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resents 17 percent or about $1 trillion of our gross domestic product. The capital stock of our infrastructure is valued at $1.4 trillion. This is a very important investment that we have made as a Nation and one that this administration wants to continue to support.

The result of the 1995 budget request is to set unprecedented levels of support for transportation in our country. The budget that we are recommending is about investment-in our economy, in jobs, in infrastructure, in safety and technology. The challenge that we had in putting this budget together was to deal with the budget caps that we had agreed to meet. The bottom line is that our request is for $39.7 billion in appropriations and obligation limitations for the programs administered by the Department.

I see Gene has already put up these very nice charts that we have with us.

Let me first describe the process that we used in putting the budget together. First, I asked each of the administrators and assistant secretaries to review their budgets from bottom up and eliminate programs that were no longer essential, cut back in areas that were no longer critical, and then to preserve the very fundamental mission of the Department. By doing that, we did cut some programs, we are happy to discuss those. We are terminating some programs. But we also preserved a strong and growing budget for our infrastructure, for research and development, to keep American goods and people moving efficiently, and to address our future environmental concerns.

DOT STRATEGIC PLAN

The process that we used, Mr. Chairman, was to make every effort to get our budget to reflect our goals. We developed this sevenpoint strategic plan for the Department some time ago. It is not enough to develop a strategic plan if you can't get your budget to reflect that plan and allow you to implement it. So we have tried to shift priorities in the 1995 budget to reflect the priorities that we identified here.

Let me just quickly refer to them.

The first was to create a truly intermodal system, one that ties America together, that ties all of the modes of transportation that we have in the country together into a unified national transportation system. To do that, however, we assume that all of the modes of that transportation system are healthy. The fact is they

are not.

There are three in particular where we have decided that unless we make substantial investments and make them financially healthy, strong and competitive, we could not then have a national transportation system. Those three are aviation, the maritime industry, and passenger rail. This budget reflects investment in those three industries.

In aviation, we are requesting a 7 percent increase to about $2.3 billion for facilities and equipment and keeping the AIP grant program at about $1.69 million. As you know, we are at work on an Air Traffic Control private corporation concept. It is not reflected

At this point we don't think it will have a 1995 budget impact, but it might. But thus far we think that that proposal would take time to implement.

The maritime industry is very critical to our national security and our global competitiveness. So we are proposing a $1 billion, 10-year maritime security program which will allow us to make payments to our maritime fleet. It will be funded by an increase in the tonnage fee. The payments are about $2.5 million per vessel for the first three years. That drops down to about $2 million per vessel. That will help us keep alive about 52 ships under the U.S. flag.

In addition to our maritime security proposal, we are investing in shipbuilding. Given last year's commitment and this year's budget request, we will be able to leverage through loans about $1.5 billion in new ship construction in the United States, which is very important to that industry.

The third component is passenger rail. Obviously, the strongest passenger rail system we have in the country today is Amtrak. We are proposing a 15 percent increase in Amtrak operating and capital assistance to about $788 million.

In addition, we want to continue to support the Northeast Corridor Improvement Program at about $200 million. And we are also proposing a $32.5 million program for high-speed rail, which I will talk about in a second.

Our second goal is to continue to invest in infrastructure. As you know, Mr. Chairman, almost half of the departments in the government were cut; the others were subject to some increases. The President made a decision that investment in infrastructure, in particular transportation infrastructure, was going to be a priority for this administration, and it is reflected in this budget.

We want to continue to grow in this area, particularly with highway funds which are provided to the States. We want to get to a level of about $28.2 billion for total infrastructure.

The amount of the 1995 budget that goes to direct investment in infrastructure is 71 percent of our total budget. Interestingly, what we invest in DOT in transporation infrastructure also represents about 83 percent of the total Federal Government's investment in infrastructure. Normally, you hear references to other areas of investment for infrastructure, but when you get down to where the predominant portion of infrastructure investment comes, it comes in the area of transportation.

With respect to ISTEA, we are recommending that we fully fund the key programs of ISTEA. When we talk about full funding, Mr. Chairman, I must say that there has been a very legitimate difference in definition, I guess is the best way to put it, of what we mean by full funding.

What we mean by full funding is fully funding the primary formula programs of ISTEA that effect every State and every transit system in America. That means the core highway grants, we would like them to be $18.3 billion, up 4 percent over 1994; and the mass transit formula grants, an increase of 19 percent over 1994.

We are recommending in the transit area a 25 percent reduction in operating funds, but again, our formula capital investment in transit increases by 40 percent. And I am happy to talk about that

in response to questions, but generally speaking we have made the decision that it is more strategic from our perspective to invest on the capital side as opposed to the operating side.

Let me just say on that point, Mr. Chairman, because there has been a lot of discussion about this, that every transit agency in America will receive more money for transit than they ever have before under this budget. No agency will receive a reduction in transit funding.

So when you hear from some individuals who are concerned about the reduction in operating assistance, I want to emphasize that the increase in capital funding is far in excess of the reductions in operating. On average, every transit agency in America will receive about a 19 percent increase in new transit formula funds. And we are hopeful that they can make adjustments in response to the recommendation we are making to reduce operating assistance by 25 percent.

Overall, this budget will fund about 94 percent of ISTEA compared to 1993, where we only had 81 percent funding. This means that States and local governments will have about $3.6 billion more to spend on highways and transit than they did in 1993.

