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94–803 2015

THE ROAD AHEAD: SMALL BUSINESSES AND THE 

NEED FOR A LONG-TERM SURFACE TRANSPORTATION REAUTHORIZATION 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JUNE 3, 2015 

Small Business Committee Document Number 114–013 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

TOM RICE, South Carolina 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

STEPHEN DENNIS, Deputy Staff Director for Policy 

JAN OLIVER, Deputy Staff Director for Operation 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 2 

WITNESSES 

Mr. William Schmitz, Vice President, Sales and Quality Control, Gernatt 

Asphalt Company, Collins, NY, testifying on behalf of the National Stone, 

Sand and Gravel Association .............................................................................. 5 

Mr. Don Shilling, President, General Equipment and Supplies, Fargo, ND, 

testifying on behalf of the Associated Equipment Distributors ....................... 6 

Mr. Matt Davis, Director, Build Our New Bridge Now Coalition, Cincinnati, 

OH ......................................................................................................................... 8 

Dr. Jonathan Gifford, Professor and Director, Center for Transportation Public-Private Policy, George Mason University School of Public Policy, Arlington, VA .................................................................................................................. 10 

APPENDIX 

Prepared Statements: 

Mr. William Schmitz, Vice President, Sales and Quality Control, Gernatt 

Asphalt Company, Collins, NY, testifying on behalf of the National 

Stone, Sand and Gravel Association ........................................................... 29 

Mr. Don Shilling, President, General Equipment and Supplies, Fargo, 

ND, testifying on behalf of the Associated Equipment Distributors ........ 38 

Mr. Matt Davis, Director, Build Our New Bridge Now Coalition, Cincinnati, OH .................................................................................................... 44 

Dr. Jonathan Gifford, Professor and Director, Center for Transportation 

Public-Private Policy, George Mason University School of Public Policy, 

Arlington, VA ................................................................................................ 47 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

Statement of Congressman Blaine Luetkemeyer ........................................... 51 

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(1) 

THE ROAD AHEAD: SMALL BUSINESSES AND 

THE NEED FOR A LONG-TERM SURFACE 

TRANSPORTATION REAUTHORIZATION 

WEDNESDAY, JUNE 3, 2015 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 11:07 a.m., in Room 

2360, Rayburn House Office Building, Hon. Steve Chabot [Chairman of the Committee] presiding. 

Present: Representatives Chabot, Hanna, Rice, Radewagen, 

Knight, Curbelo, Hardy, Vela ́zquez, Chu, Hahn, Meng, Moulton 

and Takai. 

Chairman CHABOT. Good morning. The Committee will come to 

order. We want to thank everyone for being here as we discuss the 

importance of our Nation’s surface transportation infrastructure, 

with a focus on the small firms that help build it and those that 

depend on it. I want to thank each of our witnesses here this morning who have agreed to provide testimony this morning. 

There are lots of projects throughout our Nation that I could cite 

as examples of why our infrastructure is important, but none that 

is closer to home for me than the Brent Spence Bridge. This is a 

bridge that connects Ohio to Kentucky, the Midwest to the South. 

It carries 172,000 cars and $1 billion in commerce every day, it is 

considered to be functionally obsolete. It takes about twice the 

amount of traffic every day that it was built for. 

I have actually worked with a lot of my colleagues in a bipartisan 

fashion from the region over the years, both Republicans and 

Democrats, from Rob Portman, to Jean Schmidt, to Brad Wenstrup, 

to Ken Lucas, to Tom Massie, and to Sherrod Brown, to Jim 

Bunning and Steve Driehaus and others at the Federal level and 

many at the State level, in both Ohio and Kentucky and in the Cincinnati area itself to try to find a solution to this. I am pleased that 

the Committee is able today to examine how our communities and 

small businesses suffer from the outdated infrastructure that is existent in this country and certainly in our area. 

America has always been a place where citizens are free to follow 

their dreams and pursue happiness. Well, infrastructure gets us 

there, it makes commerce possible, and the Brent Spence Bridge is 

the perfect example of why we need a long-term transportation bill 

that will keep America moving forward. 

When you speak to folks back home about infrastructure, the 

first thing they generally bring up is traffic, or the fact that they 

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2 

are sitting in traffic far too long. It probably is the case that my 

esteemed colleague, Ms. Vela ́zquez, our ranking member, probably 

has a horror story or two about crossing the Brooklyn Bridge in her 

district during rush hour. 

Time spent in traffic causes more than just a headache; it costs 

Americans real money. If you are a florist, getting stuck in traffic 

means your deliveries aren’t as fresh or as fast as they should be. 

If you are an HVAC repairman, it means you can’t make as many 

house calls in a day as you otherwise would, which directly impacts 

your bottom line. If you are a manufacturer, it means a longer time 

for your products to get from one place to another, which is money 

out of your pocket. 

Improving our infrastructure is about making American businesses more competitive and making sure we have, as consumers, 

the best access to goods and services every day that we can, and 

that it keeps things as affordable as possible for American families. 

And it is about jobs, not just construction jobs, but jobs across the 

economy, from manufacturing to retail and just about everywhere 

in between. 

Small businesses play an important role in all of this. On the 

construction side, small producers provide the stone and sand to 

build the new highways, small equipment distributors rent and 

maintain heavy equipment that is used on construction sites, and 

in the end, the small business that needs to ship an order of their 

goods across the river will be able to do so quicker and cheaper 

with a new and modern bridge, for example, in place. 

Our country needs a long-term surface transportation bill to provide States and localities the certainty they need to tackle large, 

multi-year projects that fit the needs of their growing communities. 

Just last month Congress passed a short-term extension to keep 

the Highway Trust Fund operational through the end of July. 

While that was necessary to ensure things didn’t come to a grinding halt, we must find bipartisan solutions that lead to a long-term 

plan to improve the infrastructure that keeps our country moving 

forward. 

I want to thank all our witnesses again for being with us today. 

I have personally testified several times about the national significance of the Brent Spence Bridge, but since I am on the dais today, 

I asked a fellow Cincinnatian to come here and to share the Brent 

Spence Bridge story, Mr. Davis, and also its importance to our Nation. 

If we want to do something positive for the millions of Americans 

that rely on small businesses to put food on the table, we have to 

get to projects just like the Brent Spence Bridge and get them 

done. We owe it to the American people to invest in those projects 

that produce long-term savings, keep us competitive, and most importantly, create American jobs. I keep saying that, because it really, really is important. 

And, again, I want to thank the witnesses. And I would now like 

to yield to our ranking member, Ms. Vela ́zquez, with her horror 

stories about infrastructure. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

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3 

I just want to take this opportunity to thank all of you, the witnesses, for taking time to be here with us this morning. This is a 

very important issue. 

As we all know, congressional action on a long-term reauthorization of transportation infrastructure programs is greatly overdue. 

It is my hope that this hearing will call badly needed attention to 

this matter. And I hope, Mr. Chairman, that the Republican leadership listens to you. It would be of a great help to the Nation. 

The small business sector is actively affected by transportation 

policy. Roads, bridges, and highways are there for the use of American commerce, and small firms depend on them to move goods to 

market. As such, traffic congestion and delays stemming from outdated infrastructure directly affect small firms’ bottom line. Traffic 

congestion deprived the U.S. economy of $124 billion in 2013 alone. 

It is estimated that the costs could rise to as much as $186 billion 

if steps are not taken to address these delays. 

Beyond being users of our roadways, small businesses have a key 

role to play in upgrading our transportation and infrastructure system. The construction industry is dominated by smaller firms, with 

90 percent of companies defined as small. Almost seven and a half 

million Americans are employed by companies in this sector, making it a key driver for the broader economy. Other industries, like 

equipment operators, manufacturers, material producers, and engineers benefit from these investments. That is why each dollar of 

federal highway grants received by a state raises that state’s gross 

product by $2. 

Conversely, delays and uncertainty in federal transportation policy hold back our economy. To plan and hire employees, it is important small businesses are able to predict future government infrastructure projects. Unfortunately, Congress has sidestepped the 

hard work of a long-term reauthorization, opting instead to kick 

the can down the road with short-term extensions. Last July, the 

House passed a 10-month extension, failing to adopt a longer term 

reauthorization. In May, we extended these programs until July, 

pulling the expiration date yet again. 

This piecemeal approach has a very real impact on the American 

economy. The uncertainty it creates slows economic development 

and hampers job creation. One trade group has suggested that this 

has cost the U.S. over 900,000 jobs, 97,000 of them in the manufacturing sector. That is why business group after business group has 

called for a long-term solution for the Highway Trust Fund. 

Congress’ failure to lead on this issue is evident in our transit 

system condition. Once viewed as an infrastructure leader, the U.S. 

now ranks 16th. Nearly one-third of our roads are considered to be 

in poor or bad condition. Twenty five percent of U.S. bridges require significant repair or cannot handle today’s traffic. 

Mr. Chairman, I have spent a lot of time trying to cross bridges 

to make it into other parts of my district. I have to cross four 

bridges that will connect me from either Queens or Brooklyn into 

Manhattan. It is just unacceptable. 

Mr. Chairman, it is critical Congress pass legislation to maintain 

our roads and infrastructure for the long-term. It is my hope that 

today’s hearing will move us toward that goal. 

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With that, I would like to thank again the witnesses and the 

chairman for holding this important hearing. Thank you. 

Chairman CHABOT. Thank you very much. 

And I will—before introducing our panel, I will go ahead and inform you of our timing rules, which you are probably already familiar with. We have what we call the 5-minute rule. You have 5 minutes to testify. We will ask questions for 5 minutes also. A yellow 

light will come on to let you know when you have got 1 minute to 

wrap up. When the red light comes on, we ask that you cease talking at the end of that sentence, maybe, or a little bit beyond that 

if you need a little more time, but we would ask to you stay within 

those constraints if at all possible. 

And introducing the panel, we will begin with William Schmitz, 

who is vice-president of quality control and sales at Gernatt Asphalt Products in Collins, New York. Gernatt has been in business 

since 1946 and serves all of western New York and northwest 

Pennsylvania. The company has provided crushed stone, gravel, 

and other products to several major projects in New York, such as 

construction of Ralph Wilson Stadium, the First Niagara Center in 

downtown Buffalo, and the New York State thruway. He is testifying on behalf of the National Stone, Sand and Gravel Association. 

We thank you for being here, Mr. Schmitz. 

Our next witness will be Don Shilling, who is president of General Equipment and Supplies, headquartered in Fargo, North Dakota. Don has been an owner and in the company’s management 

since 1984, serving as president since 2000. During that time, the 

company has grown from one with three locations in North Dakota 

to one with nine facilities in three States. He currently serves as 

chairman of the Associated Equipment Distributors and he is representing that organization today. We want to thank you for your 

testimony, Mr. Shilling. 

Our next witness will be Matt Davis, who is director of the Build 

Our New Bridge Now Coalition, and advocacy organization made 

up of nearly 200 businesses, labor organizations, and community 

leaders advocating to build a new Brent Spence Bridge Corridor in 

Cincinnati. In addition to his work at the coalition, he serves as 

president of DSD Advisors, a full service government relations firm 

that partners with public, private, and non-profit clients to achieve 

their public policy goals at the local, State, and Federal levels. We 

are looking forward to your testimony as well, Mr. Davis. 

And I will now yield to the ranking member to introduce our 

other witness. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. It is my pleasure to 

welcome Dr. Jonathan Gifford, professor in the School of Public 

Policy at George Mason University, and the director of its Center 

for Transportation Public-Private Partnership Policy. His primary 

area of expertise is transportation and public policy, with a particular focus on infrastructure finance. His book, ‘‘Flexible Urban 

Transportation’’, examines policies to improve urban transportation 

systems, and he has twice chaired committees of the National 

Academy of Sciences that review U.S. Department of Transportation programs. 

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Professor Gifford received his Ph.D. in civil engineering from the 

University of California Berkeley, where his research focused on 

the history and development of the interstate highway system. 

Welcome, and thank you for being here. 

Chairman CHABOT. Thank you very much. 

Mr. Schmitz, you are recognized for 5 minutes. 

STATEMENTS OF WILLIAM SCHMITZ, VICE PRESIDENT, SALES 

AND QUALITY CONTROL, GERNATT ASPHALT COMPANY, 

COLLINS, NY, TESTIFYING ON BEHALF OF THE NATIONAL 

STONE, SAND AND GRAVEL ASSOCIATION; DON SHILLING, 

PRESIDENT, GENERAL EQUIPMENT AND SUPPLIES, FARGO, 

ND, TESTIFYING ON BEHALF OF THE ASSOCIATED EQUIPMENT DISTRIBUTORS; MATT DAVIS, DIRECTOR, BUILD OUR 

NEW BRIDGE NOW COALITION CINCINNATI, OH; AND DR. 

JONATHAN GIFFORD, PROFESSOR AND DIRECTOR, CENTER 

FOR TRANSPORTATION PUBLIC-PRIVATE POLICY, GEORGE 

MASON UNIVERSITY SCHOOL OF PUBLIC POLICY, ARLINGTON, VA 

STATEMENT OF WILLIAM SCHMITZ 

Mr. SCHMITZ. Thank you, Chairman Chabot and Ranking Member Vela ́zquez for the opportunity to testify today on behalf of the 

National Stone, Sand and Gravel Association, the NNSGA, about 

the importance of the Nation’s surface transportation system to 

small businesses and particularly small aggregate companies. I am 

Bill Schmitz, vice-president of Dan Gernatt Gravel Products, a 

small business. 

Since 1946, the Gernatt family and their companies have been 

proud to serve all of western New York and northwestern Pennsylvania. Comprised of Gernatt Asphalt Products, Dan Gernatt Gravel 

Products and Countryside Sand and Gravel, our company provides 

sand, gravel, stone, hot mix asphalt, and trucking. 

NNSGA is a leading voice and advocate for the aggregates industry. Its members, the stone, sand and gravel producers, equipment 

manufacturers, and their service providers, produce the essential 

raw materials found in homes, buildings, roads, bridges, and public 

works projects. There are more than 10,000 aggregate operations 

across the country, at least one in nearly every congressional district. During 2014, NNSGA member companies represented more 

than 90 percent of the crushed stone and 70 percent of the sand 

and gravel consumed in the U.S. 

