have gone up

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                             Presentation by Robert H. Muller,
                             Managing Director, J.P. Morgan Securities

                             dramatically in every year except from 1992 to 1996. The converse is that
                             we have not done a very good job on maintenance. Maintenance outlays
                             are virtually flat on a real basis. My answer is that maintenance is an
                             awfully unsexy business. If you can figure out a way to get all the financing
                             types to work on maintenance, that may solve some of the problem. With
                             an aging highway system—like an aging house—maintenance should have
                             been going up on a real basis over the last 15 years. So—pretty good
                             grades on financing the sexy part of it—new roads and added
                             capacity—and not so good grades on maintenance.

Flexibility and Innovation   There has been real change in financing flexibility in the last couple of
in Financing                 years. State and local governments are permitting innovation, and
                             Congress has finally allowed some new uses of federal money. The San
                             Joaquin Foothills Transportation Corridor and the Eastern Foothills
                             Corridor are examples. I know the Eastern Foothills Corridor intimately
                             because we were senior managers of that financing in 1995. I’m pleased to
                             say that as it has opened over the last 2 months, its forecast has proven
                             reasonably accurate. There was a federal line of credit on both
                             projects—only $120 million, accessible to $12 million a year. They used the
                             federal line of credit actively to restructure the bonds in 1997. Although
                             San Joaquin’s forecast was well short of projections, it would not have
                             gotten bond insurance that enabled it to avoid even more significant
                             shortfalls in forecast without the federal line of credit. One of the things
                             that has not come up today is taking advantage of new transportation
                             construction—taking some of that gain from development and using it to
                             build roads and transit.

                             Zero coupon bonds are a wild innovation, compared to the way toll roads
                             were financed in the 1950s. At that time, you did them, you restructured
                             them, and you restructured them again. Thanks to Congress, you cannot
                             restructure taxes and debt very often because you can only advance or
                             fund one time. Unless you want to go into bankruptcy, that means you’ve
                             got one opportunity. Zero coupon bonds magnificently allow toll-road
                             increases in usage to match up with the maturity of the debt. The
                             disadvantage is it leads to an extraordinary amount of debt on the future
                             value basis.

                             Allowing the states to pay maintenance expenses really was a significant
                             innovation. We don’t really think about that as innovative, but it was—it
                             was a partnership with the state. I-470 uses zero coupon bonds—local
                             license fees mixed with toll usage. Dallas North Tollway, heavily touting

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                          Presentation by Robert H. Muller,
                          Managing Director, J.P. Morgan Securities

                          how much money was put in at the state level, had bond insurance at the
                          beginning because it had not established a basic draw. In the last year, the
                          Connector 2000 project in South Carolina came out with a public-private
                          venture that effectively provides that a private firm will be responsible for
                          future operations. It is, probably, in many people’s mind, the weakest of
                          the projects. The state accepts subordinated payment for a period of time
                          for maintenance. We have not built a lot of miles with this innovation, but
                          we have issued a lot of debt.

                          The final development is the Garvey bond that comes directly from TEA-21.
                          Garvey bonds are the sexy products in the tax-exempt market right now,
                          and I’ve been talking to some state departments of transportation about
                          them. For the first time, the marketplace has shown the willingness to
                          have long-term debt secured by an appropriation process that is shorter
                          than the maturity of the bond. Ten years ago, if you told me that you could
                          sell grant anticipation notes, I would not have accepted it. If you told me
                          you could sell a grant anticipation bond, I would have said you were crazy.
                          Well, Massachusetts did that to finance the Boston Central Artery. I expect
                          to see many states using these bonds as a way to jump-start all the new
                          money that’s coming out.

Potential Advantages of   Many people do not realize how unique the U.S. financing market has been
the Existing Regime       for public infrastructure. The previous European model was strictly a
                          government-financed model at the sovereign level. There was some
                          subsovereign involvement, but it was basically a sovereign financing
                          model. Europeans went directly through the quasi-public model that we
                          have in the United States to a private model. It is being developed around
                          airport funding, but we’ve seen it certainly on the highway side as well.

                          In the United States, an obstacle to innovation is that we have created a
                          favored market for financing infrastructure through the existence of
                          tax-exempt bonds. We have a revenue bond concept. It effectively is a
                          model not dependent on national government largesse, but with some
                          degree of market discipline—a kind of a quasi-corporate financing model.
                          Tax-exempt bonds themselves provide specific benefits. They are the
                          lowest cost of capital, without question. They also give access to an
                          investor base and do not have to compete against equity financing or
                          Internet stocks. Tax-exempt bonds are investor based and focus only on
                          government finance, with the small exception of the nonprofit sector.
                          Tax-exempt debt also has structuring advantages such as the selling of
                          zero coupon bonds, one of the innovations in the San Joaquin project.

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                            Presentation by Robert H. Muller,
                            Managing Director, J.P. Morgan Securities

                            However, talk to a taxable trading desk about selling zero coupon bonds,
                            and their eyes glaze over. This is because you have to pay taxes every year
                            on the accretion. With tax-exempt financing, you get no accretion. There
                            are all sorts of advantages in terms of how the market works. Finally, I
                            think government has the time and money to tolerate long development
                            periods for new assets. When Steve Lockwood and I first met each other
                            about 4 1/2 years ago, we worked on S.R. 125 for about a year and realized
                            that it was going to take a long time to get finished, so we dropped out of
                            the process. I don’t know if they now have the second, third, or fourth
                            banker involved in it, but only government has patience for that long-term
                            time frame.

What Are the Limitations?   The federal grant system is still the easiest method of financing, even
                            though there are strings attached. It is money and there’s nothing I’m going
                            to tell you that beats having dollars from the federal government.
                            Governments are neither risk-takers nor innovators at heart—that really is
                            not the focus of government. As we know in the municipal market, the
                            goal of financing these days seems to be creating a commoditized product
                            so bond insurers can slap on insurance. The creation of commoditization
                            doesn’t necessarily create innovation. There are certainly some reasons to
                            question whether we will have enough innovation. The municipal bond
                            business itself is also very isolated. It’s amazing how isolated those of us
                            are in the tax-exempt business from the rest of our firms. The truth of the
                            matter is that we are not necessarily attached to the best ideas, and that
                            will become an issue over time. Tax-exempt bonds also have a very limited
                            investor base, courtesy of the Congress. The only people who buy
                            municipal bonds are individuals with mutual funds, although there is
                            limited insurance company purchasing. But infrastructure financing in the
                            United States is almost fully financed by private individuals. I’m not sure
                            that’s a good long-term situation.

