OPENING STATEMENT OF THE HONORABLE FEDERICO PEÑA
SECRETARY OF TRANSPORTATION

BEFORE THE HOUSE APPROPRIATIONS SUBCOMMITTEE ON TRANSPORTATION
FEBRUARY 23, 1994

Mr. Chairman and members of the Subcommittee, I am pleased to appear before you to discuss the Department's budget request for Fiscal Year 1995. I would like to take this opportunity to thank the Subcommittee for the very fast response to the emergency requirements facing Los Angeles after the earthquake.

I give you my assurance that DOT will work closely with California to ensure prompt rebuilding.

I would like to take this opportunity to explain how we approached the FY 1995 budget and the priorities that shape our budget request.

We have always been a nation in motion. Americans have moved farther, gone faster, and made more progress in our short history than any other country on earth. Together, the transportation industry represents 17 percent, or about $1 trillion, of our Gross Domestic Product. The capital stock of our transportation infrastructure is valued at over $1.4 trillion. As we approach the next century, our transportation system remains critical to the well-being of this nation.

This budget recognizes the importance of transportation to our economy. Several months ago, the President sat down with his Cabinet and senior advisors to begin putting this budget together. When I met with him, the President and I talked about the role of transportation investment in our economy:

about the nearly 25,000 quality jobs supported by every $1 billion investment in transportation infrastructure;

O about the critical role that transportation plays in
local and regional economic development; and

O about the important public commitment of stewardship and fiduciary responsibility to maintain our infrastructure. The result is a budget for 1995 that sets unprecedented levels for transportation investment in this country. This budget is about investment in jobs, infrastructure, safety, technology and most importantly in America's competitive future.

The Challenge

We had to provide for DOT's key investment priorities while

TOTAL DOT-WIDE BUDGET

RESOURCES ($ BILLIONS)

NOTE: "Budget Resources" Includes Appropriations, Obligation Limitations, and Exemptions

meeting budget targets, and achieving our deficit reduction goals. This is the first time discretionary spending in the Federal Budget has been capped at zero growth. Hence, we faced tough choices in formulating this budget.

The Bottom Line

We are asking Congress to provide $39.7 billion in appropriations and obligation limitations for programs administered by the Department of Transportation. This is about a 2 percent increase, $800 million more than the levels enacted in the regular DOT Appropriations Act for FY 1994.

The President made tough choices, and a key priority of his was to invest in transportation infrastructure because it helps grow the economy and create jobs. Moreover, the Department has a public commitment of stewardship, and fiduciary responsibility, to maintain the nation's infrastructure. As an example in the highway area alone, FHWA estimates that about 25 percent of our major highways have poor or mediocre pavement, which increases vehicle operating costs and congestion. Similarly, 20 percent of the highway bridges are rated as structurally deficient. Deferring rehabilitation or reconstruction increases the cost and time required to rebuild.

The Process We Followed

I began the FY 1995 budget process by asking each Administrator
and each Assistant Secretary to do a thorough "bottom-up" review
to:
O cut back wherever possible

eliminate activities we no longer need to do, and
preserve what is essential to DOT's mission.

Our tough budget process has resulted in a number of program cuts
and terminations but it has also preserved a strong and growing
budget for infrastructure, and R&D which will keep American goods
and people moving efficiently, address environmental concerns,
and move our transportation system toward the 21st century.

DOT Strategic Plan

DOT's new Strategic Plan, which we recently completed, provides the framework for this budget. I would like to explain how the budget supports the seven goals set out in our Plan.

GOAL 1: Tie America Together:

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The first goal in our plan is to develop an effective intermodal transportation system to help us meet the challenges of the 21st century global economy by enhancing all our different modes of transportation and their links, allowing all of us to travel at lower cost and with fewer delays. This will involve the development of a National Transportation System (NTS) involving all modes, which is built upon the model of the National Highway System (NHS) we recently announced. The NTS will include components from aviation, highways, intercity bus, intermodal terminals, pipelines, ports and waterways, public transit and railroads. It will be developed in cooperation with transportation industries, users, State and local governments, and others affected by transportation services and facilities. The Department will ask those parties, through an outreach effort, to share the insights that they have developed through their ongoing planning and operational experience.

In this budget we are focusing on three modes that need strengthening to be effective players in our emerging intermodal system: the aviation industry, maritime industries and passenger rail service.

For aviation, we propose a 7 percent increase to $2.3 billion for Facilities and Equipment, for major projects to improve and modernize air traffic control systems, such as radars and landing and navigation aids. We also request level funding for Airport Improvement grants at $1.69 billion to address the capacity, efficiency and safety of our aviation system. AIP grants fund major projects, such as construction and rehabilitation of runways, taxiways, and apron areas.

While the budget does not reflect our proposal to create an Air Traffic Control (ATC) corporation, we are actively working to develop a proposal for consideration later this year. As the Committee knows, FAA's air traffic control system is a unique entity within the government. It is an operational organization, up and running 24 hours a day, 365 days a year. It is also the only government entity upon which an entire industry is wholly dependent. Put simply, without air traffic control, there is no airline service.

Bound by the federal personnel, procurement, and budgetary constraints as it is today, the air traffic control system simply cannot function as safely, efficiently, and cost-effectively as it should. Restructuring the system into a government corporation can address those problems. As we put together our detailed proposal, we look forward to working with the Committee to make the air traffic control system work better and cost less.