Our locations are spread over three rural western New York 

counties, where people struggle to find good paying jobs. The 

Gernatt companies consider our 175 loyal employees as family, and 

we want to provide them the well paying, stable employment they 

deserve. We share the same faith-based values, and are strong supporters of local businesses and community efforts where we operate. It is important to us that these local businesses and communities benefit from our success. 

Aggregates are the foundation of our business in a key industry 

that serves as a barometer for the rest the U.S. economy. Stone, 

sand and gravel are essential to any construction project. When the 

demand for our products is high, jobs are being created and critical 

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national assets are being built. If the aggregates industry is doing 

well, so is America and the Gernatt companies. Sales of aggregate generate over $40 billion annually for the U.S. 

economy. When combined with related industries, such as cement, 

concrete, asphalt, and construction equipment, they generate more 

than $200 billion in economic activity every year and employ more 

than 2 million people. 

Due to high transportation costs, proximity to a market is critical. Unlike many other businesses, we cannot simply choose where 

we operate. Because so much of our material is used in public 

projects, any cost increases are ultimately borne by the taxpayer. 

Congress needs to do what they were elected to do. Stop kicking 

the can down the road, and address the long-term funding of our 

Nation’s surface transportation infrastructure. No more short-term 

extensions. Seventy percent of NNSGA members are small businesses. Reauthorization is critical to us. 

Multi-year highway bills are important for funding for the confidence they provide State transportation departments. When they 

know the Federal Government will apportion their funding year 

after year, they have the confidence that they will be reimbursed. 

The process of building and maintaining our infrastructure then 

can proceed as planned. Stability of the program is a critical factor, 

particularly for small businesses. 

Improved safety is another important reason to pass a multi-year 

highway reauthorization bill now. Safety must come first, to ensure 

that all Americans get to and from their daily activities safely. The 

Gernatt companies are committed to the safety of our employees, 

our most precious resource. We pride ourselves on our safety 

record. Our small company devotes numerous resources to maintaining our safety program. 

Mr. Chairman, again, thank you for the opportunity to testify 

today. Congressional action on a long-term highway bill, one that 

increases investment in the Nation’s infrastructure, is vital to the 

aggregates industry and all small businesses. We require certainty 

to make sound capital investment decisions. Reverting to shortterm extensions will only create havoc in resource development decisions and construction projects. 

Attached to my statements are two infographics that NNSGA put 

together. Small Change calculates the real costs to the average 

American of the Corker-Murphy proposal to increase the fuel user 

fee 12 cents. The second infographic shows virtually the cost of 

doing nothing. 

We look forward to continuing to work with you in what is right 

for America. If we ignore the maintenance and improvement of our 

Nation’s road and highway network, it is at our own peril. We risk 

the loss of economic growth, improved safety, cleaner air, and jeopardize the freedom of mobility that we all take for granted. Thank 

you. 

Chairman CHABOT. Thank you very much. 

Mr. Shilling, you are recognized for 5 minutes. 

STATEMENT OF DON SHILLING 

Mr. SHILLING. Chairman Chabot and Ranking Member 

Vela ́zquez, and other distinguished members of the House Small 

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Business Committee, my name is Don Shilling, and it is my pleasure to appear before you as executive of a construction equipment 

company impacted by uncertainty surrounding the Federal Surface 

Transportation Program, and my capacity as chairman of the Associated Equipment Distributors. 

AED is the trade association representing distributors of construction, mining, energy, forestry, industrial, and agricultural 

equipment. AED members, the overwhelming majority of which are 

small family businesses, supply equipment that builds America’s 

highways, bridges, airports, sewer, and drinking water systems. 

I am president of General Equipment and Supplies. The authorized Komatsu construction equipment dealer for North Dakota and 

western Minnesota. We have four North Dakota locations, two facilities in Minnesota, one in South Dakota, and employ 235 American workers. 

General Equipment and Supplies and AED members across the 

Nation are ready to supply the heavy equipment needs to rebuild 

America. 

The Highway Trust Fund consistently flirts with bankruptcy, as 

gas taxes and other user fee revenues are insufficient to support 

even the current inadequate levels of investment. This is creating 

enormous uncertainty for the entire construction sector. 

My company is fortunate. The energy boom in North Dakota has 

allowed General Equipment and Supplies to stay in business despite sufficient decreases in equipment sales to road contractors, 

which account for about 50 percent of our customer base. However, 

in Minnesota locations, the most prominently—which we most 

prominently service highway—the market, we see dramatic reductions in sales due to uncertainty surrounding the Federal investment. In fact, between 2013 and 2014, we saw a 34 percent reduction in equipment whole good retail sales. Even in North Dakota, 

the State is reluctant to bid long-term equipment extensive jobs, 

and recently pulled 30 contracts due to the lack of confidence in the 

highway Federal program. 

Historically, General Equipment and Supplies and most AED 

members primarily sold heavy construction equipment. However, 

we have increased rentals by 26 percent between 2013 and 2014 

due to the uncertainty surrounding the Federal investments. While 

we are grateful for the business, the drop in sales has broad implications, including forcing dealers to continue to carry rental equipment on our balance sheets along with associated financial risks, 

tying up cash that could be used to hire more workers and invest 

in our companies. 

Federal highway fund’s precarious situation is also impacting 

business decisions. My company has considered opening a new location in North Dakota, which means purchasing a 20,000-squarefoot building and hiring 12 to 20 new employees. We have been reluctant to expand, because of a lack of confidence in the highway 

market since the new facility would primarily serve road building 

and agricultural sectors. 

Additionally, it should be noted that AED members’ interest in 

resolving the uncertainty surrounding the Federal Surface Transportation Program isn’t solely to increase sales. My company services customers in a territory of over 100,000 square miles and we 

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rely heavily on interstate highway systems. We deliver parts nightly from Minneapolis to western North Dakota. We also—a majority 

of our equipment is serviced and repaired in the field, where our 

service trucks are dispatched daily to remote locations. 

As a small business, delays and costs associated with inadequate 

highways and congestion sufficiently increases operating expenses 

and hinders investment in the company. 

The detrimental impact of the Highway Trust Fund certainly 

isn’t unique to General Equipment and Supplies. In August, in 

fact—the fact by August, without action, economic shock waves will 

reverberate throughout the country as the Federal program is unable to support the transportation spending, jeopardizing more 

than $50 billion annual investment and threatening $2.4 billion in 

equipment market activity, and close to 4,000 equipment dealership jobs. 

Chairman CHABOT. Did you want to wrap up? 

Mr. SHILLING. I just had one more comment here. 

Chairman CHABOT. Sure. Okay. 

Mr. SHILLING. Sorry. I turned my page too soon. 

We did do a survey amongst our dealers and, an example; 91 percent of the respondents said that they would add employees if Congress would pass a highway bill, 78 percent would purchase new 

service trucks, and 91 percent would invest in additional inventories if—to help in the manufacturing sector. And we have additional information in our packet—— 

Chairman CHABOT. Okay. 

Mr. SHILLING. —that describes that. Thank you. 

Chairman CHABOT. Thank you very much. 

Mr. Davis, you are recognized for 5 minutes. 

STATEMENT OF MATT DAVIS 

Mr. DAVIS. Chairman Chabot, Ranking Member Vela ́zquez, and 

members of the House Committee on Small Business, thank you for 

the opportunity to meet with you today to offer testimony on the 

importance of transportation infrastructure to business growth. 

Thank you for dedicating the time of this Committee on this important issue too. Thanks for spending your time on this. This is important. 

My name is Matt Davis and I am president of DSD Advisors, an 

advocacy and consulting firm and small business in Cincinnati, 

Ohio. In addition to that, I am also the director of the Build Our 

New Bridge Now Coalition. 

Created in 2012, the Build Our New Bridge Now Coalition is a 

diverse group of small, medium, and large businesses, community, 

government, and labor leaders who have come together to advocate 

for the rebuilding and rehabbing of the I75/71 Brent Spence Bridge 

Corridor. These leaders joined to focus their efforts to rebuild the 

corridor because it is inextricably linked to our region’s current and 

future economic opportunities, quality of life, and safety. 

If you don’t already know, the Brent Spence Bridge is a 52-yearold span that carries Interstates 75 and 71 across the Ohio River 

locally. It also serves as a major artery in our national highway 

system, carrying the equivalent of 4 percent of our Nation’s GDP 

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every year, and connecting Michigan to Miami, servicing many 

communities and companies, both large and small, along the way. 

Locally, the Cincinnati region has a distinct geographic advantage which has supported our economy, being within just a 90- 

minute flight or one-day drive of 25 of the top U.S. metros and 41 

percent of the Nation’s purchasing power. Couple those numbers 

with the amount of the Nation’s GDP I referenced before, you can 

see that our geography has served our region’s residents and small, 

medium, and large businesses very well. Unfortunately, our roads 

and bridges have not. 

The Brent Spence Bridge was built more than 50 years ago to 

create jobs and spur our economy. Now it is failing our region. The 

Brent Spence carries more than twice the amount of vehicles per 

day that it was designed to accommodate, it is considered functionally obsolete, and was given a grade of C minus in 2014 by Kentucky transportation officials, down from a B plus grade in 2006. 

Congestion on this crumbling, decaying and out of date span continues to increase, stifling productivity, slowing the flow of goods 

and commuters, raising safety concerns and lowering our quality. 

According to our NPO, the Ohio, Kentucky and Interregional 

Council of Governments, approximately 60 percent of our local population and 75 percent of our local jobs are within 5 miles of I-75. 

This data shows us that the interstate corridor and the Brent 

Spence Bridge that supports it are critical to our region’s present 

and future. Businesses chose the Cincinnati region because of its 

economic climate, and infrastructure, particularly the Brent Spence 

Bridge Corridor, is a key component of that climate, so we must 

care for it to ensure our economic future. 

Another statistic you should know, you are three to five times 

more likely to be in an accident in the Brent Spence Bridge Corridor than you are in any other portion of the interstate system in 

Ohio, Kentucky or Indiana. That stat leads to wonder what the future holds for the safety of our commuters and businesses. 

If we do nothing, will conditions improve? Probably not. And if 

we don’t, then we fear that existing businesses will relocate and 

prospective businesses will look elsewhere. The corridor’s future 

can either create a roadmap to our region’s future or hold us back 

if we do not develop a strategy to modernize it. 

Businesses, particularly small ones, operate on very thin margins. As the old saying goes, time is money, and that rings true for 

every small businesses in Cincinnati and in the country. In order 

for those businesses to stay afloat, they need reliable roads, 

bridges, waterways, airports, and railways to move employees and 

goods from place to place as safely as possible. If a delivery or an 

employee is late, it can cause major disruptions for that business, 

with a multiplied effect on our region. 

The Build Our New Bridge Now Coalition is one of many groups 

that believe in developing strategies and infrastructure at the State 

and national levels with a set of priorities will be a springboard to 

significant job gains, particularly for small, homegrown businesses. 

So I said what we asked what would happen if a we did nothing. 

Let’s ask what happens if we do do something on the Brent Spence 

Bridge project. Northern Kentucky University completed a study 

that looked at the economic impact of building the Brent Spence 

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Bridge Corridor, and found that 24,488 jobs would be created in 

Ohio and Kentucky, generating $1.9 billion in labor income and 

$193 million in State and local government revenues. Keep in 

mind, those are real jobs with real income just from the construction of this one project. I know most of you in Congress have not 

traveled the Brent Spence Bridge and many of you never will, but 

you all have projects like these in your district that if completed 

can make a huge difference. 

Providing reliable and safe infrastructure is one place where 

Washington and the States can play a major role in supplying the 

tools for success for America’s small business. The sky is the limit 

for the future of small businesses, but not if employees can’t get 

to the office or a delivery truck is constantly late. If that happens, 

the sky won’t be the limit. They won’t be able to get off the ground. 

Thank you for your time today and attention to this important 

issue, and I look forward to answering any questions you may 

have. 

Chairman CHABOT. Thank you very much. 

Now, one kind of interesting historical fact is that the Brent 

Spence Bridge was slated to be dedicated, but it had to be delayed 

until the following week. It was supposed to be dedicated the week 

of John F. Kennedy’s assassination, and so they did it the following 

week instead. So that tells you also how old the bridge is. 

So Dr. Gifford, you are recognized for 5 minutes. 

STATEMENT OF JONATHAN GIFFORD 

Mr. GIFFORD. Thank you, Chairman Chabot, Ranking Member 

Vela ́zquez, and distinguished members of the Committee for the 

opportunity to speak today. 

I am a professor at George Mason University, where I direct the 

Center for Transportation Public-Private Partnership Policy. The 

center provides objective analysis of transportation public-private 

partnerships through research, education, and outreach. We believe 

that a better understanding of P3s will lead to their more appropriate use. 

I would like to make three points today. First, public-private 

partnerships for transportation projects offer significant opportunities for small business. P3s generally involve design, construction, 

and long-term operation and maintenance of transportation 

projects. P3s usually last 35 years, in some cases up to 75 years. 

These long-term agreements support small business. Business 

needs include engineering materials, construction, public affairs, 

community relations, architects, attorneys, security, and appraisers. These business needs are not just for the construction of the 

project, but also for the long-term operation and maintenance, 

which goes on for decades. Such long-term agreements foster the 

creation and sustenance of local businesses. 

Moreover, such opportunities are not just discretionary on the 

part of the concessionaire. States participating in P3s typically establish goals for participation by small woman-owned and minority-owned businesses and disadvantaged business enterprises. 

For example, Virginia’s goals from three of its major projects 

total more than $1 billion for the design and construction phase 

alone. The recently completed 495 and 95 express lane P3 projects 

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in Virginia supported more than 28,000 jobs during construction 

and employed hundreds of DBE/SWaM firms during that time, 184 

firms for the 95 express lanes and 250 firms for the 495 express 

lanes. 

A long-term surface transportation reauthorization can support 

small business by removing barriers to P3s and by continuing and 

possibly increasing Federal support for P3s. Without long-term reauthorization, agencies do not have the budget to let in and continue meaningful contracts. Large firms can often absorb this uncertainty, but small businesses are not well equipped to deal with 

the off-on nature of the current Federal process. 

A major barrier for P3s in many States is the Federal ban on 

tolling and reconstructed interstates. Congress may wish to reconsider that ban since so much of the interstate will require reconstruction in coming decades. Significantly relaxing or removing this 

ban can be done at no cost to the Federal budget and it would 

allow States to decide whether and how much to explore tolls as 

a means of renewing and expanding their highway systems. 