Our third goal in our strategic plan is to invest in new technology. We have proposed a significant increase in research and development. Overall we are now looking at $2.7 billion spent on transportation-related R&D. We want an increase of 14 percent to $692 million for DOT under this particular budget.

Examples of what we want to do in new technologies is more investment in intelligent vehicle highway systems, more support of the global satellite system, which we are trying to accelerate to bring it in use much more quickly than we had originally anticipated, and thirdly, getting back to my reference to high-speed rail, we want to continue that program moving forward.

I must say, Mr. Chairman and Members, some of you know that I was hopeful that we would get more funds for high-speed rail. We were not able to do that. But we want to continue the work. Our work there will be in three areas.

Number one, focusing on technology, such as electric locomotives and new crossing improvements. Second, conducting a commercial feasibility study, which is actually required by ISTEA, but for whatever reason the Department had not done and third, working closely with Amtrak in developing next generation technology. So that is our general investment strategy in terms of technology.

Our fourth goal is to continue to work on safe and secure transportation. Our funding level in the area of safety is maintained at about $1.9 billion. We want to increase our Motor Carrier Safety Grants to the ISTEA level of $83 million. We want to reduce motor vehicle injuries because they are also a public health concern. We are beginning to observe that in addition to the loss of life and injuries, the problems on our highways generate about $3.7 billion per year in Federal medicare and medicaid costs, and about $14.2 billion in a year in total health care costs.

So there is a health care component to what we do in the area of safety that we hadn't thought about before or at least hadn't em

We are also making security a new emphasis in the Department in light of recent situations in our country. We think it is important that we focus on security issues.

As respect the Coast Guard, we want to increase funding by about 4 percent. As you know, Mr. Chairman, and Members, there are other areas where we have taken action to improve safety, primarily in the drug and alcohol area where we recently issued some rules there.

Our fifth goal is to enhance the environment. That has a number of components to it. Number one, cleaning up our own operations in DOT. We have our own facilities which have environmental problems.

We are recommending $519 million to clean up our own facilities, for marine environmental protection and for noise mitigation.

We also want to work on congestion mitigation. We know that in the 50 largest cities in the country, about $39 billion a year is wasted on fuel costs and lost time and of course damage to the environment. So we want to support the congestion mitigation highway funds authorized by ISTEA. We also propose something new, and that is to require that 10 percent of the formula transit capital grants that go to all of the cities, about $265 million, be used to support congestion mitigation efforts. We think that is a very high priority for our country. Having just spent a lot of time in Los Angeles, I can tell you that.

Our sixth goal is to make transportation relevant and accessible to users. This may sound like a very simple concept, but we have observed in the past that investments made in the area of transportation have not been friendly to neighborhoods, and have not taken into account user friendly aspects of those investments. We want to change that to ensure that transportation investments truly improve the quality of life for people throughout communities. For example, the increased funds that we are proposing for transit capital will allow transit agencies to comply with the Americans With Disabilities Act. This has been a concern raised by a number of transit agencies.

We want to increase funds for transportation planning so that people can plan more thoughtfully. We want to provide $30 million for a program we are calling the Livable Communities Program, which is to find way to assist communities as they make investments to integrate transit into the entire neighborhood.

For example, in Oakland, a community there wants to connect a series of neighborhood businesses that are about a block away from the transit stop to integrate shopping with the transit stop. There is also a health care facility about a block-and-a-half away. We have not thought about how to integrate all of those activities around transit stops. This program is an effort to give people an incentive to think more carefully about how to do that.

The last effort is transforming the Department of Transportation itself. As you know, we are very committed to reforming this government. The Vice President and the National Performance Review effort asked all of us to think about programs that we ought to terminate, things that we ought to do differently, and we are no different from other departments.

So in our budget we are recommending things like increasing fees for FAA inspection of foreign repair facilities. We felt that those fees had not been kept up to pace.

We are also asking that we reconsider old programs like the Essential Air Service. It is very important to communities that are isolated from airports. But over time, we have seen that we are funding some of these cities substantially with very high subsidies, over $200 per passenger, and communities less than 70 miles from an airport-where we think they can drive to that airport and take advantage of that service we have been subsidizing them also.

We have had to take a hard look at the essential air service and say we have to make changes there. The same is true with the Local Rail Freight Assistance Program, a program that was started 20 or 30 years ago at the time when the industry was hurting financially. We have now recognized that things have changed and that is a program that we ought to terminate. Very difficult decisions, but again, I think the American people expect us to make those kind of tough decisions.

We are also committed to making tough decisions as respects our civilian employment. Our effort right now will achieve a 12 percent reduction by 1999. We will have a 5 percent reduction from 1993 enacted levels by the end of 1995, and we are actually ahead of our projections in that area. To help us reduce employment, we need the buy-out legislation which has been proposed so that we can do it thoughtfully and strategically and not through the RIFS of times past. RIFS have not been very helpful in getting to the objectives we are trying to reach.

We are going to streamline the bureaucracy, make cuts where necessary and respond to the requests to transform the Department of Transportation.

Mr. Chairman, that summarizes my opening comments. I have been rather general in my presentation; I am happy to add many more specifics to this.

It was a tough budget. We did come out with some support compared to other departments, and I think it reflects the President's commitment to invest in infrastructure and in transportation technology for the country.

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