                            Finally, state infrastructure banks seem to be going nowhere. So that
                            innovation hasn’t done very well. Also, people hate tolls. I keep trying to
                            come up with a way to do innovation that does not involve tolls, but they
                            have to come into play in some way. The fight, as I see it, is going to be
                            between the increasing use of tolls and new technology that is
                            phenomenally different. As people begin to forget the current system of
                            finance, tolls are likely to be more acceptable. That will bring great

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                          Presentation by Robert H. Muller,
                          Managing Director, J.P. Morgan Securities

Where Global Finance Is   In discussing where global finance may be heading, I do not want to
Heading                   defend tax-exempt bonds because it’s an endless argument in Washington.
                          Tax-exempt bonds continue to have a very real place in the process
                          because of their positive factors. There are many reasons to believe that
                          the value of tax exemption outweighs any question of inefficiency in
                          market allocations.

                          A more viable model requires the use of tolls for several reasons. First,
                          stand-alone project finance is not the best way for us to finance capacity.
                          There seems little question that existing state toll-road authorities will
                          have to step up to the plate and be willing to use their existing capacity. It
                          is a lot cheaper to finance off of an existing revenue base than it is with
                          new projects. You get higher ratings, much lower financing costs, and you
                          don’t have to buy bonds.

                          What if we didn’t have tax-exempt bonds? What if Congress finally decided
                          that tax-exempt bonds are gone? We would have very rapid innovation in
                          financing highways in this country. Tax-exempts are really a crutch in
                          many ways because they’re so easy to use. One of two things may happen.
                          States will continue to issue taxable securities at interest rates that will be
                          30 or 40 percent higher than tax-exempt debt. That necessarily reduces
                          impact. Coverage numbers go down and the amount of roads that you can
                          build under that model goes down. Basically, the elimination of
                          tax-exempt financing will require state and local governments to raise
                          taxes to finance higher cost debt. The alternative, if you have tolls, is a
                          private-sector version of financing and a sure revenue stream that will
                          allow private companies to come into this business and begin a lot more
                          financing. Equity is not cheap. A lot of people think that private company
                          financing is a much cheaper way of doing the tax-exempt model. That is
                          not true. It’s an alternative model. It is a model that by its nature provides
                          more innovation, more creativity, and perhaps more efficiency. But it isn’t
                          absolutely a better model than what we have today.

Privatization             I did an exercise of turning some of our state toll-road authorities into
                          private companies and creating initial public offerings for these
                          companies. Right now, state and local governments are as flush as can be.
                          If we get into a recessionary environment, my guess is that they are going
                          to feel really pressed for money, and change will come in that
                          environment. When they seek more private involvement, the question will
                          be making better use of the assets to meet needs. States might consider
                          their turnpikes as a source of money. For example, the Massachusetts

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Presentation by Robert H. Muller,
Managing Director, J.P. Morgan Securities

Turnpike in 1996 would have fetched, under my model, about $200 million
to $250 million. Its outstanding net debt was $390 million—before the
Boston Central Artery. Using some standard ratios from other types of
privatization, I found that there was not enough money at the existing toll
level to pay off their taxes and debt. That implies a large subsidy and
certain policy issues. The New Jersey Turnpike was even more interesting.
I came up with about $1 billion off the turnpike against $2.1 billion of debt.
The answer is that you would not have been able to sell the New Jersey
Turnpike. By contrast, when I did the same exercise for airports, the very
interesting result was that you can clearly sell airports in the United
States. Aside from the federal grant issue, they generate a substantial
positive net benefit for the community that owns the airport. I think that’s
the reason why we’re seeing some European airports becoming viable
private companies. The bottom line is that a corporate financing model for
highway finance will require very dramatic changes in the willingness of
consumers to pay for services.

As Steve Lockwood said, there are niche opportunities for the private
sector to pick off pieces of this market. But, for the foreseeable future, I
see little likelihood of a major alternative model to the way we finance
highways today. We should continue the innovations that we have talked
about during the conference. We should continue to defend taxes and debt
because of the advantages that they provide, and where possible, privatize
a lot of the services.

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Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of
               “We can’t solve problems by using the same kind of thinking that we used when we created
               the problems in the first place.” (Albert Einstein)

               Those who have heard me either in Committee or in forums like this know
               that I love history and like to reach back into history. It’s important to
               know, as Lincoln said, where we have been so that we may better
               understand whither we are tending. If we had had a conference like this at
               the turn of the last century, it would have been when the first prototype
               automobile by Henry Ford was just being built. It was only 5 years old.

               The beginnings of transportation as we know it today were stimulated by a
               group of bicyclists, which is one of my passions. A group of cyclists in
               1894 petitioned the U.S. House of Representatives for an appropriation of
               $10,000 for the then-predecessor of the Bureau of Public Roads—the
               Office of Road Inquiry, a small agency in the Department of
               Agriculture—to study the possibility of developing a system of paved
               surfaces, to get those new-fangled horseless carriages off the routes that
               the bicyclists were using. Because those predecessors of automobiles
               were causing ruts in the pathways, they were causing, consequentially,
               bicyclists to take what they then called “face plants.” The bike would hit
               the ruts, they’d go over the handlebars, and go smack face first into the
               mud. Congress accommodated the request and appropriated $10,000; the
               study was undertaken. A few years later, the Bureau of Public Roads was
               established, elevating the Office of Road Inquiry to a higher level in the
               Department of Agriculture. That began what we know today as the Federal
               Highway System.

               The study built on an initiative by the Office of Road Inquiry, which
               developed what we call today a map of paved surfaces; those that were
               gravel crust and those that had macadam. It found that only 7 percent of
               the 2.1 million miles of roadway had any kind of surface at all. Usually,
               they were just formed by a cow who had trampled down the grass, and
               that became a roadway. Those that were more sophisticated used some
               kind of compression means to pack down the surface—a very few had
               macadam surface—7 percent of the 2.1 million miles.

               That conference, had we convened it then, would have been 4 years prior
               to the first transcontinental road trip. You can imagine a group like this
               gathering around and thinking about what surfaced roadways might look
               like—questioning the need for them. Simon Newcomb, a noted American
               astronomer of the time, confidently predicted that, of course, it is folly to
               think that man can fly long distances in heavier-than-air craft. In 1893, a

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Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of

prominent newspaper editorialized that the horseless carriage movement
will of course come to naught. A decade plus later, the 1 millionth Ford
rolled off the assembly lines. This leads me to conclude that futurists are
often wrong, often make judgments based on inaccurate, incomplete, or
insufficient information, and probably ought not to be dabbling in the
future. But if we don’t, we’ll never get there.

Twenty years after that first transcontinental trip, a young U.S. Army
officer fresh out of West Point by the name of Eisenhower accompanied
and led a convoy across the United States. He noted the shortcomings of
this network of gravel, stone, and mud surfaces. He wondered how the
United States could defend itself adequately if called upon in a time of
emergency. He didn’t forget that experience. Later, as President, he asked
the Congress to reawaken a study done in 1944 by Congress or
commissioned by Congress in 1944, just as World War II was coming to an
end. He directed a study of a 44,000-mile interconnected network of
highways across the United States. Eisenhower, remembering his own trip,
asked the Congress to develop what became known as the National
System of Interstate and Defense Highways, which he signed into law in
June 1956. It also included an innovative financing scheme.