Congress may also wish to extend or expand current programs 

that support P3s, notably TIFIA and PABs. TIFIA provides loans 

and credit support to most P3 projects. PABs, or Private Activity 

Bonds, level the playing field between bonds for P3 projects and 

municipal bonds by exempting PABs from most Federal income 

taxes. President Obama’s proposed qualified public investment 

bonds would expand the dollar amount available for.P3s by eliminating the current $15 billion cap on PABs. 

My second point relates to the Federal gas tax. The gas tax and 

the Highway Trust Fund have played important roles since 1956 

in the construction of the interstate system and support for the 

Federal Aid Highway Program. The current gas tax rate doesn’t 

support the program’s ongoing expenditures. Congress has filled 

this gap in recent years from the general fund. Continued reliance 

on the gas tax as the primary source of program funds is problematic. As cars get more fuel efficient and the numbers of hybrids and 

electric vehicles increase, a flat per gallon tax on gasoline generates less and less for each mile driven on our highway system. 

In the long term, Congress will decide how much financial support it wishes to provide the program and how to pay for it. An increase in the gas tax could support an ongoing program at current 

spending levels. However, in the longer term, other sources of 

State, local, and Federal revenue, such as tolls, may provide a more 

stable and suitable financial foundation for addressing the Nation’s 

transportation needs and opportunities. 

Global capital markets appear to have a significant appetite for 

infrastructure investment. Investment in the U.S., however, is limited, due in part to a lack of bankable projects. Removing barriers 

to tolling could enable more private capital investment. 

My third and last point relates to the University Transportation 

Center’s program. This program has supported many universities, 

including my own, to research our Nation’s transportation system 

and educate generations of students who go on to design, construct, 

operate, finance, and maintain it. As an active participant in the 

UTC program for most of my career, I would like to assure the 

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Committee that the program has generated considerable value in 

research, education, and professional development. 

Our Nation appears to be on the cusp of major changes in its 

transportation systems. Important innovations include autonomous 

vehicles, GPS, mobile devices, advanced materials, companies like 

Uber and Lift, and public-private partnerships. These innovations 

are transforming the movement of people and freight. They are also 

disrupting industries and institutions that make up our transportation system. Continued support for the UTC program will allow 

research and education to continue to contribute to expanding the 

development of such innovations and our understanding of how 

they affect society. 

That concludes my statement. I look forward to your questions. 

Thank you. 

Chairman CHABOT. Thank you very much. 

And we want to thank all the panel members for their testimony 

this morning. I think they were all excellent. 

And we will start the questioning, and I will begin with myself. 

I am recognized for 5 minutes. 

Mr. Davis, I will start with you. Downtown Cincinnati, as you 

know, has gone through pretty significant urban renewal over recent years, for the better. It seems to be looking a lot better downtown, more people coming down, and just the general, I think, attitude of the city about itself. Could you discuss what the new 

bridge, the Brent Spence Bridge, if we can finally get it done, what 

impact that would have on the overall urban renewal of the city, 

and also what—this is the Small Business Committee. What impact would you see this having amongst small businesses in, not 

only downtown Cincinnati, but throughout the region? 

Mr. DAVIS. Thank you, Mr. Chairman. I will take your first question first about urban renewal, how it could affect Cincinnati. As 

I mentioned earlier, you know, our statistic that 75 percent of the 

jobs in our region are within 5 miles of I-75. And as you know, Mr. 

Chairman, I-75 runs right next to downtown, right through the 

urban core, and also goes into northern Kentucky. So it is really— 

the Brent Spence Bridge, the corridor, is really at the center of 

our—is at the center of our—of our central business district. 

Expanding that, unlocking that, you know, decreasing the congestion, in our view, will lead to greater investment. There is—the 

CBO reported in 2014 that every dollar spent on infrastructure can 

lead to anywhere between $1.15 and $1.25 on return, so there is 

the numbers right there that show that it is a good bet that infrastructure investment will bring a higher return. 

On the small business side, we have many members of our 

coalitiion who work on both sides of the Ohio River, that work in 

northern Kentucky or work in Cincinnati, and, you know, take that 

bridge every day or take any of the—any other number of six 

bridges that we have in the region to cross the Ohio River, and 

timing is important to them. We have a lot of professional services 

companies, IT service, for example, who are often late because they 

are unable to—often late and waste time and gas and money by— 

because they are stuck in traffic. So we think that unlocking that, 

making it easier for businesses to access the urban core by widSBREP-219 with DISTILLER

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ening the highway, by adding—rebuilding the Brent Spence Bridge 

and rebuilding the corridor will be helpful. 

Chairman CHABOT. Thank you very much. 

Mr. Gifford, you—or Dr. Gifford, you already talked about the 

gas tax, so let me maybe turn to your colleague, one of the three 

of you, if you wouldn’t mind answering this question. With people 

driving more fuel-efficient vehicles, do you have any suggestions 

outside the raise-the-gas-tax box that we ought to look into? Are 

there other ways besides that that you could see us coming up with 

additional funds to move forward on transportation? 

And whoever wants to handle it. Mr. Shilling, you look like you 

might want to—— 

Mr. SHILLING. Yes. I would like to state a couple things. Number 

one is even—even if the gas tax—if we looked at indexing the gas 

tax based on inflation would help increase the revenues, but also 

I think a lot of talk has been centered around actual miles driven, 

because you have a lot of vehicles using the highways that do not 

burn fuel or very much fuel anymore, so a mileage seem to be more 

appropriate mechanism for paying for the user fees. 

Chairman CHABOT. Okay. Thank you. 

Mr. Schmitz, let me ask you this one. In your written testimony, 

you talked a little bit about the negative impact that the Waters 

of the United States regulatory action coming from the EPA will 

have on your industry. Could you elaborate a little bit? What are 

you concerned about there? 

Mr. SCHMITZ. That is a very ominous decree looking at us. We 

operate several operations which dredge sand and gravel from underwater. Ponds that we have created that are not connected are 

now being considered as Waters of the United States. One of our 

dredging operations, which has been in existence since 1964, has 

now fallen under this jurisdiction, and we have spent hundreds of 

thousands of dollars on studies proving our point, but the ominous 

overreach that the Waters of the United States has us concerned 

at all of our locations, because even the mud puddles along the side 

of the road in front of our operations are now considered under this 

jurisdiction. 

Chairman CHABOT. Thank you very much. My time has expired. 

Gentlelady from New York, the ranking member, Ms. Vela ́zquez, 

is recognized for 5 minutes. 

Ms. VELA ́ ZQUEZ. Thank you. 

Dr. Gifford, I want to go back to the highway vehicle miles traveled, which have decreased since 2003. Now we also have increasing fuel standards and the rise of alternative-energy vehicles, so 

this made the gas tax even less of an indicator of highway usage. 

Given that reality, what sort of funding structure is most appropriate to fund our highways in the long-term? 

Mr. GIFFORD. In the long-term, I think the viability, as I stated, 

of the traditional per-gallon gas tax is limited. There are a lot of 

alternatives that have been placed on the table by many of constituencies surrounding this issue, looking at a VMT or miles-traveled tax that is under consideration now in experiment in Oregon, 

it looks technically viable and it looks manageable in ways that can 

protect the privacy of motorists so that they don’t have government 

SBREP-219 with DISTILLER

14 

tracking their everyday movements, that I think that is quite viable. 

I mentioned tolls in my statement. And I think, like gas taxes, 

tolls are a user fee. And from a public policy standpoint, I think 

looking at ways to, you know, charge users for their use of a system has a lot to commend it. The gas tax was a loose proxy for 

usage, but tolls, I think, are more direct and may be, as I mentioned, something where, at no cost to the budget, the Federal Government could enable. 

Ms. VELA ́ ZQUEZ. So let me ask you: From a small business perspective, user perspective, such as those involved in trucking or delivery or related companies, what is the least burdensome alternative? 

Mr. GIFFORD. I think it depends. That is not a very clear answer, 

but, you know, the tolls are usually higher for heavier vehicles, so 

step vans or delivery trucks are going to pay higher tolls than a— 

you know, than a light duty vehicle like a pickup truck or a car. 

On the other hand, gas taxes are also heavier. Those are more 

gas-dependent or diesel-fuel-dependent vehicles, so raising the gas 

tax also has a disproportionate impact on them from that perspective; appropriately so. They are heavier, larger vehicles. 

Ms. VELA ́ ZQUEZ. Yes. And with large general funds transferred 

occurring since 2008, all states now receive more funds that they 

contribute to the Highway Trust Fund. If Congress acted to tie the 

trust fund more closely to highway use, some states could again 

end up in a net loss position. What is your view on that issue? 

Mr. GIFFORD. The issue of donor-donee and now all donee States 

to a certain extent is a difficult one. If—I think every State would 

like 100 percent of the money it sends to Washington to come back 

to that State, where someone else takes the political heat for the 

tax, and they are able to have the spending money, but of course 

that—it doesn’t work that way. Where a—you know, our Constitution gives two votes in the Senate to every State, we built the 

interstate system, and not every State was able to pay its costs. So 

I think some regional equity always emerges in a Federal system, 

and rightly so. Those are the terms of the deal in which the Union 

was created. 

Ms. VELA ́ ZQUEZ. I would like to ask you a question about one of 

the programs in DOD, and that is the DBE program. It has been 

operating since 1985, but recently the DOT’s inspector general 

found that the program had limited success, mainly because there 

were little incentives for companies to grow beyond the DBE program itself. What are your views on the DBE, and should it be 

overhauled, reformed? 

Mr. GIFFORD. I am not familiar with the Federal DBE program. 

In my State, I mentioned the targets that States attached to public-private partnerships for as goals, and I think the results there 

are compelling, that many small businesses, disadvantaged businesses, women-owned and minority businesses, are recipients of 

contracts. I have data from Virginia Department of Transportation 

sent to me yesterday that more than 50 percent of the funds in 

public-private partnerships are spent locally. 

Ms. VELA ́ ZQUEZ. Okay. Thank you, Mr. Chairman. 

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Chairman CHABOT. Thank you very much. Thank you. The 

gentlelady yields back. 

The gentleman from New York, Mr. Hanna, who is the chairman 

of the Subcommittee on Contracting and Workforce, is recognized 

for 5 minutes. 

Mr. HANNA. I am also the guy who has owned lots of Komatsus 

and was in heavy construction for years. Used tens of thousands 

of yards of gravel. But to get to the point, though, we are on our 

33rd extension. I mean, to say that I agree with all of you is—you 

know, I do, and I think most members here do. The question is 

what are we doing about it, and we are not doing a whole hell of 

a lot, are we? 

But to respond to the talk about the gas tax, in many ways it 

has become a more regressive tax. We know that mass transit 

doesn’t pay in, and yet we can understand the value of mass transit. We also know that 34—ages 18 to 34 year olds, they are not 

driving, yet they enjoy the full benefit of the highway system 

through all the things they order online and all the other things, 

and we know that people who drive cars that don’t necessarily pay 

in, which is, you know, roughly 2 or 3 percent now. 

So there are a lot of things about how we fund this that are problematic and lead us to believe that there is some—we need an overhaul. And Oregon’s experiment is just that, an experiment, it is not 

going to happen in any kind of time limit that is going to help us 

solve our problem that we are talking about today. I think we can 

all admit that. 

So my point is that all of this builds a case—and triple P’s are 

nice, but they are not happening, either, and that is something else 

we need to talk about, but all of this builds a case for me to take 

the money out of the general fund and find it someplace other than 

this, you know, kind of pretense we have about dealing with it 

some other place. 

And that is what we have had to do, that is how we were short, 

and I think that that is what Congress is, you know, trying to do 

at the moment, is find it someplace else, but the—I want to know 

what you think about that in terms of 18 to 34-year-olds who aren’t 

driving, why is it that mass transit isn’t paying in. I can appreciate 

both sides of that argument, but—Mr. Gifford. 

Mr. GIFFORD. Well, as to the question of why mass transit isn’t 

paying in, I think back in the 1950s when we created the Highway 

Trust Fund, the interests of the mass transit industry was being 

exempted from the gas tax. That was really the only thing they 

wanted out of the 1956 bill, and they got it. And that has been carried forward. Starting in the 1970s, as you know, we began to fund 

mass transit from the Highway Trust Fund. And, you know, there 

are debates about whether that is justifiable or whether that 

should be paid from the general fund. 

Mr. HANNA. But the point, who is contributing more to whom 

and how that distribution is fair or unfair is interesting to me, and 

I wonder about your opinion on that? 

Mr. GIFFORD. Let me understand your question. You—you are 

looking at the equity impacts—— 

Mr. HANNA. Yes. 

Mr. GIFFORD. —of the gas tax, who is paying, who is benefiting. 

SBREP-219 with DISTILLER

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Mr. HANNA. Right. I live in the district. I go buy a loaf of bread, 

it costs me a couple bucks. I go across Manhattan, it costs a couple 

bucks, three bucks, whatever it is. So why isn’t that—what can you 

make of that argument? And I value mass transit. It is not that. 

And the notion of 18-year-olds to 34-year-olds not driving and yet 

we see the depletion, and we talk about the gas tax obsessively, 

which I get, you know, and I have worked to find a way to solve 

this problem, but there is kind of a confluence of issues here that 

people are not talking about, I think, appropriately in this Congress and around the country, and always pointing to the gas tax, 

I think, doesn’t give us the kind of long-term solution we need. 

Mr. GIFFORD. Well, I mentioned tolls. I don’t know if you are— 

you know, referring to tolls, but with respect to the gas tax itself, 

certainly there are some, you know, leakage that occurs. You know, 

all of the benefits of using the highway system do not redound only 

to the vehicle that is operating, the vehicle driver for personal vehicle or a delivery truck for a commercial vehicle. The whole economy 

benefits, as I think my colleagues on the panel have mentioned, 

when we have a well-functioning transportation system, but there 

is no perfect taxing mechanism, either. 

And so you could certainly take the money out of general funds, 

but I think you know only too well how difficult it is to find payfors in the current general fund environment. And I agree that 

there are general benefits that redound to the economy from a good 

functioning transportation system. 

Mr. HANNA. Would you agree in the time I have left that there 

are broad sections of our economy and people therein who benefit 

from the highway system but don’t pay proportionately? 

Mr. GIFFORD. I would say they don’t pay directly, but when I 

order from Amazon, I pay a delivery fee, and that delivery fee goes 

in part to a delivery company that is paying gas taxes or other fees. 

