oversight

Issues Related to DOT's Fiscal Year 1991 Budget Request

Published by the Government Accountability Office on 1990-04-26.

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

*       ’

                     United States General Accounting O ffke           1 f / Cgf $
G.0                , ’ Testimony


                                                                      lllllllllllllll
                                                                            141248

For Release           Issues’ Related      to DOT’s F iscal   Year   1991
on Delivery
Expected at           Budget   Request
 1O:OO a.m. EDT
Thursday
April  26, 1990




                      Statement   of
                      Kenneth M . M e a d
                      Director,   Transportation       Issues
                      Resources,   Community,       and Economic
                      Development    Division

                      Before the
                      Subcommittee       on Transportation    and
                      Related      Agencies
                      C o m m ittee on Appropriations
                      United      States   Senate




                           ,a?19
GAOfT-RCED-90-72                                                             GAO Form 160 (12/W)

    *       \
Mr. Chairman               and Members of the Subcommittee:
            We appreciate                 the opportunity               to testify         .on selected           aspects
of the           Department           of Transportation's                      (DOT) fiscal           year     1991 budget
request.             Specifically,                 we will        address        issues     related           to the
Federal           Aviation          Administration                (FAA),        the    Interstate            highway
program,           and Amtrak.                 In each of the past                    3 years,        we have
reported           and testified                  to the Subcommittee                  on FAA's efforts                to
modernize           the      air     traffic           control          (ATC) system        and maintain               system
safety           through      its         three     key work forces --controllers,                            inspectors,
and maintenance                    technicians.                As requested            by the        Subcommittee,             the
bulk        of our testimony                   today      will     focus        on these      two topics,              which
together           account          for     80 percent            of FAA's $8.3            billion          budget
request.            We know the                Subcommittee             also     faces     important           budget
decisions           on the          Interstate            component            of the highway           program         and on
federal           assistance              to Amtrak.             Consequently,            we will       provide         a
brief        overview         of what our work suggests                           in these          areas      as well.


            In summary,             we found           that:
                                                                    .


            --    Developing       and installing      new ATC systems continue     to take                                          *
                  longer than FAA expected.             Most major systems have
                  experienced       another round of delays.         Such delays have
                  required      the addition      of interim  projects   to upgrade
                  existing      systems.       Our work to date on the largest      of these
                  projects--the        Interim    Support Plan--suggests     that FAA did
                  not properly       plan and assess its needs before seeking
                  funding     from the Congress.
            --    FAA has not yet identified          the additional      human resources
                  necessary    to implement ATC modernization            projects   at field
        u         locations.       Insufficient    staff   at field    locations    to
                  install,   test,     and be trained     on the new equipment will
                  cause further       delays in realizing      modernization      benefits.
           em
                FAA will not meet this year's              staffing      goals for
                controllers,     inspectors,      and maintenance           technicians.        It
                expects shortages       of about 1,900          experienced       controllers,
                500 inspectors,      and 1,500 maintenance             technicians.          In
                addition,    FAA’s training       initiatives         are falling      behind
                schedule.     FAA may have to curtail              its planned hiring
                because of lim ited      training      capacity,       'further    compounding
                shortages.
           mm
                Over 40 percent       of the pavement on Interstate             highways is
                in fair or poor condition.             In addition,       about one-half      of
                future   Interstate      preservation       dollars     is estimated      to be
                used for lane widening,          which is much more than anticipated
                when it became an eligible            activity      in 1981.    Given
                burgeoning     demands for rehabilitation             ,and reconstruction
                funds, federal      priorities      for use of these funds must be
                exam ined.
          --
                Income generated   from A m trak's revenue enhancement
                activities  cannot be reasonably     expected,    at this point in
                time, to cover the railroad's      operating   losses and capital
                needs.

