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[Senate Hearing 108-284]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 108-284

                  PROPOSED FISCAL YEAR 2004 BUDGET FOR
                   THE FEDERAL TRANSIT ADMINSTRATION

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

 THE DETAILS OF THE ADMINISTRATION'S FISCAL YEAR 2004 BUDGET PROPOSAL 
                 FOR THE FEDERAL TRANSIT ADMINISTRATION

                               __________

                             MARCH 13, 2003

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs

91-526              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah              PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming             TIM JOHNSON, South Dakota
CHUCK HAGEL, Nebraska                JACK REED, Rhode Island
RICK SANTORUM, Pennsylvania          CHARLES E. SCHUMER, New York
JIM BUNNING, Kentucky                EVAN BAYH, Indiana
MIKE CRAPO, Idaho                    ZELL MILLER, Georgia
JOHN E. SUNUNU, New Hampshire        THOMAS R. CARPER, Delaware
ELIZABETH DOLE, North Carolina       DEBBIE STABENOW, Michigan
LINCOLN D. CHAFEE, Rhode Island      JON S. CORZINE, New Jersey

             Kathleen L. Casey, Staff Director and Counsel

     Steven B. Harris, Democratic Staff Director and Chief Counsel

               Peggy R. Kuhn, Senior Financial Economist

                Sherry E. Little, Legislative Assistant

                   Sarah A. Kline, Democratic Counsel

                   Aaron Klein, Democratic Economist

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)

                            C O N T E N T S

                              ----------                              

                        THURSDAY, MARCH 13, 2003

                                                                   Page

Opening statement of Chairman Shelby.............................     1

Opening statements, comments, or prepared statements of:
    Senator Sarbanes.............................................     3
    Senator Chafee...............................................     6
    Senator Reed.................................................     6
    Senator Dole.................................................     8
        Prepared statement.......................................    28
    Senator Schumer..............................................     8
    Senator Dodd.................................................     9
    Senator Bennett..............................................    13
    Senator Carper...............................................    25
    Senator Corzine..............................................    28
    Senator Johnson..............................................    29

                                WITNESS

Jennifer L. Dorn, Administrator, Federal Transit Administration,
  U.S. Department of Transportation, Washington, DC..............    13
    Prepared statement...........................................    30
    Response to written questions from:..........................
        Senator Shelby...........................................    35
        Senator Chafee...........................................    39
        Senator Reed.............................................    40
        Senator Carper...........................................    42

                                 (iii)

 
                  PROPOSED FISCAL YEAR 2004 BUDGET FOR
                   THE FEDERAL TRANSIT ADMINISTRATION

                              ----------                              

                        THURSDAY, MARCH 13, 2003

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.

    The Committee met at 10:20 a.m. in room SD-538 of the 
Dirksen Senate Office Building, Senator Richard C. Shelby 
(Chairman of the Committee) presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The hearing will come to order. I am very 
pleased this morning to welcome Federal Transit Administrator 
Jennifer Dorn from the Department of Transportation.
    Welcome. We are sorry we were late. We had two back-to-back 
votes.
    I asked Administrator Dorn to come before the Committee 
today to share the details of the Administration's 2004 
Proposed Budget for FTA, and I appreciate her willingness to 
respond to the Committee's request for her time.
    I will begin by saying that this is most likely the first 
time since 1998 that FTA's budget has garnered so much 
attention and scrutiny. Because we are in a reauthorization 
year, it is inevitable that the 2004 Budget would provide a 
glimpse into what the Administration will propose for TEA-21's 
successor bill. Incidentally, the reauthorization proposal is 
one that I hope will be delivered in an expeditious fashion. I 
need not tell the Administrator here that we are anxiously 
awaiting the details of the President's proposal. It is, 
frankly, a bit troubling that we have yet to see it. When it is 
released, I will be calling a hearing of the Full Committee to 
review it. That being said, let's move on to the 2004 Budget.
    The President is proposing a Fiscal Year 2004 Budget level 
of $7.226 billion--the same level as 2003. Several substantive 
legislative proposals accompany the budget. The Administration 
is proposing distributing all grant funds by formula, with the 
exception of New Starts. I have observed that transit 
properties have the tendency to make decisions based on the 
category of Federal assistance available, which may not lead to 
the best transit choice to meet that community's need. It is 
clear to me that what works for Birmingham doesn't necessarily 
work for a place like Detroit or even Baltimore.
    I am most concerned, however, about the idea of eliminating 
the bus program. For many communities this is the lifeblood of 
its transit system. It is an invaluable resource to the great 
majority of communities who rely on buses as the sole mode of 
public transportation. Eliminating the program, I believe, 
would be detrimental to mid-sized communities who need lump 
sums to make bus purchases and build bus facilities. Regular 
formula funds--even with the increase of 30 percent that would 
come from the elimination of the bus program--would not provide 
enough resources in a timely fashion to make cost-effective bus 
purchasing and construction decisions. It may take several 
years worth of formula funds for communities even to be able to 
do a modest bus fleet replacement. In my view, eliminating the 
bus and bus facilities program is not a feasible option that 
makes a lot of sense.
    Along the same lines, I am interested to hear from the 
Administrator about the rationale for expanding resources for 
New Starts. I do think that there is great value in widening 
the criteria for New Starts eligibility that would include new 
innovative technologies like bus rapid transit. However, I 
worry that FTA is too quick to commit themselves to full 
funding grant agreements, which take up the Agency's funds 
going forward. The result has been that we are entering a 
reauthorization cycle with $3.9 billion in New Starts funds 
having already been committed to existing and proposed 
projects. Cynics in the audience may believe that taking bus 
money to add to New Starts was necessary to have funds 
available for additional full funding grant agreements.
    I am pleased that rural transit is finally garnering the 
attention that it deserves. This is an area too long neglected. 
I have seen the value of committing resources to advance rural 
connectivity in communities all over the country. Currently, 40 
percent of rural counties offer no transit service at all. 
Increasing funds for the rural program will go a long way 
toward meeting the growing need.
    The Administration is also proposing eliminating rail 
modernization as a program with separate requirements from the 
Urbanized Area Formula Program. Merging these two accounts will 
not in any way affect the amount of money that any one 
community receives. Instead, it will eliminate the requirement 
that only rail modernization funds be spent on rail 
modernization projects. While I could debate the wisdom of how 
the rail modernization program is allocated under TEA-21, I 
think this is an intriguing proposal and one that I hope to 
hear about in greater detail from the Administrator this 
morning. I think there are a few clever ideas in the 
President's proposal for transit, although on balance, I think 
it is a current services budget and I do hope that it will 
evolve significantly in some areas.
    I plan to play an active role both as Chairman of this 
Committee and as Chairman of the Subcommittee on Transportation 
Appropriations to make sure that transit needs are addressed in 
the 2004 Budget, as well as in the reauthorization process.
    I am looking forward to an active year on transit and have 
already begun to lay out the groundwork for an aggressive 
series of hearings at the Full Committee on reauthorization 
issues.
    Along those lines, I delivered a letter to the Senate 
Budget Committee Chairman last week--signed by 64 of my 
colleagues in the Senate--that expressed a desire for transit 
funding increases in the Budget Committee's bill being marked 
up this week. I understand that several Members of the 
Committee may be at that markup even as we speak.
    Madam Administrator, we are pleased to have you with us 
this morning, and I look forward to hearing your remarks.
    Senator Sarbanes.