My predecessor in Congress, John Blatnik, was one of the five co-authors
of the Interstate Highway System and the Highway Trust Fund. They
thought they had accomplished a work for all time. Of course, nothing
needed to be done except to watch over the development of a 42,500-mile
network of highways that theoretically crossed the United States from
coast to coast and border to border without a traffic light. Well, that was
before population growth. That was before transportation began driving
the development of everything in our economy, expanding growth and
exploding population. It is a far cry today from 1956, when that legislation
was enacted, with over 565 million vehicles traveling the nation’s
roadways and a trillion passenger miles every year. It’s the most
extraordinary development. But not so extraordinary when you come to
think that Americans own three-fourths of all the trucks and half of all the
cars in the entire world. They need some place for them to drive.

But it certainly wouldn’t have been envisioned in the imaginary conference
that I mentioned at the turn of the last century. So let’s hope that here at
the turn of this century we do a little bit better in thinking ahead to where
we need to go. Oliver Wendell Holmes observed, “I find the great thing in
this world is not so much where we stand, as in which direction we are

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Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of

moving.” We must sail sometimes with the wind and sometimes against it.
But sail we must, not drift, and not lie at anchor.

That certainly should be the challenge of this conference. Where will
America sail in the 21st century? What will be the legacy of the
post-Interstate era? That was the question I began asking as Chair of the
Oversight Subcommittee in the 1980s, what will the post-Interstate era
look like. Where are we headed? In the course of the hearings that I
conducted, we had a number of tantalizing thoughts. Demographics were
changing. Predictions in 1986 and 1987 were that by the end of this decade,
which we are approaching, half of all drivers would be 50 years of age and
older. Well, that suggests some new ideas about road surface, markings,
reflective surfaces, driving habits, and driving conditions. It also suggests
some new ideas about the kind of driving that people would do—more
leisure miles driven and more people taking vacations (maybe longer
duration), using the Interstate to get to the point of their vacation travel,
and then using the non-Interstate roadways of this country for the balance
of their travel.

Something that emerged along with those hearings was a demand for a
change in the quality of peoples’ driving experience. Drivers want more
than the neat, separated grade-crossing controlled Interstate highway
system—something that shows more of America’s scenic, cultural, and
historic treasures. Out of that arose my idea for a Scenic Byways Program,
which I crafted and with the help of numerous groups, tourism and
environmental organizations, put together and made it part of ISTEA in
1991. Millions of miles are driven on the scenic byways of this country. We
have 14 national scenic byways, 11 all-American roads and hundreds of
state-designated scenic byways. In addition, these roads are a powerful
driving force behind America’s $92 billion in-bound international travel
and tourism, with a $22 billion positive balance-of-payments benefit to the
United States.

The other ideas that emerged were that people wanted something more
than just more road surface—a better quality of life in their communities.
They wanted an enhancing rural and urban life, and out of that came what
we know today as the Enhancements (contained in ISTEA and TEA-21). In the
20 years prior to ISTEA, only $40 million had been spent on bicycle
provisions and converting railroad grade beds to bicycling paths and
pedestrian walkways. Providing (in ISTEA) a 10-percent set-aside of
enhancements program for bicycling facilities, converting railroad grade
beds to bicycling paths, and mandating the establishment of a bicycling

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Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of

coordinator in every state Department of Transportation led to the
development of a state bicycling road plan. A billion dollars has been spent
in the lifetime of ISTEA compared with $40 million in the previous 20 years.
Three thousand two hundred forty bicycling projects are all across
America—10 million more Americans bicycling than 7 years earlier
because of a massive change in our lifestyle—a more aerobic
lifestyle—people are going to be living longer and healthier.

That was the framework for ISTEA. Add to it congestion mitigation and air
quality improvement provisions that said we should use some of our
Highway Trust Fund dollars to improve the quality of air and quality of our
driving experience in America’s urban centers. To reduce congestion or to
mitigate choke points in urban areas, states and localities have used that
flexibility to transfer $4 billion from highway construction to transit
projects. These innovations led to real changes in the way we think about
transportation in America—something more than just pouring more
asphalt and concrete.

But we really broke through some preconceived notions about our federal
highway program with ISTEA. We carried that forward in TEA-21, the
Transportation Equity Act for the 21st Century. The most important
initiative in TEA-21 was to take the trust fund off budget and reestablish it as
it was originally conceived in 1956 and as it operated until 1968. It’s off
budget within the budget, but it’s guaranteed spending that increases as
revenues increase and, of course, would decrease if revenues dropped, but
not below a certain threshold. The trust fund is indeed secure. Spending is
guaranteed—it cannot be withheld by the Appropriations Committee. In
addition, there’s a 40-percent overall increase in outlays for the states;
guaranteeing that 90.5 percent of every state’s gas tax dollar be returned to
the state.

In addition, we agreed on an 80-20 split of the Highway Trust Fund;
80 percent for highways and 20 percent for transit. I won’t walk you back
through the age-old controversy. But I can remember as a Hill staffer in the
1960s, when the idea was first surfaced of using Highway Trust Fund
dollars for transit projects, the hew and cry and screams of, “This is our
money and you can’t use it for transit.” People would rather choke in
traffic, sit behind the wheel of their car, and breathe in those exhaust
fumes from the guys ahead of them than get their fellow motorists off the
road into mass transit.

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Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of

We’ve changed that, $173 billion for highway and $41 billion for transit. If
you had looked at the program in 1963, when I first started my work as a
Legislative Assistant on the Hill, you would have said, “No way, never.”
But it’s there. It’s also guaranteed spending. In addition to that, we’ve
included provisions in TEA-21 to designate funding for rebuilding existing
transit systems and expanding and constructing new ones. We also
provide funds for magnetic levitation (MAGLEV) and other high-speed rail
development, loans and guarantee programs for freight rail rehabilitation,
and reconstruction and improvement.

We also provided funds for a rather innovative idea—to coordinate land
use and transportation planning. Planning has all too often been a bad
word, an evil term. I remember up along the North Shore of Lake Superior
in my district going to a town meeting when the Coastal Zone Management
program was being planned. One after another suspicious citizen got up
and said they’re going to do it again; they’re going to take our land away
from us; they’re going to plan it out of our hands. I told them that this is
your opportunity. Either you make the plans—either you take this money
and you design how the future is going to look along the North Shore—or
it will just happen without your input at all. Developers will come and
you’ll be screaming at me 20 years from now saying, “Why didn’t you stop

The county boards and local governments voted against coastal zone
management. Five years later, they asked me to come back. They wanted
to know how to get some of that money and take charge of their destiny.
After a time, planning—the reasonableness of it—settles in with people.
When they understand that it’s a grass roots initiative, they take hold and
do it well, with substantial amounts of funding, in this case, $120 million to
coordinate land use and transportation planning. When dedicated to the
simple purpose that transportation does not have to destroy the
environment, it does not have to destroy quality of life, and citizens can be
entrusted with the decision-making that affects their own life. We’re going
to give that to them.