Mr. HANNA. That is fair. Thank you. 

Chairman CHABOT. Thank you. The gentleman’s time has expired. 

The gentlelady from California, Ms. Hahn, is recognized for 5 

minutes. 

Ms. HAHN. Thank you, Mr. Chairman, and thank you for holding 

this hearing. I really appreciated the testimony from all of our witnesses today. And I sit on the House Transportation and Infrastructure Committee, very proud member, so I love it that we are 

bringing this incredibly important issue to how it impacts our local 

small businesses. I think that is extremely important. And certainly I am happy we sort of got into the discussion about how do 

we fund going forward our incredible needs in transportation. 

Certainly our infrastructure is crumbling around us, it is in—we 

have something like 70,000 bridges in this country that are deficient. That is—you know, that is really troubling to me. 

And I drive an electric vehicle, so I haven’t been to a gas station 

for 4 years, and I think that is part of what we are discussing this 

morning. Our gas tax shouldn’t be the only way going forward that 

we are going to try to attempt to fund this incredible need in the 

country. I am one of those that would like to look at alternatives. 

No one mentioned yet, but I even think a flat fee when folks register their cars annually with the DMV might be an interesting alSBREP-219 with DISTILLER

17 

ternative, but I do think we need—apparently the gas tax still only 

brings in something like $34 billion annually, and yet we need 

about $50 billion annually to keep up with our infrastructure 

issues, so clearly that is not the way forward, so I am glad we are 

talking about this. 

I do have one idea that would help to fund our freight corridor 

in this country. I have come with an idea that doesn’t raise the tax, 

doesn’t call for a new fee, and it would work by diverting 5 percent 

of our incoming import fees at our ports. If we divert that, it would 

be about $2 billion a year that we could fund our freight projects 

in this country so that they wouldn’t have to compete on an ongoing basis with the Highway Trust Fund. 

And I think that would solve a lot of our issues in this country 

in terms of congestion, in terms of moving goods, in terms of making us competitive globally, so I am hoping that bill will get some 

traction. I have a couple of Republican cosponsors so far, but I 

could use more. 

But, you know, I was going to—I am very concerned that we 

have had this short-term fix, and I was going to ask Don Shilling 

this question. We were told by some construction folks that construction jobs are for the most part seasonal, and we were told that 

because of what Congress—our inaction recently, that we have 

missed the summer construction season by not allowing for projects 

to be put on the books. Can you explain that to me? Is that correct, 

or what impact do you think this short-term fix has on our summer 

construction jobs? 

Mr. SHILLING. Yes, it very much impacts us. As I mentioned, in 

North Dakota for the May letting, they pulled 30 jobs because of 

the no funding secured. Basically by the time they get those jobs 

back on the docket and bid them, we will—our work season will be 

done. So if you look at our bidding cycle, most of the bidding is 

done November, December, January, February for projects that 

start then in March and work through the end of October. And we 

are, of course, as far north as you can get, but most of the other 

states around us are the same. They are very seasonal. There are 

a lot of things that can’t be done in the winter months. 

Ms. HAHN. I appreciate that. 

And, Mr. Schmitz, I was going to—in your testimony, you talked 

about how the cost of the materials increase because of transportation cost, and I was wondering if you could elaborate on what are 

transportation costs that then get passed on to the consumer in 

materials like sand and gravel? 

Mr. SCHMITZ. Yeah. That—transportation is a huge part of our 

cost of doing business. Our products are heavy, we are generally 

within 25 miles of the market, but if it is an area devoid of aggregate, we ship via rail and trek the trailer over longer distances. 

The cost of the material over 25 miles to transportation actually 

outweighs the cost of the materials. 

What we can put on our costs is we can put on our tolls and our 

Federal excise taxes, but when the truck is sitting in traffic or has 

to detour 10 or 15 miles to avoid the bridge that can no longer take 

the weight limit, the public is bearing these costs. It is tough for 

us as a small business to even quantify it, but we have to build 

that in. Instead of our trucks doing 45 miles on hour, they are 

SBREP-219 with DISTILLER

18 

down to 35 miles an hour or taking an extra 10 miles. So ultimately the traveling public is the one who is bearing the cost, the 

taxpayers are, for the conditions of the highways. 

Ms. HAHN. Thank you. My time is up, but I really appreciate all 

of you making the case again for why Congress needs to pass a 

long-term surface transportation bill. 

Chairman CHABOT. Thank you very much. The gentlelady’s time 

has expired. 

The gentleman from South Carolina, Mr. Rice, who is chairman 

of the Subcommittee on Economic Growth, Tax and Capital Access 

is recognized for 5 minutes. 

Mr. RICE. Thank you, Mr. Chairman. 

We are in the midst of the weakest recovery from a recession 

since the Depression. Average household income has declined 8.7 

percent since the President took office, consumer spending is rising 

at a very anemic rate of 1.4 percent. Forty four percent, the most 

recent numbers I have seen, of recent college graduates are underemployed or unemployed. And I think a lot of that comes from this 

very fact that, you know, we are talking about uncertainty. Uncertainty doesn’t allow our States, our counties or the Federal Government to invest. 

Complete lack of a long-term plan, bandaid solutions that are applied on a short-term basis; we have got to have a long-term plan 

and we have got to have long-term solutions, and it is shocking to 

me that we don’t have these things. 

This funding issue, we can resolve it. It is not a matter that we 

don’t have enough revenue. I mean, we are collecting more revenue, the Federal Government is, that—it is above the 40-year average, the amount of revenue we are collecting. We are spending 

far too much, and particularly on entitlements. Entitlements are 

two-thirds of our total spending. 

So we have got to find a solution for the Highway Trust Fund. 

I am going to propose one myself. I am going to propose increasing 

the gas tax and a simultaneous decrease in the income tax, because 

the Highway Trust Fund has got to be self-sustaining, the Social 

Security Trust Fund needs to be self-sustaining. All this uncertainty we are heaping on the economy holds back job creation, 

holding back GDP. 

We shouldn’t be surprised that GDP has been—the forecast from 

CBO has dropped from 3 percent to 2.7 percent to 2.3 percent. We 

had negative growth last quarter. It requires leadership, and we 

are not getting it. So I am going to put out my own solution to this. 

One of the worst calls I have had in Congress was from my State 

secretary of transportation last summer, I think it was in June, she 

called me and asked to meet with me, and I went and sat down 

with her and she said, I understand the Highway Trust Fund’s 

supposed to expire in August. What am I supposed to do? Am I 

supposed to cancel my contracts? Am I supposed to not take anymore contracts? 

You know, you can’t turn these things on a dime. It requires 

years to plan and execute. 

And in addition to the funding issue, we have got—the regulatory structure is incredibly burdensome and amok and it stifles 

progress on every front. It is not just in highway construction, it 

SBREP-219 with DISTILLER

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is across the board. It is so hard to get anything done in this country anymore. We used to be a can do country, and now we are a 

you can’t do that country. 

I-73 in my district, I live in Myrtle Beach, South Carolina, 16 

million visitors a year, one of the top ten tourist destinations in the 

country, and the only one in the top ten that does not have an 

interstate connection. I have been working on trying to get a permit for that road to connect really from the North Carolina line 

down to I-73—I mean, down to Myrtle Beach since I have been in 

Congress, 2 years and 4 months, and it was—they were working 

on it for years before that, and we are still involved in wetlands 

mitigation. It is a—we are being held hostage by the environmentalists. They propose that in order to mitigate for the 270 acres 

of wetlands they say we are destroying in that 80-mile stretch, that 

we purchase 6,800 acres. The system is completely amok. 

The Port of Miami, they have been trying to get permission to 

dredge that port. There is not a port in the southeast that can take 

the post-Panamax ships today until we get dredged. The Port of 

Miami has been trying to get permission for 16 years, trying to get 

a permit. Port of Charleston, one of the most efficient ports in the 

country, been working on trying to get an environmental permit for 

4 years and they have still got years to go. 

We are tying our own hands. We are making our own selves uncompetitive. We cannot point at anybody else. The only people 

holding us back is us. We have got to have leadership. 

Thank you very much. 

Chairman CHABOT. Thank you. Does the gentleman yield back? 

Mr. RICE. I yield. 

Chairman CHABOT. The gentleman yields back. 

I now recognize the gentleman from Florida, Mr. Curbelo, who is 

chairman of the Subcommittee on Agricultural, Energy and Trade. 

And before you get started, I would like to note the fact that we 

had the opportunity to do a wonderful event in his district last 

week during our district work period, several events, but one in 

particular at a college that I now realize is actually the most populous college in the world, if I am not mistaken, Miami Dade County, 165,000 students at the various campuses. Its 10,000 Small 

Businesses Program is just an incredibly impressive program that 

they do at 20 different places around the country. And so if you are 

interested, I would encourage you to perhaps seek out Mr. Curbelo. 

I am certainly going to do that for my district and see if we can 

spread this growth. Incredibly good program, and thank you for 

sharing it with us. 

So I will now yield, not on his time, but at this point his time. 

Mr. Curbelo is recognized for 5 minutes. 

Mr. CURBELO. Mr. Chairman, thank you for your leadership on 

this issue and thank you for visiting South Florida last week. We 

did have a wonderful visit to Miami Dade College, which is home 

to one of the 10,000 Small Businesses Programs. And Miami Dade 

College is one of those places where people go to find hope, opportunity, knowledge, and they certainly find it, and a lot of successful 

entrepreneurs graduate from that critical university. 

SBREP-219 with DISTILLER

20 

Chairman CHABOT. Just for the record, I was down there for 

parts of 2 days, and during that entire time, I did not see a beach, 

so it was strictly business. 

Mr. CURBELO. Neither did I, Chairman, so—well, as the chairman has indicated, I hail from South Florida, Florida’s 26th Congressional District, southwestern Miami and the Florida Keys, at 

one point home to the Overseas Railroad. So we are all about 

transportation and infrastructure in South Florida. It is absolutely 

critical to our quality of life. So I certainly appreciate this opportunity, not only as a member of this distinguished Committee, but 

also as a member of the Committee on Transportation and Infrastructure. 

I wanted to ask, Mr. Davis, are there any reforms you see that 

we could implement in a potential highway bill, which, by the way, 

is one of my top priorities as a Member of Congress, that could empower state and local officials to give them more control over what 

projects take precedence? 

Mr. DAVIS. Thank you, sir, for that question. I think broadly, one 

reform that—you know, that—and it has been—Mr. Rice mentioned this before, there is a real need for general across-the-board 

regulatory reform and how we deliver these projects. The years and 

years that it takes to, you know, complete environmental documents, things of that nature, we believe that those should really 

be cut down. 

And I will use my project as an example of the cost of delay. And 

I can cite Kentucky Governor Steve Beshear for this number. For 

the Brent Spence Bridge, every month that we delay, the added 

cost is approximately $7 million a month. So every year that we 

are waiting, we are getting right around $100 million that we wait 

to delay. So let’s say we even—you know, let’s start—say, okay, we 

are going to start moving forward with this with that $7 million, 

you know, ticker running, then we lump on top of that the time 

that it takes to wade through the regulatory process. I mean, I 

think really sharpening the pencils and looking at what the process 

is, what the needs for the regulatory—for the regs—what the needs 

for the regs are and how we might shorten the time and shorten 

the turnaround would be helpful. 

And your point about States, I think finding ways for States to— 

giving them more flexibility on things such as how they use publicprivate partnerships, how they look at different user fee models, 

what—when they can use user fees, I think those are all things 

that, you know, should be contemplated. So I would start there: 

just more flexibility, allowing them to prioritize as well, not so 

many boxes for States that they are stuck in that they can only 

spend this on this, I think, would be helpful. 

Mr. CURBELO. Thank you, Mr. Davis. 

Mr. Gifford, I understand that while I had to step out, UTCs 

came up. And just last month I led a bipartisan letter with 68 colleagues here in the House advocating on behalf of these university 

transportation centers and the upcoming highway bill. My district 

is home to one of these, Florida International University, which 

hosts the UTC Accelerated Bridge Program, and that program is 

doing cutting-edge research on repairing our Nation’s aging 

bridges, which is clearly a chief priority. 

SBREP-219 with DISTILLER

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Can you talk about any partnerships or any of your experiences 

with universities to repair, not just our aging bridges, but infrastructure in general, especially as it applies to our Nation’s urban 

areas? 

Mr. GIFFORD. Thank you for that question. I actually know the 

FIU program well and have worked with them on some small 

projects myself. 

I think the UTC program really does support a very broad array 

of university programs, not only in the engineering, material, sort 

of the hard side, and I say that as a civil engineer myself, but also 

on the soft side, the institutional policy, financial matters for delivering programs. So I think it is very important, not only the research that comes out of these programs, but the workforce that 

emerges from these programs. I think UTC program plays a critical 

role. About 4 years ago I attended one of the national UTC meetings, and generations of transportation professionals have been 

beneficiaries of this program. 

So the workforce in universities as well as in our companies and 

government agencies, I think, have, you know, benefited from this 

program, so it is tremendously useful and I think something that 

we, you know, urgently need to continue to support. 

Mr. CURBELO. Thank you, Mr. Gifford. Thank you to all the witnesses. It is good to see you. 

And thank you, Mr. Chairman, for this opportunity. I yield back. 

Chairman CHABOT. Thank you. The gentleman yields back. 

The gentleman from Nevada, Mr. Hardy, who is chairman of the 

Subcommittee on Investigations, Oversight and Regulations, is recognized for 5 minutes. 

Mr. HARDY. Thank you, Mr. Chairman. 

Just a little background about myself. I happen to have been a 

director of public works in my past life. I have been a business 

owner in the construction industry for over 20 years, heavy highway, roads, bridges, dams, treatment facilities, and other. 

So with that background, would you agree that for—and also on 

the RTC for about 14 years, Regional Transportation Commission, 

Regional Flood Control Commission. 

Would you agree that it takes long-term funding to be able to 

come up with long-term goals and solutions for these entities to be 

able to function properly? Anybody care to—Mr. Gifford, do you—— 

Mr. GIFFORD. Yes. I think it is critical. The large, you know, 

multi-hundred million or multi-billion dollar projects are very difficult to start and stop on an annual funding basis. And it increases the expense, it reduces the amount of competition that is 

able to participate in such projects, and it raises the price to the— 

to the public of delivering these assets. 