             STATEMENT OF SENATOR PAUL S. SARBANES

    Senator Sarbanes. Thank you very much, Mr. Chairman.
    I am going to have to depart because I am on the Budget 
Committee and we are going into markup very shortly.
    I want to thank Chairman Shelby for holding this very 
important and timely hearing. Mr. Chairman, I just want to add 
a caveat to what you said. You were pointing out the need to 
have flexibility because what might work in one place might not 
work in another.
    Chairman Shelby. That is right.
    Senator Sarbanes. I think you said, what works in 
Birmingham might not work in Baltimore. But I want you to know, 
I am working overtime to try to ensure that what works in 
Birmingham will also work in Baltimore, and hopefully, vice-
versa.
    I just wanted to bring that up.
    [Laughter.]
    Chairman Shelby. We want to take some of those Baltimore 
projects--not theirs, but some like them--to Birmingham.
    Senator Sarbanes. All right. You can put that on the 
record.
    [Laughter.]
    Chairman Shelby. We have learned from him.
    [Laughter.]
    Senator Sarbanes. The Committee, as you noted, will soon be 
charged with reauthorizing the transit provisions of TEA-21, 
which expires on September 30. This is important to recall as 
we resume our consideration of transit.
    During the last Congress, this Committee, along with its 
Subcommittee on Housing and Transportation chaired by our able 
colleague, Senator Reed, held eight hearings on transportation 
issues.
    In fact, I have the hearing record here. It is quite 
voluminous--I would need Senator Dodd to help me pick it up.
    Senator Dodd. I thought it was his opening statement.
    [Laughter.]
    Senator Sarbanes. He was very relieved to find out that 
that was not the case.
    [Laughter.]
    Chairman Shelby. If it is your opening statement, let's 
make it part of the record, without objection.
    [Laughter.]
    Senator Dodd. It will be the record.
    [Laughter.]
    Chairman Shelby. Go ahead.
    Senator Sarbanes. Administrator Dorn testified before us 
four times in the last Congress, as well as Secretary Mineta 
and others, including elected officials, business leaders, 
transit operators, and riders. They gave us some very 
thoughtful testimony.
    I think you could sum it all up as: TEA-21 works. In fact, 
the Administrator herself said to us that America's investment 
in public transportation is reaping substantial benefits.
    Because of the work that we all did together 6 years ago, 
investment in transit has increased by almost 50 percent over 
the TEA-21 period. We have seen increased ridership across the 
country and improved quality of life. Transit saw the highest 
percentage of ridership growth among all modes of surface 
transportation in the period from 1993 to 2001, experiencing 
almost a 30 percent increase. More and more communities are 
considering transit investment. They perceive that it 
stimulates economic development benefits.
    A Dallas County Commissioner testified before us last June 
that over $1 billion has been invested in private development 
along Dallas' existing and future light rail lines, raising 
nearby property values and supporting thousands of jobs.
    Individual companies are also recognizing the value of 
transit. I was very much struck by a statement by Herschel 
Abbott with BellSouth testifying that his company is relocating 
almost 10,000 employees from scattered sites throughout 
suburban Atlanta to three downtown buildings near MARTA rail 
stations, each within an easy walk of the transit station.
    He listed the benefits of this plan for BellSouth. He says 
that, ``it saves employees time. It saves employees money. It 
saves wear and tear on the employees' spirit.'' And of course, 
transit also benefits the economy in other ways as well.
    Bill Millar, the President of APTA, testified, and this is 
interesting because it is a point that is not often emphasized, 
that ``When New Jersey builds a rail system, for example, 
often, the construction is done by a company that is 
headquartered in Idaho. When Texas cities buy buses, it might 
be a bus company in Colorado that gets the contract.'' So while 
the Federal money appears to be going to one jurisdiction, the 
economic impact of it can go far and wide. Investing in transit 
boosts the economy of States that are not getting the transit 
money directly, and I think we need to keep that in mind.
    Of course, transit also has very important quality-of-life 
aspects to it. Senior citizens, young people, the disabled, and 
others attain mobility that would not otherwise be available to 
them. We had representatives of senior groups who were very 
strong on this point because they say it gives independence to 
our older citizens that they otherwise would not have.
    Now, I want to look ahead for just a couple of minutes.
    I share the Chairman's desire that we get the 
Administration's reauthorization proposal as promptly as 
possible so that we can begin the process of reviewing and 
examining it.
    I think from the hearings we have had, there are three 
priorities which emerge clearly. First, we need to grow the 
transit program. And I am very concerned that your budget 
submission does not grow it for this year, and what that 
implies or predicts about what is to come.
    Second, we need to maintain the funding guarantees which 
have been very important in enabling local and State 
governments to plan effectively.
    And third, we need to preserve the balance that was 
established in ISTEA and then in TEA-21 between highways and 
transit both in terms of overall investment levels and in terms 
of Federal matching ratios for the highway and transit program. 
We worked out that accommodation between highways and transit 
and it has stood us in good stead. I think it is very important 
to preserve that.
    Obviously, there is a tremendous demand for transportation 
investment. DOT has identified $14 billion per year in capital 
needs simply to maintain the conditions and performance of our 
transit systems. The FTA itself has come up with that figure. 
Twenty billion dollars is needed to improve conditions and 
service. And of course, others estimate even greater needs.
    I made reference to the fact that the budget for the next 
year does not even keep pace with inflation, let alone with 
ridership growth. This decision essentially to flatline the 
transit programs runs counter to all the recommendations that 
we have received and all that we are hearing from 
constituencies all across the country.
    Moreover, and I have discussed this with the Administrator 
before, the Administration has proposed to lower the Federal 
match for New Starts transit projects, but they have not 
proposed a corresponding change for highway projects.
    This would run counter to what I set out as a third 
priority, which is to maintain the balance between the two, 
highway and transit, and not to skew decisionmaking at the 
local level toward highway projects.
    In fact, the Mayor of Charlotte, North Carolina, testified 
at one of our hearings and I am quoting him: ``There is a 
strong need to keep the program 80/20, as we do for other forms 
of transportation, including roads. That does send a strong 
message that transit is as important as our road network.''
    The head of the Utah Transit Authority testified that his 
agency would not have been able to build the first light rail 
line in Salt Lake City without the 80/20 match. He says at that 
time, there just wasn't the level of support needed to go at 
the higher local share. He says, now that they have seen the 
benefits of light rail, there is considerable demand to put 
more resources into the transit program.
    We worked very hard to level the playing field, and we do 
not think we should put local decisionmakers back in a 
situation when they are trying to decide what better serves 
their purpose in terms of transportation needs where they say, 
well, if we build a highway, we only have to put up 20 percent 
of the money. But if we go to transit, we have to put up 50 
percent of the money.
    Now the argument that was made is that, we have tremendous 
demands and we do not have enough resources. Therefore, we will 
do 50/50 and we will be able to do more projects. But the same 
rationale applies for highways as well. There is a tremendous 
demand for highways that far exceeds the resources, just as is 
the case with transit. And yet, there is no proposal here to 
shift the highway matching ratio.
    I am in favor of maintaining the 80/20 ratio for both. But 
if you are going to depart from it, it should not be departed 
from in one mode of transportation and not in the other, 
because then you are going to get transportation decisions 
based not on transportation reasons, but based on a skewed 
financial arrangement. And I urge that thinking upon the 
Administration.
    The concepts that were contained in TEA-21 have worked. I 
think that they are valid. I think they need essentially to be 
carried forward into the new reauthorization. And we look 
forward to working with the Administrator on this project.
    Mr. Chairman, I want to also thank you and commend you for 
the letter that you originated and sent to the Budget Committee 
on growing the transit program. Just shy of two-thirds of the 
Members of the Senate signed that letter.
    Chairman Shelby. That is right.
    Senator Sarbanes. I think that is some indication of the 
support. Clearly, transportation generally needs more 
resources. I do not know what the Administration is going to do 
about that. But there is a tremendous demand and need out there 
for infrastructure improvement in the transportation network, 
both highways and transit. I am supportive of trying to do that 
and I am supportive of maintaining the arrangements and the 
linkages which have been established between highways and 
transit over these last two reauthorizations.
    I think it is very important that we carry those forward 
into the new one.
    Thank you very much, Mr. Chairman.
    Chairman Shelby. Senator Chafee.

             COMMENTS OF SENATOR LINCOLN D. CHAFEE

    Senator Chafee. Thank you, Mr. Chairman. I look forward to 
the witness' testimony, and thank you for holding this hearing.
    I associate myself with your comments also, Mr. Chairman.
    Chairman Shelby. Thank you.
    Senator Reed.