        IZING AND REBUILDING THE
      TRAFFIC CONTROT,S Y S T E M

          The major        problems           that    confronted            FAA in the        eighties          are
com m on knowledge.                 Aging      ATC equipment               became stressed            to the      lim it
by the unforeseen                  rise      in air       travel      after     airline       deregulation.
Furthermore,             in the       aftermath           of the      controller          strike,        over    11,000
controllers             were abruptly            fired.            FAA's response          to the        equipment
problem         was the National               Airspace            System     (NAS) Plan,           an ambitious
$12 billion,             lo-year          program .        Introduced          in 1981,       the     NAS Plan was
envisioned         to update              and replace           obsolete       computer,        radar,      and
com m unication           equipment.            Modernization               was projected            to improve
safety,         reduce     airspace           congestion,            and increase          controller
productivity.              Equally          ambitious           was the       agency's      plan      to rebuild
and train         its     controller           work force.             As we begin           a new decade,

                                                            2
progress          is being        made.       New ATC equipment                  is being          built         and more
controllers            are being‘hired.                However,          many of the problems                      we have
reported          and testified             on in the past              are still         with         us today.


ATC Modernization                 Problems       Persist


          Since      1981,       the NAS Plan has undergone                          several       changes.
Project       delays          and the       changing       nature        of'#air       travel,          such as
airline       implementation                of the hub and spoke concept,                              have caused
FAA to reconsider                 what projects           will      be needed,            how much
modernization             will     cost,      and when needed projects                          will       be
completed.            Past delays,            ranging         from 1 to 4 years,                   have
necessitated            the      addition      of short-term              projects             needed         to keep up
with      work     load       demands until        longer         term        solutions          can be
installed.


          At the      request        of this      Subcommittee,                we are reviewing                   one of
the     largest       of these        short-term          projects,            the     Interim          Support
Plan.        The Interim           Support      Plan      is a conglomeration                      of projects
directed          primarily        at resolving           maintenance              and capacity                 problems
at terminal           radar       approach      control          facilities            until       longer         term
activities           are completed.             Our work to date                   suggests            that      FAA did
not properly           plan       and assess       the        Interim         Support          Plan before             it
sought       funds      for      the project.           The program             was included                  in the
budget       before       the     agency's      normal         review         process      was complete.
Addktionally,             FAA did       not resolve            concerns         raised          by its          Systems

                                                          3
 Engineering                 and Integration                      Contractor.                          -For example,          the
 contractor                 found        that       7 of the               10 individual                       projects       were not
 cost-beneficial.                          The likelihood                       of additional                     short-term
 initiatives                 suggests             the need for                       FAA to properly                  review         new
 projects             before            funding               is requested.


           Short-term                   projects,               coupled              with         others        needed       to correct
original              design            deficiencies                  or to meet new requirements,                                       have
caused              an increase-in                  the estimated                       cost            of ATC modernization.                      The
estimated              total            cost     could           reach          $27 billion                    by the year           2000.
Furthermore,                   FAA now acknowledges                                  that        modernization               will        need
continuous                  funding,            and not           end in 1991 as its                             preliminary              cost-
benefit              analysis            for     the NAS Plan                        indicated.


          As we reported                        last          week,        project               delays         persist.l            A
comparison                  of current             estimates                with            those          from just         1 year        ago
shows that                  8 of 12 major                     projects               experienced                an additional              delay
of 200 or more days.                               Vendors            are still                        experiencing          hardware           and
software              development                problems             because                   systems         cannot       meet FAA's
requirements.                       As we have reported                               in the past,                 such problems                could
have been minimized.2                                  FAA awarded                    production                contracts           without
the benefit                  of risk-mitigating                            information                    provided          by techniques
such as operational                             testing.              This            was the             case for          the Mode S

                        .                                                                                                  .
l&ir      Traffic             Control               .Status           of        FM          s    Eff
                                                                                                         ort    to Modernize             the
Svstem               (GAO/RCED-90:146FS,                          Apr.          17,'1990).

