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S. HRG. 113–590 

NEW ROUTES FOR FUNDING AND 

FINANCING HIGHWAYS AND TRANSIT 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 6, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JOSHUA SHEINKMAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee on 

Finance .................................................................................................................. 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

CONGRESSIONAL WITNESS 

Boxer, Hon. Barbara, a U.S. Senator from California .......................................... 5 

WITNESSES 

Kile, Joseph, Ph.D., Assistant Director for Microeconomic Studies, Congressional Budget Office, Washington, DC ............................................................... 9 

Layne, Hon. Aubrey L., Jr., Secretary of Transportation, Commonwealth of 

Virginia, Richmond, VA ....................................................................................... 10 

Dhru, Jayan, senior managing director, corporate and infrastructure ratings, 

Standard and Poor’s Ratings Services, New York, NY ..................................... 12 

Barend, Samara, senior vice president, AECOM Capital, New York, NY .......... 14 

Edwards, Chris, director of tax policy studies, Cato Institute, Washington, 

DC .......................................................................................................................... 16

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Barend, Samara: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 41 

Responses to questions from committee members ......................................... 50 

Boxer, Hon. Barbara: 

Testimony .......................................................................................................... 5 

Prepared statement with attachment ............................................................. 57 

Dhru, Jayan: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 61 

Responses to questions from committee members ......................................... 66 

Edwards, Chris: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 69 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement with attachment ............................................................. 81 

Kile, Joseph, Ph.D.: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 84 

Responses to questions from committee members ......................................... 104 

Layne, Hon. Aubrey L., Jr.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 107 

Wyden, Hon. Ron: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 117 

COMMUNICATION

Adams, Travis et al. ................................................................................................ 119 

(1) 

NEW ROUTES FOR FUNDING AND 

FINANCING HIGHWAYS AND TRANSIT 

TUESDAY, MAY 6, 2014 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:07 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Ron Wyden 

(chairman of the committee) presiding. 

Present: Senators Rockefeller, Stabenow, Nelson, Menendez, Carper, Cardin, Bennet, Casey, Warner, Hatch, Grassley, Crapo, 

Thune, and Isakson. 

Also present: Democratic Staff: Joshua Sheinkman, Staff Director; Michael Evans, General Counsel; Todd Metcalf, Chief Tax 

Counsel; Ryan Abraham, Senior Tax and Energy Counsel; and 

Todd Wooten, Senior Tax and Energy Counsel. Republican Staff: 

Chris Campbell, Staff Director; Tony Coughlan, Tax Counsel; Jeff 

Wrase, Chief Economist; and Nicholas Wyatt, Tax and Nominations Professional Staff Member. 

OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR 

FROM OREGON, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The Finance Committee will come to order. The 

Finance Committee is here today to discuss how to meet the country’s extraordinary need for investment in roads and highways and 

other infrastructure projects. 

My bottom line is, you cannot have a Big League quality of life, 

and you certainly cannot have Big League economic growth, with 

Little League infrastructure. The status of our roads and highways 

affects all Americans, from commuters to exporters to rural Americans who drive long distances for just about everything. And, in the 

global competition for investment in jobs, the condition of our infrastructure is a major determinant of how the outcome plays out. 

By any calculus, our investments in infrastructure lag way behind the competition. China, for example, invests 8.5 percent of its 

gross domestic product in infrastructure, and in some parts of Canada, they invest 10 percent. The U.S. invests only 1.7 percent. No 

American can be happy with the prospect that it is easier to move 

goods from a Chinese factory to a Chinese port than from an American factory to an American port. That is what is at risk here. 

The American Society of Civil Engineers, the trusted gurus, so 

to speak, of infrastructure, write an annual report card that grades 

our country’s roads and highways. In 2013, we earned a D-plus, not 

exactly anybody’s definition of success. The report found that nearVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
2 

ly a third of our roads are in disrepair, and nearly half of our highways around cities suffer from congestion. Americans waste millions of hours and more than a billion gallons of gasoline sitting in 

traffic every year. That is what has to change. 

Now, there are two priorities to consider. The first is reauthorizing and fixing the Highway Trust Fund, which feeds money into 

transportation projects. Unfortunately, it has less money coming in 

than it has going out. Fixing it in the short term will require $10 

billion to keep the fund solvent through the calendar year. Getting 

through fiscal year 2015 will take another $8 billion. 

What happens if the authorization expires, or the fund dries up? 

According to one report, 6,000 projects grind to a halt, putting 

many thousands of construction workers out of a job and causing 

headaches, what I call ‘‘traffic migraines,’’ from one end of the 

country to the other. 

Then for the longer term, Congress needs to find a sustainable 

source of funds that will keep this crunch from happening again. 

It would be a tragic mistake to let highway funding become another stop-and-go extender like Medicare physician payments and 

many other important tax incentives have been. Relying on shortterm policies, emergency patches, and temporary extensions makes 

forward-looking strategies impossible. And when it comes to infrastructure, our business community advises that planning ahead is 

absolutely essential. 

Some proposals offered over the last few months, like using new 

tolls on existing roads, or charging motorists based on the number 

of miles they drive, in my view raise questions about privacy and 

feasibility that would need to be answered. We are going to examine them thoroughly. It is going to take $100 billion just to keep the Highway Trust 

Fund solvent for 6 years. Meeting that bar will give the States a 

chance to think ahead, and construction workers will not have to 

worry about being laid off because of Washington inaction. And 

while the Congress develops fresh, long-term policies for the trust 

fund, it should also consider ways to encourage Americans to use 

the cleanest and most efficient fuels. But we ought to face it. Fixing 

the trust fund is just the bare minimum in terms of the investment 

needed. It is time to aim higher and to do it on a bipartisan basis. 

That is where the second priority comes in: getting private capital off the sidelines and into this effort. There are a whole host of 

innovative proposals. I see Senator Warner is here, and Senator 

Blunt, Senator Bennet, Senator Schumer, a number of my colleagues, have bipartisan proposals for the long term. And the only 

place you have to look to find proof that you can get private capital 

off the sidelines is the Build America Bonds program. The Build 

America Bonds program had been proposed by Democrats and Republicans for years and years when it was finally included in the 

Economic Recovery Act. 

In this very hearing room, colleagues, Senators hoped—we 

hoped—that it might generate $5 to $10 billion worth of infrastructure projects over its lifetime. By the time the Recovery Act period 

was over, Build America Bonds had helped to finance more than 

$180 billion worth of projects in my home State and from one end 

of America to another. 

3 

* For more information, see also, ‘‘Overview of Selected Tax Provisions Relating to the Financing of Surface Transportation Infrastructure,’’Joint Committee on Taxation staff report, May 5, 

2014 (JCX–49–14),https://www.jct.gov/publications.html?func=startdown&id=4599. 

So the lesson is clear. There are hundreds of billions of dollars 

in private capital sitting on the American sidelines. Some of that 

can surely be invested in American infrastructure. So I would like 

to aim higher and do everything possible to build a bipartisan coalition for policies that generate $1 trillion in American infrastructure. 

From a purely commercial standpoint, investing that capital in 

critical American infrastructure projects certainly has the potential 

to be more profitable and improve more lives than a number of the 

alternatives. It is important not to punt investments further into 

the future. Maintaining a good-quality road is cheaper than rebuilding a failing one, especially—especially—while interest rates 

are low. And it is tougher to invest in new transportation projects 

if the country’s roads and highways are falling into disrepair. The 

price tag for a strong national infrastructure is only going to grow 

in the future, so it is time to get to work.* 

[The prepared statement of Chairman Wyden appears in the appendix.] 

The CHAIRMAN. Finally, before I recognize Senator Hatch and introduce our colleague, the chair of the Environment and Public 

Works Committee, who has been a passionate advocate for transportation, fortunately, I want to take a moment to recognize the 

unfortunate passing of our former colleague, Jim Oberstar. Jim 

Oberstar spent his entire career working on transportation policy, 

first as a staffer who worked on the legislation that created the Department of Transportation in the 1960s, then during the years 

that he represented Minnesota’s 8th district for more than 3 decades in the House. He was a titan of transportation policy, especially in aviation. All who fly in America should be grateful to Jim 

Oberstar, and I would just like to say, because I think some colleagues did not get to serve with him, I did not get a chance to 

serve with anyone more decent and caring than the late Congressman Jim Oberstar, and I just wanted to recognize his passing this 

morning. 

Senator Hatch? 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman. I share your 

viewpoint with regard to Jim Oberstar. He was a fine, fine man 

and a great member of Congress. 

I thank you for holding this hearing. I also want to thank the 

chair of the Senate Committee on Environment and Public Works, 

Senator Boxer, for joining us today. Welcome. We are grateful to 

have you and your advice. 

I think we can all agree that a long-term surface transportation 

reauthorization is an important goal, most notably because it will 

allow States to plan for the long term when it comes to funding infrastructure programs. However, the old admonition that there is 

no such thing as a free lunch still holds, which is why this hearing 

is so important. 

4 

According to current estimates, the Highway Trust Fund will be 

unable to meet obligations sometime this summer. This is the result of what is becoming a longstanding problem when outlays from 

the trust fund are greater than the receipts from the dedicated 

Federal excise taxes. 

When it comes to paying for all or some of the highway bill, a 

number of ideas have been floated, some good, some bad. One of 

the ideas I have heard most often is the proposal to raise revenue 

by taxing overseas earnings of U.S. global corporations. Now, this 

idea, sometimes referred to as ‘‘the repatriation proposal,’’ is, in my 

view, not a very good one. 

As we all know, under current law the U.S. defers taxes on earnings companies make overseas until the money is brought back into 

the country. And because the U.S. has the highest corporate tax 

rate in the developed world, many companies prefer to keep their 

money offshore for long periods of time. We simply have to attack 

that problem. Some have suggested that we change the rules of 

international taxation in order to immediately subject those funds 

to U.S. taxes so that we can use the revenue to, among other 

things, shore up the Highway Trust Fund. 

Make no mistake. I believe we should have a robust discussion 

as to how our tax system should deal with overseas earnings. However, given the economic implications of any changes to this system, that discussion should take place in the context of a broader 

debate about tax reform, not as a part of an ad hoc effort to pay 

for a highway bill. 

Now, I hope that today’s discussion does not simply devolve into 

a debate about the wisdom of the repatriation proposal. That said, 

we do face a near-term problem in that reimbursements to the 

States will likely be impacted if the trust fund is not shored up in 

the very near future. Neither the chairman nor I wants to see a 

slowdown in payments. Let us keep in mind that, however we deal 

with the immediate shortfall in the Highway Trust Fund, the longterm funding problem will still loom before us. 

I am more than willing to have a discussion about long-term financing options such as bond proposals and public-private partnerships, but we should remember that, in this committee, we are 

dealing with a funding problem more than a financing problem 

with a system that was created based on a user-pays model, where 

certain Federal excise taxes, such as the gas tax, were intended to 

serve as proxies for use of certain resources, such as the Federal 

highway system. Personally, I would like to preserve the user-pays 

system and prevent our Federal infrastructure programs from becoming another tax extender, dependent every year or two on an 

infusion of cash from the general fund of the Treasury. 

In addition, while it is wholly appropriate and necessary for us 

to thoroughly examine the revenue side of the funding equation, we 

should also have a complete examination of the spending side. 

Since its inception in the 1950s, the Highway Trust Fund has been 

called upon to fund an increasingly broad scope of activities, such 

as bike paths and other so-called enhancements, in quotes. Additionally, there are many requirements and regulations that increase the costs of Federal highway projects. So, if we are going to 

5 

talk about revenues, we should also talk about reforms that will 

address costs as well as outlays. 

Now, Mr. Chairman, I look forward to working with you to examine the short- and long-term issues we face when dealing with this 

important part of our infrastructure. And I look forward to working 

with our other colleagues on this committee and throughout the 

Senate as well and having a robust discussion of all of these issues 

during today’s hearing. 

I want to thank you again, Mr. Chairman, for holding this hearing. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. Thank you, Senator Hatch. And we are going to 

be working on this in a bipartisan fashion, and we are going to 

work with the Environment and Public Works Committee in a bipartisan way. 

I am very pleased that the chair of the committee, Senator 

Boxer, is here, and I just would like to note that virtually every 

time that Senator Boxer and I have talked about this over the 

years, initially with Jim Inhofe but now with Dave Vitter, Senator 

Boxer has emphasized how important it is that these issues are addressed in a bipartisan way. 

So we welcome the chair of the Environment and Public Works 

Committee. We will make your prepared remarks a part of the 

record, and you may proceed as you like. 

STATEMENT OF HON. BARBARA BOXER, 

A U.S. SENATOR FROM CALIFORNIA 

Senator BOXER. Thank you. Senators, thank you. All my friends, 

I am just so happy to be here, and I want to talk to you straight 

from the heart and straight from the shoulder, because where we 

are is in a very difficult place. And, if we are going to succeed, Mr. 

Chairman and Ranking Member, you are both right in that we 

have to examine everything. We have to do it in a bipartisan way. 