                 STATEMENT OF SENATOR JACK REED

    Senator Reed. Thank you very much, Mr. Chairman. Let me 
begin by commending you for not only holding this hearing, but 
also for the leadership you have shown. The letter that Senator 
Sarbanes alluded to is a very important statement of the 
commitment of so many of our colleagues to transit, and now we 
have to follow through.
    I am pleased that my colleague from Rhode Island is here. 
We are well represented on this Committee.
    [Laughter.]
    And we are committed to transit collectively.
    Last year, as Chairman of the Subcommittee, we held a total 
of six hearings on TEA-21 reauthorization. Senator Sarbanes 
indicated, we collected a voluminous record which I hope will 
help guide us in the deliberations going forward.
    We have had the privilege of listening to Ms. Dorn and she 
has done a great job at the FTA, and we are very pleased with 
your performance and your commitment to this process.
    I look at the President's Budget and there are some 
encouraging notes. But the overall and the most discouraging 
aspect is the lack of sufficient resources to do what we all 
know must be done to continue the success of transit.
    There is an endorsement in the budget of the overall 
structure of transit and highway programs. But there are some 
issues that have been raised, Senator Sarbanes alluded to them, 
about specific aspects of the funding and the support of 
transit which are I think important and must be considered as 
we go forward. But the 
bottom line is that the $7.2 billion budget is inadequate to 
meet the demand.
    One of the things we heard persistently during our 
hearings, and Ms. Dorn I think can verify this, is that with 
resources, transit will flourish. Without resources, it won't 
stay the same. It will deteriorate very quickly.
    We see encouraging increases in ridership. We have seen the 
testimony of business leaders, as Senator Sarbanes mentioned, 
the BellSouth Company official who talked about how transit had 
a remarkable impact on their business operations. Transit's 
environmental benefits are something to emphasize, also.
    We are looking at a reauthorization of the transit and 
highway bill. Just for the record, when we passed TEA-21, 
transit funding doubled and was projected to double. I do not 
see that doubling in this budget. As a result of those 
resources, ridership rose by 28 percent over the period of TEA-
21. That is a remarkable increase.
    As I said, I am encouraged in some respects. The 
Administration does appear to be committed to continuing the 
flow of the gas tax revenue for transit. That is a critical 
issue. That might be one of the most important fundamental 
issues that we address in our deliberations.
    There are some interesting proposals for reducing barriers 
to small New Starts projects, for example, which we have to 
consider.
    But I am concerned about other aspects. I am concerned that 
the Administration is proposing to turn the Bus Discretionary 
Program into a formula program. I think that the Bus 
Discretionary Program has done so much to increase the vitality 
of our bus fleets, to lower the age of buses from 15 to 20 
years, to often 3 or 4 years, on average. It is a remarkable 
success.
    And I am also concerned, as Senator Sarbanes is concerned, 
about the match requirements for New Starts. If we do not 
maintain the 80/20 split, there will be a distortion, not 
caused by the value of the project, but simply by how much 
money the localities can get if they have a highway project 
versus a transit project. That is not a good approach to 
dealing with comprehensive transit and highway issues.
    One final point I want to make is, among the hearings that 
we conducted last year, we had two hearings on transit 
security. Administrator Dorn has shown a great sensitivity and 
a great feel for assuring the safety of our transit systems.
    The General Accounting Office went out and asked just eight 
transit systems how much money they would need to ensure the 
security of their system from some type of deliberate attack. 
Their answer was over $700 million. That is just eight systems. 
And the bottom line number is much greater than that.
    Unfortunately, the President's Budget for the 
Transportation Security Administration contains no specific 
funding for transit. We just have to be realistic. Our 
opponents, our adversaries are ruthless individuals who look 
for the soft way in, not the hard way in.
    We are spending billions to protect our air transportation 
system, and if we do not commit ourselves to protecting our 
transit system, I think we will regret that. And that is a 
regret that I do not think any of us want to have.
    Mr. Chairman, I look forward to working with you. I look 
forward to the Administrator's testimony. And once again, let 
me thank you, Mr. Chairman, because your leadership is 
important and also, it is demonstrated by having this hearing 
and your letter and I thank you for that.
    Chairman Shelby. Thank you.
    Senator Dole.

               COMMENTS OF SENATOR ELIZABETH DOLE

    Senator Dole. Chairman Shelby, I particularly look forward 
to working with Administrator Dorn because we have had that 
opportunity many times in the past. It has been my pleasure to 
work with Administrator Dorn at the Department of 
Transportation during my tenure there, at the Department of 
Labor, and for part of my tenure at the American Red Cross.
    And so, since she has testified many times before this 
panel before I joined you, I know that I do not have to tell 
you that she is an extremely able and dedicated servant of the 
public, and I look forward to an opportunity to ask some 
questions in a few moments.
    I have a statement I would like to submit for the record.
    Chairman Shelby. We will make it a part of the record.
    Senator Dole. In the interest of time, I am going to put it 
into the record.
    Chairman Shelby. Senator Schumer.

            STATEMENT OF SENATOR CHARLES E. SCHUMER

    Senator Schumer. Thank you, Mr. Chairman. And I thank you 
again for holding this hearing, and for your tremendous 
leadership on this issue. We really are very grateful to you 
for that.
    I also want to thank Administrator Dorn for coming before 
the Subcommittee, and also for proposing in the budget MTA's 
East Side Access Project. They are going to receive a full 
funding grant in fiscal year 2004. It is to connect the Long 
Island Railroad to Grand Central Station. It enjoys broad 
bipartisan support in New York, and it is essential to the 
continued economic growth of the New York City region.
    You just cannot get another train under that East River, 
and that is holding back growth because both Long Island and 
New York City job markets, until recently, have been growing 
and will be growing again, we pray. And so, we are going to 
need this very, very much. It is the project I think that New 
Starts was made for and I look forward to working with you and 
the Administration on its success.
    Now, I am quite aware, as we all are, that the Nation faces 
large deficits--the war in Iraq, urgent homeland security 
expenses. But I still believe strongly that we cannot neglect 
our transportation infrastructure, which is essential to the 
Nation's long-term economic growth.
    As I know the Administrator knows, because she is so 
capable, and I appreciate my colleague from North Carolina's 
praise of her and I think we all concur. The demand for transit 
has never been greater. This is not one of those flat growth 
areas.
    As you, Madam Administrator, testified to this Committee 
last year, the demand for nationwide transit increased 28 
percent. In my city alone, known for having an older transit 
system, the growth has been even more dramatic. Ridership in 
New York City increased a staggering 43 percent from 1992 to 
2002. Currently, there are over 2.15 billion trips taken 
annually in New York City alone, and that is not counting the 
so-called suburban commuting that comes in.
    So, I know that there are some that argue that the Nation's 
older transit systems no longer deserve strong Federal support. 
But as these numbers demonstrate, New York's ridership 
continues to grow at levels comparable to the newer systems.
    Given this growth by both old and new systems, I think 
there is a strong need for greater transit funding. Obviously, 
I share the concern of others, that the proposal to spend only 
$7.2 billion, a flat funding request from 2003 to 2004, is not 
adequate.
    I can only hope that this budget will not be reflective of 
your TEA-21 reauthorization proposal. We dramatically need to 
increase transit spending, not cut it. And I hope you will be a 
champion of increased funding for transit, also ensuring that 
we keep a ratio of highway-to-transit funding close to 80/20, 
and of continuing to adequately support older transit systems, 
as well as newer ones.
    Your report released in 2001 on the condition of the 
Nation's transit systems states that in order just to maintain 
our existing systems, we need to be spending on the order of 
$15 billion this year. And yet, the proposal is for half that 
amount, the Administration's 2004 Budget proposal.
    If we want to maintain our existing systems and provide for 
a much-needed expansion nationwide, we have to do a lot better 
than $7.2 billion this year.
    Federal investment in transit infrastructure is one of the 
most important ways we can stimulate the economy and provide 
clean, livable cities to our citizens. I look forward to 
working with you to find ways to increase transit spending in 
the future.
    Thanks again for coming today and again, Mr. Chairman, 
thank you for this hearing and for your leadership.
    Chairman Shelby. Senator Dodd.