Vana-ment                   of the NM Plan
                                                                            4
communications                and surveillance                   system.            As my colleague,                        Ms.
Hecker,       will         testify,           5 years         after           contract        award,            the Mode S
vendor       has yet          to build             one device            capable          of meeting               FAA's
requirements.                 The detrimental                  impact           of project            delays            is clear:
projected           benefits           to the travelling                       public       and to FAA's work force
have been postponed.


         In past           reports         and testimonies,                     we have made recommendations
to improve           management               of ATC modernization.                           In particular,                   we have
recommended           that         FAA prioritize                its      modernization                projects              and
ensure       that     operational                  testing      be performed                  independent                 of system
developers.             This          would        provide      additional                assurance              that       the
system      procured           can function                  in FAA's day-to-day                     ATC environment.


         To FAA's credit,                     it    has begun to address                       our concerns.
Acknowledging               that       the NAS Plan no longer                            reflects          its      total         ATC
modernization               needs,         the      agency      recently            announced              it     was
developing           a more comprehensive                       program            entitled          the         Capital
Investment           Plan.          This       new effort              will       include       the     original               NAS
Plan     and other           projects              needed      for      adding           capacity,              satisfying
newly-identified                   requirements,               and sustaining                  existing             operations.
We believe           the     new Capital               Investment               Plan provides                   FAA with          the
opportunity           to address               our recommendation                        concerning              priorities,              as
well     as to consider                 ways of developing                       a measurement                   strategy          that
can clearly           show progress                  toward         meeting         established                  goals.



                                                                5
          This     is an important                point.           Since     the new plan             would
differentiate              between        projects          with        the ability            to sustain       the
existing         system        and those          needed to raise                  capacity,        the Congress
would       be in a better               position          to weigh         trade-offs           between       short-
term      and long-term             activities             and investments.                    An additional
encouraging            step      is the      recent         designation             of an Executive              Director
for      Acquisition           and his       role       in ensuring            that      independent
operational            testing         is performed              in the      future.


          An emerging            issue     in modernization                  that      bears       attention          is
FAA's       increasing           use of support              contractors.                FAA recently           awarded
a contract          to TRW Incorporated                     to assist          with      its     automation
effort.          Some of the types                  of tasks            TRW will       perform,         such as
testing       and evaluation,                parallel            tasks      in the contract                 of Martin
Marietta,         FAA's Systems              Engineering                and Integration             Contractor.
Specifically,            we are concerned                   about        how additional             players       will
affect       Martin      Marietta's           overall            role     in integrating              all
modernization            projects.            FAA officials                 told      us they       are reviewing
the use of support                 contractors.                  As part       of this          assessment,
defining         precise         roles     would      help        to avoid          overlapping
responsibilities                 and unnecessary                 costs.        Furthermore,            as we
recently         testified,            developing          in-house          systems           engineering
expertise         is an option             that      deserves            serious       consideration            in light
of the       ongoing          nature      of modernization.3


3Issues       Related to FM                   Modern&z t&on    f the Air0                        Tr affic      Control
System       (GAO/T-RCED-90-l:,                Feb. 27: ;9907.
                                                             6
Field        Imnlementation                    Staff      Needs Still             Unknown


           Field             implementation              is another            major      modernization                 issue      that
needs        further              attention.             FAA still        does not have'a                    handle        on the
number of staff                      needed to inst&ll                 and test           the       new equipment                and
train        controllers                 in its         operation,        nor has the                agency       provided
regions             with         an accurate            information            system         for    planning           such
activities.                      FAA has not           completed         its      assessment               of human resource
needs to bring                     modernization             equipment            on line.            It     has a draft
study        that            estimates         its     needs at one group                     of facilities,               Air
Route Traffic                     Control       Centers.          While         this      study       is still            in draft
form,        it      does suggest               substantial            shortfalls              of air        traffic
controllers,                   engineers,            and technicians--                 over     700 staff              years      in
fiscal            year        1991 and steadily                 increasing             to over        1,900       staff          years
in fiscal             year         1995.        Until       FAA estimates                and takes           action        to meet
its      total           field      resource           needs to implement                  ATC modernization
systems,             the       credibility             of existing             project         schedules          is highly
questionable.