Mr. HARDY. The reason I ask the question, I have got a little different line of questioning going here. You know, I found out—I am 

new to this place. I have been here about less than 5 months, and 

there is a lot of finger pointing goes on every direction, responsibility. 

I would like to go back to about 2008. You know, we had close 

to a trillion dollar stimulus program that went everywhere. Do you 

think that if that—some of that funding, say, to the tune of, for a 

6-year program, about $333 billion of that, that would have gone 

SBREP-219 with DISTILLER

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to a long-term focus on our highway infrastructure and rail system 

infrastructure, that that might have been a better opportunity to 

stabilize an economy rather than going to a rental-type programs 

that equipment companies are going to, because the contractor cannot see the future, he can’t tell what is going on, so he is not going 

to buy that equipment like we did in the past, he is going to rent. 

Do you think that might have been a better avenue to go if we are 

going to step down that road? Mr. Shilling, Mr. Schmitz? 

Mr. SHILLING. Yes, I would agree with that. I—we noticed when 

we did the stimulus package, that a lot of the projects that got 

moved up and took immediate action on were—I wouldn’t call them 

totally frivolous, but pretty frivolous, more patching, whatever, and 

they were not real investments in our infrastructure, so—— 

Mr. SCHMITZ. I would echo that sentiment also. The projects that 

were done, it was a rush to get them done. In New York, we did 

a study. It takes 13 years, because of the regulatory environment 

and such, for a project to come to fruition. That shot in the dark 

did nothing to help the long-term plan. It was a quick fix, overlay 

some roads. It was not money well spent. 

Mr. HARDY. Thank you. Seen the same thing myself. It was a 

quick fix for certain things that didn’t need to be fixed lots of times 

that were just on the mediocre end. Things like the bridge could 

have been done, and done right and been done and over with, and 

it would have been—wouldn’t have been a problem anymore. 

Do you believe that maybe you have some of the same—do you 

have any of the same frustrations I have with the way the funding 

is done within this place where fuel tax takes care of all sorts of 

things, rather than a focussed targets. You know, I believe that 

fuel tax should maybe go for highway projects, interesting enough, 

and maybe light rail projects should have another source of funding. Targeted funding. I believe in targeted funding would be better 

for us. And I don’t call it taxes, I call it fees. Anybody comment on 

that? Short time here. 

Mr. SCHMITZ. I believe the user fee is the way to go, in that the 

revenue that is collected from highways should stay in the highways, the revenues collected from other things should stay in those. 

The fact that the people using the highways are subsidizing all 

other forms of transportation—it is not good for business. 

Mr. HARDY. I guess I will stop there, I am running out of time, 

but I really believe that we need to focus on those type of issues 

for fees, we need to make sure that we provide long-term, because 

I am the type of individual that truly believes that when the engineers are busy, I know I am about to get busy, and when they are 

not doing anything, I know I am about to get really slow. And so 

we need to look for the future, stop looking for the immediate fix, 

but to look for the long-term and make sure we are out there. 

So with that being said, you—you all support the taxing fuels, do 

you support the—or what do you call it? The indexing of fuels. Are 

there any other avenues that you think are out there that you believe might be a good fix? Mr. Gifford on that? Tolling? 

Mr. GIFFORD. Well, I mentioned tolling, and not so much to impose tolling, but to allow States to decide if they wish to consider 

tolling for reconstruction and renewal of their systems. 

Mr. HARDY. Thank you. My time is expired. 

SBREP-219 with DISTILLER

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Thank you, Mr. Chairman. 

Chairman CHABOT. Thank you. The gentleman’s time is expired. 

The gentleman from Nevada mentioned he had been here for 

about 5 months, and I have been here almost 20 years now. When 

I was first elected another Member told me that when you first get 

here, you are kind of starry-eyed and you are thinking, how did I 

ever get to this place, and within about 5 months, you are wondering, how did these other Members get here? So it doesn’t take 

too long for that to occur. 

The gentleman—and that has nothing to do with the next gentleman from California. Mr. Knight is recognized for 5 minutes. 

Mr. KNIGHT. How did that guy get here? 

You know, my comments will be very simple. I think we are 

going down the road to maybe increase gas tax. In California, we 

are at about $0.63. We are talking about raising it another $0.20 

by January 1, so we will be the number one, as in California, we 

like to be number one in many tax categories, so us being number 

three right now doesn’t sit real well, but that $0.20 is going to be 

upwards of a dollar. For every time you fill a gallon of gasoline, you 

are going to be paying almost a dollar in tax, and you could be 

more. With our global climate change issues, we could be paying 

well over a dollar in taxes. 

So I guess my question is, is if we are going to go down this road 

of more gas tax or higher gas tax, is there a point where the consumer is not going to take it, we are not going to be able to drive 

as much. Every week that I am home in the district, I average 850 

miles on my personal car. At some point it is going to be transferred into, well, it already is, into a gallon of milk, into the groceries we buy, into all of the products that we buy. 

Do you see at some point that we just can’t go down that road, 

that we have to make the commitment from the general fund, that 

we have to make the commitment from what the taxpayers believe, 

that this is one of the highest commitments from government that 

we have on infrastructure where people can rely on? Anyone want 

to take that question that we are getting to that point? Sir. 

Mr. DAVIS. Thank you, sir. It is hard for me to speak on behalf 

of, you know, consumers about what is or is not the tipping point. 

You know, $0.63 is a lot for some, it is not a lot for others. So it— 

you know, the pocketbook issues are tough, but I would say, 

though, as it relates to the work of this Committee and the work 

of the Congress is that if those investments don’t happen right now 

and the priorities aren’t made right now, and the strategies aren’t 

put in place—aren’t set forward right now, that that number is 

only going to go up. So the $0.63 only goes up. 

It is like at home, you have a leaky roof and you don’t pay attention to it and you say, oh, I am going to let it go, and then the next 

thing you know, you are ripping your whole roof down because you 

have got to redo the whole deal. So it is a pocketbook issue on the 

$0.63 and whatever the tipping point is, you know, and that is 

something that businesses and consumers, a decision they will 

make by themselves, but, you know, one of the things I am excited 

about this conversation is hopefully it kick starts a real 

prioritization within the Congress about making and taking some 

steps right now so that those dollars don’t go up in the future. 

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Mr. KNIGHT. Well, and I firmly agree with you. I think that 

prioritizing this is what Congress should be talking about. You 

know, outside of maybe defense of this Nation, one of the things 

an average taxpayer is looking for is a solid infrastructure. I need 

to get from point A to point B to go to work or church or wherever 

we are going to go, I need to be able to get there, and so infrastructure is always going to be one of those top priorities. 

Yes, sir. 

Mr. GIFFORD. I would add that it is not only the revenue side 

that we need to look at, but the spending side and how efficiently 

we deliver infrastructure. And I mentioned P3s in my statement, 

public-private partnerships, and I think the record is pretty solid 

that in terms of minimizing the life cycle cost for the delivery of 

assets, public-private partnerships have a lot of benefits compared 

to traditional delivery through design-bid-build or design-build 

projects, because of a focus on operations and maintenance and 

minimizing those life cycle costs. So we may be able to enhance the 

value we derive from funds that we are raising. 

Mr. KNIGHT. I agree. I have been part of an author of designbuild bills in California, several of them. They do save money. They 

are a faster way. All those things are helpful, but in the end, we 

are going to have to have a funding source that is going to be reliable. I think that a reliable funding source has got to be a big portion of the general fund. It just has to. If we have a user fee or 

if we have a mileage fee, like many States, and my State is talking 

about that, how many miles you drive, so if I drove 850 this week 

and you drove 12, you know, is that going to be the most effective 

way? Is that going to be the most useful way? 

And that—that is going to be several studies, that is going to be 

several ways down the line, but we are going to have to make that 

commitment. I think the biggest commitment is going to have to 

be a bigger commitment from the general fund. 

And I yield back the balance of my time. Thank you, Mr. Chairman. 

Chairman CHABOT. Thank you. The gentleman yields back. 

The gentlelady from American Samoa, Ms. Radewagen, who is 

the chair of the Subcommittee on Health and Technology, is recognized for 5 minutes. 

Ms. RADEWAGEN. Thank you, Mr. Chairman. 

I want to thank the panel for appearing today. 

Dr. Gifford, back in my home district of American Samoa, almost 

every business qualifies as a small business. At the same time, 

American Samoa has some of the worst surface transportation infrastructure in the Nation. This lack of quality surface transportation infrastructure has a lasting and profound negative effect on 

those businesses, and it is safe to say that the American Society 

of Civil Engineers would grade American Samoa’s infrastructure 

with an F. 

Knowing of the benefits of the P3 approach, has the Center for 

Transportation Public-Private Partnership Policy included such territories as American Samoa in its research and outreach? Also, 

what challenges do you see in incorporating the P3 approach in the 

territories? 

SBREP-219 with DISTILLER

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Mr. GIFFORD. I have not had the privilege of visiting American 

Samoa and I am not very knowledgeable about it. I will say I am 

more familiar with Puerto Rico, which is a different case, of course, 

but they have been aggressive in the use of public-private partnerships, with some success in their airport and highway projects. And 

I lived briefly in high school in Puerto Rico as well, so I am a little 

more familiar with that territory. 

So I think in speaking generally, the statutory framework for 

public-private partnerships is something that redounds to the 

States and localities. The Federal policy has a few important provisions, like TIFIA, PABs that I mentioned in my statement, but primarily it is a function of the States, who own the assets, the transportation assets. I don’t know if that is the case in American 

Samoa, but I think in general, delivery of reliable, low cost transportation can be done in most environments with consideration of— 

of the P3 model. 

Ms. RADEWAGEN. Thank you very much. 

That is all I have. Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady yields 

back. 

We will go into a second round here. I am not sure if Mr. Rice 

has any questions, but I am going to yield to the gentlelady. 

Ms. VELA ́ ZQUEZ. Thank you. Thank you, Mr. Chairman. 

Mr. Schmitz, you testified that the easiest way to not waste fuel 

and to improve air quality is to increase the capacity of roads and 

bridges. However, mass transit also plays a key role in this area, 

and it is especially important when it comes to commuting to and 

from work. 

What are your views on the role that mass transit should play 

in our transportation system? 

Mr. SCHMITZ. My view is mass transit is very important in the 

metropolitan areas and certainly has to be looked at in a logical 

sense. I am from the Buffalo area, a small city. They spent a lot 

of money on an underground transit system, which to me was a 

waste, when surface transportation is the most logical way to do 

it. I think that the mass transit systems have to look beyond building subways and spending a lot of money, and what is the most efficient system. Buses may very well be the most efficient to use the 

existing highways, but the highway infrastructure has to have the 

capabilities of handling the buses. So mass transit is very important and it certainly does need to be funded, but I think that highways play a key component in the mass transit system. 

Ms. VELA ́ ZQUEZ. Dr. Gifford, do you have any views on that? 

Mr. GIFFORD. Well, I think public transit plays important economic and also social roles in providing access to jobs, but also essential services, medical, healthcare, you know, shopping, education, plays, you know, a broad range of roles. And the users of 

many mass transit systems tend to be from lower income groups, 

and so it has a particularly important impact on—on the social 

well-being of those groups. 

The method of delivering that in the most cost-effective manner, 

I think, is something where we could see improvement. We have 

had for the last 50 years a model of generally public agencies delivering transportation services, and we are now beginning to see, for 

SBREP-219 with DISTILLER

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example, in Denver, the Eagle P3 project going from downtown 

Denver to Denver International Airport is being delivered through 

a long-term concession, saving considerable amount of money over 

the original cost estimates. Those can be paid for with something 

called availability payments from the government. So the government is still paying for the service, but delivering the product, the 

service in a more efficient way. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Shilling, contracting requirements, such as Buy America provisions, can help U.S. small businesses by ensuring demand for 

their products. However, it can create compliance difficulties even 

if a tiny portion of a larger product has a foreign component in it. 

In this regard, MAP-21 expanded the Buy America requirements 

on federal aid highway projects by applying these requirements to 

an entire project, not just the portion that receives federal funds. 

Have these provisions affected small companies like yours? Are 

they a good thing or a bad thing, from your perspective? 

Mr. SHILLING. Well, we do represent a foreign manufacturer, and 

it does impact us. We have not had a tremendous amount of impact 

as our business, because some of our foreign-owned manufacturers 

that do have U.S. factories and they do produce the materials in 

the U.S., but I know that other components, steel and other goods, 

cements that are being shipped in from overseas, most of the people that I deal with in the construction industry are in favor of the 

Buy American side of things for that—for those type of products. 

The sand and gravels and whatever should be produced locally, 

so—— 

Ms. VELA ́ ZQUEZ. Okay. Thank you, Mr. Chairman. 

Chairman CHABOT. Thank you very much. The gentlelady yields 

back. 

I just have one question, and I am going to give it to you, Mr. 

Davis, and it is actually probably an unfair question, a little bit 

complicated, and—but I am going to let you see what you can do 

with it. And you have got up to 4 minutes and 47 seconds right 

now, but it shouldn’t take you that long. 

All right. The Brent Spence Bridge, we have talked about it in 

our community, as you know, for quite a few years now. Let’s say 

we left it up to an equity court judge to decide, knowing the costbenefit analysis, the realities that we all live in, how would you 

divvy up the bill, say, percentage-wise, for lack of a better way of 

doing it? We know it is going to cost two and a half, $3 billion, approximately, and the longer it takes us to get this done, the more 

expensive it is going to be. 

And here are the entities you have got to work with. You have 

got the Federal Government, which I think has at this point, I 

think, funded something in the neighborhood of $63 million, I 

think, and most of that has gone for the planning and things like 

that. You have got the State of Kentucky, you have got the State 

of Ohio. You have got the local jurisdictions, the City of Cincinnati, 

the City of Covington, et cetera, on both sides of the river. So you 

have got the local folks other than the State in Ohio and the other 

local entities on—at Kentucky. So that is, I think, about five that 

I have mentioned so far. 

SBREP-219 with DISTILLER

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And then you have also got—well, let’s say the private sector, if 

there are some local businesses that want to be part of this solution that are willing to have a special fund that they are going to 

help out. You can put them in. And then you have got a category 

called—we will call it tolls, and you can either include that as 

something over and above the categories that we have talked about 

here or not include it at all. 

That is why I say you have got to work at the—kind of the political realities that we are dealing with. And then if there is some 

other entity that you can think of that should be helpful to this or 

could be helpful, you are welcome to do that. 