            STATEMENT OF SENATOR CHRISTOPHER J. DODD

    Senator Dodd. Thank you very much, Mr. Chairman. And thank 
you, Madam Administrator, for being here and for your work.
    I think it is important you are hearing from us. We 
obviously want to hear from you as well, but I think it is very 
important at a time like this that you can carry back to your 
Agency and to the Administration the concerns that you are 
going to hear. And unlike an awful lot of subject matters where 
you will find a highly divided Committee, I think what you are 
hearing here from the Chairman all the way through, with maybe 
some minor exceptions, is our deep commitment.
    I was struck, Mr. Chairman, I do not know if you were here, 
I think it was last year when the issue came up, discussing I 
think informally here on the Committee, transit issues. I 
recall thinking to myself as I looked down the row of the 
various Members and where they were from, I was anticipating 
what I thought each Member might say about the subject matter 
based on where they were from in the country, and how surprised 
I was about what a different reaction we recieved.
    I recall our colleague from Idaho saying, this is a very 
important issue to Boise. I remember being taken aback, 
thinking, I would have assumed that the Senator from Idaho 
would be only talking about roads. Our colleague from Colorado, 
the same thing. He said, this is a major issue for us. And on 
down the Committee.
    This, for years, used to be an issue of East Coast-West 
Coast versus the rest of the country. And what the Chairman has 
so eloquently said here this morning is this is no longer the 
case, that transit is really a major issue for almost every 
State.
    Nevada is the most urbanized State in America. We 
traditionally would think of it as a rural State in the West. 
But, in fact, of course, with the populations in Las Vegas and 
Reno, it is highly urbanized.
    It is very important I think and I appreciate your 
listening to us and I apologize that we are all taking a little 
bit of your time to share our thoughts, but sometimes having 
the ability of listening to our concerns and where we stand on 
this, particularly since there is as much unanimity as there 
is, I thought might be of some value for you. Some of this will 
be repetitive, but I just wanted to share a few thoughts with 
you.
    As has been said here, ridership across the country and the 
new programs developed by local leaders in response to local 
needs are changing the way in which we think about community 
transportation services.
    Today, transit doesn't necessarily mean, as you have heard, 
waiting on a city corner in New York or Boston or Hartford or 
Providence, or riding on a city bus any more. It doesn't 
necessarily mean waiting on a crowded platform to get on a 
subway car.
    For many Americans, transit now means they have access to a 
wide range of community-based services, including services like 
dial-a-ride to help an elderly person get to a grocery store, 
the job access program to help get working Americans from their 
homes to their jobs even when they do not live in the city. Or 
with an established route bus program. Transit is changing to 
meet the needs of more Americans in more communities in more 
parts of the country than ever before.
    There are now nearly 6,000 transit systems in the United 
States. And it is not just the 10 or 15 big systems that we 
hear so much about. And the operators of the Nation's 6,000 
transit systems are doing a tremendous job making life better 
for those who ride transit and for those who do not.
    According to the Texas Transportation Institute, the annual 
economic loss to the United States caused by traffic congestion 
is 
almost $68 billion. And believe me, as you know, Madam 
Administrator, in the area of Fairfield, Connecticut, for 
instance, and my colleague from Rhode Island can testify to 
this because we share Route 95 coming through our two States, 
God help you if you get caught in lower Fairfield County. And 
it used to be just during rush hour. Now it is almost any time 
of day. It is literally a parking lot. It has affected 
commerce. It has affected everything in that northeast 
corridor, that tremendous bottleneck that occurs as a result of 
the congestion that has been mounting up.
    An additional $20 billion would be lost if the United 
States' transit commuters drove instead of rode on transit 
systems. In other words, our transit programs are functioning 
as critical parts of the largest surface transportation system. 
It is no longer a question of whether we should build more 
highways and more transit. We must do both because it is now 
clear that transit is contributing to the efficiency of a 
deeply interconnected whole and unified transportation network.
    As I look at the FTA's budget proposal, I must tell you, 
Madam Administrator, like the Chairman and like others, I am 
concerned about it. We all know the pressures. We all know what 
is looming in costs and so forth. But this is such a critical 
piece of our economic growth and development.
    At a time when transit ridership is growing, and you heard 
the testimony of others already, at about 3\1/2\ percent a 
year, the FTA has recommended no additional resources for 
transit at this time. At a time when the need to relieve 
highway congestion is so critical, the Administration appears 
to be proposing that we take away one of the most effective 
congestion mitigation tools.
    What is more disturbing is that FTA has recommended major 
changes in the programs that have been functioning so very, 
very well. It seems to me that the proposed flatline funding 
combined with unnecessary changes could prove disastrous for 
the traveling public, especially in smaller urban and rural 
communities, such as the State the Chairman is from.
    I note that the programs slated for elimination or 
significant changes are those that are often relied upon by the 
small- and medium-sized transit operators.
    The Administration is proposing, for example, completely 
eliminating the Bus Discretionary Program and moving the bus 
money to the New Starts Program.
    In my view, that is likely to put small communities in 
direct competition against large transit properties in a way 
that may reduce the rich variety of services that have been 
emerging over the last decade.
    We should be encouraging transit innovation in our less 
densely populated communities, and I do not see how making in 
my case a man in Connecticut, a rural or suburban community, 
and Boulder, Colorado, compete against our Nation's largest 
transit districts under inflexible criteria is going to 
encourage innovation or improve services.
    The Administration is also recommending significant change 
to the Job Access and Reverse Commute--the JARC Program. The 
Administration wants to convert this program from a competitive 
grant program administered at the local level to a formula 
program administered at the State level.
    Again, this program, JARC, has been a model of transit 
innovation, even in States that haven't historically been 
thought of as transit-dependent. JARC is improving lives and 
local economies, smaller communities across the country, and I 
am not convinced that we should radically change the program's 
design. Indeed, if we do anything, we should be trying to 
figure out how to build on JARC's success. I understand that 
there have been concerns about the earmarking of JARC funds. 
But block-granting, we know all too well, these rural, less 
politically influential communities do not do well at the State 
level when it comes to the allocation of funds. And too often, 
they get short-changed if we do not pay attention to them.
    So, I am hoping that you will be thinking that through and 
realizing, but for us, a lot of these rural smaller communities 
would lose out at the block funding approach at the State 
level.
    Finally, I want to comment on the Administration's proposal 
to eliminate the Transit Clean Fuels Program. This was another 
innovative initiative started under TEA-21.
    I think it is unfortunate that Congress has never funded 
this program and I regret that the Administration has decided 
to back away from this effort, especially in light of the 
President's recent commitment to develop hydrogen-powered 
automobiles through a Department of Energy program.
    In my view, the Nation's transit agencies should be leading 
the way toward clean fuel implementation and given the looming 
problem in the Middle East, we may be wishing we had some 
program like this to minimize our dependency on a very troubled 
area of the world. The FTA should not be retreating, in my 
view, just as the technologies are being developed.
    We, in Connecticut, have several striking examples of 
successful clean fuels initiatives, including a bus initiative 
currently operating--at a profit, I might add--by the Greater 
New Haven Transit District and a planned fuel cell bus rapid 
transit line in Hartford, Connecticut. In Connecticut, we 
believe that clean fuel technology is the future of 
transportation and we are ready to embrace that future now.
    As the reauthorization debate continues, I hope that the 
Administration will consider its position on transit clean fuel 
technologies and other matters that I have raised.
    We are very fortunate, indeed, to have as the Chairman of 
the Full Committee, the person who is also Chairman of the 
Subcommittee dealing with these issues.
    It is going to be I think important for us here to be 
talking about this, and I appreciate the Chairman's request to 
get some sense of authorizing proposals so that we can go to 
the Appropriations Committee with a clear direction of where we 
in this Committee, charged with the business of overseeing 
urban mass transit, can have a benefit.
    I see my colleague from Utah arriving. And by the way, what 
great news from your State last night. I just cannot tell you 
how that brightened up an otherwise gloomy picture as we look 
toward the next few weeks or days in front of us, to hear what 
a wonderful job the people in Sandy, Utah--I even know about 
Sandy, as you know. My wife is from Utah. I cannot tell you how 
excited we were to hear about the good news for the Smart 
family.
    But also, Salt Lake is an urban area. Transit issues are 
critically important. So, you are going to hear from all of us. 
And unlike the days when we were competing up here about 
transit dollars, I think you know this, and I am preaching to 
the choir because I know how much you care about it, you are 
going to hear from all of us up here today how important these 
issues are.
    I apologize, Mr. Chairman, for taking a little additional 
time, but this is an issue that really does deserve the 
attention of the full Congress.
    Thank you.
    Chairman Shelby. Senator Bennett, do you have anything?

             COMMENTS OF SENATOR ROBERT F. BENNETT

    Senator Bennett. Thank you, Mr. Chairman. I just want to 
welcome the Administrator. As Senator Dodd has indicated, we 
have a transit program in Utah, a combination of buses and 
light rail, which is doing extremely well.
    Since you represent FTA now, FTA institutionally has been 
enormously helpful. And we can report to you and to the 
Congress that ridership is higher than the most optimistic 
projections. Even those who grumbled and complained that it was 
going to be snail-rail and it was going to be a tremendous 
boondoggle have to grumpily admit that revenues are higher, 
ridership is higher.
    And, interestingly enough, because of the increased 
ridership, the subsidy per rider on light rail is about half of 
the subsidy per rider on buses. This indicates that light rail 
indeed has a great future if it is done right. And I 
congratulate the people of Utah for doing it right. But 
obviously, they could not do it without the support of the FTA.
    I appreciate your being here and look forward to your 
testimony.
    Chairman Shelby. Administrator Dorn, your full statement 
will be made a part of the record in its entirety. You may 
proceed as you wish.