TEA-21 addresses safety. The $540 million incentive program is for states
that enact a 0.08 blood alcohol standard for drunk driving, punishment of
repeat offenders and for open alcohol containers, and the enhancement of
the national driver register, which tracks dangerous drivers—those who
lost their license in one state and try to get a license in another state. This
is an initiative that former Republican leader John Rhodes and I crafted.

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                      Presentation by James L. Oberstar,
                      Ranking Democratic Member, Committee on
                      Transportation and Infrastructure, House of

                      We catch something like 500,000 of those drivers and get them off the
                      roads every year.

                      Those are all good initiatives. But it’s still not enough. Einstein said that
                      we can’t solve problems by using the same kind of thinking that we used
                      when we created those problems in the first place. Some of our old
                      thinking about highway programs got us there. In ISTEA, and continued and
                      enhanced in TEA-21, are three tools that help us avoid the kinds of thinking
                      that got us into the problems that we confront in our current
                      transportation system: the use of advanced technology, smart growth
                      concepts, and innovative financing.

Advanced Technology   I have taken the train a grande vitesse (TGV) from Paris to Lyons in 2
                      hours and 1 minute. In 20 years time, they had cut the travel time in half.
                      There were 3 million air passengers between those two cities and 500,000
                      rail passengers. Today, there are 500,000 air passengers and 5 million TGV
                      passengers at 178 miles an hour between those two cities. The five
                      segments of the TGV are running profitably and are paying for the rest of
                      the rail system. I’ve been to Tours in the southeastern part of the Loire
                      Valley where business people commute daily 220 miles to Paris in an hour
                      and 15 minutes at 180 to 190 miles an hour. The Inter City Express (ICE) in
                      Germany is achieving speeds of 180 miles an hour. The MAGLEV that
                      Germany is developing between Hamburg and Berlin at a $1 billion cost
                      will move 15 million people a year at speeds of 300 miles an hour. I rode
                      the Shinkansen in Japan from Tokyo to Osaka at 180 miles an hour. They
                      expect to have high-speed MAGLEV operating in Japan in the next five

                      Meanwhile, our highest speed on our passenger rail in the United States is
                      110 miles an hour. Most of the time it’s much less than that. We have
                      similar corridors, Minneapolis-St. Paul-Chicago, where high-speed rail
                      would be vastly superior to air travel between those two cities. There’s
                      also enough population density to make it attractive. Why do we have
                      high-speed rail in Europe, Germany, France? England is improving its
                      speed, and the Italians have done the same. Spain has taken the TGV with
                      a few adaptations. The Japanese are doing it. China is moving in that
                      direction. But we—the leaders in transportation in the world—don’t. Why?
                      Because we’re not thinking right.

                      We will have high-speed rail here in the East Coast with the electrification
                      of the Northeast Coast Corridor. You’ll be able to travel using the new

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                        Presentation by James L. Oberstar,
                        Ranking Democratic Member, Committee on
                        Transportation and Infrastructure, House of

                        [Acela] high-speed trainsets up to 150 to 166 miles an hour. That’s high
                        speed for us. But it’s because we are still thinking about transportation
                        with the same mind set that got us into these problems in the first place.
                        We have to get beyond that way of thinking.

                        TEA-21 provides some funding for us to take advantage of the MAGLEV,
                        TGV, and other high-speed rail technologies and develop high-speed rail
                        corridors, which we designate in the act as 10-10 corridors and specifically
                        authorize out of appropriated funds—but not out of trust fund
                        moneys—$1 billion for the development of the MAGLEV idea over the next
                        5 years. Thanks to Senator John Chafee’s vision and determination, we
                        have the innovative finance program of TEA-21 available to finance the
                        high-speed rail, including MAGLEV developments, over the next few years.

                        Unfortunately, high-speed rail took a little setback just about a week or 10
                        days ago when the new Governor of Florida decided to cancel the state’s
                        participation in the FOX Overland TGV Corridor between Orlando and
                        Miami. I don’t have a complete statement of the Governor’s decision. But I
                        have worked with the FOX promoters, we have put authorization in TEA-21
                        to enhance that initiative. I think it made perfectly good sense. It was a
                        good investment for the state and its future. The failure to proceed with it
                        will just mean more cars, more drain on the resources and more
                        congestion. In a real sense, high-speed rail is a “Field of Dreams” idea. If
                        we don’t build it, they won’t come.

                        The other initiative that I mentioned is Intelligent Transportation Systems.
                        We invested a lot of money in ISTEA and continued those investments in
                        TEA-21 to the tune of about $2.5 billion over the next 6 years in intelligent
                        transportation system concepts. If all the funds are used wisely, I think
                        we’ll approach the no-hands, no-feet idea of ITS driving with the automated
                        highway in which cars literally can drive themselves. In fact, I-15 in San
                        Diego, an 8-mile segment, is a no-hands, no-feet driving demonstration
                        project. If we carry this concept through, we’ll enable highway managers
                        to double or triple the capacity of highways by increasing speeds and
                        shortening distances between vehicles with greater control mechanisms.
                        We’ve got to test them out. That’s what this is all about.

Smart Growth Concepts   What we need is smart growth, not unbridled growth. We need to look
                        very carefully at the idea of induced travel. There was a very thoughtful
                        piece in The Washington Post just a few weeks ago about the I-270
                        corridor. Those of you who are from the Washington, D.C., area and have

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                       Presentation by James L. Oberstar,
                       Ranking Democratic Member, Committee on
                       Transportation and Infrastructure, House of

                       driven up Rockville Pike and beyond, going up toward Frederick,
                       Maryland, know what that’s all about. That was a nice four-lane road a few
                       years ago. Traffic grew and eventually congestion grew along with it. So
                       the highway folks said, “well, let’s do what we do best—add more lanes.”
                       So they got 12 lanes. You know what happens when they have all those
                       lanes? Someone says, “well, I don’t have to car pool any more. I can drive
                       my own car. I don’t have to use that HOV lane now, I don’t have to be
                       stuck with my neighbor and listen to his silly conversation. I can drive

                       So now you have congestion. It’s a big story every morning, you look to
                       see what’s happening on I-270, because more lanes beget more travel,
                       which begets more growth. One-and-a-half-million drivers a day are stuck
                       in traffic somewhere in America. The Los Angeles Chamber of Commerce
                       did a study a few years ago that showed that the cost of congestion is $3.5
                       billion a year to drivers stuck in traffic in Los Angeles. It costs $40 million
                       each year to the United Parcel Service and Federal Express just to have
                       delays. That’s a look at business news. If you like spending time in traffic
                       with yourself only, then support the continued plan that we have of adding
                       lanes and opposing HOV lanes and schemes to get some cars off the
                       roadway and make travel more expeditious, more convenient, and

                       The President has, as part of his State of the Union message, announced
                       an initiative for sustainable cities, or livable cities, which includes a
                       $6 billion increase in funding for public transit. It also includes $2.2 billion
                       for community-based programs with innovative transportation strategies
                       and regional transportation strategies to improve existing roads and
                       transit and invite ideas for alternative transportation. I think that’s a good
                       idea. I want to see the specific legislation they send forth. It’s in the right
                       direction. This is the kind of thinking that we need to embrace.