People who travel on the roads, people who cross the bridges, every 

political party—this is something that must bring us together. 

I want to say, first of all—because you know how I am, very direct—I think a short-term extension really leads to a major problem. It extends uncertainty. And uncertainty is a death knell for 

our States. So whatever you do—and I know how hard it is—we 

really need to push for a multi-year solution. 

I come here in friendship. I want you to know that Senator Vitter 

and I have—I know how Senator Vitter and I argue on the environment issues, but on public works we have been joined at the hip. 

We, our Big Four—along with Senators Carper and Barasso—have 

agreed in principle on a highway bill, and we are closing it out 

today, and we should mark it up next week. And I want to say, 

particularly to Senator Hatch, it includes reforms. So did MAP–21. 

And believe me, we all came away a little bruised and battered because we had to make these compromises. But we did it. 

Our bill will be based on current levels plus inflation. So, Senator 

Wyden, I know your vision, which I share, is for a much larger look 

at this. But our committee, in order to just save the Highway Trust 

Fund, has come up with a proposal that is based on current spendVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
6 

ing plus inflation. Also, we move around some funds within. Considering what Senator Hatch said, there are some things we think 

we can move away. And we came up with some good funds to do 

some interesting things. 

Now, I just want you all to know this very straightforwardly: the 

trust fund runs out of money in the summer. Let me say it again. 

The trust fund runs out of money in August. And we need, in order 

to fix this bill, to keep it just to its current level plus inflation, we 

need you, with our help and support, to figure out how to pump 

$18 billion into the Highway Trust Fund. 

I share Senator Hatch’s view. It should be a user-pays situation, 

because we do not want that uncertainty that you talked about. 

Now, I am going to just be very brief, because I have 2 minutes 

left. I want to give you some quotes, and I see Senator Isakson 

here. According to Georgia’s Department of Transportation, if Federal funding is cut, I quote, ‘‘We would not be able to fund any new 

projects.’’ They say it is a potential disaster for a State that is very 

dependent on the Federal transportation dollar. 

In Iowa, I say to Senator Grassley, the Iowa DOT described the 

impacts of going 1 full year without a Federal highway program. 

They said, ‘‘For the Iowa DOT, this will result in cutting our anticipated construction program in half for 2015. This will have an impact on local jurisdictions, and they will not be able to begin any 

new construction projects that involve Federal funding.’’ And I 

could have done this for every one of your States, but I did do it 

for Oregon. [Laughter.] Oregon DOT said it would be hit hard because it might be forced to delay or cancel a large number of highway projects. Quoting them: ‘‘Basically, our entire capital construction program could be affected.’’ 

I am going to hold up a picture for you. You are going to wonder, 

‘‘What is she thinking?’’ But it is a photograph of a Super Bowl stadium, and 100,000 people fit in there. We have 800,000 construction workers who are out of work. That is eight of these stadiums. 

Just to put it into perspective, at the height of the recession, we 

had 2 million unemployed, so we had—how many of those? Twenty. 

So we are down to eight. But we cannot go back to those days. And 

this does not count the thousands of businesses, both small and 

large, that would be affected. 

Now, there are lots of solutions. In my 30 seconds, a gas tax rise 

is supported by the Chamber of Commerce. A lot of us do not support it at this point. President Obama does not support it at this 

point. It is a problem. But it should be looked at. 

Now, what the Governor of Virginia did and what the Governor 

of Michigan is doing right now is, they are supporting a plan that 

would take away the gas tax at the pump and replace it with a 

sales tax on the wholesale price of gasoline and diesel. This is a 

Republican Governor who signed that into law, I want to say to my 

colleagues, and a Republican Governor looking at it. It is an easy 

solution. You do away with the gas tax. You replace it with this 

sales tax. It brings in the money that you need, and you can adjust 

it, depending on what it is that you want to accomplish. 

So I am going to put my statement in the record, and I will include a letter from the Governors of a whole slew of States, including, Senator Bennet, Colorado and South Dakota and Pennsylvania 

7 

and Maryland, and lots of other States that are represented here, 

saying, please do not fail us. 

I will close with this. Colleagues, failure is not an option for us. 

We need to do this. It is our time to figure it out. And I want to 

be there for you. I know Senator Vitter feels the same way. And 

we will stand by. We will help you in any way with technical support—not that your staff needs it, but we are there. 

Thank you so much for this opportunity. 

[The prepared statement of Senator Boxer appears in the appendix.] 

The CHAIRMAN. I thank the chair of the Environment and Public 

Works Committee, and I think that is an ideal closing to say ‘‘failure is not an option.’’ And I would also like to note that I have very 

much appreciated your effort to try to do some serious streamlining 

in terms of getting these projects through the regulatory hoops. 

And I think that also is a step towards bringing both sides together. 

I think at this point, Senator Hatch would like to read a statement, I believe, from the ranking minority member, Mr. Vitter. Is 

that correct? 

Senator HATCH. Yes, he has asked me to read his statement. 

Senator BOXER. I would like to stay for that. 

Senator HATCH. Well, you do not have to, but I do not blame you 

if you want to. [Laughter.] 

Well, I want to thank you, Senator Boxer, a great chairman in 

this area. Unfortunately, Ranking Member Vitter was unable to 

join us this morning, but I do have a letter from him that he would 

like me to read, if I can, or at least put part of it in the record. 

His letter reads: ‘‘Thank you, Chairman Wyden and Ranking 

Member Hatch, for holding today’s hearing. Highway infrastructure 

is a critical component of our Nation’s economy and our quality of 

life. A first-class infrastructure is fundamental to connect people in 

communities and is a critical building block in developing, sustaining, and growing an economy—something we must all remember and prioritize as we move forward. 

‘‘Putting such a structure on sound footing will restore the stability and certainty in the Highway Trust Fund, which is so vital 

to economic growth in this country. I am mindful of the comments 

of several Finance Committee members from the last markup on 

highway funding. I would like to tell my friends on my side that 

I am sensitive to the principles laid out at that time. A bipartisan 

solution to this problem is the only way forward. 

‘‘So, as we work toward such a solution, we must again adhere 

to the following principles. We must work to maintain the userbased system. We should avoid spending down the balance of the 

trust fund and work to keep a healthy cushion to ensure against 

funding crises and disruption. We should provide for as long a 

multi-year authorization as possible to minimize uncertainty. And 

finally, we should preserve investment levels and not increase the 

overall tax burden on taxpayers. 

‘‘If we are going to be successful at putting such a structure back 

on a sustainable course and deliver on the economic promise of 

sound infrastructure investment, we must work to put trust back 

in the Highway Trust Fund. Adhering to the principles I have laid 

8 

out will bolster our efforts toward rebuilding that trust and finding 

a bipartisan solution. 

‘‘Again, I thank Chairman Wyden and Ranking Member Hatch 

for holding this hearing. Sincerely, Senator Vitter.’’ 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Hatch. 

Senator HATCH. I would like this letter—— 

The CHAIRMAN. Without objection, it will be entered into the 

record at this point. 

[The letter from Senator Vitter appears in the appendix on p. 

83.] 

The CHAIRMAN. It is very clear that the chair and the ranking 

member of this committee and the chair and the ranking member 

of the Environment and Public Works Committee, we are all going 

to work very closely together. And to you, Chairman Boxer, a special thanks for your energy and your passion. That is what it is 

going to take to make this happen. 

Senator BOXER. Thank you very much, everybody. 

The CHAIRMAN. Thank you. 

Let me now announce the witnesses for the panel. I do want to 

let Senator Warner introduce the witness from Virginia. 

Our first witness will be Dr. Joseph Kile, who is the Assistant 

Director of the Microeconomic Studies Division of the Congressional Budget Office. 

Then we have Mr. Aubrey Layne, Secretary of Transportation for 

the State of Virginia. Senator Warner will give him a formal introduction. 

Our third witness will be Jay Dhru, who is the senior managing 

director of corporate and infrastructure ratings for Standard and 

Poor’s Ratings Services. 

Our fourth witness will be Ms. Samara Barend, who is the senior 

vice president and public-private partnership (P3) development director for AECOM Capital. 

And our final witness will be Mr. Chris Edwards, who is director 

of tax policy studies for the Cato Institute. 

Senator Warner, why don’t you introduce Mr. Layne? 

Senator WARNER. Thank you, Mr. Chairman. I want to introduce 

my good friend, Aubrey Layne, who is the Secretary of Transportation for Virginia. Under Governor McAuliffe, Aubrey Layne was 

sworn in as Secretary of Transportation just recently, in January 

of this year. He oversees an agency with 10,000 employees with a 

combined budget of more than $5 billion—something that I paid a 

great deal of attention to while I was Governor. 

Aubrey has served on our oversight board prior to being Secretary—the Commonwealth Transportation Board. He began his 

career as a CPA with KPMG. He was active in the private sector. 

He was president of a very successful public-private initiative in 

the education space. And what I think he is going to talk about beyond the concerns about what happens to the Highway Trust Fund 

is that Virginia, actually over the last 20 years, has been really a 

leader in public-private initiatives. I think he is going to give a 

shout-out for the bipartisan initiative that we have created, the 

9 

* The Building and Renewing Infrastructure for Development and Growth in Employment Act. 

BRIDGE Act * that has five Republican and five Democratic cosponsors. And I think he will make the point, while this is a useful 

tool in the toolbox, it is not the silver bullet, that you have to have 

that permanent funding source. You can leverage private capital, 

but, if you do not have that permanent funding source, you are not 

going to be able to get things done. 

So, Mr. Chairman, I really appreciate the fact that we have the 

Secretary of Transportation here. He can also comment, as was 

mentioned by Senator Boxer, on some of the changes we have made 

in Virginia transportation recently. Thank you. 

The CHAIRMAN. Thank you, Senator Warner. 

I thank all of our witnesses. It is customary here that your prepared statements are made a part of the record, and that will be 

done. If you could use your 5 minutes or so to summarize, you can 

see there are a host of Senators here who would like to ask questions. That will be helpful. Let us begin with you, Dr. Kile. 

STATEMENT OF JOSEPH KILE, Ph.D., ASSISTANT DIRECTOR 

FOR MICROECONOMIC STUDIES, CONGRESSIONAL BUDGET 

OFFICE, WASHINGTON, DC 

Dr. KILE. Thank you, Chairman Wyden, Senator Hatch, and 

members of the committee. I appreciate the opportunity to be here 

today to talk about the status of the Highway Trust Fund and options for financing highway construction. 

In 2013, about $156 billion was spent to build, operate, and 

maintain highways in the United States. Another $60 billion was 

spent on transit systems. About one-quarter of that total came from 

the Federal Government, mostly through the Highway Trust Fund. 

Although the trust fund’s balances were stable or growing for 

several decades, since 2008 lawmakers have transferred $54 billion 

from the general fund of the Treasury to the trust fund. With its 

current revenue sources, the Highway Trust Fund cannot support 

spending at the current rate. By the end of this fiscal year, CBO 

estimates that the balance in the highway account of the trust fund 

will fall to about $2 billion, and the balance in the transit account 

will fall to about $1 billion. Because of those declining balances, the 

Department of Transportation will probably delay payments to 

States at some point this summer. In 2015, CBO estimates that the shortfall will be about $13 billion, as future spending from the trust fund outpaces revenue collected. If lawmakers do not act to address that shortfall, all of the 

receipts credited to the fund during the next year would be needed 

to meet obligations made during or before 2014. Beyond that, if 

nothing changes, the shortfall in the trust fund would steadily accumulate in subsequent years. 

Lawmakers have three broad options to address the projected 

shortfalls in the trust fund. One option would be to reduce Federal 

spending on highways and transit projects. If lawmakers choose to 

address the shortfall entirely by cutting spending, the authority to 

obligate funds from the highway account would have to decrease by 

more than 30 percent over the next decade, and similarly, the auVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
10 

thority to obligate funds from the transit account would need to decline by about 65 percent compared with CBO’s baseline. 

A second option would be to increase the revenues credited to the 

trust fund. For instance, one approach would be to increase the existing taxes on gasoline and diesel fuel. The staff of the JCT estimated that a 1-cent increase in the tax on gasoline and diesel fuel 

would raise about $1.5 billion each year. As such, increasing those 

taxes by 10 to 15 cents per gallon would eliminate the projected 

shortfall. Another approach for increased revenues would be to impose new taxes on using the highway system such as one based on 

vehicle miles traveled. 

A third option for addressing the shortfall would be to continue 

to transfer money from the general fund to the Highway Trust 

Fund. Unless spending were cut or revenues were increased, that 

would require a transfer of $18 billion in 2015 and between $13 

and $18 billion every year thereafter through 2024. 

The projected shortfall in the trust fund has generated interest 

in greater use of borrowing by State and local governments, sometimes in conjunction with the private sector. The Federal Government encourages such borrowing through tax preferences that provide a subsidy for highway financing projects. In addition, the Federal Government offers direct loans that encourage State and local 

governments and the private sector to borrow money for highways. 