So you have got—and everybody else is welcome to leave if they 

want to. This probably isn’t particularly interesting to everybody 

else, but it is really interesting to me, and you have got 2 minutes 

and 40 seconds or so. And you can think out loud too, so we can 

decide how you have come to this process and—— 

Mr. DAVIS. Think out loud on the record. 

Chairman CHABOT. The floor is yours. 

Mr. DAVIS. Thank you, Mr. Chairman. Did I get this question because we went to rival high schools? Is that—— 

Chairman CHABOT. Yes. 

Mr. DAVIS. You know, how do you divvy it up. 

Chairman CHABOT. Back in our community, by the way, everywhere else, people ask, where did you go to school, and they are 

talking about college; back in Cincinnati, we are talking about 

what high school you went to. 

Mr. DAVIS. St. Xavier and LaSalle. 

Chairman CHABOT. And I went to LaSalle. And you went to? 

Mr. DAVIS. St. Xavier. 

Chairman CHABOT. St. Xavier. 

Mr. DAVIS. Yeah. 

Chairman CHABOT. And my son went to Xavier too. 

Mr. DAVIS. Well, how do you divvy it up, you know, and that is 

a—and I think that is a really—and I am not filibustering here, 

but this is really a question, I think, that comes up in every community across the country, right: Who is on the hook for the cost 

of delivering this public good. We have that discussion locally. 

You know, it is a Federal Government project and it is a Federal 

interstate. The Federal Government should pick up the tab for this. 

Well, you know, then other heads come in and they say, well, you 

know, maybe, but Federal Government is not paying 80 percent in 

the former 80/20 mix that we used to have before. There needs to 

be more State and local involvement as well. 

So while I don’t know, and I don’t know if you will let me get 

away with this as an answer, but—— 

Chairman CHABOT. Well, come on. 

Mr. DAVIS.—I don’t know that—I don’t know that I could put a 

specific percentage within all five, but I think that what we need— 

one thing that become very clear in the discussion today and the 

discussion that has led up to today is that everybody has to play— 

every level of government has to play a role in this. The Federal 

Government must play a leading role in the development of public 

good. The State governments need—they receive dollars, their gas 

tax dollars back. They need to find a way to program those behind 

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a set of priorities. User fees, whether that be gas tax or tolls or 

however you—whatever kind of type of user fee you would like to 

categorize, I think that needs to be part of it too. 

As Ms. Hahn referenced before, you know, you have got people 

who maybe are not—who get the benefit from—who get the benefit 

but maybe aren’t paying, you know, the same amount. You know, 

there is a discussion—there is probably something there that if everybody benefits, then maybe everybody should have some skin in 

the game on that issue. 

So I don’t know that I could put it down into specific percentages, 

but I think a discussion needs to happen between Federal Governments and State governments to say, you know, we are all in this 

together. Infrastructure is not just important from, you know, 

the—you know, everybody getting to, you know, go to a ribbon cutting, but it affects—it has a tremendous effect on our quality of life, 

it has a tremendous effect on economic development. 

To your point, Chairman, from the beginning, you know, what is 

the point of building out these cities and communities if we can’t 

get to and from them? From a small business perspective, what is 

the point of opening—having a florist, and to use your example 

from the beginning, in downtown Cincinnati in an urban area, if 

his or her, you know, customers can’t get to and from there. 

So I think it is a shared cost, but I do think that there is a leading role that the Federal Government needs to play. 

Chairman CHABOT. Okay. I am going to let you get away with 

that. 

Mr. DAVIS. Thank you. 

Chairman CHABOT. I want to thank you, both you, Mr. Davis and 

all the other witnesses. I think you have all done an excellent job 

here this morning, so thank you for taking your time to help us. 

Members will have 5 days to extend their remarks or to file extraneous materials. If there is no further business to come before 

the Committee, we are adjourned. Thank you. 

[Whereupon, at 12:40 p.m., the Committee was adjourned.] 

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A P P E N D I X 

STATEMENT OF 

WILLIAM SCHMITZ 

VICE PRESIDENT, QC AND SALES 

GERNATT ASPHALT PRODUCTS, INC. 

ON BEHALF OF 

THE NATIONAL STONE, SAND & GRAVEL 

ASSOCIATION 

BEFORE THE HOUSE SMALL BUSINESS COMMITTEE 

HEARING ON 

‘‘THE ROAD AHEAD: SMALL BUSINESSES AND THE NEED 

FOR A LONG-TERM SURFACE TRANSPORTATION 

REAUTHORIZATION’’ 

June 3, 2015 

SBREP-219 with DISTILLER

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Thank you, Chairman Chabot and Ranking Member Velazquez, 

for the opportunity to testify today on behalf of the National Stone, 

Sand and Gravel Association (NSSGA) about the importance of the 

nation’s surface transportation system to small businesses, and 

particularly small aggregates companies. I am Bill Schmitz, Vice 

President of Dan Gernatt Gravel Products, Inc. 

Since 1946, the Gernatt family and their companies have been 

proud to serve all of western New York. Comprised of Gernatt Asphalt Products; Dan Gernatt Gravel Products, Inc.; and Country 

Side Sand and Gravel, Inc., our companies provide sand, gravel, 

stone, landscape aggregate, hot mix asphalt products and trucking 

to Buffalo, N.Y., western New York and northwest Pennsylvania. 

NSSGA is the leading voice and advocate for the aggregates industry. Its members—stone, sand and gravel producers and the 

equipment manufacturers and service providers who support 

them—produce the essential raw materials found in homes, buildings, roads, bridges and public works projects. During 2014, 

NSSGA member companies represented more than 90 percent of 

the crushed stone and 70 percent of the sand and gravel consumed 

annually in the U.S., and there are more than 10,000 aggregates 

operations across the United States. Nearly every congressional 

district is home to an aggregate facility. Production of aggregate in 

the U.S. in 2014 totaled 2.39 billion tons at a value of $20.3 billion. 

Seventy percent of NSSGA members are small businesses. Failure of Congress to enact a highway bill, changes in the regulatory 

environment governing aggregates extraction or their use have 

huge impacts on small business. I know, because I come from a 

small business. 

The first of our sites was in Collins, N.Y., on the Gernatt family 

dairy farm. In 1955 Dan Gernatt mortgaged his farm to put up a 

sand and gravel plant when Interstate 90 was first constructed 12 

miles from the farm. The dairy herd was milked daily while the 

gravel plant ran in the barnyard. This first operation was fun by 

Dan Sr., Dan Jr. and two employees. The cows were eventually sold 

as they added a concrete plant and an asphalt plant to the Collins 

location. Since our founding, we have expanded to have eight sand 

and gravel processing plants, six hot mix asphalt plants, one contractor supply outlet, a rock salt terminal and numerous sand and 

gravel excavation sites. 

Our locations are spread over three western N.Y. counties in 

rural areas where people struggle to find good paying jobs. The 

Gernatt organization considers its 175 loyal employees as family 

and we want to provide them the well-paying, stable employment 

they deserve. The business has grown because of the hard work by 

the Gernatts and their employees. We are an open shop operation 

where everyone works together for the common goal of making the 

company’s successful. The Gernatts share their faith-based values 

and are strong supporters of the local businesses and community 

efforts where we operate. It is important to us that the local repair 

shops, auto dealers, tire shops, welders, painters and all other support businesses benefit from our success. We are an integral part 

SBREP-219 with DISTILLER

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of the western New York community and we do this because it is 

the right thing to do. 

Aggregates are the foundation of our business and an essential 

American industry that serves as a barometer for the rest of the 

U.S. economy. Without it we cannot make hot mix asphalt, concrete, landscape stone or winder road sand. Stone, sand and gravel 

are essential to any construction project—public and private. When 

the demand for our products is high, the nation is growing, jobs are 

being created and essential national assets are being built. If the 

aggregates industry is doing well, America is doing well and so are 

Gernatt companies. 

Aggregates are used in nearly all residential, commercial, and industrial building construction. They are also used for many environmental purposes, including pervious pavements and other 

LEED building practices, the treatment of drinking water and sewage, erosion control on construction sites, and the treatment of air 

emissions from power plants. While Americans take for granted 

this essential natural material, it is imperative for the construction 

of our infrastructure and homes and for positive growth in our communities. 

We in the aggregates industry remove materials from the 

ground, then crush and process them for various uses. Hazardous 

chemicals are not used or discharged during removal or processing 

of aggregates. When aggregates producers are finished excavating 

the stone, sand or gravel in an area, they pay to return the land 

to other productive uses, such as residential and business communities, farm land, parks, lakes or nature preserves. 

While stone, sand and gravel resources may seem to be ubiquitous, construction materials must meet strict quality and technical guidelines to make durable roads and other public works 

projects. There is no shortage of aggregates; however the availability of future sources of high quality aggregates could become a 

significant problem in many areas of the country if proposed regulatory changes, like the recently issued EPA waters of the U.S. 

rule, are implemented. 

Sales of natural aggregates generate over $40 billion annually for 

the U.S. economy. When combined with related industries, such as 

cement, concrete, asphalt and construction equipment and supplies, 

the transportation construction industry generates more than $200 

billion in economic activity every year and employs more than two 

million people. 

Through its economic, social and environmental contributions, 

aggregates production helps to create sustainable communities and 

is essential to the quality of life Americans enjoy. Aggregates are 

a high-volume, low-cost product. Due to high product transportation costs, proximity to market is critical; unlike many other 

businesses, we cannot simply choose where we operate. We are limited to where natural forces have deposited the materials we mine. 

There are also competing land uses that can affect the feasibility 

of any project. Generally, once aggregates are transported outside 

a 25-mile limit, the cost of the material can increase 30 to 100 percent. Because so much of our material is used in public projects, 

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any cost increases are ultimately borne by the taxpayer. Since we 

operate near areas of limited quality reserves we ship up to 200 

miles via truck and rail to meet the demand where quality aggregates are not locally available. This is only possible using adequately maintained highways and railways. 

Over the past eight years, the aggregates industry, like many 

others, has experienced the most severe recession in its history 

with the federal regulatory tsunami causing further harm to an industry that has seen production drop by 39 percent since 2006. 

During that time, when the commercial and residential construction markets slowed to a crawl, we were forced to scuttle expansions, lay off employees and alter our business plans. 

Our highway system infrastructure continues to deteriorate at a 

rate much faster than we are making repairs. Our local towns, 

counties and New York State DOT struggle to maintain adequate 

conditions, say nothing of reconstructing roads that have exceeded 

design life or design capacity. With federal funding in a continual 

state of limbo, states are unable to adequately plan for long term 

infrastructure repair and maintenance. With all this uncertainty 

small businesses, like ours, struggle to plan our futures. Our equipment is extremely expensive, so making huge capital equipment investments without a clear vision is difficult at best. Many things 

need to fall into place to do a project in the shortened construction 

seasons of the northern U.S. While it may not seem like long time, 

a four-week delay in funding or awarding contracts will cause a 

project to lose a complete construction season and add to its cost. 

This causes a ripple effect, affecting many businesses along the 

supply chain resulting in a great deal of economic distress. 

The business of successfully building and maintaining our national surface transportation infrastructure depends in large measure on funding stability and year-over-year predictability provided 

by the surface transportation authorization. The extension of the 

current law, MAP-21, expired on May 31. 

Congress passed a two-month extension of the program to July 

31, which continues authorization of the program and allows continued expenditures from the Highway Trust Fund. It was the 33rd 

short-term extension of the program over the past six years. At the 

end of July, the Highway Trust Fund is expected have a balance 

of $3.5 billion. 

Congress needs to do what they were elected to do and stop kicking the can down the road by addressing the long-term funding of 

our nation’s surface transportation infrastructure. No more shortterm extensions. Reauthorization is critical to NSSGA’s many small 

aggregates producers like us. 

We are active in our community organizations, within our state 

trade associations and with other national trade associations including the National Asphalt Pavement Association. Regardless of 

which organization I am participating in, the conversation is the 

same. When are we going to fix our highways and infrastructure? 

Elected officials on every level recognize the need for sustainable, 

stable, adequate funding to maintain AND improve our highway 

system. Our employees ask, ‘‘When are we fixing the roads and 

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bridges we drive on every day?’’ New York State DOT personnel 

open each meeting with a plea for us to call our congressmen and 

get the state DOT a stable program so they can plan for our future 

needs. We can no longer ignore the elephant in the room. 

In the absence of a long-term plan, my customers are telling me 

they are not sure what the next years are going to bring to them, 

thereby causing me to withhold investment in plants and new machinery for the foreseeable future. It is increasingly difficult to do 

long range workforce planning due to uncertain demand. 

Last increased in 1993, the transportation user fee has outgrown 

its current buying power. The cost of materials and labor has gone 

up dramatically since then, as well as increased fuel efficiency. In 

order to keep up with the twenty-first century, two commissions, 

created by the last multi-year surface transportation reauthorization law, recommended a simple, straightforward, effective solution—to increase the fuel user fee coupled with indexing it to inflation. The commissions’ reports suggested other potential revenue 

sources; so too, have reports from a host of organizations. Revenue 

options are not the problem. 

Continued patches and temporary fixes hurt future and existing 

projects as states and localities are hesitant to move forward out 

of fear the federal government will not meet its funding obligations. 

Multi-year surface transportation reauthorizations are particularly vital for the funding confidence they instill in state departments of transportation. When they know that the Federal Highway Administration will apportion their funding year after year, in 

the amount authorized, they have confidence that their state expenditures will be reimbursed. The states then award contracts, 

and the process of building and maintaining our transportation infrastructure can proceed smoothly. Confidence in the stability of 

the program is a critical factor in ensuring success, particularly for 

small businesses. 

When there are doubts, as there are today, awards for construction slow. Already Arkansas, Georgia, Tennessee, Wyoming, Montana, Nevada, Utah, Colorado, Nebraska, Mississippi, Pennsylvania, West Virginia, Connecticut, Vermont and Maryland have either delayed or cancelled highway, bridge or transit capital projects 

this year or are considering doing so because of uncertainty over 

future federal funding. Congressional highway program extensions 

have affected $1.3 billion in transportation improvement projects. 

The aggregates industry alone employs approximately 100,000 

highly-skilled men and women. Nearly 700,000 jobs relay on federal transportation spending. At its core, surface transportation reauthorization is a jobs bill that results in long-term national assets. 