Innovative Financing   Coming to the third point that we dealt with in ISTEA—finance—the
                       Highway Trust Fund has spent $372 billion building our Interstate highway
                       system and its accompaniments. That’s a lot of money. It built the greatest
                       road system in the world. But it’s not enough. There isn’t enough money to
                       address all the roadway needs in this country, even with the 40-percent
                       increase that we provided—even with the guaranteed spending. What
                       that—the guarantee—will do is assure from year to year that highway
                       planners, highway engineers, and design people can count on the money
                       they need for the projects they’ve designed.

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Appendix IX
Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of

I was in California last summer for the meeting of the Mineta Institute for
Intelligent Transportation Systems. The Director of CalTrans talked about
the impact of TEA-21 on his department. The increase in funding is so great
they’re going to hire 2,000 engineers to carry out the planning, design, and
engineering of the new roadways they’re going to build and existing ones
they’re going to improve. When it came my turn, I said I would have felt a
whole lot better about the future of transportation if you had added 200
planners to design strategies for dealing with the growth of transportation
in California, instead of just plowing ahead to build. You have to have
some thought going into this as well.

A good example of what is needed is additional funding for sources or
using the available Highway Trust Fund dollars to leverage other
investments to make those improvements in traditional as well as
alternative transportation concepts. The Transportation Infrastructure
Finance and Innovation (TIFIA) provision of TEA-21, also an idea of Senator
Chafee’s, to whom I give great credit for this initiative, is authorized at
$530 million to cover the risk of loans, loan guarantees, and credit
enhancements up to an additional $10.5 billion over the amount
guaranteed in TEA-21. TIFIA will make it possible to finance projects of
national or regional importance. Projects costing more than $100 million
are beyond the means of a state to finance from its highway
apportionment. With the TIFIA money, a state could use these leveraging
dollars to fund transit, passenger rail, and even freight rail projects.

The Alameda Corridor in California is really the forerunner and guide for
this idea. The Corridor provides access to the ports of Los Angeles and
Long Beach. Why is that important? One-fourth of all of our imports and
exports by water go through those two ports. So before you can move
goods by truck or by rail, before you can get them on the boat, you have to
move them by truck or by rail to that port and get them on board to move
by water some place. The tangle of local rail lines and highways and grade
crossings created gridlock that made it impossible to move at a
competitive basis. DOT provided $59 million to finance a loan for the
additional $400 million that California needed to complete a $2.4 billion
project. Their allocations out of the Highway Trust Fund were nowhere
near the amount that they could foresee to complete this project. With the
project financing that makes a $2.5 billion initiative possible to untangle
those rail lines and improve the truck and rail access, trade is expected to
jump from $116 billion to $253 billion over the next 10 years, creating an
additional 700,000 jobs locally. Those are the kinds of initiatives that we

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Appendix IX
Presentation by James L. Oberstar,
Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of

can undertake with TIFIA and with State Infrastructure Banks, four of
which are authorized in TEA-21.

A new initiative, one I particularly championed and advocated vigorously,
is the railroad loan and guarantee program for the short-line railroads of
this country—those that have picked up the slack from the abandonments
and consolidations of our nation’s freight rails into four national rail lines.
With the funds from the Title V program, as we call it, we will be able to
leverage some $3.5 billion of railroad infrastructure improvement for the
nation’s short-line rails and revitalize small towns and small communities.

Those are the kinds of initiatives that I think we need to undertake. Those
are the three principal areas of innovation of TEA-21. We should have had a
lot more in the way of innovation and new ideas and out-of-the box
thinking in TEA-21. What we did, I think, was about as good as you can
expect of the legislative process in the short run.

If conferences of this nature can stimulate new ideas and new thinking,
that’s good—we have a mid-term correction coming up in a couple of
years, and we need to assess where we are with TEA-21 and make some
adjustments. That’s the place for new ideas. It may not necessarily require
new financing but new ways to leverage dollars, like those that I
suggested. Help us to move our transportation agenda forward.

There were a few cartographers in the Office of Road Inquiry at the turn of
the century who developed a set of maps that laid the foundation for what
became the Interstate system. What we need today are innovative
mapmakers on the threshold of the 21st century to help us chart the map
to take transportation forward from here.

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Appendix X

Presentation by C. Michael Walton,
Chairman, Department of Civil Engineering,
University of Texas/Austin
                          “A major attribute of international reform initiatives has been to redefine the role of
                          government by separating policy and management responsibilities from program and
                          service delivery.”

                          My remarks will center on the trends of international institutional reform
                          in delivering transportation programs and services and the implications for
                          domestic policy and delivery. I recently led a committee that visited New
                          Zealand, Australia, Sweden, and the United Kingdom—countries identified
                          as having innovative programs for transportation agency reforms—to
                          investigate how other countries are coping with budget constraints and
                          using new tools to manage their transportation programs.

International Trends in   Many transportation agencies in countries throughout the world, including
Institutional Reform      the United States, are feeling the pressures of privatization in wake of
                          current government restructuring and downsizing. In short, transportation
                          agencies are being required to do more with fewer resources. This trend is
                          part of a larger redefinition of government and business functions and is
                          by no means confined to the transportation sector. A number of countries
                          have already implemented the comprehensive restructuring of their
                          transportation departments, and their experiences present useful input to
                          the formation of similar issues in the United States.