Through both of those channels, though, the Federal Government 

bears some of the cost of such financing. 

Despite some prominent examples, the experience with private financing in the United States is very limited. In particular, highway 

projects that have used private financing have accounted for about 

one-half of 1 percent of all spending for highways over the past 25 

years. Some of those projects have failed financially because the 

total revenues for the projects were overestimated. Perhaps because of that experience, projects that are still under construction 

rely less on tolls as a revenue source. More commonly, private partners are compensated from a State’s general fund, thus limiting the 

risk that the private partner will not be repaid. As a result, the 

risk of lower-than-expected revenues stays with the public sector. 

Regardless, however, borrowing is only a mechanism for making 

future tax revenues or future user fees available to pay for transportation projects today. It is not a new source of revenues. Borrowing can augment the funds readily available for highway 

projects today, but revenues that are committed to repaying borrowed funds will be unavailable for new transportation projects or 

other government priorities in the future. 

Thank you very much for your time, and I would be happy to answer any questions that you might have. 

[The prepared statement of Dr. Kile appears in the appendix.] 

The CHAIRMAN. Thank you very much, Dr. Kile. 

Our next witness will be Mr. Aubrey Layne. 

STATEMENT OF HON. AUBREY L. LAYNE, JR., SECRETARY OF 

TRANSPORTATION, COMMONWEALTH OF VIRGINIA, RICHMOND, VA 

Mr. LAYNE. Good morning. I would like to thank Chairman 

Wyden, Ranking Member Hatch, and Senator Warner for the opVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
11 

portunity to speak with you today on a vitally important matter 

that concerns our Nation. 

As Senator Warner mentioned in my introduction, prior to being 

appointed by Governor McAuliffe, I served on the Commonwealth 

Transportation Board for 5 years, where I was very involved in the 

funding for transportation projects in Virginia. I was introduced at 

that time to the three As of transportation: appropriation, allocation, and authorization. 

Now, as Secretary of Transportation, I certainly understand 

there is a fourth A, and that is accountability, as I see myself as 

a primary fiduciary for the taxpayers of the Commonwealth and 

our country. I oversee and set policy for the Commonwealth’s seven 

transportation agencies, with an annual budget of close to $5.5 billion. 

Now, I think I am the only panelist today who is directly responsible for implementing policy and delivering projects. As a State 

that recently tackled some of the big issues that you are looking 

at here today, I have a few points I would like for you to consider. 

First of all, the Federal Government has a strong role in surface 

transportation. This is a partnership with the States, and we need 

a strong, reliable partner. Many States are stepping up or have 

stepped up, but we can only do so much. We need the Federal Government to do its part. And the solutions that we come up with 

here should include all modes of transportation—highways, transit, 

and rail—and should be long-term in nature. 

And last but not least, the conversation here today should also 

be about growth of the system. It is not enough simply to patch 

holes. We have to discuss how we invest at what levels to support 

sustained economic growth. 

I can give you a few examples of how this has worked in Virginia. As you may know, last year the Republican-led General Assembly and Republican Governor worked across the aisle with 

Democrats to pass the first long-term solution to transportation 

funding in Virginia in over 25 years. The compromise raises almost 

$3 billion over 6 years for State-wide revenues, and it has multiple 

parts. One, we converted the cents-per-gallon tax to a wholesale 

sales tax. We also increased the general sales tax, and a portion 

of the existing general sales tax was transferred to transportation, 

and we also increased the motor vehicle sales tax. 

The key here is, in the State of Virginia we increased both general fund revenues and non-general fund revenues. This needed 

funding provides Virginia with approximately $1.1 billion annually 

in revenue available for transportation projects such as highway, 

rail, transit, aviation, and ports. 

We combined these State-wide revenues with the $1.1 billion we 

have traditionally received from the Federal Government to help 

fund projects ranging from freight rail improvements, large highways, public-private partnerships, to passenger rail expansion. 

To fund many of these projects, we work hard to leverage our 

government funding. So, in addition, we look to other sources of 

revenue such as Transportation Infrastructure Finance and Innovation Act loans, private activity bonds, contributions from developers and local governments, State bonds, toll revenues, and loans 

and lines of credit from the Virginia Transportation Infrastructure 

12 

* The Transportation Investment Generating Economic Recovery grant program. 

Bank. Basically, if there is an option to invest in infrastructure in 

Virginia, we have explored it. But even with all our efforts, the 

Federal Government remains a critical partner. The Federal program represents more than half of our expenditures that are available for our annual capital revenues. 

As you know, the Federal Highway Trust Fund is facing an impending insolvency. If nothing is done, the consequences will be 

dire. In Virginia, we expect our construction program will grind to 

a halt this October and imperil our ability to pay contractors for 

existing contracts. We ask Congress to act to shore this up. 

Now, there are lots of options that have been outlined in the past 

for how this can be accomplished. But the option of how to best 

solve this Federal revenue problem is for this committee and other 

members of Congress to decide. 

However, the trust fund is not the only pending emergency. Key 

transportation programs are left out of the trust fund and go 

through the appropriations process. TIGER grants,* new starts, 

and passenger rail are just as important to us as Federal trust 

fund revenues. Unfortunately, we do not know from year to year 

whether these programs will exist or how much will be funded. 

Now, I understand there is a lot of debate going on about the 

type of investments, and, as you consider these questions, I would 

ask that you remember that transportation is not an end in itself. 

The focus should be on how an investment achieves an outcome, 

how we help move people and goods efficiently, improve the economy, and spur economic growth. 

Now, finally, as I said, we are looking at every way to leverage 

funds, and I know the committee is examining some of these options. We strongly support the BRIDGE Act, but I want to address 

the misconception that I continually hear. Public-private partnerships and financing are helpful, but they are not silver bullets and 

cannot solve all the transportation problems. Financing in P3s of 

large-scale projects is necessary, but it is only a part of the procurement process. And I will remind the committee that there are 

two Ps before partnership: public and private. And without those 

funds, we could not have P3. 

So, just wrapping up here, the problems that we face are significant, and we ask Congress to act in a bipartisan manner to get this 

resolved. We look at transportation as underpinning our economy 

and, quite frankly, underpinning our freedoms. So we think that 

this solution is necessary, not only to support projects, but the 

quality of life in our Nation. 

Thank you very much. 

[The prepared statement of Mr. Layne appears in the appendix.] 

The CHAIRMAN. Thank you very much, Mr. Layne. 

Mr. Dhru? 

STATEMENT OF JAYAN DHRU, SENIOR MANAGING DIRECTOR, 

CORPORATE AND INFRASTRUCTURE RATINGS, STANDARD 

AND POOR’S RATINGS SERVICES, NEW YORK, NY 

Mr. DHRU. Chairman Wyden, Ranking Member Hatch, and members of the committee, my name is Jay Dhru, senior managing diVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
13 

rector with Standard and Poor’s. As a leading provider of credit 

ratings, research, and analytics, our teams of analysts assess risk 

and assign credit ratings to public-private partnership projects, or 

P3s, such as the I–95 Express Lanes managed lanes project in Virginia, the Goethals Bridge replacement in New York, and the Ohio 

River Bridges Project. 

Thank you for the chance to share our views on the challenges 

and opportunities involved in addressing what we believe to be a 

$200-billion annual gap in funding for the repair and new construction of critical U.S. infrastructure. 

We all agree that reliably moving people and goods is essential 

to reaching any nation’s economic potential. My testimony will 

focus on how the needs of infrastructure can be financed through 

a range of investment sources, including the government and private sectors. 

With governments tightening their belts and banks repairing their balance sheets, funding the $200-billion annual gap is daunting. At the same time, providers of public infrastructure spending—Federal, State, and local governments—have pulled back. 

From 2008 to 2010, States cut spending as revenues declined by 12 

percent in order to balance their budgets. Similarly, new debt 

issuance by State and local governments declined by $64 billion 

over the last 5 years, 60 percent of which was simply used to refinance existing bonds. 

While public funds for new projects and existing infrastructure 

repair decidedly are under pressure, who fills that void? Our analysis has found that institutional investors, such as insurance companies, pension funds, and other non-bank lenders, are wellpositioned. In fact, infrastructure has many advantages for investors, including higher yields, the tolerance and need for long-term 

investments, and diversification. S&P has estimated that institutional investors would like to target about 4 percent of their portfolio to infrastructure, higher than their current levels of 2 percent. 

If achieved, this would provide an estimated $200 billion in additional global infrastructure funding each year—nearly $3.2 trillion 

by 2030. 

The CHAIRMAN. Can you just, on that number, give your analysis 

of what it would provide for investing in American infrastructure? 

Mr. DHRU. I do not have that breakdown, but I can get that for 

you. 

The CHAIRMAN. Would you? 

Mr. DHRU. Yes, absolutely. 

The CHAIRMAN. Thank you. 

Mr. DHRU. We believe two important steps can be taken towards 

unlocking this investment. First, standardize project finance and 

enhance transparency, information, market visibility, and predictability. The success of P3s in the United Kingdom, Canada, and 

within certain U.S. States has grown in recent years due to just 

these types of reforms. Second, minimize political and regulatory 

risk. Institutional investment thrives on certainty, and having a 

clear vision of how expenditures are recovered is vital to increased 

investor participation. 

P3s allow investors to design, build, and operate public infrastructure, lending their expertise and sharing in the risk of delivVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
14 

ering transportation projects on time and within budget. As an example, take the I–595 expansion project in Florida, the State’s first 

P3. It was completed in 5 years, 15 years ahead of the State schedule, and at a cost of $1.8 billion, $275 million lower than estimated. 

As for the public benefits of P3, governments are able to replace 

or build new infrastructure while shifting substantial risks over to 

private investors, including cost overruns and penalties. 

While in the U.S. P3s are still relatively new, elsewhere in the 

world they are being used more extensively to build public transit, 

airports, schools, and hospitals. According to the European PublicPrivate Partnership Expertise Center, 80 European P3 transactions 

closed in 2013, totaling $16.3 billion. The challenge in the U.S. is 

how to increase P3 accessibility. We put forward the following steps 

that could encourage P3 growth. 

First, establish mechanisms for the Federal Government to help 

States adopt best practices and innovation standards. Although 33 

States and Puerto Rico have enabled P3, only a handful of States— 

notably, Virginia, Texas, Florida, Indiana, and Colorado—have 

used them in a significant way. Standardization of the P3 procurement and documentation process has been a driver of activity in 

Canada, where contract forms are consistent across provinces. 

Second, expand the use of Federal ‘‘magnet’’ and bond programs 

such as the TIFIA program and the private activity bonds. These 

funding sources attract private capital by lowering overall project 

costs, and TIFIA offers favorable repayment terms. 

Third, provide near-term funding certainty and predictability. 

The current surface transportation and transit funding program is 

often seen as an insufficient time horizon for the planning, design, 

and construction of large-scale projects and programs that often 

take years to plan, build, and manage. 

And finally, increase the transparency and availability of construction and performance data. This will enable the public and 

private sector to gain a better understanding of the costs and benefits to private investment. 

In summary, we believe the actions outlined here would greatly 

reduce the funding gap through incentivizing and strengthening 

private investment. And, in the spirit of just-in-time, the U.S. estimate is about half of the $200-billion shortfall, about $100 billion. 

Thank you very much for the opportunity to speak before you 

today on this important topic, and I look forward to answering any 

questions you may have. 

[The prepared statement of Mr. Dhru appears in the appendix.] 

The CHAIRMAN. Thank you. We will have some questions in a 

moment. 

Ms. Samara Barend, thank you. 

STATEMENT OF SAMARA BAREND, SENIOR VICE PRESIDENT, 

AECOM CAPITAL, NEW YORK, NY 

Ms. BAREND. Chairman Wyden, Ranking Member Hatch, and 

members of the committee, it is a real pleasure to be with all of 

you today. 

I am Sam Barend, and I serve as development director for 

AECOM Capital, the investment arm of AECOM, and AECOM is 

a global engineering and construction firm. We have about 45,000 

15 

employees around the world, many of them in your States. AECOM 

has participated in about 60 percent of all the P3 projects that 

have been delivered in the country, and we also serve as an investor. And a few of those projects include the Port of Miami Tunnel 

project in Senator Nelson’s State, the I–595 project, the Long 

Beach Courthouse, and others. 

Mr. Chairman, the topic you have selected for this hearing is pivotal. I would like to recognize the leadership of your State, Oregon, 

in spearheading the creation of the West Coast Infrastructure Exchange, which has been connecting private investors with muchneeded public infrastructure projects. 

For the past 7 years, I have approached public-private partnerships, or P3s, from both the public and private sectors, so I come 

before you with considerable passion on this topic and an understanding of the significant role that the Federal Government must 

play in catalyzing private investment in public infrastructure. 