A recent Transit Labs report on the best and worst bridges found 

that 430 of 435 congressional districts have at least one structurally deficient bridge. What makes a bridge structurally deficient? Federal law requires states to inspect their 20+ ft. bridges 

every two years. Bridges are rated from 0–9 with 9 being the best. 

Federal guidelines classify bridges as ‘‘structurally deficient’’ if one 

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of the three components holding up the bridge (deck, superstructure or substructure) is given a 4 or less. 

According to the report, 11 percent of congressional districts account for over half of our nation’s deficient bridges. If you break it 

down, there are more than 300 deficient bridges per district and 

more than 32,000 structurally deficient bridges in total. In many 

states—Iowa, Illinois, Indiana, Kansas, Missouri, Mississippi, New 

York, Oklahoma, and Pennsylvania there are at least 3 districts 

with more than 300 deficient bridges. The Memorial Bridge that 

links Arlington National Cemetery with the nation’s Capital City 

was deemed structurally deficient and restricted to a single lane of 

passenger vehicles in each direction. The crisis is nationwide. 

We recognize the difficulty in finding long-term funding for the 

highway program. NSSGA supports an all-the-above approach to 

fund our nation’s infrastructure projects. We also understand that 

no one funding mechanism is a panacea. In the absence of action, 

the costs to maintain and improve our nation’s vascular system 

only increase. Meanwhile, Americans are becoming more and more 

frustrated with the growing number of potholes, cracked roads and 

traffic jams plaguing our roads, highways, and bridges. According 

to the Texas Transportation Institute Americans spend 38 hours 

and $121 billion in wasted fuel sitting in the congestion plague our 

urban areas. Extra vehicle repairs and operating costs are costing 

$94 billion a year billion—$444 per motorist. 

President Eisenhower signed the law creating the National Interstate Highway System nearly sixty years ago. It was designed to 

last 25 years. We are 34 years beyond is useful life. Is it any wonder that it is deteriorating? 

The least expensive way not to waste fuel and to improve air 

quality is to increase the capacity of our roads and bridges and alleviate congestion. The Federal Highway Administration estimates 

that each dollar spent on road, highway and bridge improvements 

results in an average benefit of $5.20 in the form of reduced vehicle 

maintenance costs, reduced delays, reduced fuel consumption, improved safety, reduced road and bridge maintenance costs and reduced emissions as a result of improved traffic flow. 

Improved safety is another important reason to pass a multiyear 

highway reauthorization bill now. There were 32,719 traffic fatalities in 2013 in the U.S. A total of 165,340 people died on U.S. highways from 2009 through 2013. The fatality rate on the nation’s 

rural roads in disproportionately higher than that on all other 

roads. There were 1,199 traffic fatalities in 2013 in New York. 

Motor vehicle crashes cost New York $19.5 billion per year, $1,027 

for each resident, in medical costs, lost productivity, travel delays, 

workplace costs, insurance costs and legal costs. 

We can do better. Safety must come first to ensure that you and 

I and our families, friends, and employees get to and from their 

daily activities safely. Gernatt Companies are committed to the 

safety of its most precious resource—our employees. The company 

uses all possible means, be they administrative or engineering controls—to protect employees. While our industry is based around 

large equipment, conveyors, crushers, off road equipment and lots 

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of dump trucks, we pride ourselves on our safety record. Our small 

company devotes numerous personal and monetary resources to 

maintaining our safety program. While we all must comply with 

the federal regulations enforced by Mine Safety and Health Administration and Occupational Safety and Health Administration, we 

are part of a captive self-insured group that requires safety programs to exceed any federal regulations. We hold annual safety refresher courses, maintain our own safety committee and send a 

cross-section of employees to our captive safety meetings. We also 

utilize an employee wellness program through our health insurance 

captive as commercial health insurance has become cost prohibitive. 

There are those that say we should devolve the program to the 

states in order to return maximum discretionary authority and fiscal responsibility to them for all elements of the national surface 

transportation systems. It is critical to remember that the federal 

government’s role in maintaining the national road network, which 

carries more than 73 percent of the 48 million tons of goods transportation across the country daily, is a constitutional one. Article 

1, Section 8, directs the federal government ‘‘To establish Post Offices and post Roads,’’ or the forerunner of our national highway 

system. Devolution of the program would saddle the states with 90 

percent of the fiscal responsibility for supporting highways that the 

federal government has an obligation to establish. In order to make 

up lost federal monies, New York would have to raise the gas user 

fee 20.7 cents and the diesel fuel user fee 19.3 cents. 

A better approach is to reform the system, not risk the nation’s 

economic future by disinvesting in a highway system that is already under-funded. 

Mr. Chairman, again thank you for the opportunity to testify 

today. Let me reiterate the importance to the aggregates industry 

and all small businesses of Congressional action on a multi-year 

surface transportation reauthorization, one that increases investment in the nation’s roads, bridges, and highways. Our industry, 

like most businesses, requires certainty to make sound capital investment decisions. Reverting to short-term extensions will only 

create havoc in resource development decisions and construction 

projects. 

Attached to my statement are two infographics that NSSGA put 

together. ‘‘Small Change’’ calculates the real costs to the average 

American of the Corker-Murphy proposal to increase the fuel user 

fee $12 cents. The second infographic shows visually the costs of 

doing nothing. 

We look forward to continuing to work with you in doing what 

is right for America. If we ignore the maintenance and improvement of our nation’s road and highway network—the circulatory 

system of America, it is at our own peril, we risk the loss of economic growth, improved safety, cleaner air, and jeopardize the freedom of mobility we all take for granted. 

Attachments 

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Chairman Chabot, Ranking Member Vela ́zquez, and other distinguished members of the House Small Business Committee, my 

name is Don Shilling, and it is my pleasure to appear before you 

today both as an executive at a construction equipment company 

directly impacted by the uncertainty surrounding federal surface 

transportation programs and in my capacity as chairman of Associated Equipment Distributors (AED). 

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I am the president of General Equipment & Supplies, the authorized Komatsu construction equipment dealer for North Dakota and 

Western Minnesota. In addition to our four North Dakota locations, 

we have two facilities in Minnesota and one in South Dakota. We 

also have two Canadian locations. General Equipment & Supplies 

employs 235 American workers. 

AED is the trade association representing distributors of construction, mining, energy, forestry, industrial, and agricultural 

equipment. AED members supply the equipment that builds America’s highways, bridges, airports, sewer, and drinking water systems and the association has a longstanding commitment to strong 

federal infrastructure programs. AED’s members range in size from 

small dealerships with one location and a handful of employees to 

larger companies with thousands of employees and dozens of locations across several states. However, the overwhelming majority of 

AED’s members are small, family businesses: AED’s average member achieves about $40 million per year in revenues and employs 

80 people. 

I appreciate the opportunity to come before the Committee to discuss the nation’s infrastructure crisis; the impact the federal highway program’s uncertainty has on my company and the broader industry; and what needs to be done immediately to restore confidence in construction markets. 

Confronting the Nation’s Infrastructure Crisis 

America’s surface transportation needs are well documented and 

negatively impact the country’s economy, national security, combativeness, productivity, and environment. In fact, the World Economic Forum ranks the United States quality of roads 16th in the 

world, behind the likes of China, Japan, Oman, and the United 

Arab Emirates. 

According to the Transportation Road Information Program 

(TRIP), a nonpartisan organization that researches, evaluates, and 

distributes economic and technical data on surface transportation 

issues, nineteen percent of America’s major roads are in poor condition and twenty-four percent of the nation’s bridges are structurally 

deficient or functionally obsolete. Road and highway needs aren’t 

limited to heavily populated areas. TRIP recently released a report 

concluding America’s rural roads and bridges have significant deficiencies. In 2013, 15 percent of the nation’s major rural roads were 

rated in poor condition and another 39 percent were rated in mediocre or fair condition. In 2014, 11 percent of the nation’s rural 

bridges were rated as structurally deficient and 10 percent were 

functionally obsolete, impacting U.S. agricultural sectors and hampering farmers from delivering goods from farm to market in a 

timely manner. 

As Congress delays addressing the country’s drastic needs, the 

public is paying the price in lost productivity and vehicle repairs. 

TRIP found that inadequate roads cost U.S. drivers $109 billion a 

year in extra vehicle repairs and operating costs. According to the 

Texas Transportation Institute, traffic congestion (resulting in 

large part from inadequate capacity) detracts more than $121 bilSBREP-219 with DISTILLER

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lion per year in wasted fuel and lost productivity from the U.S. 

economy and costs the average American commuter approximately 

$818 annually, threatening the environment and public health. 

Few will argue that the time for substantial investment in our 

nation’s surface transportation infrastructure is long overdue. 

Nonetheless, lawmakers continue to punt the tough decisions about 

how to pay for robustly funded, long-term surface transportation 

legislation to restore certainty to the Highway Trust Fund (HTF) 

and provide certainty to construction markets. 

Impact of Highway Investment Uncertainty on General 

Equipment & Supplies 

General Equipment & Supplies and AED members across the nation, operating in every state and congressional district, are ready 

to supply the heavy equipment needed to rebuild America. The 

HTF consistently flirts with bankruptcy as gas taxes and other 

highway user fee revenues are insufficient to support even the current inadequate levels of transportation investment. This is creating enormous uncertainty for transportation planners, contractors, and equipment distributors. 

My company is fortunate. The energy boom in North Dakota has 

allowed General Equipment & Supplies to stay in business despite 

significant decreases in our equipment sales to road contractors, 

which account for about 50 percent of our customer base. However, 

our Minnesota locations, which almost predominately services highway markets, have seen dramatic reductions in sales, due to the 

uncertainty surrounding federal investment. In fact, between 2013 

and 2014 we saw a 34 percent reduction in equipment whole goods 

retail sales. Even in North Dakota, the state is reluctant to bid 

long-term, equipment intensive jobs, and recently pulled 30 contracts due to lack of confidence in the HTF. 

Historically, General Equipment & Supplies (and most AED 

members) primarily sold heavy construction equipment. However, 

we increased rentals by 26 percent between 2013 and 2014 due to 

the uncertainty surrounding federal investments. While we’re 

grateful for the business, the drop in sales has broad implications, 

including forcing dealers to continue to carry rental equipment on 

our balance sheets (along with the associated financial risk) and 

typing up cash that could be used to hire more workers and investment in the company. 

The HTF’s precarious situation is also impacting business decisions. My company has considered opening a new location in North 

Dakota, which means purchasing a 20,000 square foot building and 

hiring between 12 and 20 new employees. I’ve been reluctant to expand because of lack of confidence in highway markets, since the 

new facility would primarily service the road building and agriculture sectors. 

Additionally, it should be noted that AED members’ interest in 

resolving the uncertainty surrounding federal surface transportation programs isn’t solely to increase sales. My company services 

customers in a territory over 100,000 square miles and we are 

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heavily reliant on the interstate highway system. We deliver parts 

nightly from Minneapolis to Western North Dakota. Also, a majority of our equipment servicing and repairs happen in the field 

where our service trucks are dispatched daily to remote job site locations. As a small business, delays and costs associated with inadequate highways and congestion significantly increase operating 

expenses, hindering investment in the company. 

The Impact of Highway Investment Uncertainty on Equipment Markets 

The detrimental impact of the uncertainty surrounding the HTF 

isn’t unique to General Equipment & Supplies. In fact, by August, 

without action, economic shockwaves will reverberate throughout 

the country as the HTF will be unable to support any highway or 

transit spending, jeopardizing more than $50 billion in annual investment and threatening $2.4 billion in equipment market activity 

(i.e., dealer revenue from sales, rental, and product support) and 

close to four thousand equipment dealership jobs. 

In preparation for this hearing, AED conducted a quick survey 

of its membership to gage the federal highway program’s impact. 

Ninety-one percent of respondents said that surface transportation 

construction either had a significant impact on demand for their 

companies’ products or that it was their most important market. 

Not surprisingly, the effects of the uncertainty are the same nationwide as they are in my territory. Here’s a sampling of some of 

what our members said about how they and their customers are 

impacted: 

Uncertainty is forcing dealers to cut jobs. ‘‘Our company has 25% less employees than we did in 2008m with a $10 million 

smaller payroll,’’ said an AED member in Tennessee. 

Dealers must carry more risk and divert resources due to 

the uncertainty. ‘‘Contractors have less certainty about their long 

term future, thus they tend to rent equipment rather than buying. 

That means we have to borrow more money to have equipment on 

hand to meet our customer’s needs,’’ writes an AED member in 

Texas. 

Congressional inaction is hindering economic growth. An 

AED member in Connecticut said, ‘‘Without a long term plan, contractors are not willing to invest in equipment for future work, 

thus restricting growth in our business. 

Uncertainty is causing contractors to delay investments in 

heavy equipment. An AED member in New York said, ‘‘It has 

negatively impacted our company due to the lack of longer term 

planning of projects/programs. The larger, more impactful projects 

tend to be delay and postponed—contractors are less likely to invest in equipment due to the uncertainty of future projects.’’ A 

California-based equipment distributor wrote, ‘‘The short-term extensions do not allow construction contractors to make decisions regarding fleet equipment purchases.’’ 

While the economic harm being caused by the uncertainty is 

clear, so is the fact that enacting a new fully-funded, long-term 

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highway bill would have broad economic benefits for our industry 

and beyond. For example, ninety-one percent of our survey respondents said they would likely add employees if Congress passed 

a highway bill. Seventy-eight percent would purchase new service 

trucks and 91 percent would increase inventory levels, all of which 

would help the manufacturing sector. 

A new, long-term highway bill would also create new business activity for construction contractors, even those who don’t build roads 

as evidenced by the fact that 47 percent of our survey respondents, 

similar to my company, are likely to expand or improve existing facilities and more than a third would open new locations if Congress 

restores certainty to the program. 

The Solution 

What’s needed is bold, decisive action to restore long-term certainty to the federal highway program. A 2013 study conducted by 

researchers at William & Mary’s Thomas Jefferson Program in 

Public Policy found that the HTF deficit will amount to $365.5 billion by 2035. The AED report also proposed bold solutions: increasing the gas tax to 25 cents per gallon and indexing it for future inflation would raise $167 billion more than current baseline spending requirements over the next two decades. 

AED strongly supports a user fee increase in the near-term as 

Congress develops a more sustainable revenue model (e.g., vehicle 

miles travelled fee). Nonetheless, all options should be on the table 

to fully fund the federal highway program well into the future and 

ensure a strong federal role in surface transportation investment. 