                 STATEMENT OF JENNIFER L. DORN

         ADMINISTRATOR, FEDERAL TRANSIT ADMINISTRATION

               U.S. DEPARTMENT OF TRANSPORTATION

    Administrator Dorn. Thank you very much, Mr. Chairman And I 
do appreciate the passion and the support of the Members of the 
Committee for transit and am eager for us to have a more 
fulsome discussion about a number of the proposals.
    I would mention that FTA is in a relatively unique position 
vis-a-vis the reauthorization proposal because many of our 
proposals for reauthorization are, in fact, embedded in the 
budget.
    So, we have the luxury of being able to talk about things 
in a programmatic way, as well as in a budgetary way today. It 
is a great opportunity for me, and thank you for providing it.
    I recognize fully that resource adequacy is fully in the 
eye of the beholder. I think it is important that we not lose 
sight that in the President's Budget is a record level of 
funding for transit, positioned to grow 26 percent over the 6 
years.
    In the face of enormous and costly challenges, particularly 
the fight against terrorism and protecting the homeland, as was 
referred to by Senator Dodd and others, the Fiscal Year 2004 
Budget signals the high priority that President Bush and 
Secretary Mineta place on our national transportation system 
and on public transportation particularly. I think it is a 
prudent balance of priorities at a very difficult time and I 
fully support the President's Budget for fiscal year 2004.
    Last April, I testified before the Committee regarding the 
success of TEA-21 and the opportunities we envisioned to build 
upon that success. And foremost among these was providing 
stable, dependable funding streams for transit. I have heard 
that over and over from the stakeholders at State and local 
levels. It is nearly as important as the amount of resources. 
Dependable formula funds and full-funding grant agreements for 
New Starts have significantly improved the ability of transit 
agencies to finance, to plan, and to execute projects to 
produce real results for the transit-riding public. As I 
indicated then, and I fully believe now, stable formula funds 
help agencies do more with limited resources because they give 
financial markets the confidence to support transit 
investments. They give communities an incentive to commit long-
term resources, and they give community developers the 
confidence that the transit commitments necessary to support 
new development will be honored.
    It should come as no surprise to this Committee, therefore, 
that our budget reflects a significant shift away from the 
uncertainty--and that is the key problem, in my view--the 
uncertainty of discretionary grant programs, and moves them 
toward more predictable formula-based and multiyear funding 
programs. Compared to the recently enacted 2003 Budget, the 
President's Proposed Fiscal Year 2004 Budget would increase by 
nearly 20 percent the formula-based transportation funding for 
rural communities.
    We know, and as the Chairman so aptly stated, we need to 
help address the transportation needs in 40 percent of the 
communities that have no public transportation, and become more 
responsive to the increased needs of rural areas who already 
have some level of service.
    We are eager to fund the transportation component of the 
President's New Freedom Initiative as a formula program to 
States. We want to provide increased transportation services to 
better meet the needs of persons with disabilities who are of 
working age and who are able to work, but one of their most 
significant barriers to becoming a full participant in the work 
force is transportation. That is a very important Presidential 
initiative.
    We also increase by 21 percent transportation funding for 
an expanded New Starts Program, so that current full-funding 
grant agreements can be honored, meritorious projects in the 
pipeline can be funded, and a broader spectrum of cost-
effective--and I want to emphasize that--cost-effective 
transportation projects can be accommodated.
    Through these formula funds and multiyear agreements, we 
will put public transportation dollars to work equitably 
throughout the Nation and, importantly, at community 
discretion. The more we can get the funding decisions made 
closest to the customer, the better decisions they often are.
    In my written statement, you will find more specific 
information about changes we are proposing to preserve the 
viability of the mass transit account of the Highway Trust 
Fund. I would just comment that the Administration believes 
that funding transit through the gas tax revenues is an 
appropriate vehicle to support public transportation.
    I have also outlined, in more detail, how we propose to 
ensure that New Starts projects are cost-effective and are best 
suited to community needs, how we seek to improve local 
communication and coordination and decisionmaking regarding 
service to the elderly, persons with disabilities, and low-
income populations, and how we propose to improve transit 
planning in communities and in States throughout the Nation.
    There is nothing more important to good transit investments 
than to have a good plan, to have that coordinated at the local 
level, and to be able to provide transportation for more 
services and more riders.
    I would like to provide, rather than speaking to those 
details, just a couple of points about the overall goals that 
have driven the development of this proposal.
    At a time when it might have been easier to say ``things 
are working well enough'' or ``do not rock the boat,'' 
Secretary Mineta told me to think boldly--as he did in the 
ISTEA and TEA-21--to think boldly about how we can make sure 
that public transportation works and grows in every community.
    We believe the fundamentals are definitely in place through 
ISTEA and TEA-21. We propose some changes that are outlined in 
our proposal. This is a result of literally hundreds of 
meetings with transit stakeholders who said TEA-21 and ISTEA 
have made very important and fundamental changes in how we do 
business. We think we need to make some improvements and we 
tried to respond to those comments.
    First and foremost, we are proud that this budget proposal 
promotes common sense transit solutions. To accomplish this 
goal, we propose to reduce the number of different program 
``silos.'' That is why we want to formularize all programs, 
except New Starts, so that States and localities have the 
flexibility that they need to fund local priorities, as 
Chairman Shelby mentioned. Instead of trying to match projects 
to specific pots of money, we want States and 
localities to be able to base their transit decisions on 
maximizing mobility and creating seamless community 
transportation networks. That is what it is going to take to 
grow this program.
    Second, consistent with the President's call for customer-
focused, outcome-oriented Government, our budget proposal 
includes a new ridership-based performance incentive program to 
encourage A-plus performance in transit. The outcome in transit 
is more riders, and we want to incentivize all of our grantees 
toward producing that result.
    Third, this budget reflects the President's and FTA's 
determination to keep our commitments, especially to the people 
who most depend on public transportation for mobility. By 
sustaining the Federal funding at the TEA-21 record-high 
levels, we will be able to continue to provide stable, 
predictable formula funds to urbanized areas, increase funding 
for underserved rural areas, honor our multiyear funding 
commitments under the New Starts Program, and, perhaps most 
importantly, improve services to the elderly, low-income, and 
persons with disability through coordinated planning, 
predictable funding, and working together with our counterparts 
in Health and Human Services and the Labor Department. They 
provide significant dollars for transportation, although not 
always in a coordinated fashion with us at the local level, the 
State level, or the Federal level.
    Finally, this budget supports the President's effort to 
champion independence and economic opportunity for all 
Americans. It proposes the creation of a new formula program, 
as I mentioned, the President's New Freedom Initiative, 
providing $145 million for new transportation services to those 
who can be more fully integrated into American communities and 
the Nation's workforce. Further, our proposed 20 percent 
increase in funding for rural communities represents a 
downpayment on our commitment to basic mobility.
    Mr. Chairman, I do believe this is a responsive and 
responsible budget proposal. I appreciate the opportunity to 
discuss its elements and those elements that relate to 
reauthorization and their connection to the budget.
    Thank you.
    Chairman Shelby. I am concerned about the cost overruns in 
the projects under the FFGA's and the cost of general service 
delivery. Could you articulate further your view of the Federal 
role in transit and what principles are guiding you in your 
reauthorization proposal? For example, I am interested to know 
why you believe that distributing Federal transit dollars based 
on formula, essentially going out on auto-pilot, would allow 
the Federal Government to maintain any role in containing 
costs?
    Administrator Dorn. A number of good questions there.
    First of all, with respect to oversight of capital 
projects----
    Chairman Shelby. Right.
    Administrator Dorn. --I believe that the FTA has one of the 
best oversight and partnership programs with transit agencies 
of any in Government, and we are working to improve that.
    Chairman Shelby. What about the San Juan project? That is a 
troubled project, isn't it?
    Administrator Dorn. It was a troubled project, but it is 
moving forward very aggressively to be on track. And both the 
Inspector General and I personally have increased our 
vigilance. They have turned around a number of management 
problems.
    I am proud to say that the vast majority of the full-
funding grant agreements which the FTA has executed have been 
on time and on budget. I think there are a number of areas 
where the transit agencies and the FTA seek to improve our 
cost-estimating and the kind of benefits that we are proposing.
    We are very vigilant about making sure that the bar is set 
at the right level for investments, and we will continue down 
that path.
    Chairman Shelby. On the San Juan project, we are sending 
some staff from this Committee, authorizing Committee, and also 
the appropriations transportation, to see what is really going 
on down there. I am sure they will coordinate that with you 
because that is one of the most troubled projects that we have, 
I think. I wouldn't say the only one, but it is one.
    Administrator Dorn. I think that there have been 
significant problems in the past. That project is 90 percent 
complete. And when it is complete, it will take 120,000 
passengers daily. So, I look forward to the completion of an 
excellent project. But you are correct. It has had significant 
troubles in the past.
    With respect to the issue of bus discretionary funding, I 
think there is some misunderstanding with respect to that 
amongst some of our stakeholders.
    We have learned from the State and local funding partners 
through ISTEA and TEA-21 that few things are more valuable than 
predictability of funds.
    But the problem is that nothing is more unpredictable than 
an earmark. That is how 100 percent of the Bus Discretionary 
Program has been utilized. The problem is that then local 
communities cannot count on it from year-to-year, and that 
tends to skew their decisions about longer-term investments. 
There are serious trade-offs in this, and sometimes even the 
winners tend to be losers because they do not know if they are 
going to get an earmark the next year.
    We feel that if funds are distributed based on proportional 
levels of needs through a formula, they can make good 