With that said, my goal today is to leave you with three 

thoughts. First, we must expand performance-based infrastructure 

delivery opportunities, such as public-private partnerships. It is essential that we stretch the limited Federal and State funds we 

have to deliver projects faster, cheaper, and with greater accountability and performance over the long term. Second, Federal and 

State funding has played and continues to play an essential role in 

advancing P3 projects. And finally, but most important, we must 

level the landscape between low-cost tax-exempt financing and 

higher-cost taxable financing to catalyze private investment in public infrastructure. 

Since 2008, the use of performance-based P3s has fast-tracked the delivery of 16 projects, worth $18 billion, across the country. 

For example, Florida’s I–4 Managed Lanes project, which actually 

is in the process of reaching a financial close right now, is going 

to be delivered 20 years sooner through a public-private partnership than if the State had utilized traditional methods of financing 

and delivery. 

Now, for Florida, this P3 approach has enabled the State to leverage future revenue streams while eliminating the need for multiple procurements and full up-front funding. P3s have also allowed 

the States to transfer key risks to the private sector, as Mr. Dhru 

mentioned, which has ensured complex projects are delivered on 

time and on budget with greater performance over the long term. 

Even more, cities and States, and really all of us taxpayers and 

the Federal Government, are the beneficiaries of these publicprivate partnerships because we are saving a significant amount of 

money. The Denver FasTracks P3 has saved $300 million. The Port 

of Miami Tunnel project has saved the State of Florida $750 million in one project—50 percent below the original engineer’s estimate. And the Goethals Bridge project saved the State of New York 

$150 million. These are real savings. This is real money back to 

taxpayers. 

That said, private finance can never replace State and Federal 

funding; rather, it serves as a means of stretching the very limited 

but essential public funding. U.S. P3 projects have combined numerous sources of public and private capital, such as State highway funds, TEA–21 dollars, low-cost TIFIA loans, and private acVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
16 

tivity bonds, alongside private debt and equity. The combination of 

such Federal funding has been utilized for high-profile new-tollrevenue projects such as Texas’s North Tarrant Expressway and 

Virginia’s I–495 Managed Lanes projects, where public investment 

has been effective in capping tolls and future toll increases. 

The role for Congress in advancing P3 projects, however, does 

not end with funding highways and transit. In 2005, Congress authorized a pilot program that created $15 billion in new transportation exempt facility bonds. This program is so significant because 

it truly leveled the playing field between private investment and 

tax-exempt financing. It truly served as a catalyst for opening the 

doors for private investment in public infrastructure. 

Since 2008, exempt facility bonds or private activity bonds, as they are otherwise called, have facilitated at least $12 billion, if not 

more, in transportation P3 projects in the country. And of note, 

every U.S. P3 project that has moved forward has been undertaken 

and utilized with either these exempt facility bonds or TIFIA, or 

a combination of both. 

Just to close, I really believe this is an opportunity in the upcoming reauthorization for the Senate Finance Committee to continue 

this trend of public-private partnerships and performance-based 

P3s, to open the doors to private finance, and to not allow this authorization for private activity bonds to expire as it is expected to 

in the next year. 

Thank you very much for the opportunity to testify. 

[The prepared statement of Ms. Barend appears in the appendix.] 

The CHAIRMAN. Thank you very much. 

Colleagues, here is what we will do. We will have a vote at 11 

o’clock. We will hear from Mr. Edwards, and then we will take 

hopefully about a 10-minute break, and we will come right back to 

questions. 

So, Mr. Edwards, welcome, and I know about our history working 

on tax reform, so we welcome your remarks. 

STATEMENT OF CHRIS EDWARDS, DIRECTOR OF TAX POLICY 

STUDIES, CATO INSTITUTE, WASHINGTON, DC 

Mr. EDWARDS. Thank you very much, Chairman Wyden and 

members of the committee. The Nation certainly faces challenges 

in upgrading its highways, bridges, and other infrastructure. Nonetheless, I am skeptical of some of the doom and gloom coming from 

some of the groups that are pushing for large increases in Federal 

infrastructure spending. 

There is some data showing that our infrastructure has been 

gradually getting better. The share of Federal bridges that are 

structurally deficient has actually plunged over the last couple decades. The quality, the surface quality of our interstate highway 

system, has actually improved over the last couple decades. So 

there is some good news with infrastructure. 

It is true that congestion is a big problem in many parts of the 

country, and I share the chairman’s concern that America have the 

best infrastructure in the world. I do not think that more Federal 

aid is the right answer for infrastructure, though. 

For one thing, Federal aid is often misallocated. It is certainly 

not allocated as efficiently as it could be. The Highway Trust Fund 

17 

creates winners and losers. Some of the long-time loser States in 

the Highway Trust Fund are actually some of the States with more 

need. So, for example, Texas and Florida, fast-growing States, have 

long gotten the short end of the stick from the Highway Trust 

Fund. Academic studies have shown that the Highway Trust Fund 

actually distributes money from lower-income States to higherincome States, which makes no sense to me either. 

I think Federal aid distorts State and local decision-making. So, 

for example, with transit, for many decades the Federal Government has subsidized the capital costs of urban transit systems but 

not the operating costs. So I think that has biased many cities to 

go toward expensive rail systems with high capital costs, because 

they can get the Federal subsidies, rather than more efficient bus 

systems. So I think Federal aid does create some distortions to be 

concerned about. 

So what should we do about the Highway Trust Fund? Well, a 

straightforward solution would be to phase down spending over a 

period of time to match the lower level of revenues. I think State 

governments should be free to respond to that void in any way that 

they would like—raising fuel taxes, adding electronic tolling to 

highways, and more privatization and P3s. I think Congress can reduce some of the costly mandates that Senator Hatch mentioned, 

such as the Davis-Bacon rules. And I also think Congress—and I 

agree with President Obama here—should lift the ban on tolling of 

the interstates. For me it is a federalism issue. The interstate highway system is owned by State governments. I think we ought to 

free up State governments’ ability to be able to respond to infrastructure needs in any way they can, such as electronic tolling on 

some of the interstate system. 

I think a good way to cut the Highway Trust Fund—and I know 

it is not going to be popular with some Senators—would be to reduce Federal spending on transit. Do you know that before the 

1960s, the great majority of urban transit in America was provided 

by private, for-profit companies in the Nation’s cities? That ended 

with one fell swoop with the introduction of Federal aid to local 

government-operated transit systems. That eliminated within a 

couple of years a century of investment by private companies in 

urban transit systems. So that is an example of the way Federal 

aid can create distortions, in my view. 

So I think the answer to America’s infrastructure challenges is 

not more Federal aid, but more innovation by the States. I am a 

big fan of P3s. And also, where we can, full privatization is also 

possible for some infrastructure projects. If you look around the 

world, seaports are private in Britain, private and unsubsidized. 

All the major airports in Canada are private, nonprofit corporations, unsubsidized. Air traffic control in Britain and Canada is run 

by private, nonprofit corporations, unsubsidized by governments. I 

think those are good models we need to look at. 

You can even privatize highways and bridges in some cases, and 

there are examples, even in the United States. The Dulles Greenway in Virginia, for example, was privately built, unsubsidized, a 

14-mile toll highway. I know some people, such as Representative 

Frank Wolf, grumbled about the Greenway, but I think it is a good 

project. 

18 

Elsewhere in Virginia, last year a private company financed and 

built a $140-million bridge over the Elizabeth River in Norfolk, 

again, completely unsubsidized by government. That company, 

FIGG Engineering, is actually expected to start construction this 

year on a $200-million bridge, called the Cline Avenue Bridge, in 

East Chicago—again, completely unsubsidized by government. 

So hopefully we can bring more entrepreneurial efforts like that 

into America’s infrastructure. We have big challenges, and we need 

both the public and more private-sector participation. 

A last note, I think relevant to this committee, is that it is interesting if you look at Department of Commerce data, the vast majority of infrastructure in America is actually provided by the private 

sector. If you add up the total amount of annual investment in 

things like, you know, refineries and pipelines and cell-phone towers, private investment in infrastructure in the United States is 4 

times larger than all Federal, State, and local investment combined. So a simple way to increase infrastructure investment in the 

United States would be to slash the corporate income tax. And I 

know that is something the committee is working on. 

With that, I will end my comments. Thank you very much. 

[The prepared statement of Mr. Edwards appears in the appendix.] 

The CHAIRMAN. Thank you very much, Mr. Edwards. 

So we have a 15-minute reprieve here, so we will start, colleagues, and just see if we can keep it going. 

Here is my question for the panel: Mr. Dhru provided us with a 

bit of good news this morning. Mr. Dhru said that, in his view, 

there was potentially available significant private-sector funding 

for transportation, which could be up to $100 billion per year, to 

help meet our Nation’s infrastructure needs. So that clearly is a 

constructive step, but yet it only meets a portion of the country’s 

infrastructure needs. So what is needed, what our challenge is, is 

to come up with a complete solution, and certainly that means that 

there has to be an innovative Federal role here as well. 

What I would like to do—we will spare you today, Dr. Kile, from 

the Congressional Budget Office—is kind of have a little bit of a 

lightning round on transportation. I would like each one of you to 

give me your best idea for the short term and your best idea for 

the long term. We will just take you four for purposes of my opening round. We have lots of colleagues who would like to get into 

this, so let us start with you, Mr. Layne—best idea short-term, best 

idea long-term. 

Mr. LAYNE. Best idea short-term is to fund the trust fund. Our 

State has relied on those obligations in putting forth contracts, so 

to let that go insolvent would have a significant impact to the State 

of Virginia for the short term. 

Long-term, it needs to be multimodal in focus and not just deal 

with simply the current situation, but be able to grow, have a sustainable revenue source that is tied to the future. I recognize the 

current Federal fuel tax is regressive and it is static. CAFE standards are getting higher. But some type of percentage of economic 

activity—for instance, we tied it to the motor fuels wholesale tax 

that allows for increases as economic activity goes up. 

19 

So those are a couple of ideas. But to think that it is going to 

be one, the answer, I think it is going to take a pragmatic approach 

of a lot of different tools to be used. All the things mentioned I 

would agree with today except for cutting the government input 

into transportation revenues. But I think it is going—— 

The CHAIRMAN. Very good. Mr. Dhru, one of each—short-term, 

long-term. 

Mr. DHRU. I would say, actually, short- and long-term would be 

the same thing, which is to take the uncertainty out of the market. 

You know, every 2 years renewing it actually adds to a significant 

amount of uncertainty. So I think that is an opportunity. 

The CHAIRMAN. And I gather that, with respect to the private 

side, you do think that streamlining in some of the areas that reduce uncertainty would help to boost that private side. 

Mr. DHRU. Absolutely. 

The CHAIRMAN. All right, very good. Let us hear from Ms. Samara Barend. Two ideas—short-term, long-term. 

Ms. BAREND. Short-term, as I mentioned, just particularly speaking on performance-based P3s, the authorization for exempt facility 

bonds is likely to expire very soon, so that will really put a wrench 

in all of the private development and private investment we have 

seen. It is fundamental for this committee to expand that, at least 

expand it temporarily. If not, in the long term you should really 

provide a sustainable mechanism through long-term funding of private activity bonds and potentially TIFIA that does incentivize 

States and cities to utilize P3s, because currently the option of just 

tax-exempt financing makes it very difficult to move forward a 

project with private finance. 

And you know, also, another option, in terms of the long term, 

is equipping States with the tools necessary to understand how to 

advance a public-private partnership project. As Mr. Dhru mentioned, only about eight to ten States are really in the process of 

moving forward these projects. 

The CHAIRMAN. Good. Staff also, colleagues, gave me a note that, 

according to the estimates, we know that more than a quarter of 

transportation projects were financed with Build America Bonds 

during the program between 2009 and 2010, so your point, Ms. 

Barend, that certainly the role of bonding can be a factor, is a good 

one. 

We will wrap up with you this round, Mr. Edwards. 

Mr. EDWARDS. In the short term, I think the reality is that Congress is going to fill the hole in the Highway Trust Fund with general fund revenue. I mean, I do not see any other option. President 

Obama’s corporate tax proposal is not going anywhere this year, 

and few people seem to favor raising the gas tax. 

In the longer term, I think, again, Congress ought to free up the 

hands of States. States can raise gas taxes anytime they want. But 

I think a lot of transportation economists are kind of gelling 

around the idea of using new modern electronic tolling on more 

highways. It makes a lot of sense. You can raise a lot of revenue 

and you can reduce congestion, so you can kill two birds with one 

stone. 

20 

I encourage the States to experiment with electronic tolling. It is 

much lower-cost than the old-fashioned tolling with toll booths, and 

it makes a lot of sense, again, to reduce congestion. 

The CHAIRMAN. So, as a little bit of a libertarian, I am concerned 

about those privacy issues in some of those things, so we will talk 

about that. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. 

Dr. Kile, can you tell me that some Federal highway account 

spending is for non-highway purposes? 

Dr. KILE. Yes, a share of the spending from the Highway Trust 

Fund is for transit projects and for other projects related to safety. 

Senator HATCH. What percentage is that? 

Dr. KILE. The spending in 2014 for the transit account is about 

$8 billion. 