                          The road-sector reforms reviewed in several countries are part of an effort
                          to make government more responsive; to treat the public more as a
                          customer. It is taken as a given that making the distribution of resources
                          and contracts more competitive will improve the efficiency and
                          cost-effectiveness of providers, transportation authorities, and the
                          transportation network itself. Regulation methods are being redefined in
                          relation to the private sector—generally becoming more “light-handed”
                          and results-oriented, to allow for innovative approaches—although there
                          has been concern that privatization will require more careful monitoring.
                          There is a move toward greater accountability of government agencies and
                          to the use of more objective, careful, and inclusive real-cost accounting as
                          a means of allocating scarcer resources through the use of cost-benefit
                          ratios and performance measures. A concern of note is the issue of public

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                       Appendix X
                       Presentation by C. Michael Walton,
                       Chairman, Department of Civil Engineering,
                       University of Texas/Austin

Redefined Public and   The transportation reforms in the countries surveyed were found to be
Private Roles          part of an overall reevaluation of the appropriate nature and extent of
                       government activity in response to a government mandate or some degree
                       of financial crisis. In the reorganization of government, there has been a
                       greater distinction drawn between policy formation and management and
                       the delivery of services and facilities. The decision that has been made, to
                       a greater or lesser extent, is that service delivery is best provided by the
                       private sector, partly in response to the process of governmental reforms
                       and demands for greater cost-effectiveness. In all of the countries
                       reviewed, reform began with reevaluating and clarifying their
                       transportation agencies’ core functions and responsibilities and roles
                       within the organization and identifying those functions best transferred to
                       the private sector. As an alternative to total outsourcing, public policy in
                       some countries allows—if not requires— providers to operate as profit
                       centers or publicly owned enterprises, which compete directly with
                       private companies, collect a profit, and pay taxes. Sweden has adopted
                       this approach, at least in principle, as a means to maintain quality
                       standards and prevent the very few major private roadworks contractors
                       from behaving as an oligopoly. One of the most important and successful
                       changes in structure adopted by all the countries surveyed was an explicit
                       separation of buying and selling roles within the agency, forcing project
                       decisions to be made more carefully and reducing conflicts of interest.

                       There is also an effort to transfer some of the public risk in transportation
                       infrastructure development to the private sector, as evidenced in several
                       trends: a variety of turnkey programs are being used successfully in the
                       United Kingdom and Australia, variously referred to as
                       design-build-finance-operate (DBFO), build-operate-transfer,
                       build-own-operate-transfer, and design-construct-maintain according to
                       their specified contractual obligations. So far, the United Kingdom
                       particularly has seen significant cost savings with its first eight DBFO
                       contracts in comparison with its standard system, which routinely ran
                       over budget. In principle, these contracts are deliberately made rather
                       long-term (up to 30 years of operations) and comprehensive in scope to
                       apply the same incentives and responsibilities to the private company that
                       a public authority would have to operate under.

                       All countries are also beginning to outsource maintenance work under
                       similar contracts (3-5 years) that are more “performance-based” than
                       “specification-based.” The United Kingdom also uses “lane rental
                       contract” clauses to keep as many lanes open as possible during
                       maintenance and construction activities. Other than through the DBFO

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                             Appendix X
                             Presentation by C. Michael Walton,
                             Chairman, Department of Civil Engineering,
                             University of Texas/Austin

                             projects, the idea of transferring design activities to the private sector is
                             treated very cautiously out of concern for maintaining consistent safety
                             and quality standards and because there may not be enough highway
                             design work in the smaller countries to support more than a limited
                             number of private companies; however, most do express interest in having
                             foreign firms compete in this area as well. With the transfer of
                             responsibility for service delivery to the private sector comes a certain
                             degree of authority as well.

Transportation Initiatives   Transportation departments in the countries surveyed were under great
and Links to Economic        pressure for financial accountability. Tolls, except for bridges, were
Viability                    generally disliked, although they were being reconsidered and there was
                             some warmth toward electronically assessed tolls, which might also be
                             used to distribute traffic by encouraging the use of alternate routes. It was
                             observed that only New Zealand had dedicated funding sources
                             comprising of user fees for transportation (although Australia’s
                             transportation funding at the federal level is intended to correspond to
                             income from fuel taxes and registration fees, strictly speaking, the moneys
                             come from general revenue) and, instead, must compete for funding with
                             other government agencies during each budgeting period. While fees from
                             highway users are collected in all countries, the fees typically accrue to
                             the account of the general fund for allocation during the normal budget
                             cycle. Even in New Zealand, highway user fees are used for nonhighway or
                             transport-related purposes. Generally, there seemed to be only little,
                             though growing, acknowledgment of the importance of transportation
                             infrastructure to economic growth, especially by national governments
                             (other than Australia, which considered it instrumental and invested
                             heavily in its highway system through the 1980s). Sweden explicitly
                             considers transportation investment as an important means to equalize
                             regional development. Wales, which recently decided to double its
                             transportation investment, saw greatly increased economic growth
                             compared with the rest of the United Kingdom.

                             Cost-benefit analysis has been one of the major ways in which this
                             business-like approach has been expressed. Such analysis systems are
                             increasingly being used to prioritize projects and allocate resources more
                             objectively. The costs included in this analysis vary, however: some
                             include costs related to noise, environmental degradation, aesthetics, and
                             delays, and some do not. Some include a comparison with the costs of a
                             do-nothing option. Mostly all include items related to safety. There is
                             interest in making these analyses very generic to facilitate a comparison

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Presentation by C. Michael Walton,
Chairman, Department of Civil Engineering,
University of Texas/Austin

between regions and internationally. These analyses are very much
works-in-progress but are being pursued enthusiastically.

This new businesslike approach has allowed the public sector to level the
playing field with the private sector in certain circumstances. In some
cases, the public sector has been allowed to compete with private-sector
firms, most notably in Sweden and Australia, and the public sector has
been able to hold its own and gain a number of contracts on its own
merits. In both of these countries, the public-sector firms must allow for
certain rates of profit and pay taxes in a manner that makes them operate
with many of the same constraints as their private-sector competitors.
Although there have been discussions about the lack of equality between
private- and public-sector firms in Australia, VicRoads has let its in-house
teams compete and has seen them compete well. The experiences of each
country suggests that there have been mixed results to date; however,
most officials agreed that overall direction has yielded short-term benefits.
Some agencies have set goals for their units in competing with the private
sector, which has proven to be both successful and viable.

One concern was retaining core competencies within the transportation
agencies, many of which had been drastically downsized. All placed a high
priority on retaining their experts for a variety of reasons, including
contract writing (especially important to be done carefully when contract
arrangements and types are changing) or a sense that privatizing
necessitates more careful monitoring. There is concern for the training of
future transportation professionals. Research efforts have generally
suffered under privatization, except in Sweden, where transportation
research is supported by the SNRA, which also collects statistics related to
road use, and through grants distributed by the KFB (Communications
Research Board).

The major component to operating in a businesslike atmosphere is the
effect of competition. It is a common perception in all the countries
surveyed that making the provision of service subject to competitive
tendering is the most significant means to increase efficiency and
encourage innovation. It therefore is important that there be enough firms
to provide sufficient competition to offset tendencies toward oligopoly,
which is a significant concern for some of the smaller countries.