          Last        year,         we also          reported         on the       inadequacy              of FAA's
information                   system,        which       caused       regions          to have difficulty                      being
ready       to receive                new equipment              because         of inaccurate                equipment
delivery             dates.4             Although         FAA is developing                    a new information


4Air      Traffic        .
                          Control:
                                .                FAA   ImDle                    ati n of Modernization
Froiects             in the Frela               (GAO;&ED-89%:                    Jhe 28, 1989).
                                                                  7
,




     system,      the      initiative         is behind           schedule            and may not be complete
     for   another         6 months.


               The need for         such accurate              planning              information        cannot         be
    overemphasized,               as evidenced          by a situation                  concerning            installation
    of a new instrument                   landing      system           at the Charlotte              Airport.
    Regional       officials            delayed      contracting               for     site    preparation             for    the
    new equipment            because        they     believed            the    information            system      did       not
    accurately          portray         the actual        status           of the vendor's              equipment
    delivery       plans.          Indeed,         although            the vendor         was 17 months behind
    schedule,        the     information            system        listed        equipment           delivery       as
    occurring        in January            1990.       However,            without        telling       the     region,
    FAA purchased            some equipment             through            other       means and some equipment
    was delivered            to the Charlotte              airport             in February           1990.        Since       the
    site   was not prepared                 to receive            the equipment,               it    has to be stored
    on-site.         FAA plans           to complete           installation               in late       June 1990.


    Work Force          Staffing         and Trainins             Problems


           Although          FAA is making             progress,            controller    and inspector
                                                                             .
    staffing       shortages            persist.        Last           January,    FAA estimated   it would
    fall   about        1,900      people      short     of its            1990 goal          of 12,725         full
    performance          controllers           and that           it     would not meet its                overall
    congressional            controller            mandate.             FAA's 1991 inspector                   work force
    will   be about          250 short         of about           3,000        needed.         Both of these
    estimates        may be off           target,       however.               The number of controllers

                                                              8
FAA actually                   needs cannot            be determined                     because,           after      3 years,
staffing            standards              are still         being              updated.           Additionally,              the
 inspector              shortage           may be greater                      because          FAA's staffing             standards
understate               the     number needed                   for         major     new inspection                 requirements.
                                                                                                                                               .

           FAA's maintenance                      technician                   shortage          is severe          and probably
will       get worse.               At the beginning                           of fiscal          year      1990,      FAA was
about           1,500      short       of the        10,000             technicians               it     needed.         Reaching
this       level        will       be difficult.                   First,             as we had reported,                   much of
the maintenance                    work      force         is within                 5 years           of retirement          age,        so
the     shortage            is likely             to worsen.5                    Second,          even if       FAA is able               to
hire      the       over       2,300        technicians                 it      says are needed by 1994,                          some
time      will       pass before              they         are         fully         experienced            because        3 to 5
years           are needed          for      new hires             to reach              full      performance             level.


          As part           of its         plan      to overcome                  staffing              shortages,         FAA began
paying           controllers,               inspectors,                 and maintenance                   technicians             an
incentive            allowance              of up to 20 percent                          in June 1989 to attract
people           to hard-to-staff                  facilities                   in the      Los Angeles,               Oakland,
Chicago,           and New York areas.                            FAA has paid                  about      $15 million              in
incentive            allowances              through         March 1990.                    While         the   overall           number
of employees               has slightly                increased                 at participating                   facilities,
results           so far        are mixed.                 For example,                 of the           9 participating                 ATC



5FmeStaffinq.                   Challenq               .              *
                                                                 an clng Shortaaes                        in the Maintenance
Work Force               (GAO/RCED-87eS37,                       ept. 25, 1987).
                                                                        9
 facilities,                 only     4 have shown an increase                                in the number of
experienced                  controllers.