Senator HATCH. All right. Assuming a Federal role in highway 

financing is maintained, could we not decide to spend highway account dollars on highways alone, thereby funding more road work 

than occurs currently? 

Dr. KILE. That would obviously be a choice for you and your colleagues, but that is one possibility, and that would address part of 

the shortfall in the trust fund. 

Senator HATCH. How would eliminating the Federal role in the 

funding of highways lead to more efficiency in highway spending? 

Dr. KILE. If the Federal Government were to be less involved 

with highway funding, there would probably be fewer highways 

built in the United States. How much less would depend on how 

States offset that, and I think beyond that, State and local governments would make the decisions that they felt in their best interest. 

Senator HATCH. Well, as I understand it, a 6-year reauthorization proposal maintaining current spending levels plus inflation 

would require new offsets totaling $94 billion over the 6-year period. CBO’s website indicates that every cent of motor fuels tax increase yields about $1.5 billion per year. We have heard that testimony here today. 

Now, as I read your testimony, if the new funding were offset 

with a motor fuels tax increase, it would amount to more than 10 

cents per gallon, likely 10 to 15 cents per gallon by 2015. Now, to 

a lot of people, that is a serious motor fuels tax increase. 

Now, would it not be the largest Federal motor fuels tax increase 

in modern times if we did that? 

Dr. KILE. I do not have in front of me the history of increases 

in the tax for the gas tax. But, yes, those numbers that you cited, 

which were produced by the Joint Committee on Taxation, are correct. 

Senator HATCH. Well, some people think we should pause here, 

and before you accept the notion of a 6-year funding proposal, I am 

trying to find out what we can do and what is reasonable with the 

current Congress. 

Mr. Dhru and Mr. Edwards, what I often hear when the word 

‘‘infrastructure’’ is used, is how many jobs a given project will create. Now, how trustworthy do either of you believe are the estimates of how many jobs will follow from a given amount of spendVerDate Mar 15 2010 16:32 Mar 13, 2015 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 R:\DOCS\93657.000 TIMD
21 

ing on a road or a bridge or a bike path? Do you think the estimates are scientific, precise, and reliable? 

Mr. DHRU. We just published a report yesterday, in fact, where we said a $1.3-billion investment in real terms in 2015 could create 

up to 29,000 jobs in the construction sector. When you are commenting on the future, obviously you make some assumptions, but 

I think the fundamental point remains. There is a significant opportunity for jobs growth. 

Senator HATCH. Mr. Edwards? 

Mr. EDWARDS. I do not think we ought to look at the infrastructure issue with respect to jobs. If private companies with P3s can 

do infrastructure more efficiently, they can build highways and 

bridges more efficiently, it means that they are going to use less 

labor, not more. So, you know, what society wants in general is a 

net return. They want to have a minimal cost for the maximum 

amount of benefit, so the issue is investment efficiency, I think, 

and not jobs. 

Senator HATCH. All right. Dr. Kile, as I understand it, the 6-year 

reauthorization proposal maintaining current spending levels plus 

inflation would require new offsets totaling $94 billion over the 6- 

year period. Now, your testimony indicates that, even if the 6-year 

reauthorization proposal were enacted and offset, Congress would 

find itself facing the same problem in just a few years. 

It looks to me like we have a permanent structural deficit problem in the Highway Trust Fund. Now, do you disagree? And, if we 

want the Highway Trust Fund to have an identity as a trust fund, 

do we not need to have a permanent solution to these various problems? 

Dr. KILE. It is correct that spending is outpacing revenues for the 

foreseeable future—for the period of our projection through 2024. 

Senator HATCH. All right. My time is up, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Hatch. 

Senator Stabenow? 

Senator STABENOW. Thank you, Mr. Chairman, very much. First, 

I want to join you in sending condolences to Jim Oberstar’s family. 

I worked with him extensively in the House. He was a wonderful 

man and truly a champion for transportation infrastructure for our 

country. 

Welcome to all of you. This is a critically important discussion. 

I have a couple of comments first, and I just have to say, coming 

from Michigan where it has been very difficult to get the legislature, despite the Governor’s actions, to try to take action in terms 

of what needs to be done in Michigan, Mr. Edwards, when you say 

things are getting better, come to Michigan. We have several missing persons reports of people who found the potholes, and we have 

yet to find them. So we certainly would say, at least on our end, 

that things are not getting better. They are actually getting worse. 

At this point, one of the things, I guess, Mr. Chairman, that is 

concerning to me is the big picture in a global economy. I spoke 2 

years ago in Beijing at a global auto leaders summit, and they were 

talking about building 20 new airports, state-of-the-art airports, as 

we are struggling to try to make sure we have infrastructure in 

place. And now back closer to home in Michigan, we have the largest, the busiest northern border crossing in the country between 

22 

Detroit and Windsor into Canada. We desperately need a second 

bridge—the Homeland Security Secretary was with us on Friday at 

the bridge—both for commerce, with over $1 billion a day back and 

forth, but also from a homeland security standpoint. 

Canada has stepped up to fully finance the bridge because the 

United States of America, the greatest country in the world, cannot 

do its part. And we are trying to just come up with the money for 

a Customs plaza on our side of the bridge. I think this is embarrassing to us as a country. 

Build America Bonds have been extraordinary. I strongly support them going forward. But when we look at, right now, $357 a person 

in auto repairs and costs for everybody in Michigan with what is 

happening right now, Lord knows we ought to be able to do better 

than this. 

So I guess the first question I would ask is to Dr. Kile. When we 

look long-term, the State highway transportation officials have 

said, spend a dollar to keep a road in good condition or $6 to $14 

a person to rebuild the same road. Most people would say that is 

kind of crazy and that we ought to talk about efficiency, we ought 

to be on the front end of that. 

I wonder if you could talk a little bit more about the long-term 

cost if we pass a transportation bill just at current levels or levels 

limited to the trust fund revenues. 

Dr. KILE. Senator, there is general agreement among economists 

that there would be benefits to additional infrastructure spending. 

I am sorry I do not have any additional information as to what that 

would be at this time, but there is general agreement on that point, 

despite general improvement in the quality of roads and highways 

and bridges. 

Senator STABENOW. All right. Thank you. 

On P3s, I wanted to hear a little bit more, Ms. Barend. And, Mr. 

Dhru, Secretary Layne, you mentioned P3s as well. And I am wondering, in your experience, starting with Ms. Barend, what types 

of projects are the best choice for P3s? How do you think we could 

design programs better, with TIFIA or infrastructure banks, to encourage more partnerships? 

Ms. BAREND. Senator Stabenow, it is a pleasure to be with you. 

I actually testified twice in Michigan on the new international 

trade crossing, and I am a huge proponent of that project and the 

way that the Governor is actually moving it forward. I think that 

project is a perfect project for a P3 because, you know, it is a 

tricky, sticky, complex, challenging project—you know, international. Those are the types of projects that are very suited to 

P3s, not, you know, your typical $50-million road repair, widening 

projects. It is for really large, complex projects that, but for a 

public-private partnership, probably would not move forward, like 

the Port of Miami Tunnel project in Florida that, you know, the 

Florida State DOT says there is no way they would have been able 

to finance given the amount of risks that are involved in it. 

So this is essentially allowing the State of Michigan and Canada, 

really Ontario, to know for a certainty that the project will be delivered on time, on budget, and over the course of probably about 

35 years, that the performance will be maintained. So, you know, 

those are the best types of projects for P3s. 

23 

And in addition, what you all can do from the Senate Finance 

Committee—I mentioned the private activity bonds, and those have 

been just really fundamental. And TIFIA has also been truly fundamental, the two of those combined. The key to improving them 

is, as Mr. Dhru said, increasing the certainty. You know, as the 

private activity bonds dwindle down, there is less certainty in financing. So a number of projects are probably going to be put on 

the sideline as this expires in the next year. So that means, for the 

private sector, all the financing that they are interested in investing in States that are lining up to do all the due diligence that goes 

into these projects will be put on the sideline. 

So I think we need more predictability, less political input in 

terms of the decision-making on which projects go forward. I think 

there has been a huge amount of advancement at USDOT in this 

regard. But there could still be more improvement on the TIFIA 

side. But private activity bonds continue to be really useful. 

Senator STABENOW. Well, I would also mention Port Huron is another very important project for us to look at. 

And, Mr. Chairman, I know we are out of time. I do not know 

if we have time to hear from others on this question. 

The CHAIRMAN. I am calling more audibles. We are just going to 

keep going. 

Senator STABENOW. Yes, thank you. 

The CHAIRMAN. Senator Carper is next, and, colleagues, I think 

with a little luck, depending on when the vote starts, we can go, 

we can come back. But I know this is a subject that interests lots 

of Senators. Senator Carper? 

Senator CARPER. Thanks, Mr. Chairman. Thanks to all of you for 

joining us today and for your thoughtful comments and your willingness to respond to our questions. I spent a lot of my life in Virginia as a kid, growing up in Danville and Roanoke. Our son went 

to William and Mary, my youngest son, so, Mr. Layne, I am going 

to pick on you, going back to my roots. 

You described in your testimony how Virginia has recently overhauled its entire transportation funding system, and your State 

has also been a leader in developing innovative financing tools and 

public-private partnerships. In your opinion, can we replace Federal formula grant funding for transportation with financing tools 

and public-private partnerships? 

Mr. LAYNE. No. In the State of Virginia, about 15 percent of our 

projects would qualify as P3s. It is basically a procurement method. 

It is about sharing risk with our private partners, and that risk is 

over a continuum. And, of course, the private partners want to be 

paid for that risk. 

So you have to take into account public policy in addition to determining what is a P3—as I said, about 15 percent, the larger 

projects. But I would point out that in every one of those projects, 

besides private equity and expertise, there was a host of not only 

State but Federal additional funds put in. Only about 10 percent 

of the project really was private equity and expertise. 

So these projects would not come forward without TIFIA loans, 

low-cost financing, and State participation. So it is not a substitute. 

It is a powerful procurement tool, though, when the project meets 

those criteria. 

24 

One other point on that is, to think that these private partners 

do not come back time and time again once the deal is done, when 

things do not go well, is just not accurate. It is a partnership, and 

so it is a continuing—because these are complex projects, their negotiations go on and on. So, when you look at the risk, you have 

to make sure you are considering what the public policy is and 

what the risk is to the taxpayers ultimately in the transaction. 

Senator CARPER. Good. Thank you. 

Let me just ask for a show of hands. Do any of you on our panel 

think that financing tools are a substitute for program funding? If 

you do, would you raise your hand? [Mr. Edwards raised his hand.] 

Thank you. 

I am going to continue to pick on you, Mr. Layne, if you do not 

mind, but would you just take a moment and tell us how the Federal Government can best support Virginia in achieving the mix of 

transportation modes that you have prioritized in your State. 

Mr. LAYNE. Well, there are two things that the Federal Government can do. Number one is to be a reliable funding partner. I 

agree with Mr. Dhru that the uncertainty in this process makes 

transportation funding more difficult. We work closely with the private industry in the Commonwealth of Virginia about letting contracts, and not having certainty costs us additional monies as we 

have to stop and start projects. So being a reliable partner would 

be number one. 

And then, number two, certainly the BRIDGE Act, those financing tools, those innovative things, are very helpful to help us leverage our money. So we would encourage the passage of things like 

that in order to be able to continue to leverage monies from all 

sources. 

Senator CARPER. What about freight investments? 

Mr. LAYNE. Yes, sir, freight—— 

Senator CARPER. When it comes to freight, what are Virginia’s 

priorities? Are they mainly on the highways? Or are there other 

projects that would offer shared benefits for freight travel on the 

highway system? 

Mr. LAYNE. Certainly, particularly in the Port of Virginia, freight 

is very important to us, the efficient movement into and out of our 

port to other parts of the Commonwealth and the east coast. We 

use State rail enhancement funds to help private parties dealing 

with more efficient movement of freight. Obviously we have programs to help get freight off the roads to reduce congestion. We 

have barges that go between the Port of Virginia and the Port of 

Richmond. 

So we look closely, and the major component of whether or not 

we decide to help with freight is if we get the freight off the highways to help reduce congestion. That is the highest scoring in 

there. 

Senator CARPER. In my State, if Congress does not act to stabilize the Highway Trust Fund, we would see about half of our 

transportation budget disappear. What would be the impact in Virginia if we failed to find revenues to support the program through 

the next several years? 

Mr. LAYNE. Senator, it would be very similar. Over half of our 

construction budget comes from the Federal Government. Projects 

25 

like 149 bridges, 44 smaller transit systems, more than 300 

projects—just mainly bread-and-butter construction—175 transit 

vehicles would not be bought, and 2,000 lane miles of pavement 

would not be done. 

And I would like to point out here that Virginia is continually 

recognized as one of the top places to do business, and CNBC traditionally ranks us there. But several years ago, we dropped, and 

they specifically pointed out that our inability to fund our transportation was the reason why we dropped. And that was a very big 

impetus on why this funding of transportation got done last year, 

because, if we are going to be open for business, we have to have 

an efficient transportation system. 