Since this current businesslike state is evolving, it is impossible to foresee
what it will lead to in the future. However, some trends have begun to
emerge. The overreliance of a cost-benefit analysis can lead to encourage

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                        Appendix X
                        Presentation by C. Michael Walton,
                        Chairman, Department of Civil Engineering,
                        University of Texas/Austin

                        short-term or suboptimal decisions unless some mechanism is in place to
                        allow for long-term implications to be more readily factored into the
                        process. With the changing roles of the public units, the training of
                        personnel has become a concern. In general, the public agencies have
                        been a source of human capital for the private firms. In addition, they have
                        traditionally provided formal instruction and training coupled with
                        on-the-job experience. The reform and its impact on the traditional public
                        agency has altered this process both in the quantity of technically and
                        professionally qualified people with skills desired by the expanding private
                        companies but in the training activities. The result has been that the
                        private companies have recognized their mandate to include training in
                        their annual budget process. Similar trends are occurring in research
                        where the private sector recognizes that it must include research and
                        development in its activities as the public agencies scale down their
                        involvement. With the shift of emphasis from the public to private sector,
                        the public sector has dropped its lead role in both of these areas. It is now
                        up to the private sector to fill the void left by the public sector and
                        increase their emphasis in these two crucial areas.

                        Because of the increasing influence of the private sector, a check is
                        needed to ensure that the job that they are doing is meeting requisite
                        quality and is as efficient as possible. The governments of the selected
                        countries reviewed are moving toward a system of performance measures
                        that would allow them to oversee the areas of the road system, which they
                        view as being important, while using the fewest number of employees. The
                        performance-based approach is intended to ensure receiving the quality of
                        work for which they had contracted. These countries still find themselves
                        in the developmental stages of creating such a performance-based system
                        and also an accurate transportation database. It is believed that such a
                        system will allow internal comparisons to be made, thus ensuring a quality
                        return on public investment.

Implications of         All of the countries surveyed were and are in significant transitional
International           periods, all to varying degrees moving toward lighter regulation and
Transportation Trends   adoption of the business strategies of the private sector. Change in all
                        agencies was initiated either by crisis or government mandate, as part of a
                        policy of some branch/authority in the national government, rather than
                        internally from the transport authority itself. While their experiences offer
                        some valuable lessons, it is important to remember that these reforms
                        would be considered works in progress; their long-term implications have
                        not yet played out. The implication of these international trends on

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Presentation by C. Michael Walton,
Chairman, Department of Civil Engineering,
University of Texas/Austin

domestic policies governing the delivery of transportation programs and
services is intriguing. Several key observations are summarized for
discussion purposes.

In considering the implications of these valuable experiences for our
situation, it is useful to keep several factors in mind. Essentially, it was a
top-down reform, and these governments are going through major change.
To a certain extent, they started at a position that was much different from
ours and have gone now beyond us in many cases. One example would be
in the selling off assets that have traditionally been in the public domain.
In their case, railroads are one of those assets—unlike the United
States—as are airlines, ports, harbors, and airports. In the rail industry, the
infrastructure was separated from the operating authority, with separate
companies for each. We, of course, are not in that position.

A major attribute of international reform initiatives has been to redefine
the role of government by separating policy and management
responsibilities from program and service delivery. Public trust is a
concern, and the funding constraints associated with each. By saying it’s a
business approach to delivering transportation, we’re saying that we’re
bringing competition into the fore. The long-term implications are not
clear. But the short-term benefits are widely touted—in many cases, a 15
to 30 percent increase in efficiency or maintenance expenditures as well
as in new construction.

In all cases, there has been a decrease in the size of government. The focus
has been on maintaining core competencies in critical areas—that’s part of
defining the government role. There has been increased competition
across the board. Public units are competing among themselves and with
private units domestically and internationally. Some public units are
encouraged to compete internationally as well as domestically.

There has been general dissatisfaction with some aspects of services
provided by the private sector—for example, in the design of a
transportation facility. As a result, these countries have adopted quality
assurance standards. The use of benefit cost analysis and performance
measures is evolving in a variety of ways.

I think the lessons learned from these international experiences will reveal
some significant opportunities to help us meet the transportation
challenges of the 21st century.

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Appendix XI

Profile of Speakers

               Peter “Jack” Basso, Assistant Secretary for Budget and Programs at the
               U.S. Department of Transportation. Mr. Basso joined the Office of the
               Secretary in 1995, when he was named the Deputy Assistant Secretary for
               Budgets and Programs. Previously, he held several financial and
               administrative positions within the Federal Highway Administration, an
               agency within DOT. From 1990 to 1995, for example, he was the Director of
               Fiscal Services for FHWA. He has served as a member or chairman of
               numerous councils and committees, including the President’s Council on
               Management Improvement and the Small Agency Council. He also served
               as Deputy Chair for Management at the National Endowment for the Arts
               and as Assistant Director for General Management at the Office of
               Management and Budget.

               Anne P. Canby, Delaware’s Secretary of Transportation, has over 20
               years’ experience in transportation administration, strategic planning,
               finance, budgeting, and management. Appointed as Secretary in
               March 1993, she has focused on applying an integrated multimodal
               approach in constructing and preserving Delaware’s developing
               transportation network. Prior to her appointment, she was a partner in the
               transportation consulting firm of Canby, Cameron and Company and the
               Principal of Canby Associates. She also served as Treasurer-Controller for
               the Massachusetts Bay Transportation Authority, as a Commissioner of the
               New Jersey Department of Transportation, and as Chair of the New Jersey
               Transit Board of Directors.

               Anthony Downs, Senior Fellow at The Brookings Institution (a private,
               nonprofit research organization specializing in public policy studies) in
               Washington, D.C. He previously chaired the Real Estate Research
               Corporation, a nationwide consulting firm advising clients on real estate
               investment, housing policies, and urban affairs. He has served as a
               consultant to many of the nation’s largest corporations; major developers;
               local, state and federal government agencies (including the Department of
               Housing and Urban Development and the White House); and private
               foundations. He is the author or coauthor of numerous articles and books,
               including Stuck in Traffic, New Visions for Metropolitan America, Political
               Theory and Public Choice, and Urban Affairs and Urban Policy. Dr. Downs
               is a frequent speaker on real estate economics, housing, urban policies,
               and other topics.

               James A. Dunn, Jr., Professor of Political Science and Public
               Administration at Rutgers University/Camden. He was an Alexander von
               Humboldt Research Fellow in European transportation policy at the

               Page 78                                 GAO/RCED-99-176 Surface Transportation
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Profile of Speakers

University of Bonn and a National Endowment for the Humanities scholar
in modern French politics and transportation policy at the Institute of
Political Studies in Paris. Dr. Dunn has written articles on a range of
topics, including the outlook for high-speed rail in North America. He is
the author of Miles to Go: European and American Transportation Policies
and Driving Forces: The Automobile, Its Enemies, and the Politics of
Mobility. In 1987, he received the Rutgers Presidential Award for
Distinguished Public Service for serving as Chair of the South Jersey
Transit Advisory Committee.