           We believe                one of the most significant                                 issues        on the horizon,
which        could           have a major                impact          on the        controller          work force,
involves          plans             to consolidate                    188 terminal             radar      approach
facilities              into         at least            23 area            control       facilities.               We are
pleased          that         the     FAA Administrator                        plans      to revisit            this       issue.
Facility          consolidation                       and integration                  of technology              not      only
involves          funding             considerations                    but     also      the potential                 of affecting
controller              work         force        size,        training          requirements,                 and morale.
Consequently,                  FAA needs to thoroughly                                consider         these      matters          in its
decision-making                      process.


         Complicating                    its      staffing             problems,          FAA is        falling          short      in
its    training               efforts.                For example,              FAA may not             hire      all      of the         300
inspectors              it     intends.to                bring         on board         this     year      because          of its
inability            to train             them.              Part      of the problem               is that        the      FAA

Academy in Oklahoma                            City      does not have enough                       inspector
instructors.                   The demand for                       training          newly     hired     maintenance
technicians              will         also       outstrip              the Academy's             capacity          in 1991 and
1992 when hiring                      plans           call     for      about         900 new technicians.                       The
Academy can accommodate                                only         640 new hires              each year.               Training            .
air    traffic           controllers                   may also          be a problem.                  Last      year,      in
surveying          the         controllers,                   we found          that     they       were concerned                 with



                                                                       10
.




    the quality             of training                provided            to developmental             controllers.6-
    Training        areas       that          controllers              characterized             as inadequate
    included        using       back-up               systems,         controlling         traffic         in bad weather,
    and knowing             emergency            procedures.                  In response         to our findings,              FAA
    directed          its    facility            managers            to develop         corrective          action        plans.
    FAA headquarters               recently                  received         these    plans      from its       regions,
    and we intend             to review                FAA's actions.


              FAA has recognized                       its     training          deficiencies.            To address
    them,      FAA established                   an Office             of Training         and Higher          Education
    and developed             a comprehensive,                       $406 million,             B-year     training         plan.
    However,        30 of its                47 projects             are already         behind         schedule.          We
    believe        the plan        is off             track         because       FAA is       trying     to do too much
    with     the dollars           allocated.                   This        suggests     the need to establish
    priorities,             something           the agency has not done.


             I will         now provide               observations               from our work in highways.
                                                               i

    )IIGWAY ANT, RRIDGE NEEDS


             As the         Congress           deliberates              the      reauthorization            of federal-aid
    highway        programs,            it     will          face    difficult         decisions         on how to best
    spend available              federal              dollars         to meet enormous               highway        and
    bridge        needs.       In its           1989 biennial                 report     to the Congress,                 DOT


    6Aviation        Safety    Serious                        Problems Continue             to Trouble th Air
           .
                   Control work Force                         (GAO/RCED-89-112,             Apr. 21, 19897.
                                                                      11
.




    estimated             that     between         $25 billion            and $39 billion               would be needed
    each year             to     (1) maintain            the entire         federal-aid            highway          system--
    including             Interstate,            primary,          and secondary           roads--through                the
    year       2005 and (2) meet backlogged                              and accruing           bridge       replacement
    and rehabilitation                     needs.         The administration's                    fiscal        year     1991
    budget        estimates             that     the     federal         government        will        invest       $13.2
    billion.             We currently             have underway             a substantial                amount of work
    that       will      provide         the Congress            with      insights        on highway              funding
    mechanisms                and program         delivery          options.


               Today,          we want to call              to the Subcommittee's                      attention         the
    need to better                 ensure        that     Interstate           Resurfacing,             Restoration,
    Rehabilitation,                 and Reconstruction                    (4R) funds        will        be used to
    preserve           the       over    $100 billion            federal        investment             in the
    Interstate             system.             Although      the     Interstate          represents             only
    1 percent            of all         roads,      it    has assumed a vital                   role       in the nation's
    transportation                 network,         carrying         slightly         more than            20 percent          of
    vehicle           traffic.           Therefore,          preservation             of the       federal          investment
    in the        Interstate             must be ensured.