Senator CARPER. Thank you. 

The CHAIRMAN. Colleagues, if we are lucky, we can get Senator 

Warner and Senator Casey in before the vote. I am going to run 

over and vote, and you two, if you both take your 5 minutes, I will 

try to get right back. 

Senator WARNER [presiding]. Thank you, Mr. Chairman. I would 

note for the record that Virginia was still ranked number one for 

business when a certain Governor was there. [Laughter.] 

Senator Carper, I would be happy to go into great detail about 

Virginia’s innovative transportation system. 

I just want to make a couple comments very briefly. Since a lot 

of members are not here, maybe staff could listen up. I think concerning the BRIDGE Act, which is a financing tool, I would agree 

with what Senator Carper and Secretary Layne have said. This 

does not replace our permanent funding source. You have to have 

dollars to leverage, and private dollars have to be paid back. But 

let me make a couple comments. 

One, the U.S. Treasury Department right now has an office to 

advise pension funds how to invest in European infrastructure, but 

there is no such office to advise American pension funds how to invest in America. That makes no sense at all. 

We actually have restrictions in FIRPTA, the Foreign Investment 

in Real Property Tax Act, that prevent foreign pension funds from 

doing the kind of dramatic investing in American infrastructure 

that is needed. And I would simply make the case for members, 

there are three reasons why we need to use this financing tool. 

One is, you need long-term capital, the assuredness that comes 

with 25- to 35-year money, that you cannot find even with a fully 

funded highway transportation fund. 

Secondly, you do need some ability through Build America 

Bonds, TIFIA, or through a financing authority, to have that government backstop that can lower by up to 200 basis points the interest costs, and that can save hundreds of millions of dollars over 

a long-term project. 

Third is, smaller States—Virginia is doing this, Florida, Texas. 

Smaller States do not have the capacity right now to figure out 

how to do these P3s. You need to have that expertise in a single 

place, and, as Secretary Layne has mentioned, if you do not have 

that expertise to go toe-to-toe with Wall Street, you get snookered 

at times. 

We have highlighted the projects in Virginia that we have done 

well. We have not highlighted the projects that we might say ‘‘oops’’ 

26 

on. And, if you do not have the expertise—and as good as State infrastructure banks may be, if you do not have that kind of ability 

to have project financing expertise at a national level to leverage 

States’ ability, I think you are not going to come out always a winner. 

So I completely concur that we have to have a permanent funding source, that P3s are not free, they are going to expect to be 

paid back, and they are going to expect to be paid back with an 

ability to make a profit. As some of the witnesses have said, the 

ability to perhaps leverage faster approval processes and more innovative ways to finance projects can drive down cost, but if you 

do not have that expertise, you cannot go in eyes wide open. 

So I thank the chair in absentia for letting me do this, Secretary 

Layne, for your good work, and I look forward to working with all 

of my colleagues on trying to get this done. 

There are 2 minutes left. 

Senator CASEY. Thank you, Senator Warner, especially for that 

first commercial that you gave us. It was nice. We are grateful for 

your leadership on these issues in the State of Virginia and here 

in the Senate. 

I wanted to ask, Secretary Layne, in Pennsylvania, in fiscal year 

2014, we received roughly the same number that Virginia received, 

and I know it is difficult to precisely extrapolate the job impact, but 

to the extent that you can, in maybe even a broad framework, if 

the trust fund were to become insolvent, what would that mean to 

Virginia in terms of the job loss? Do you have a job impact—— 

Mr. LAYNE. We have done some preliminary work looking globally across the country. We think it is upwards of 60,000 or 70,000 

jobs. That is just talking about if we—— 

Senator CASEY. Nationally? 

Mr. LAYNE. Nationally. And in Virginia, it looks like it would be 

somewhere around 10 percent of that, and that is just a back-ofthe-envelope calculation based on projects that we have going. We 

have some very large projects going that are dependent upon Federal reimbursement. 

Senator CASEY. So certainly thousands of jobs, maybe not in the 

double figures. 

Mr. LAYNE. Yes, sir. 

Senator CASEY. So I would assume that, in our State, it would 

be a similar number, just at a time when in a lot of States, including Pennsylvania, the unemployment numbers have been going 

down. So that is not a place that we want to get to. 

I wanted to ask you as well about kind of a related issue. We 

hear a lot about uncertainty. We heard about it on a pretty frequent basis, especially from folks in the business community, and 

I think it is a real threat, and I think it is kind of a clear and 

present danger to a lot of businesses. 

The biggest uncertainty sometimes is what does not happen here. 

It is not some piece of legislation that is out there or action that 

is taken. Sometimes it is the inaction of Washington, the gridlock, 

the partisanship, however you describe it. 

But I do think that when I talk to folks in Pennsylvania, that 

particular kind of uncertainty and, therefore, the holding back that 

takes place, can have an adverse economic impact. Is there any 

27 

way for you to comment on that in terms of this case, the particular kind of uncertainty that results from our holding back—not 

the failure to enact a transportation bill at the Federal level, but 

doing what we did recently, which is a short-term extension, which 

will expire September 30th. So can you comment on that in terms 

of the business folks whom you encounter? 

Mr. LAYNE. Yes, sir. As I mentioned, we have a great relationship with the private business partners in Virginia, and these 

projects take a long time to develop, many of them do, particularly 

a major bridge project that we talked about here today. 

When you have uncertainty and you enter into a long-term 

project and you do not know if the money is coming, you will sometimes make other decisions to counteract what may be coming 

down there. For instance, we will look at, we have certainly looked 

at, what happens if the Federal Government does not give us the 

money, and it is pretty dire. 

But the real problem is that, when you go back to talk with that 

partner about another project, you have lost some credibility. There 

is a reputational risk in that regard. 

So certainly—and I know Mr. Dhru mentioned this in his comments—putting in a sustainable level that we could depend upon 

will certainly help our confidence in moving forward, and hopefully—Senator Warner mentioned some of the projects that potentially did not go as we planned, and that was a result of trying to 

make a P3 process work somewhere where it did not, when we had 

insufficient funds to do so. 

So I think the uncertainty just puts into the process a greater 

risk that is not necessary. 

Senator CASEY. I appreciate that. I now have to go to vote, and 

I know for this time the committee will be in a short recess. 

[Whereupon, at 11:31 a.m., the hearing was recessed, reconvening at 11:41 a.m.] 

The CHAIRMAN. The Finance Committee will come to order, and 

our patient and thoughtful friend, Senator Isakson, is at his post, 

and let us recognize him. 

Senator ISAKSON. Thank you, Mr. Chairman. 

Dr. Kile, you made reference in your testimony to vehicle miles 

traveled, I think, as one source of potential future revenue. Is that 

correct? 

Dr. KILE. Yes. 

Senator ISAKSON. Was there not a test—and I believe it was the 

State of Oregon. Did they not do a test on vehicle miles traveled? 

Dr. KILE. Yes, that is my understanding, that Oregon does have 

an experiment. 

Senator ISAKSON. Do you know whether there has been a determination as to whether it is going to be successful or not? 

Dr. KILE. I am not terribly knowledgeable about the specifics of 

that program or whether it has been a success. But that is an alternative to the gasoline tax that fits with the user-pays principle 

of financing highway use. 

Senator ISAKSON. And as we expand miles-per-gallon in terms of 

our vehicles and the Federal CAFE standards, we are buying less 

gasoline, but we are using more highways, and we have to find 

ways to fill that gap. 

28 

Dr. KILE. That is correct. 

Senator ISAKSON. And that is one of the ways to do it. 

Dr. KILE. That is an option, yes. 

Senator ISAKSON. Mr. Layne, I want to make sure I understand 

your wholesale sales tax. You converted this year to a wholesale 

sales tax on gasoline and diesel fuel. 

Mr. LAYNE. Yes, sir. 

Senator ISAKSON. Is that a certain number of cents per gallon, 

or is it a percent per gallon? 

Mr. LAYNE. It is a percent per gallon. We used to be on a cents 

per gallon tax, and the point, Senator, is that that was a declining 

revenue source because it was based simply on the number of gallons being purchased, not on the wholesale value. So it is now a 

3.5-percent tax at the wholesale level with the caveat that there is 

also a floor. And thankfully that floor is in place, because gasoline 

today is 60 cents less per wholesale gallon than it was when the 

legislation went in. 

Senator ISAKSON. Well, that was going to be part of my question. 

How did you protect yourself on the downside? And how did you 

protect the consumer on the upside? 

Mr. LAYNE. On the downside, there was a floor. But the theory 

on the upside was that gas prices would rise with the economy, 

and, therefore, this particular vehicle would participate on that upside. We would change from being a static or declining revenue 

source to one that would expand with economic activity. 

Senator ISAKSON. So you have a 3.5-percent sales tax on wholesale sales of diesel and gasoline. 

Mr. LAYNE. Yes, sir—not diesel. Diesel I believe is—— 

Senator ISAKSON. On gasoline. 

Mr. LAYNE [continuing]. Six percent. Yes, sir. 

Senator ISAKSON. What was the percent—what was the cents per 

gallon tax that you used to have? 

Mr. LAYNE. It was 17.5 cents per gallon. 

Senator ISAKSON. So you substituted 17.5 cents per gallon for 3.5 

percent of the retail—or the wholesale—— 

Mr. LAYNE. Wholesale price, yes, sir. And it is still collected the 

same way it was before, so there was no more additional administrative burden put on the system. 

Senator ISAKSON. Are you the one who pulled that off? 

Mr. LAYNE. No, sir. I was an advocate for it, but it was actually 

the McDonnell administration and working across with the other 

side, the Democrats. I would say, Senator, it was a compromise in 

which a lot of people did not like certain particular provisions, but 

in total, two-thirds of both the Houses passed it. So it got very good 

bipartisan support. 

Senator ISAKSON. It really solved some big problems. It was a 

good solution. 

Mr. LAYNE. Yes, sir. 

Senator ISAKSON. Mr. Edwards, I take it from your testimony you 

were pointing out the losers and the winners in terms of redistribution of the Federal gas tax to donor States versus recipient States. 

There was a proposal when I was on the House Transportation 

Committee about 10 years ago that was talked about, where the 

Federal Government would let the States keep the Federal tax that 

29 

was levied and administer all of it at the State level. Are you a proponent of something like that? 

Mr. EDWARDS. There is actually a proposal now, I think by Senator Lee on the Senate side, to reduce the Federal gas tax and Federal spending, the idea being that States could fill that gap however they want with their own gas tax increases. I mean, there is 

nothing preventing any State now from raising the gas taxes or 

doing something different and innovative like Virginia has done, 

and I think that makes sense. 

I think to the layman out there, you know, they pay their gas 

tax at the pump. It goes to Washington, and some of it then comes 

sprinkling back to the State. Why not just keep the money in the 

State? Yes, the Federal Government has some roles like with the 

interstate highway system, obviously, but generally I think it 

makes sense to a lot of people, when they think about it, why not 

just keep the gas tax money within the State where it is raised? 

States that are fast-growing like Texas and Florida and Georgia 

can raise money, spend it locally, and they know where the money 

should go efficiently. 

Senator ISAKSON. You know, one of my favorite things to do at 

hearings is to watch body language of other witnesses while one of 

them is testifying. I just have to ask Mr. Layne if he would like 

to comment on that. [Laughter.] 

Mr. LAYNE. I guess my body language gave me away, but, no, I 

do not agree with that. That is an unfunded mandate back to the 

States, and with devolution comes less dollars. We experience it 

when we look from the State back to the cities. I do believe it is 

an integrated network. Commerce does not stop, whether it is local 

or State or federally supplied transportation infrastructure. It supports our economy, and I think all government levels need to participate. 

Senator ISAKSON. Thank you all for your testimony. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Isakson. 

We are joined by the chairman of the Commerce Committee. 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

This is to me one of the wonderments of the post-Egyptian pharaoh world, our sort of national illiterate, bipartisan commitment 

and lack of will to keep ourselves from dropping into rivers and 

rolling over bridges that no longer are there, blowing up our cars 

in potholes—you know, this kind of thing. And it is an American 

characteristic that you do not do anything which displeases the voters because you always have to get re-elected here. And if you have 

it in your head that you cannot do anything that would displease 

the voters, then by definition you are an anathema to every single 

one of you sitting there. 

And I do not understand why that is. I understand part of it. It 

has to do with—for some it is just we do not want anything good 

to happen under this President because he is the wrong color. For 

some it is the Tea Party. For some it is just a fear of their own 

re-election prospects. There is nothing sadder to me than a Republican or a Democrat who does not dare do something or vote for 

something that he or she believes in, and we know that he or she 

believes in it, but they are afraid of what it might do to their close 

30 

election. And so you get that kind of deer in the headlights of a car. 

You know they know they are not doing what they should be doing. 

They know that they are not doing what they should be doing. But 

they do not have the guts to overcome it. 

So I am just going to ask one of those particularly dumb questions which will elicit hopefully furious answers from some of you. 