investment plans and good investment decisions. And in fact, 
they can use that predictability to secure grant anticipation 
revenue bonds, et cetera.
    We feel that more and more money granted through formula, 
as long as it has the appropriate caveats, will be an asset to 
the local communities.
    Chairman Shelby. You recently signed a full-funding grant 
agreement with the New Orleans Regional Transit Authority, 
which would provide an 80 percent Federal share for their Canal 
Street Corridor Project. At the same time, your budget proposes 
a statutory change to raise the local commitment to a 50 
percent match. How do you reconcile this inconsistency? You 
have just done that and now you are proposing this 50 percent 
match, which most of us are going to oppose.
    Administrator Dorn. So that is a no-win question.
    Chairman Shelby. True.
    [Laughter.]
    Administrator Dorn. Okay. Let me take it on.
    Senator Dole. Tell us why we shouldn't do that.
    [Laughter.]
    Chairman Shelby. I am just seeing what you did and then 
what you are proposing and there is a big inconsistency.
    Administrator Dorn. Yes, a very appropriate question, 
Chairman Shelby.
    The full-funding grant agreement which I just signed for 
New Orleans at the 80 percent level is one of the last 
remaining projects--in fact, the last remaining project--
against which the Federal Government had made a long-standing 
commitment. That has been in the works for a number of----
    Chairman Shelby. We are not against that. We just want to 
know about the inconsistency.
    Administrator Dorn. I understand. It was a promise made a 
number of years ago. The local community continued to plan that 
project based on that promise and the continued working 
relationship with them.
    It is one of the minority projects that has been funded at 
the 80 percent. It is a New Start, one of the first New Starts. 
It was this Administration's belief, therefore, that we needed 
to give advanced notice on 50/50. So in the Fiscal Year 2000 
Budget, the Administration said, 2 years hence, 50/50 would 
come into play. And so, we believe it is very important that 
that kind of advanced notice be provided and that is why we are 
supportive of that.
    I would just like to make one other comment about the 50/50 
proposal. There are some uniquenesses with respect to transit 
and highway projects. Senator Sarbanes is very correct when he 
talks about the traditional match of 80/20 for highways, as is 
the case for the vast majority of funds that we spend in 
transit. It is 80/20. However, in the New Starts proposal, 
which is only about one-sixth of our budget, we believe that 
the proportion of New Starts funds should be 50/50.
    Chairman Shelby. Why?
    Administrator Dorn. There is every opportunity for a 
transit agency to use formula funds, or to use CMAQ funds or 
STP funds, to bring that match up to an equitable 80/20. Over 
the past number of years, in fact, the flex funds that have 
been used going from highway to transit has been about $1.2 
billion annually.
    So the issue of the alleged inequity between highway and 
transit I think is modified by that piece.
    Chairman Shelby. Did you make that promise to anyone else 
other than New Orleans?
    Administrator Dorn. To my knowledge, no.
    Chairman Shelby. Okay.
    Administrator Dorn. And there are certainly no projects 
forthcoming at that level.
    Chairman Shelby. Have you thought about, if we were to go 
with a 50 percent funding match, which I hope we never do, that 
it would probably exclude a lot of communities that might not 
have the revenue base to get to 50/50. It looks like the 
program would just be weighted toward the more affluent 
communities in the country that could match on a 50/50 basis. I 
think that it might defeat your whole purpose of a widespread 
transit system all over America.
    Administrator Dorn. That certainly is not our purpose or 
our goal. And in fact, we do not have evidence to suggest that 
a 50/50 share requirement would dampen interest in the New 
Starts development process. The pipeline is bursting and we 
want to fund more projects.
    States and localities are now understanding the value of 
transit investments. So, we believe that this would allow us to 
spread the dollars more adequately. And also, the additional 
benefit is that the more that a local community gets behind a 
project and they have a stake in it, the more carefully they 
plan the execution of that project.
    Chairman Shelby. Well, we differ on that issue.
    Senator Dodd.
    Senator Dodd. Thank you very much, Mr. Chairman. I think 
the Chairman is going to have some allies on this issue.
    Administrator Dorn. I understand that.
    Senator Dodd. Let me just say, for clarity purposes and I 
do not want to spend a lot of time on this, but actually, I see 
this as a flatline budget. It is the same budget that was in 
the 2003 request.
    Now, we have made those across-the-board cuts. So if you 
are using that as a baseline, then, obviously, you can make an 
argument for an increase. But the budget request for 2003, the 
budget that was adopted by the House of Representatives, is 
almost 
exactly the same budget that is being made this year. Is that 
not the case?
    Administrator Dorn. That is the case.
    Senator Dodd. So, you have some increases here that you 
have talked about, various programs. Tell me quickly what is 
being cut to pay for those.
    Administrator Dorn. What is being cut is--primarily, what 
we are doing is allocating the former Bus Discretionary 
Program, 50 percent of it to New Starts, so we can add money 
there, 30 percent to urbanized formula, and about 20 percent to 
rural formula.
    So, overall, the pie is about the same. We are suggesting 
that we need to distribute it in a different fashion primarily 
by formula.
    Senator Dodd. So that is where the cuts are coming from, by 
moving it from that--
    Administrator Dorn. From the Bus Discretionary Program, 
that is correct.
    Senator Dodd. And are you planning on a certain amount of 
cuts occurring as a result of the block grants occurring so 
that there won't be as many of the dollars getting back to 
local communities?
    Administrator Dorn. No. In fact, just the reverse. I 
believe that you mentioned the JARC Program, the Job Access 
Program.
    Senator Dodd. I am going to ask about that.
    Administrator Dorn. We think that has been a very effective 
program and it has now moved beyond the model or demonstration. 
It is only now in a couple of hundred communities.
    What we would suggest that we do is take an allocated piece 
of money--I believe it is $150 million--and disburse it by 
formula, by income level, census data, et cetera, to all the 
States, so that all the States would be able to use that model 
and replicate it.
    We agree with you, Senator, it is a very important program 
that has done a lot for communities and we would like to 
replicate it.
    Senator Dodd. I appreciate that. But I do not see where 
that grows. I do not see any growth in that budget.
    Administrator Dorn. There is not a growth in the JARC 
Program, that is correct.
    Senator Dodd. Considering now that we just lost some of the 
300,000 jobs, people are going to be looking--it seems to me, 
given the increasing unemployment rate in the country, having a 
program that would really assist people to be able to get to 
jobs they might not otherwise be able to get to under a transit 
program, would fit in very nicely with our efforts to get 
people back to work.
    Administrator Dorn. I agree with that. And our proposal and 
our perspective is that every State has a low-income population 
that has those needs, and we would like to see those 
opportunities spread farther than in only a handful of 
communities.
    Senator Dodd. Yes. Well, from my point here, that is one 
area where I would like to see some increase and some support 
for it.
    Let me ask you quickly about two programs. First, about the 
New Freedom Initiative Program. I commend you for this one. 
This is $145 million to improve mobility options for persons 
with disabilities. My only concern here is how will the 
Department of Transportation eliminate any duplication of 
efforts where there may be some in this area? Have you thought 
about that?
    Administrator Dorn. Definitely. We think that this arena of 
providing opportunities for the disabled to get to work is a 
new focus area that really needs to be targeted.
    And so, that is why we have proposed a separate program. 
But the way we have structured it, because it is given to the 
State level, we have encouraged cooperation and coordination so 
that there need not be duplication. In other words, what we 
want to make sure is that the intended purpose of this $145 
million for New Freedom is, in fact, accomplished. But the way 
that it is administered, it gives a lot of opportunity for 
local communities to sit down, as they have done in the JARC 
Program, and sort out who does what and how we could eliminate 
some of the duplication.
    We think that it is a real opportunity to serve this 
population and to serve this population with our colleagues in 
Health and Human Services, et cetera.
    Senator Dodd. And just one last question, on the Clean 
Fuels Program, again, you have the President in the State of 
the Union, he talks about hydrogen-fueled cars.
    Here we have efforts out there being made to eliminate this 
program at a time when we may be watching gasoline prices go up 
through the ceiling, rates we have never seen before, or 
haven't seen in years.
    It seems to me, in this one area, given the importance of 
the cost of fuel and so forth, here is one way to really save 
some money, promote alternative fuels. Environmentally, it 
makes a lot more sense. Why would you even be thinking about 
eliminating a program that is as potentially beneficial as 
this?
    Administrator Dorn. Well, I totally agree with the spirit 
and the focus of your remarks. And the transit industry has 
been very aggressive about trying to be cleaner.
    The Clean Fuels Program was recommended 6 years ago. And 
since that time, there have been important advances and 
requirements in the bus industry which make the program much 
less necessary; in fact, not necessary.
    Currently, every standard transit bus that is purchased is 
either alternative fuel or clean diesel. In addition to the 
fact that, as you pointed out, the Congress has decided not to 
fund that program, and fold it into the bus discretionary, and 
since we are making such significant progress with respect to 
all bus purchases being either clean diesel or alternative 
fuels, it has just outlived its useful life. However, I totally 
accept the spirit and the goal that you have mentioned.
    Senator Dodd. I suspect, Mr. Chairman, we will be coming 
back to this idea as well to try and promote it a little bit 
further. But I appreciate that.
    Chairman Shelby. We certainly will.
    Senator Dodd. Thank you.
    Chairman Shelby. Senator Dole.
    Senator Dole. Transit certainly, in my home State of North 
Carolina, is a very important issue. I want to applaud the 
Administration for recognizing that transit investment is 
indeed about serving people. This is certainly the clear 
intention of the creation of the performance incentive grants. 
Would these incentive grants be awarded for an increase in the 
percentage of ridership or would it be based on an overall 
number of new riders?
    Administrator Dorn. Very good question. The performance 
incentive that we have in mind, Senator Dole, is to be based on 
a percentage. And also, we would size the awards based on the 
size of the agency.
    So both of those elements would protect the integrity of 
what we are trying to do, which is to increase performance in 
every transit agency in terms of increased ridership.
    Senator Dole. I continue, Administrator Dorn, to be 
concerned about the vulnerabilities of our public transit 
system to attack. What do you see as the FTA's role in 