               Our concerns              are that         over     40 percent           of the         Interstate         is in
    barely        tolerable             or worse condition,                 and some states                 are not
    meeting           their       maintenance            responsibilities               because         of inadequate
    funding.             Although         not eligible             for     4R funding,            certain        types        of
    state       maintenance              activities          can extend           the    life      of pavement            and
    reduce        or defer          federal         4R funding.             Further,        DOT projects               that

                                                                   12
about       50 percent            of the annual                   federal           Interstate             preservation
funding        will      be used for                 Interstate             widening             activities.             This         is a
significant             increase             over      the historical                    share      of the       4R funding
devoted        to widening--                 only      1 percent            in fiscal             year        1981 and 13
percent        in fiscal              year     1989.                   '


           Currently,           the     federal             government             pays for              Interstate
preservation             activities                 that     extend         pavement             life,        but does not pay
for    routine         maintenance                  activities             such as sealing                    pavement        cracks
and joints.              These activities,                        which       are states'                 responsibilities,
can also         extend         the     life         of pavements                 by slowing              deterioration.
Maintenance            has been shown to be cost-effective,                                               and can defer
capital-intensive                  types        of preservation                      activities               funded     by the
federal        government.


           Our work       indicates             that         states'         progress             in maintaining                the
Interstate            has been mixed.                       Some states              are     not performing
adequate         Interstate             maintenance                because           of insufficient                   funding.
For example,             in Louisiana,                     because         of inadequate                  maintenance,            the
Federal       Highway           Administration                    suspended              approvals           of certain
project       agreements              and authorizations.                           Responding               to the
threatened            cutoff       of funds,                the    state          took     steps          to increase           its
funding       of maintenance.                        In addition,                 while     California                has been
able       to meet its           maintenance                 needs,         its      future         ability           to do so may
be jeopardized                 by rising            maintenance              costs.
       I

                                                                  13
.
             According                 to DOT's biennial                    report          to the Congress,                funding
    requirements                 for         the      4R program        significantly                    exceed the current
    funding            level      of $2.8 billion                     per year.                 DOT estimates           that      the
    Interstate             preservation                   program       will            need federal            and state         funds
    totalling             $4.7 billion                   to $6.1 billion                  annually          through        the year
    2005.         If     the      federal             cost-share            remains             at 90 percent,             the
    required            annual          federal           investment           will         be between           $4.2 billion             and
    $5.5     billion            per year.

                                                                                    .
             In 1981,             the         scope of the             Interstate                4R program          was
    significantly                 broadened               to allow          funding             for     reconstruction,
    including            lane          widening.             Although          major            lane     widening       was not
    initial.ly           expected               to be a major            component                    of the    4R program,
    states       have increasingly                         used 4R funds                  to widen the             Interstate           in
    response            to worsening                  congestion.              If        this     trend        continues,         the     4R
    program        will         change             from primarily              a pavement                preservation            program
    to one that                includes             a large        widening              element.          About      50 percent             of
    DOT's estimate                     for      the      Interstate          preservation                 program       will      be used
    for     widening.                  The other           half       would go primarily                       to preserve
    existing           pavement.


             In light             of the            significant          level            of pavement            deterioration
    and some states'                         inability        to adequately                     fund maintenance,                program
    modifications                 are needed to ensure                         that         federal        dollars         are more
    effectively                targeted            to activities               that        extend         and preserve            the
    life,    of the            Interstate                system.        Therefore,                as the Congress

                                                                       14
deliberates            the    future          of federal-aid                  highway      programs,            it     may
wish       to consider          targeting           funding            to encourage          states           to address
maintenance            activities             directed         at preserving               the     Interstate.                 One
option       might       include       varying           the        federal      cost      share      to emphasize
the       importance         of preservation               activities.7


           Now let       us turn       to Amtrak.