Some have said—and this may have been asked, Mr. Chairman, 

and I apologize for that—that what we ought to do is just go 

ahead—you know, this chart on the gas tax and the Highway Trust 

Fund is just absolutely astounding. It is astounding. I mean, I am 

just trying to figure what happens on August 29th and 30th when 

we are scattered all over the world. You know, it will be the ultimate in misrepresenting our people if they are then dealing with 

a cessation of Federal projects—and there is always a Federal 

match of the States. They both interact, and so they start shutting 

stuff down. Hundreds of thousands of people get laid off if we do 

not take action on it. And it infuriates me at myself—at myself— 

why I have not been more up-front about this in previous sessions. 

We have all seen this coming. 

So to me, things like a gas tax and, frankly, a whole range of revenue raisers are not a matter of getting elected or not getting elected, because in the long run—this is an awful thing to say—somebody getting elected or re-elected is less important than the country 

surviving in a structural sense. And if you have—what is it?—60 

percent of our bridges—— 

Mr. LAYNE. Sixty-three thousand in the country—— 

Senator ROCKEFELLER. Yes, 63,000 are in jeopardy. I come from 

West Virginia, and I know every one of those bridges. Some of 

them are still one lane, if you can believe it. Then you have these 

200,000-pound water trucks going over them so they can go help 

build a platform for natural gas drilling, and they cannot make a 

right or a left turn because they are so huge, so they just go right 

through people’s yards. It is a study in a slow-motion spiral downwards on something so basic. 

And so I am just going to ask you: some people say, well, you 

know, the Highway Trust Fund is a big deal, and we will find some 

way to do something. But let us suppose we do not. We are going 

to be gone during August. It is now May. That sort of equals June, 

getting close to July, getting close to August. The place is not going 

to do much legislating because of the politics of this year. 

What would be the result—and I have used up all my time in 

asking my question and making my speech, but I feel very good 

about it—if, in fact, the Highway Trust Fund simply did run out 

of money? And how long would it take for—it is like when you have 

a certain kind of disease, your body just begins to shut down organ 

by organ. And that is what I think about when I think of the Highway Trust Fund with no money and us with no will. 

So can you give me, just from your own points of view, what the 

consequences of this would be for our future in this country? I am 

going to start with you, Mr. Layne, because you and I are looking 

right at each other eye to eye. 

Mr. LAYNE. Yes, sir, and I have mentioned this before. It would 

be easy and politically convenient to say that it would not be a big 

deal, but that is just not accurate. The consequences would be dire 

31 

in the State of Virginia. We would have to redirect State money off 

of other projects to fulfill obligations that have already been made 

to us by the Federal Government. I quoted earlier that if this persisted in the next year, we would have 149 bridges that would not 

be replaced, 44 smaller transit systems would cease to operate, 300 

projects, just bread and butter, would be stopped across the State, 

170 transit vehicles would not be replaced, and more than 2,000 

lane miles of pavement would not be repaired. 

You know, I was in Stanton at a public hearing, and we actually 

had two of your residents, Senator, from West Virginia come over 

and petition our hearing for a road that connects our two States, 

a road, exactly as you said, that did not really meet the criteria for 

either State to really put a lot of attention to. But for those individuals living there, it was a dangerous and an unacceptable situation. So public policy would really take a significant back seat. 

I used to be in the real estate business, and what I learned in 

that was that—as you say it is with politics, it is the same with 

real estate—everything is local. That is the same way with transportation. People’s lives would be impacted, and that is not to overstate the obvious, but the consequences would be dire. Our transportation program would be cut in half, and that would disrupt our 

economy and the quality of life for our citizens. 

Senator ROCKEFELLER. And the Federal funds that you are referring to—and, Mr. Chairman, I apologize. All you have to do is turn 

off my red button, and then you will be in good shape. These Federal funds you are talking about have already been clobbered by 

the sequester. You know, in West Virginia we had a situation 

where our Governor cut eight children’s programs and then used 

part of that money to give the Greenbrier Hotel a gigantic tax cut. 

That kind of mentality scares me terribly about the future of our 

country. And I think I had better stop talking. 

The CHAIRMAN. Well, I very much share Chairman Rockefeller’s 

view, so I am glad that he made that point. 

Senator Menendez is next. 

Senator MENENDEZ. Thank you, Mr. Chairman. This is an incredibly important hearing, and I view our Nation’s infrastructure 

as a significant sense of economic strength and a quality-of-life 

issue for citizens of this country. And the world-class network that 

we have built comes from decades of sound investment, bipartisan 

political leadership, and recognition that infrastructure is the backbone of our economy. 

Yet for too long stagnant Federal funding has made it difficult 

to maintain this competitive edge. In recent years we have allowed 

our roads and bridges to crumble, our transit systems to deteriorate. MAP–21 maintained a flat level of funding, and certainly it 

appears that that funding level will not be good enough to keep the 

trust fund solvent even through the end of this bill. 

So my plea here as a member of this committee, Mr. Chairman, 

and as the chairman of the Transit Subcommittee over in the 

Banking Committee, is that we look to be more aggressive and 

more long-term. 

You know, until the Internet can deliver product to your home, 

even it needs the ability to have an infrastructure in the country 

that can ultimately provide the transportation system that allows 

32 

product to get to market. And so I think we overlook that. And in 

a post-September 11th world, I can tell you from my experiences 

of that fateful day, multiple modes of transportation, are critical in 

a post-September 11th world. When the bridges were closed, when 

the tunnels were closed, ferry systems ultimately got people out of 

Lower Manhattan into New Jersey to be triaged at hospitals. 

So inter-city travel, multiple modes of transportation, is not only 

a question of economy and quality of life, it is also, in the new paradigm in which we live, a security question as well. 

So I have only seen the state of good repair backlog for our tran- sits grow from $80 billion to $86 billion since 2010. And I know 

that there has been some discussion, there always is some discussion, about whether transit should be part of the highway bill. 

Well, the national transit systems of this country generate 10 billion—billion—trips per year. That is critical. That is critical. 

And so I look forward to working with you, Mr. Chairman, and 

other members to get to a funding solution that is far better than 

what we have right now. And, as you think about innovative opportunities, I want to highlight a quote from a recent Deloitte study 

which examined the growing use and potential of real estate investment trusts as a funding mechanism for infrastructure projects. They noted that REITs represent a well-understood vehicle to 

access capital markets and allow the public to participate in owning qualifying infrastructure assets, aspects which may be attractive to both the public and private sector. 

So, in addition to the critical need to reform FIRPTA rules to bolster commercial real estate in America, I think we can look at it 

as an aggregate investment in U.S. infrastructure. 

So with that as a preface—and I am feeling just as good as Senator Rockefeller was about giving my preface—let me ask Dr. Kile 

two questions—actually, I am sorry, Secretary Layne. Do you believe that continuing the flat funding model that Congress used for 

MAP–21 is sufficient to bring roads, bridges, and transit systems 

up to a state of good repair? 

Mr. LAYNE. No, sir. Just continuing the current investment without significantly more investment from the States or other sources 

will not remedy the problem. We in the State of Virginia go 

through a prioritization process each year. We are trying to be good 

stewards, obvious fiduciaries with our monies, and prioritize those 

projects that require the most need and return the best results to 

the taxpayers of Virginia, not just financially but in their quality 

of life and how we rank. 

We have significant unmet needs, and even with this funding, 

with P3 projects—and I am a very, very big supporter of P3 

projects—there continues to be a very big unmet need. 

Senator MENENDEZ. And that is also a challenge to economic 

competitiveness, is it not? 

Mr. LAYNE. Yes, sir. As I testified before, we believe it is the underpinning of our economy. The thing we look at is how we are 

supporting economic activity in addition to the things you mentioned, Senator. 

Senator MENENDEZ. Now, let me ask you: many Virginians rely 

on WMATA, which is one of the transit agencies with a significant 

state of good repair backlog that makes up the $86 billion in need. 

33 

Do you believe an increase in Federal transit capital investment 

would help mobility and safety in your State? 

Mr. LAYNE. Yes, sir, I do. The PRIIA, or the Passenger Rail Investment and Improvement Act funds, are very critical to the 

State. We partner with the Federal Government, particularly with 

WMATA. We put up 50 percent, and the Federal Government puts 

up 50 percent. If, in fact, those monies were not there, it would be 

a significant impact to that transportation system. 

Senator MENENDEZ. Mr. Chairman, I have a final question for 

Dr. Kile here. 

The CHAIRMAN. Yes. 

Senator MENENDEZ. Dr. Kile, since 2008, the trust fund has been 

dependent on $54 billion in general fund transfers, creating uncertainty about the Federal commitment to infrastructure investment. 

It now appears that the funding level of MAP–21 was insufficient 

to even get us, as I previously said, to the 2-year window that was 

envisioned by Congress. 

What is the impact of continued Highway Trust Fund instability 

on the ability of States and local communities to deliver transportation projects? 

Dr. KILE. Going forward, the funding levels are $13 billion less 

than commitments for next year from the trust fund, and that is 

an amount that grows to $18 billion by the end of 2024. That would 

limit the ability of the Department of Transportation to pay funds 

to State and local governments. I cannot particularly speak to the 

impact on the State since I do not represent that perspective. 

Senator MENENDEZ. But it would be easy to extrapolate from 

your statement that if you do not have the monies flowing to the 

States, either one of two things will have to happen: either they 

will have to make it up on their own or, in the absence of that, 

some of those projects might simply not proceed. 

Dr. KILE. That is correct. If there was less spending, there would 

be less in total, and perhaps some of that would be made up by 

State and local governments. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Menendez. And we will certainly be working closely with you, as you and I have talked about. 

New Jersey was one of the significant users of the Build America 

Bonds program, so there are plenty of ideas to follow up on. 

I want to pick up on Chairman Rockefeller’s question, because I 

think it highlighted an important point. Essentially, Chairman 

Rockefeller, in discussing what happens, what are the consequences of inaction, Mr. Layne said that the consequences would 

be dire. Those are your words, not mine. 

Mr. LAYNE. Yes, sir. 

The CHAIRMAN. Dr. Kile, I think the number you gave us is that 

inaction would result in a cut of 30 percent in terms of the Federal 

highway program, in terms of spending. That, I think, would result 

in no new starts at all in 2015. 

So my question is then to you, Mr. Dhru, so we can compare 

what our government witnesses are saying to what our privatesector witnesses are saying. It sounds to me like what we have 

heard from the government witnesses in terms of the real consequences of the inaction would be—to really use the parlance of 

34 

the private sector, it would be a significant drag on the private 

economy. Is that generally accurate? 

Mr. DHRU. Absolutely. 

The CHAIRMAN. All right. Very good. Any—— 

Mr. DHRU. If I can just—— 

The CHAIRMAN. Go ahead, please. Yes, please. 

Mr. DHRU. If I can just add to that, we were talking earlier about jobs creation, and I mentioned the $1.3 billion number. That was 

the $1.3 billion creating 29,000 jobs, approximately. But the impact 

of that also, because of the multiplier effect, is that the investment 

would likely add $2 billion to real economic growth per year and 

about $200 million in Federal deficit reduction. So the impact of 

these investments will be substantial. 

To the earlier question that Senator Menendez had, if the status quo were maintained, we already see a $200-billion annual gap. So 

with the status quo, there is a $200-billion annual gap. So it is absolutely a fair way to say that this is a significant issue. 

The CHAIRMAN. I very much share your view. I do think, in the 

interest of fairness, Mr. Edwards, did you want to say anything 

with respect to these kinds of assessments? You are not required 

by law to do it. 

Mr. EDWARDS. It would be very disruptive, absolutely no doubt 

about it. I mean, from my point of view, it is part of the problem 

of everyone being too dependent on Federal aid, and we saw a similar problem with our air traffic control system during sequester. 

Because the air traffic control system is dependent on the Federal 

subsidies, you get disruptions when you folks up here cannot get 

together on bipartisan bills. 

So, again, part of the solution, I think—Canada has a private, 

nonprofit corporation that runs its air traffic control, which is not 

dependent on the Federal budget. It runs independently, separate 

from the government budget. So I think those sorts of solutions are 

the way to go. 

The CHAIRMAN. And I think, as much as anybody over the years, 

I have been one who has championed a significant role for the private sector around here. We have made it bipartisan. Mr. Dhru 

gave us some very good ideas today with respect to the private sector. The chair of the Environment and Public Works Committee, 

Senator Boxer, has taken a lot of flak for being willing to streamline efforts in the private sector. I just feel very strongly—and this 

is something we can respectfully disagree on—you also need a very 

significant Federal role here. You need a Federal partner, and I 

have heard that from Virginia, I have heard it from Oregon, we 

have heard it from West Virginia, we have heard it across the 

country. 

So I want to see if my colleagues—because I asked an additional 

question—if Senator Hatch or Senator Carper or Senator Rockefeller want to ask an additional question, they are welcome to do 

so, and then we will wrap up. Do any of my colleagues want to ask 

anything else? Senator Hatch? Senator Carper? 