transportation security now that the Transportation Security 
Administration has been moved to the Department of Homeland 
Security?
    Administrator Dorn. Thank you for the question. Very 
important area that I have worked on with Senator Reed, as 
well.
    We have a very cooperative and committed working 
relationship, with TSA. We are both focused on making transit 
safe and secure, and in fact, it is more secure than it has 
ever been. We have some work to do, as all sectors of the 
economy do with respect to that.
    The TSA has been very focused on helping establish the 
priorities among transit sectors about threats and 
vulnerabilities and what kind of assistance we might be able to 
give. They have been helping us leverage the research dollars 
from other departments in terms of some of our chem-bio 
activities, et cetera. And of course, they are responsible for 
setting appropriate standards across the industry, and we have 
been working very closely with them in that regard.
    FTA has been concentrating on the things that we do best: 
Training, making sure that employees are trained as well as 
they can be, front-line employees as well as supervisors; we 
work very hard to ensure that every community, large or small, 
has a good emergency response plan that is hooked in with the 
fire, the police, and the emergency responders; and we are 
focused on ensuring that public awareness is really at a high.
    Those are the kinds of technical assistance efforts that we 
have provided. We have provided them at no cost to the transit 
agencies because we know how stretched they all are in this 
arena.
    Senator Dole. Going to the 50/50 cost share that you 
propose, according to an April 2002 GAO report, this 50 percent 
cap would result in slightly over $1 billion that would be 
allocated to other programs. Does FTA agree with this estimate?
    Administrator Dorn. We would have to look through the 
record to make sure that that is an up-to-date estimate, but it 
certainly is hundreds of millions of dollars that could be 
utilized for other cost-effective projects that receive full-
funding grant agreements.
    Senator Dole. One last question. Under the budget the 
Administration proposes, consolidating the myriad of separate 
transit programs in order to give States and localities 
additional flexibility to meet their mobility needs in their 
communities, won't some States be tempted to ignore the needs 
of certain user groups if they can shift funds amongst the 
various programs they administer?
    Administrator Dorn. We are making every effort, and I think 
it is a good one and will be a productive one, to ensure that 
the intended purpose is accomplished.
    That approach has worked well in the elderly and disabled 
program that is now administered by the States, and we will 
insist that funds for the other programs--New Freedom 
Initiative and the JARC Program be utilized for the intended 
purpose.
    But there are a lot of ways that other agencies and other 
local providers might be able to consolidate their efforts, so 
that they could provide more service and more riders in that 
intended arena.
    It is a good question, though.
    Senator Dole. Thank you very much.
    Administrator Dorn. Thank you.
    Chairman Shelby. Senator Reed.
    Senator Reed. Thank you, Chairman Shelby, and thank you, 
Madam Administrator, for your testimony.
    So much of what you are proposing rests on formulas rather 
than discretionary funding. Could you provide the Committee 
formula runs that compare the Fiscal Year 2003 Appropriations 
bill with your proposed 2004?
    Administrator Dorn. Absolutely. I would be happy to provide 
that for the record.
    Senator Reed. Thank you very much.
    And in a similar vein, could you provide the Jobs Access 
Reverse Commute funding each State would receive under the new 
formula approach versus the appropriations approach.
    Administrator Dorn. Yes. That may be slightly delayed. The 
JARC piece, we are now determining how that formula would be 
based. But we will send the first point out and then as soon as 
we complete the formula recommendation for the JARC, we will 
send that up as well.
    Senator Reed. Thank you, Administrator.
    Just returning again to an issue that has been discussed, 
and that is the 80/20 split. It has been my understanding in 
talking to my transit and highway officials in Rhode Island, 
that, interestingly enough, a lot of the flexibility in ISTEA 
has benefited transit, that money has flowed to transit.
    I think, as a starting principle, one reason is because 
they will get the same reimbursement from the Federal 
Government if they make a transit investment or if they make a 
highway investment. And when they look at the needs, they say, 
oh, we need transit.
    Now, I think the reality, under your budget proposal, is 
they are going to look at a highway program and it is 80 
percent and they are going to look at a transit program, and it 
is 50 percent. And they are going to say, wait a second. It is 
a more important program, but we do not have the resources.
    And I think also, in the context of what I have been 
listening to in terms of State budgets, is that they are just 
scraping to come up with any money to keep their programs 
going.
    Again, it seems to me that this proposal will distort and 
inhibit a lot of the progress we have made, not just in transit 
funding, but also in overall intermodal transportation 
planning.
    Administrator Dorn. I respect your view. I tend to 
disagree, and that certainly is not the purpose.
    We believe that there are a number of cost-effective 
projects out there and we are eager for communities to have 
transit that makes sense to them.
    I think I would probably have to agree to disagree on that 
point. But we will make every effort to make sure that there is 
a level playing field. And I think with the CMAQ funding and 
the STP funding that you mentioned--which is being increasingly 
targeted or transferred to FTA or transit programs--that can be 
a real help in balancing that alleged inequity.
    Senator Reed. Well, I guess my other response would be, do 
you have any data or any indication that local transportation 
authorities will start moving money from highway to transit if 
the ratios change?
    Administrator Dorn. The overall Federal match at this point 
is about 50 percent. In addition, more and more, we have seen 
that successful transit projects have bred other successful 
transit projects.
    In other words, States and localities have more and more 
confidence that, if they plan a project well, a transit project 
is a good investment. In fact, we have seen the State and local 
contribution growing in proportion to the Federal in that TEA-
21 period.
    So there is more and more confidence. Can I absolutely 
prove it to be so? No.
    Senator Reed. Well, I just recall, and we are both engaging 
in some anecdotal evidence at the moment.
    Administrator Dorn. Yes.
    Senator Reed. I wish Senator Bennett was here because I 
recall John English, the General Manager of the Utah Transit 
Authority, making the point very explicitly that without the 
80/20 match, they would have not been able to begin their first 
phase of the light rail, which absolutely duplicates what you 
have just described, a successful transit project generating 
other transit projects which are supported locally much more 
aggressively, which leads to a better transit solution overall.
    So let's agree at this point to disagree.
    Administrator Dorn. Okay.
    Senator Reed. For the record, does the Administration 
support maintaining the current level of gas tax receipts that 
go to the transit trust fund?
    Administrator Dorn. Yes.
    Senator Reed. Thank you.
    Getting back now to the issue of transit security and 
terrorism, I know Senator Dole alluded to it also. The 
Transportation Security Administration has, as I understand, no 
specific line item for transit security. Are you working with 
Secretary Ridge and Secretary England to try to develop a 
specific program and specific resources?
    I recall just a few weeks ago, one of our colleagues in the 
House received some criticism by suggesting that in a major 
urban area in the United States, the transit system might be 
threatened. That caused a great deal of concern. But it 
underscores the fact that these are potential targets. Are you 
working with TSA?
    Administrator Dorn. Absolutely. On a daily basis, our 
staffs are working together.
    A specific transit allocation of funding is not in the plan 
at this point. One of the key advantages of having TSA as a 
part of the President's Homeland Security Department, as 
approved by the Congress is that they will now be able to 
prioritize the threats and vulnerabilities.
    Certainly, the data that we have as a result of doing 37 
threat and vulnerability assessments throughout the country has 
been shared with TSA. That represents our perspective on where 
the threats and vulnerabilities are and where the needs are.
    As TSA works through the relative priorities, I hope and 
expect that those needs will be adequately considered.
    Senator Reed. Thank you, Administrator. Once again, I thank 
you for your cooperation, your assistance, and your dedication. 
It is a pleasure working with you.
    Administrator Dorn. Thank you.
    Chairman Shelby. Senator Bennett.
    Senator Bennett. Thank you, Mr. Chairman. I will be 
unusually brief here because I sit with you not only on this 
Committee, but also on the Transportation Subcommittee on 
Appropriations. So, I want to be very careful that I am in tune 
with you all the way through.
    [Laughter.]
    Chairman Shelby. Senator Bennett and I have been together 
on a lot of these issues.
    Senator Bennett. On a lot of these issues.
    Chairman Shelby. Especially that Salt Lake City project.
    Senator Bennett. That is correct.
    Administrator Dorn. Right. Good project.
    Chairman Shelby. It was. Funded, I believe, 80/20.
    Senator Bennett. Yes.
    Chairman Shelby. It might not have been built if it was 50/
50.
    [Laughter.]
    Senator Bennett. That is correct. And I would note for the 
record that, a propos of the Chairman's earlier questions, it 
came in under budget and ahead of time. It was opened weeks, if 
not a month or so, prior to the anticipation, and it did come 
in under budget, both in the primary----
    Chairman Shelby. If Senator Bennett would yield. Maybe the 
Administrator could use that project comparative to the others 
that get in trouble, that some stay in trouble, as an example 
of what to do and what not to do.
    Senator Bennett. Frankly, I think there is a great deal 
that could be learned out of the Utah experience. Not only with 
respect to transit, with I-15, where we did a design/build 
circumstance on our highway, and again, came in under budget 
and ahead of time and surprised everybody. A project that 
normally would take 9 years was completed in 4 years.
    That is another subject. But as long as we are bragging 
about Utah, I will take the opportunity to do that.
    You know the appropriators are going to have heartburn 
about the discretionary bus circumstance.
    Administrator Dorn. I understand.
    Senator Bennett. And I won't grill you on that in any 
greater degree, except to suggest to you that you be sure your 
justification for that is well-prepared and well-presented.
    You obviously do that generally. But this one is the one 
where most of the bullets are going to be placed, along with 
the 80/20, 50/50 controversy.
    We will be looking for more justification there perhaps 
than you might normally prepare because appropriators do not 
like to see these kinds of things get changed along the way.
    Administrator Dorn. I understand.
    Senator Bennett. So that is my only counsel to you. I am 
delighted with your service. Glad you are here.
    It is fun to watch a former Secretary of Transportation 
deal with transportation issues from this side of the dias.
    Thank you again.
    Chairman Shelby. Senator Carper.