Finally, Congress must also keep in mind that funding surface 

transportation infrastructure isn’t government ‘‘spending’’. It’s an 

investment that pays for itself. A 2012 AED study found that as 

with capital assets bought by a business, over 20 years, each dollar 

invested in highways and streets returns approximately $0.35 in 

tax revenue and for each dollar invested in highways and streets, 

$0.23 of tax revenue accrues at the federal level. 

Conclusion 

In sum, our nation faces an unparalleled infrastructure crisis. 

Congress can’t keep kicking the can down the proverbial road because the road is deteriorating and full of potholes. We need immediate and aggressive congressional action to ensure that our transportation system does not degrade further and that state and federal governments have the resources they need to address the crisis. The small business-dominated construction equipment industry 

is directly impacted by federal infrastructure spending and thousands of jobs are affected by this federal program. 

The current uncertainty surrounding federal infrastructure programs is contributing to volatility in equipment markets. At the 

same time, equipment distributors and their employees suffer the 

consequences of under-investment in infrastructure along with 

other businesses and the general public. 

AED therefore urges Congress to quickly resolve the near-term 

uncertainty surrounding the HTF and to enact a long-term highSBREP-219 with DISTILLER

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way reauthorization bill that creates new revenue streams to support infrastructure investment. Further delay is inexcusable; the 

American people deserve bold, decisive leadership. Now is the time 

for Congress to step up to the plate. 

If Congress seizes this historic opportunity to the act, the benefits of new infrastructure investment will be felt immediately and 

for years to come as America positions itself to compete globally 

with a stronger economic backbone. 

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Chairman Chabot, Ranking Member Velazquez, and members of 

the House Committee on Small Business, thank you for the opportunity to meet with you today to offer testimony on the importance 

of transportation and infrastructure to business growth. 

My name is Matt Davis and I am president of DSD Advisors, 

LLC, a government affairs consulting firm based in Cincinnati, 

Ohio. I am here today in my capacity as Director of the Build Our 

New Bridge Now Coalition. Created in 2012, the Build Our New 

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Bridge Now Coalition is a diverse group of small, medium, and 

large businesses, and community, government, and labor leaders 

who have come together to advocate for rebuilding and rehabbing 

the 1-75/71 Brent Spence Bridge Corridor. These leaders joined to 

focus their efforts to rebuild the Corridor because it is inextricably 

linked to our region’s current and future economic opportunities, 

quality of life, and safety. 

If you do not already know, the Brent Spence Bridge is a 52 

year-old span that carries Interstates 75 and 71 across the Ohio 

River, locally. It also serves as a major artery in our national highway system, carrying the equivalent of 4% of the nation’s GDP 

every year and connecting Michigan to Miami, servicing many companies, both large and small. 

Locally, Southwest Ohio, Southeast Indiana, and Northern Kentucky have a distinct economic advantage, being within just a 90 

minute flight or a one-day drive of the 25 top U.S. metros and 41% 

of the nation’s purchasing power. Couple those numbers with the 

amount of the nation’s GDP that the Brent Spence Bridge carries 

alone, you can see that the geography serves our region’s residents 

and businesses well. 

Unfortunately, our roads and bridges have not. The Brent Spence 

Bridge was built more than 50 years ago to create jobs and spur 

economic opportunity. Now, it is failing our region. The Brent 

Spence Bridge carries more than twice the amount of vehicles per 

day that it was designed to accommodate, is considered ‘‘functionally obsolete’’, and was recently given a grade of ‘‘C-’’ by Kentucky 

transportation. 

Congestion on this crumbling, decaying, and out-of-date span 

continues to increase, stifling productivity, slowing the flow of 

goods and commuters, raising safety concerns, and lowering air 

quality. 

According to our MPO, the Ohio-Kentucky-Indiana-Regional 

Council of Governments, approximately 60% of the local population 

and 75% of the local jobs live within 5 miles of Interstate 75. The 

Interstate corridor and Brent Spence Bridge that supports it are 

critical to our region’s present and future. Businesses chose the 

Cincinnati region because of its economic climate, and infrastructure, particularly the Brent Spence Bridge Corridor, is a key component of that climate. So we must care for it to ensure our economic future. 

Another statistic you should know: You are 3-5 times more likely 

to be in an accident on the Brent Spence Bridge Corridor than you 

are on any other portion of the interstate system in Ohio, Kentucky, or Indiana. That stat leads one to wonder what the future 

holds. If we do nothing, will conditions improve? Probably not. If 

not, then we fear that existing businesses will relocate and prospective businesses will look elsewhere. This corridor, a great benefit 

to our region, could hold us back if we do not develop a strategy 

to modernize it. 

Businesses, particularly small ones, operate on very thin margins. As the old saying goes, ‘‘time is money’’ and that rings true 

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for every small business in Cincinnati and the country. In order for 

their businesses to stay afloat, these small businesses need reliable 

roads, bridges, waterways, airports and railways to move employees and goods from place to place as safely as possible. If a delivery 

or an employee is late, it can cause major disruptions for that business, with a multiplied effect on our region. 

The Build Our New Bridge Coalition is one of many groups that 

believe developing strategies on infrastructure at the state and national levels with a set of priorities will be a springboard to significant job gains, particularly for small, homegrown businesses. 

Northern Kentucky University completed a study that looked at 

the economic impact of rebuilding the $2.7 billion Brent Spence 

Bridge Corridor. It found that 24,488 jobs would be created in Ohio 

and Kentucky, generating $1.9 billion in labor income and $193.1 

million in state and local government revenue. Keep in mind, those 

numbers are just those directly associated with rebuilding the corridor. Providing reliable and safe infrastructure is one place where 

Washington and the states can play a major role by supplying the 

tools for the success of America’s small businesses, but it requires 

significant resources and focus. The sky is the limit for the future 

of small businesses, but not if employees cannot get to the office 

or a delivery truck is constantly late. 

Thank you for your time today and attention to this important 

topic. I am happy to answer any questions you may have. 

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1 jgifford@gmu.edu; 703–993–2275; p3policy.gmu.edu;@p3policy 

The Road Ahead: Small Businesses and the Need for a Long-Term Surface 

Transportation Reauthorization 

Hearing 

June 3, 2015, 11 a.m. 

Committee on Small Business 

U.S. House of Representatives 

Statement of Dr. Jonathan L. Gifford 1

Professor and Director, Center for Transportation Public-Private 

Partnership Policy 

School of Policy, Government, and International Affairs 

George Mason University 

3351 Fairfax Drive, MS3B1, Arlington, Virginia 

Chairman Chabot, Ranking Member Vela ́zquez, and distinguished members of the committee, thank you for the opportunity 

to speak to you today about the reauthorization of the nation’s surface transportation legislation. 

I am a professor at George Mason University, where I direct the 

Center for Transportation Public-Private Partnership Policy in Arlington, Virginia. The Center’s objectives are to provide objective 

analysis of transportation public-private partnerships (P3s) 

through research, education, and outreach in order to facilitate 

their application in the most effective situations. The Center’s program focuses on building the evidence base to evaluate P3s, advancing the capacity of public entities to asses and utilize the approach, educating researchers and professionals, and reaching out 

to business, government and the community at large to improve 

their understanding of the P3 approach to infrastructure development. We believe that a better understanding of P3s will lead to 

their most appropriate utilization. 

I would like to make three points about the subject of today’s 

hearing on small business and the need for a long-term surface 

transportation reauthorization. 

My first point is that public-private partnerships (P3s) for transportation projects offer significant opportunities to small busiSBREP-219 with DISTILLER

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2 Virginia Office of Public-Private Partnerships, ‘‘PPTA DBE/SWaM Programs: Achieving Historic Results,’’ n.d., http://www.p3virginia.org/wp-content/uploads/2014/07/FACT-SHEET—PPTADBESWaM.pdf. 3Transurban, personal communication, June 2, 2015. 

nesses. P3s generally involve design, construction and long-term 

operation and maintenance of a transportation project. P3 contracts 

usually have a term of 35 or more years, in some cases 75 years. 

These long-term agreements create a favorable environment for 

the small businesses in the communities surrounding the projects. 

Business needs include engineering, materials, construction, public 

affairs, community relations, architects, attorneys, security, and 

appraisers. Many of these business needs last not just for the duration of the construction but for the life of the concession agreement—many decades. Such long-term agreements foster the creation and sustenance of local businesses. 

Moreover, such opportunities are more than discretionary on the 

part of the concessionaire. States participating in P3s typically establish goals for participation by small, woman-owned and minority-owned businesses and disadvantaged business enterprises 

(SWaM/DBE). For example, Virginia’s goals for three of its major 

projects total more than $1 billion for the design and construction 

phase alone.2 The recently completed 495 and 95 Express Lanes P3 

projects in Virginia supported more than 28,000 jobs during construction, and employed hundreds of DBE/SWaM firms, 184 firms 

for the 95 Express Lanes and 250 firms for the 495 Express 

Lanes.3

A long-term surface transportation reauthorization can support 

small business by removing barriers in federal law regarding P3s, 

and by continuing and possibly increasing federal support for P3s. 

Without long-term reauthorization, agencies are experiencing difficulty in letting and continuing meaningful projects because they 

do not have the requisite budget authority. Large firs may be able 

to absorb this uncertainty, but small businesses are not wellequipped to deal with the off/on nature of the current federal process. 

A major barrier for P3s in many states is the federal prohibition 

against charging tolls on reconstructed Interstates. Congress may 

wish to reconsider that prohibition since so much of the Interstate 

system will require reconstruction in coming decades. Significantly, 

relaxing or removing this prohibition can be done at no cost to the 

federal budget. And it would allow states to decide whether and 

how much to explore tolls as a means of renewing and expanding 

their highway systems. 

Congress may also wish to extend or expand current programs 

that support P3s, notably TIFIA and PABs. The TIFIA program 

(for Transportation Infrastructure Finance and Innovation Act) 

provides loans and credit support to most P3 projects. PABs, or private activity bonds, level the playing field between bonds for P3 

projects and municipal bonds by exempting PABs from most federal 

income taxes. 

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President Obama’s proposed QPIBs (Qualified Public Investment 

Bonds) would expand the dollar amount available for P3s by eliminating the current $15 billion cap on PABs. 

My second point relates to the federal gas tax. The federal gas 

tax and the Highway Trust Fund have played important roles since 

their establishment in 1956 in the construction of the Interstate 

Highway System and supporting the Federal-Aid Highway Program. The current gas tax rate is not sufficient to support the ongoing expenditures of the existing surface transportation program. 

Congress has filled the gap in recent years with contributions from 

the general fund. 

Continued reliance on the gas tax as the primary source of funds 

to support the federal surface transportation program is problematic. As cars get more fuel efficient and the number of hybrids and 

electric vehicles increase, a flat per-gallon tax on gasoline generates less and less for each mile driven on our highway system. 

In the long term, Congress must decide how much financial support it wishes to provide the surface transportation program, and 

how to pay for it. An increase in the gas tax could support an ongoing program at current spending levels. However, in the longer 

term, other sources of state, local and federal revenue such as tolls 

may provide a more suitable financial foundation for addressing 

the nation’s transportation needs and opportunities. 

There appears to be significant appetite for infrastructure investment in the global capital markets. Investment in the U.S., however, is limited due in part to a lack of bankable projects. Removing 

barriers to tolling could enable more private capital investment. 

My third point relates to the future of the University Transportation Centers program. This program has supported a number of 

universities, including my own, in conducting research on our nation’s transportation system and educating generations of students 

who go on to design, construct, operate, finance and maintain that 

system. 

As an active participant in the UTC program for most of my career, I would like to assure the Committee that the program has 

generated considerable value in research, education and professional development. 

Our nation appears to be on the cusp of major changes in its 

transportation systems. Important innovations include autonomous 

vehicles, GPS, mobile devices, advanced materials, shared use of 

cars and bicycles, transportation network companies like Uber and 

Lyft, and public-private partnerships. These innovations have the 

potential to transform the movement of people and freight. They 

also have the potential to disrupt the industries and institutions 

that make up our transportation system. 

Continued support of the University Transportation Centers program will allow research and education to continue to contribute to 

expanding development of such innovations and understanding 

their implications for society. 

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That concludes my formal statement. I would be happy to answer 

your questions. 

Thank you. 

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Small Business Committee Hearing: ‘‘The Road Ahead: Small Business 

and the Need for a Long-Term Surface Transportation Reauthorization’’ 

Congressman Blaine Luetkemeyer - Statement for the Record 

Coming from a state that has the seventh largest highway system, I know just how crucial America’s roads and infrastructure 

are to our state’s and our nation’s economy. The route from point 

A to point B can determine how many deliveries or repairs are 

made in a given day by a small business owner simply trying to 

make ends meet. Failure to pass a comprehensive long-term surface transportation bill will have drastic implications on the economic health of our great state. The unfortunate truth is this—the 

American Society of Civil Engineers (ASCE) assessed the roads and 

transit infrastructure in Missouri and gave the Show-Me State an 

embarrassing ‘‘D’’ letter grade, while our bridges merely received a 

‘‘C+.’’ In Missouri, we fund maintenance, improvements, and desperately needed projects from the state gas tax, just as the federal 

Highway Trust Funds is funded. With increases in fuel efficiency 

mandated by the EPA and less total miles being driven, the revenue collected by the gas tax is not sufficient to adequately fund 

desperate maintenance and improvements to our state’s highways 

and transit system. 

On May 21st, the House and Senate passed a short-term Highway Bill reauthorization, which will extend current programs and 

spending levels until July 31, 2015. While this will allow some construction to continue during the peak season, it leaves long-term 

projects and contracts with little certainty. This by no means answers our long-term highway and infrastructure troubles. It is imperative that a bipartisan solution be reached to benefit all Missourians on the road. During the next few months, Congress will craft 

a new long-term highway bill. The top priority will be to consider 

methods to fund the nearly $12 billion dollar Highway Trust Fund 

shortfall that is exceedingly unsustainable. If we stay on the current path, it is estimated that the Highway Trust Fund outlays will 

exceed incoming revenue by $167 billion over the 2015–2024 period. As a nation we can no longer take the approach of simply 

maintaining our failing infrastructure. 

I am confident that with a proactive approach and exploring viable alternatives to the status quo, we can make real changes that 

yield positive and long-term benefits for all. This is an issue that 

has not received satisfactory attention in decades and definitely 

needs to be readdressed with fresh ideas. 

Æ 

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