Stephen C. Lockwood, Vice President of Parsons Brinckerhoff, the
nation’s largest transportation planning and design firm. He manages its
special Finance and Economics group and serves as Senior Technical
Advisor on projects involving Intelligent Transportation Systems planning,
public private partnerships, and multimodal applications. He previously
served for 3 years as FHWA’s Associate Administrator for Policy, overseeing
policy development and new legislation, as well as strategic studies and
international programs. In addition, he directed the Transportation 2020
Alternatives Group, a coalition of state and local government interest
groups dedicated to reshaping national transportation policy for the 21st
century, and served as vice president of a major national and international
consulting firm. Mr. Lockwood chairs the ITS -America Task Force on
Regional Deployment and is Vice Chair of the American Road and
Transportation Builders Association, Public-Private Ventures Division.

David Luberoff, Associate Director of the Alfred Taubman Center for
State and Local Government at Harvard University’s Kennedy School of
Government. His research and writing focus on the political economy of
infrastructure and land-use policies. He is currently coauthoring a book on
the politics of large-scale urban infrastructure projects, which will draw
heavily on a 1996 political history of Boston’s Central Artery/Third Harbor
Tunnel project. He is also a columnist on infrastructure issues for
Governing magazine and was co-editor of The Public’s Capital, a quarterly
forum on infrastructure issues. Before joining the Taubman Center, he was
the editor of the Boston Redevelopment Authority’s 1987 Midtown
Cultural District Plan and served as editor-in-chief of The Tab, greater
Boston’s largest group of weekly newspapers.

Bradley L. Mallory has been Pennsylvania’s Secretary of Transportation
since March 1995. Under his leadership, the Pennsylvania Department of
Transportation has redirected $170 million from overhead to road work
and achieved a $550-million-per-year revenue enhancement for highways

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Profile of Speakers

and mass transit. Mr. Mallory previously served as counsel to the law firm
of Dechert Price and Rhoads. From 1977 to 1989, he served in a variety of
management positions at PennDOT, spending 3 years as Director of Strategic
Planning and 3 years as the first Deputy Secretary for Aviation, Rail
Freight, and Ports and Waterways.

Robert H. Muller, currently the Managing Director of Municipal Bond
Research at J.P. Morgan Securities, has been active in municipal and
health care research for more than 25 years. Before joining Morgan in
1981, he worked for Standard and Poor’s Corporation and E.F. Hutton and
Company. The past three Institutional Investor surveys ranked him as the
top transportation analyst in municipal bonds, and prior surveys identified
him as the top generalist analyst. He is a member of the Society of
Municipal Analysts and has served on the Blue Ribbon Committee on
Secondary Market Disclosure of the National Association of State
Auditors, Controllers, and Treasurers and on the board of the Government
Accounting Standards Advisory Council. He is also a board member and
past treasurer of the National Civic League, has been a juror for the All
American Cities award program, and has spoken widely before both
investor and issuer groups.

Representative James L. Oberstar, an 11-term Member of Congress,
serves as the Senior Democrat of the House Committee on Transportation
and Infrastructure. From 1989 to 1994, he served as the Chairman of the
Aviation Subcommittee. As such, he has been a principal author of much
of America’s transportation legislation during the past two decades,
including the Aging Aircraft Safety Act of 1991, the landmark Intermodal
Surface Transportation Efficiency Act of 1991, and, most recently, the
Transportation Equity Act for the 21st Century, which provides a
40-percent increase in funding for federal transportation programs.
Representative Oberstar has taken a leading role on such issues as rail
safety, improving railroad infrastructure, developing high-speed intercity
rail, expanding mass transit, protecting environmental statutes, expanding
facilities for bicycle and pedestrian travel, and aviation safety. He has held
a number of memberships including membership in the Great Lakes Task
Force; Renewable Energy Caucus; House Trails Caucus; and Forestry
2000. He has also received a number of awards, including the James L.
Oberstar Award, from the League of American Bicyclists, and the Award
for Excellence, from the National Association of State Aviation Officials.

Les Sterman, Executive Director of the East-West Gateway Coordinating
Council since 1983, a position he assumed after working for 5 years as the

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Profile of Speakers

organization’s Director of Transportation Planning. Responsible for some
of the Council’s largest and most visible projects, he conceived and
planned the MetroLink light-rail system. He has spoken on metropolitan
transportation, urban development, and environmental issues at the state
and national levels, testifying before several congressional committees and
national conferences on these topics. Before assuming his current
position, he worked as a transportation planning consultant and civil
engineer. He is currently President, Missouri Association of Councils of
Government, and Co-Chair and Founding Member, National Association of
Metropolitan Planning Organizations, as well as a member of several
governing boards of transportation-related organizations.

Brian Taylor, Associate Director of the Institute of Transportation
Studies, University of California/Los Angeles (UCLA), and Associate
Professor of Urban Planning at UCLA’s School of Public Policy and Social
Research. He teaches courses in transportation policy and planning, and
urban policy planning. His current research is on the politics of
transportation finance and planning, including the history of highway
finance and the effect of public transit subsidy programs on system
performance and social equity. Professor Taylor has also examined the
relationships between transportation and urban form, including the effects
of suburbanization on access to employment and the evolving commuting
patterns of women, minority, disabled, and low-income workers. He was
previously an Assistant Professor in the Department of City and Regional
Planning at the University of North Carolina/Chapel Hill and a
transportation analyst for the San Francisco Bay Area Metropolitan
Transportation Commission.

C. Michael Walton, Professor of Civil Engineering, holds the Ernest H.
Cockrell Centennial Chair in Engineering at the University of
Texas/Austin. He has a joint academic appointment at the Lyndon B.
Johnson School of Public Affairs. He formerly served as Transportation
Economist, Office of the Secretary, DOT, and Transportation Planning
Engineer, North Carolina State Highway Commission. A member of the
National Academy of Engineering, Dr. Walton has served on or chaired a
number of national study panels, some mandated by the Congress and
others by the National Research Council. He is a founding member of the
Intelligent Transportation Society of America and currently chairs its
Coordinating Council. He is a Fellow of the American Society of Civil
Engineers and of the Institute of Transportation Engineers. He also holds
many other positions within the transportation profession’s technical
societies and industrial boards. Dr. Walton has received numerous awards,

Page 81                                 GAO/RCED-99-176 Surface Transportation
Appendix XI
Profile of Speakers

contributed to more than 200 publications, and delivered several hundred
technical presentations.

Page 82                                GAO/RCED-99-176 Surface Transportation
Appendix XII

Major Contributors to This Report

               Joseph Christoff
               Susan Fleming
               Libby Halperin
               David Lehrer
               Ronald Stouffer

(348135)       Page 83            GAO/RCED-99-176 Surface Transportation
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