                 OF AMTRAK'S FINANCIAL NREDS


           The National            Railroad        Passenger                Corporation--commonly                      known as
Amtrak--will            need continued               federal               support      to sustain            its      present
passenger        train        operations           for     the         foreseeable          future.             This        is so
despite       Amtrak's         steadily          decreasing                 need for       federal        subsidies.
Today,       federal         subsidies          cover      about            28 percent       of Amtrak's                   $2.2
billion       in operating             costs;        8 years               ago the      subsidy       was 52 percent.
Although        the     funding        situation           has improved,                 Amtrak       still          requires
assistance.


          The Administration's                   .fiscal        year         1991 budget          request            does not
reflect       this      reality:         it     does not             request         any funding          for        Amtrak.
As a result,           Amtrak        has submitted                   its     annual      budget       request
directly       to the         Congress.            This        request          includes         $495 million                 in
subsidies        to cover           operating            losses            and $188 million             for         capital


7Preservina           the     Interstate           System            (GAO/T-RCED-90-68,                Apr.          24,
1990).
                                                               15
assistance            in fiscal                 year      1991.          Furthermore,               Amtrak             estimates            that
in the           5-year      period             from 1989'to               1993,      it     will     need about
$2.5      billion           to cover             its      projected             operating           losses             and $1.2
billion           to replace                 aging      equipment              and improve           track.               Amtrak        is
considering                federal,             stat&,       private,             and internal              sources              to
fulfill           these      needs.


          Despite           earlier            predictions,                Amtrak      has not been able                          to
generate           enough         revenues              from its           own operations                  to meet its                 needs.
Amtrak       officials                 had said           earlier          that     beginning              in 1985,              income
from the Revenue Enhancement                                     Program would               cover         its         capital
needs.           Revenues              for     this       program          are generated              through              activities
such as track                welding             for      commuter             railroads        and real                estate
projects.            We recently                     reported           that      Amtrak      earned             a total          of
$140.9       million             between             1984 and 1988 from its                         Revenue Enhancement
Program.8                 This         income-- which               is approximately                  $28 million                     per
year--did           not      substantially                   contribute             to reducing                  Amtrak's             federal
subsidy          of $3 billion                   during          that     period,          although              it     provided
about       38 percent                 of its          capital          needs.        The program                     is expected            to
generate           about         $165.2          million          in income during                   the         next      5 years.
This      will      fall         far         short      of covering               Amtrak's          operating              losses           and
capital          needs.




8mtrak     Ilimited                     Income From the Revenue Enhancement                                             Proaram
(GAO,RC;D-90-76,                       Feb. 1, 1990).
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          The cost        of meeting            transportation              needs       is staggering               and is
certain       to exceed          the     level      of.federal             funding       being      'programmed.
The administration                  is cognizant            of that          fact     and has proposed                 a
major      shift       of the burden             to pay for           such needs to the                    states      and
localities,            especially         in the          surface         transportation             and airport
areas.        However,         in light          of continuing              budget       constraints,               there
is an urgent            need to ensure              that        federal       transportation                dollars         are
well      spent.        We believe          establishing              goals         and priorities               can help
in that       regard.            This     would       allow       better       understanding                of DOT's
trade-offs           of enhancing           safety,         preserving              investments            and
expanding           capacity      before         costly       projects         are undertaken.                    On
several       occasions,          we have recommended                      this-strategy             for     FAA's air
traffic       modernization              program.           In our opinion,                other      major
investment           decisions          in transportation,                  such as how to balance
pavement       preservation              with     widening          of Interstate            highways,              and how
rail      service       should      be improved,              would        benefit       from setting               goals
and priorities.


          Mr. Chairman,           this     concludes            my prepared            statement.                I would
be glad       to answer          any questions              you or Subcommittee                    members may
have at this           time.




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