Senator CARPER. I want to come back to a couple of things you 

mentioned and Senator Menendez just mentioned, about multiple 

modes. This is one of the questions I gave to Secretary Layne. I 

have been pushing hard as an authorizer on the Environment and 

35 

Public Works Committee, chair of the Transportation Infrastructure Subcommittee, pushing hard for us to include in our authorization bill a freight title. And one of the things I have heard repeatedly is—I do not care if it was from UPS or FedEx, I do not 

care whether it was from railroads, I do not care if it was from 

other major players in our economy—almost everybody says it is 

not enough just to fund highways. You have to find a way to help 

us move goods. And it is not just by moving them on the highways, 

because a lot of the goods that need to be moved do need to move 

on highways, but then they need to be on a barge or they need to 

be on a boat or they need to be on a train. And the important part 

is that, as we fund a transportation bill, that we also provide for 

the funding of these multi-modal approaches. Could somebody just 

elaborate on that just a little bit? I just think it is something we 

need to underline and put an exclamation point after. Does anybody want to speak to it? 

Mr. LAYNE. I would be happy to. Again, we devote State dollars 

to rail enhancement funds to that very fact, to try to make this 

intermodal, particularly, again, around our port or around our airports. To the extent we can cut out—for instance, if we can go ship 

to rail, that takes trucks off the highway. But you have to have an 

infrastructure around it, because not everything can go on rail. 

Some has to go by truck, the bulk of goods. And so you have to 

have the infrastructure to get those trucks out of the port. And 

that is where the road networks come in. That is why we have 

made significant investments in the Hampton Roads region around 

the Port of Virginia. 

So we do see them as related, Senator, not only from an economic 

standpoint but in terms of helping mitigate some of the traffic congestion and other delays that we face, particularly around these 

large economic generators, like airports and ports. 

Senator CARPER. Ms. Barend? 

Ms. BAREND. I would also just add, the Port of Miami Tunnel 

project, which is opening in Miami, has been a significant economic 

boon for that area. I had alluded to it earlier. This is a project that, 

but for the private sector and the innovation brought through a 

performance-based delivery approach, would not have moved forward. It is generating billions and billions in economic activity, and 

it has actually saved the State quite an amount of money in using 

the delivery approach. 

Senator CARPER. Thanks. 

Mr. Chairman, I would just like to mention in closing, a number 

of years ago I was trying to get to Mackinac Island in the northern 

part of Michigan, out in the middle of one of the Great Lakes. I 

left my house. I walked out to my car. I drove to the train station, 

the Wilmington train station. I took a train to BWI, and I walked 

off the train, got onto a shuttle, which took us into the terminal. 

I took a people mover to our gate and got on an airplane that flew 

to Traverse City, MI; got off there, rode a bus to a ferry, took a 

ferry across the water, landed in Mackinac Island, and got in a 

horse-drawn carriage which took us to our hotel. [Laughter.] 

It worked, and it was cost-effective. 

The CHAIRMAN. Trains, planes, automobiles, and horse-drawn 

carriages. 

36 

Senator CARPER. All of the above. 

The CHAIRMAN. Wonderful. Thank you. 

Senator Rockefeller had an additional question. 

Senator ROCKEFELLER. Two. 

The CHAIRMAN. Two. 

Senator ROCKEFELLER. I just have to respond, Mr. Edwards, to 

this idea of, not privatizing the FAA but, you know, getting in outside groups—and I chair the committee that oversees that, and we 

have to fight desperately to get bills, reauthorization bills, desperately. They are growing so fast in passenger use: 700 million 

people went on airplanes this year; 1 billion Americans will do so 

in 5 to 8 years. They are filled with people who—we are not talking 

about pilots. We are talking about people who are mechanics, people who do logistics, people who coordinate activities, people who 

look out into the future, people who simply are up in the air control 

towers, they see two planes, both trying to land, and, you know, we 

have not built our modern landing system, which we have pledged 

that we would do, which is actually law that we do, but we have 

not done it. 

And then I think about the situation in Virginia where—and 

Mark Warner was on Commerce, and I made him chairman of the 

Transportation Subcommittee, and I said, ‘‘But there is only one 

condition. You have to solve the Loudoun County problem.’’ And he 

immediately appeared on the Finance Committee and was not on 

the Commerce Committee anymore. 

But, I mean, that is so typical. In other words, you have a line, 

a beautiful train line that goes right on out. We have the same 

thing in West Virginia with roads, 4-lane roads which go, and then 

they stop, and then there is 15 miles of grass, and then they pick 

up again, because the Federal money was not there, the matching 

money was not there. 

It is the same thing in Loudoun County. People do not want to 

pay in any way to support that, putting the train through the county, and Dulles is probably one of two or three of the most important 

airports in the entire country. 

And all I am saying is that it makes people feel good to say, if 

we could just get the Federal Government out of this, we could do 

it better. The only thing is that the Federal Government can raise 

the revenue, which the private sector cannot do and will not do and 

would not do and should not do. To cooperate, yes, to partner, yes, 

but to be responsible for, no. The Federal Government has its role. 

I agree with the chairman. And there are so many examples. Corridor H is something we are very familiar with in West Virginia. 

That is an Appalachian regional highway thing which has been 

going on for 30 years. If it finished and we hooked up—Frank Wolf 

is no longer there, so we could probably hook up with I–66. And 

that would change two-thirds of the economy of the State of West 

Virginia, two-thirds of the State of West Virginia’s land mass 

would be changed for the better by the economy. But, no, we do 

about 2 or 3 miles every 2 or 3 years, and it is just—I am sorry. 

And I have the ease of the fact that I am not running again. And 

I was just telling the chairman it makes me even madder at myself 

that I was not screaming and yelling earlier. When I was Governor, 

West Virginians were the heaviest smokers in the entire country. 

37 

We pay a terrible price for it, along with black lung. And I raised 

the tax on cigarettes to the point where there were no more cigarettes to buy in West Virginia. Everybody was just going to Ohio 

and Virginia and Kentucky and Maryland to get their cigarettes. 

And, you know, that was all right with me, because we got a lot 

of money out of that and they could not, you know, decide to kill 

themselves on our behalf. 

So I am sort of militant about this subject, and I want to see 

something break loose, Mr. Chairman, either here or—we have Secretary Foxx coming in tomorrow at the Commerce Committee. Barbara and I are going to work all of this stuff together with you. And 

we have just got to have the money to do something, or else we are 

going to fade away. 

The CHAIRMAN. Well said, and we are going to be doing this in 

a bipartisan way and in all three of those committees, and I look 

forward to it. 

Senator Nelson has joined us. 

Senator NELSON. Thank you. I am quite intrigued, Mr. Layne, by 

what you all did in Virginia in replacing the gas tax, and so I 

would like to ask Dr. Kile, if the Federal gas tax were replaced 

with a sales tax, do you know what approximately that would have 

to be to bring in the same amount of revenue? And how would you 

adjust that sales tax for the future so that you could have additional revenue in the future? 

Dr. KILE. Senator, I am sorry, but that is not a proposal that we 

have yet analyzed, and I believe that the estimate would actually 

come from the Joint Committee on Taxation. We would be happy 

to work with you and your staff to explore that. 

Senator NELSON. All right. I would like to do that because, you 

know, anything that has anything to do with taxes, makes people 

get apoplectic around here. And yet, what we have seen is, the gas 

tax was set way back in the 1990s, and those sources of revenue 

are just not meeting the transportation needs of the country. So I 

think it is very interesting that the Commonwealth of Virginia got 

very visionary and decided they were going to start shifting. 

Would either one of you comment about the viability of a sales 

tax in supplying the revenue for transportation needs as opposed 

to the gas tax? 

Mr. LAYNE. Virginia’s experience is that we looked at—our gas 

tax was 171⁄2 cents a gallon, and a computation was made, what 

would be relatively the same level of sales tax, a wholesale-level 

sales tax, to make that revenue-neutral in the first year, with the 

thought being, as gas prices increased or usage increased, economic 

activity increased, that that would no longer be a static tax; it 

would be one that would rise with economic activity. 

Senator, you mentioned, and you are right, that on strictly a 

cents-per-gallon basis, CAFE standards are getting higher, so that 

is a regressive or a declining type of tax. 

The one thing we did do was put a floor in to make sure it did 

not fall below the level that we were already getting from the 171⁄2

cents a gallon tax, and it was good that we did that because, right 

now, the wholesale price of gasoline is 60 cents below where it was 

when the legislation went in. 

38 

So what we think we have done is put in place something that 

will rise with economic activity in the future, whether it is for the 

price of gasoline or the usage of more gasoline, so that it would be 

a little more indexed to inflation or economic activity. 

It does not meet all our needs. In addition to that, we did raise 

monies in the general fund through additional sales taxes that 

were transferred to transportation. But the combination of those 

helped fill a significant gap in the Commonwealth of Virginia’s 

funding. 

But also, Senator, we continue to be big proponents of P3 

projects, alternative financings like the BRIDGE Act, trying to leverage those monies into more uses for transportation across the 

Commonwealth. So we believe that could be the basis, but it needs 

to be part of a package that, when you add all the elements up— 

and some of them, Senator, are grants; some of them are very competitive. But we do also believe in being good stewards and making 

sure these projects are well-vetted. 

So we understand that there is a need to be good fiduciaries, but 

even with that, we have a lot of unmet needs. So that has been our 

experience, Senator. 

Senator NELSON. All right. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Nelson. 

Senator Rockefeller? 

Senator ROCKEFELLER. Just a quickie. In preparing for this, 

which I did 2 days ago, I think I read that the American Academy 

of Civil Engineers said that it is going to take $2.3 trillion over the 

next couple of decades to bring us, in terms of general infrastructure—that is not just roads and bridges, but the general situation—back to where we need to be. Do we not have to look at all 

of this with that as a prospect? Anybody. Why don’t you answer 

that, Ms. Barend? 

Ms. BAREND. Sure. To your point, this is why, you know, the Federal funds that are available continue to be quite scarce, and the 

need for Congress to act and to increase the funding is of the utmost importance given the need. But also I think the onus of responsibility is also on Congress and the States to figure out how 

we maximize this funding to the best extent possible. 

The time for cost overruns and schedule delays in projects, big 

dig projects, we cannot afford that anymore in this country. We 

just simply do not have the money. So we need to maximize every 

dollar that is spent and make sure that we are incentivizing States 

and cities to use delivery approaches that really push performance. 

And that is really, you know, figuring out how to use the best of 

the private sector together with the public sector to generate these 

cost savings that a number of States are realizing. 

Senator ROCKEFELLER. So I think it is safe for me to say then, 

other than Mr. Edwards—and I respect you greatly, sir—that none 

of you would quit your positions or run off to Canada or Nova Scotia or something in a fury if we were to raise some taxes to pay 

for what this country has to do? Do you think you could survive 

that emotional trauma and we would actually have a train that 

went out to Dulles airport? Because what we have now is a train 

that goes nowhere. It is a wonderful train, but until the Loudoun 

39 

County issue is solved, it has no use. That may be an overstatement, but it is not to me. 

Mr. LAYNE. Well, the intention is, as you know, the TIFIA loan 

was approved, the largest in the Nation’s history, to fund the extension of the Silver Line out to the airport. 

Senator ROCKEFELLER. Yes. 

Mr. LAYNE. Yes, sir. 

Senator ROCKEFELLER. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Rockefeller. 

I am going to give you one question for the record, Ms. Barend, 

particularly on the balance and interaction between tax-exempt financing and the private-sector issue, because you clearly were raising questions about how that relationship would work, particularly 

for the private sector. So we will get that in writing. 

[The information from Ms. Barend appears in the appendix on p. 

50.] 

The CHAIRMAN. Here is where we are, and we are going to conscript you all into this debate in terms of how we move forward. 

This strikes me as a position almost akin to what Winston Churchill said many years ago about our country, and the great phrase he 

used is, ‘‘Americans always get it right.’’ And then he paused in 

that inimitable way, and he said, ‘‘After they have tried everything 

else.’’ 

And my sense is, we are sort of at that position now, and we are 

going to be talking to you about the steps ahead, and my sense is 

that we are going to need something akin to an all-in strategy. We 

are going to need an effective government/private sector approach. 

We have explored some ideas about that. I am very pleased about 

Chairman Rockefeller’s question, which I tried to build on. Mr. 

Layne, you have said the situation for your State would be dire. 

Mr. Dhru, representing the private sector—and I quote here—said 

that this would be a ‘‘significant drag’’ on the private economy. So 

we have gotten a strong message today from the government and 

from the private sector about the consequences of inaction. And I 

think Senator Boxer, the chair of the Environment and Public 

Works Committee, summed it all up, which is, failure is simply unacceptable. 

So we are going to operate on that kind of theory. We will be 

calling on you, taking some of your nights and weekends here, as 

we try to deal with this promptly. 

We thank you for your patience, and with that, the Finance Committee is adjourned. 

[Whereupon, at 12:22 p.m., the hearing was concluded.] 

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