              COMMENTS OF SENATOR THOMAS R. CARPER

    Senator Carper. Thank you, Mr. Chairman. And welcome. Thank 
you for being with us again today.
    Just refresh my memory. What is the Federal gasoline tax? 
Is it about 18 cents?
    Administrator Dorn. It is 18.4 cents. And transit gets 2.86 
cents of that.
    Senator Carper. I do not mean to put you on the spot, but 
in terms of history of the level of the gas tax and what was 
attributed or apportioned to transit, do you have any 
recollection of what it has been for the last decade or so?
    Administrator Dorn. It was 80/20, 80 highway and 20 transit 
has been the division since 1982.
    Senator Carper. All right. Thank you. And Senator Reed 
asked a question I think about the Administration's position 
with respect to resources, I think through the gasoline tax. I 
thought I understood you to say that the Administration was 
asking for no change. Did I misinterpret that?
    Administrator Dorn. That is correct. It was my 
understanding that there was some concern whether or not it was 
appropriate to fund transit from the gas tax receipts. And I 
answered in the affirmative. The Administration believes that 
that is an appropriate funding mechanism.
    Senator Carper. Are you hearing from anyone in the 
Congress, the House or the Senate, that more monies are needed 
for highways and for transit? Are you hearing that at all?
    Administrator Dorn. Yes.
    Senator Carper. Does the Administration have a view on 
that?
    Administrator Dorn. We believe that given the various and 
important challenges of this Administration and this country, 
that the level is appropriately set in the President's Budget, 
yes, Senator.
    Senator Carper. Before I worked here in this job, I used to 
be Governor of Delaware. From time to time, we would raise or 
talk about raising the gas tax. We actually raised it I think 
once in the 8 years I was Governor.
    I come from a school that is old-fashioned. I think if 
programs are worth having, we should pay for them. If they are 
not worth having, we shouldn't have as many of them as we 
otherwise might like to have. And we will have an interesting 
debate here in the months ahead over what level of resources we 
actually need for highways, for bridges, and for transit, and I 
hope for rail as well.
    There is a program that I think is designed to affect small 
cities, maybe transit-intensive cities. I have a question I 
want to ask about that. What kind of cities are involved in 
that? What kind of city do you have to be in order to fall into 
this category?
    Administrator Dorn. You have to have a really excellent 
transit project. That is the first piece. But what we are 
seeking to do in the President's proposal is to expand the 
eligibility for the major capital infrastructure piece, the New 
Starts piece.
    We believe that there are lots of opportunities--
particularly for smaller and growing cities, but not 
necessarily only them--to be able to have a cost-effective 
transit solution without having a fixed-guideway. In other 
words, you do not need a rail in order to have a cost-effective 
kind of proposal and project. So, we are expanding the 
eligibility and increasing the funds for that pool. It is not 
allocated based on a formula. It is based on a good plan and 
proposed locally, proposed alternative to build a project that 
makes sense for that community.
    We have had a number of communities who have come to us 
with a proposed light rail, for example, when what they really 
want to do perhaps is a bus rapid transit. But they have to 
follow the path of the money. And the money says it has to be a 
fixed-guideway.
    Our proposal suggests that we broaden the eligibility.
    Senator Carper. All right. Some of these questions have 
already been asked. It is tough when you get here this late.
    We have another hearing going on in the Environment and 
Public Works Committee that focuses on CMAQ and on conformity.
    Administrator Dorn. Yes.
    Senator Carper. I apologize for not being here for the rest 
of the hearing and to hear what was asked of you and what you 
said.
    With respect to flatlining of certain programs, I 
understand that FTA freezes funding for programs such as the 
elderly and disabled, for Job Access and Reverse Commute 
Program.
    We are very much involved all over the country in welfare 
reform. As an old Governor, I got to be the lead Democratic 
Governor on welfare reform within the NGA and worked to 
implement welfare reform in my own State as our Chief 
Executive.
    One of the programs--there are really four things that I 
always found that you needed in order to help move people from 
welfare to work and to stay off of welfare.
    One, you need a job. Two, they need a way to get to the 
job. Three, they need some help with their child care. And 
fourth, if you expect people to leave welfare and lose their 
health care, they are not likely to stick with that for long.
    In my own State, and I think in other places around the 
country, the Job Access and Reverse Commute Program has been 
really an important part of welfare reform. I just want to 
know, why don't you put more resources into a program like 
that, that has a proven track record--we have plenty of people 
who are still on welfare and we are trying to help them move 
off.
    And I think as time goes by, what we are trying to do is 
instead of using our Federal tax dollars to give people cash 
welfare checks, what we are trying to do is to provide supports 
around them so that the work actually pays more than welfare.
    Administrator Dorn. You make a very good point, Senator. I 
think that the JARC Program has been a very successful 
approach. We are eager to expand the opportunity for other 
communities throughout the Nation to emulate that approach. And 
it is a holistic one, as you mentioned, the job, how to get 
there, the child care, the health care, et cetera, all very 
important.
    In terms of funding levels, it is a matter of priorities 
and trade-offs. And yes, this is a current services level 
budget.
    We believe that our proposal and how we would administer 
the program provides a lot more opportunity for coordination 
amongst other agencies who have, in effect, mega-bucks to do 
transportation, and we haven't always hooked in with them.
    So, we have smoothed the way, I believe, for the State-
administered piece of that program to be able to pool some 
resources from HHS and from Labor programs, so that we can 
provide transportation more efficiently and to more riders.
    It is a current services level, but we do provide 
opportunities for better coordination so that we can get more 
services to more riders. I am hopeful that the JARC model will 
be used for a number of other areas, like elderly and disabled, 
as well. And you are right, it is a very good program.
    Senator Carper. Mr. Chairman, I would just say to my 
colleague, Senator Bennett, it used to be in Delaware, people 
would show up at the welfare office and say, I would like to 
sign up for welfare and get a check. They do not do that much 
any more. They come to the welfare office and we say, how would 
you like to go to work? The same is probably true in your State 
as well. And people say, I do not know how to get to work. I 
have a tough time getting to work. This program is actually 
quite helpful in enabling people not just to receive and be on 
the dole from all of us, but to actually become self-sufficient 
and stay there.
    Thank you, Madam Administrator.
    Chairman Shelby. If there are no further questions, we want 
to thank you for your appearance today and thank you for 
waiting on us while we had the votes.
    Administrator Dorn. Thank you. No problem.
    Chairman Shelby. We look forward to working with you where 
we can. But we do have some problems, as you notice from the 
hearing today, especially that funding formula.
    Thank you.
    Administrator Dorn. Thank you, sir.
    Chairman Shelby. The hearing is adjourned.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]
    [Prepared statements, response to written questions, and 
additional material supplied for the record follow:]

              PREPARED STATEMENT OF SENATOR ELIZABETH DOLE

    Thank you, Mr. Chairman. I would like to express my appreciation 
for your holding this hearing today. Today, the U.S. transit system 
faces tremendous challenges which we must address as we seek to protect 
both our citizens and the American freedom of movement. Since the 
tragedy of September 11, we have looked to our transit system not only 
for transportation but also as an evacuation system and as a highly 
vulnerable asset to terrorist attack. We are all in agreement that we 
should have the safest, most secure transit system possible since this 
system is essential to the proper functioning of our economy.
    Our transportation system is the backbone of our communities, one 
which we must continually maintain and improve upon so that our 
communities can properly function and grow. This budget contains a 
number of new initiatives which seek to assist communities which have 
not traditionally been served by Federal transit funds. I especially 
note the higher priority the Administration has placed on rural public 
transportation; an area which I believe has been too long overlooked. 
Our rural populations have long been challenged by a real lack of 
public transportation. In fact, 40 percent of rural counties have no 
public transit today and this is especially true for southern and 
western States. This is an area which deserves attention and I applaud 
the Administration for taking steps to address this problem.
    In addition, I want to complement the ``small start'' initiative in 
this budget. This recognizes that there is a difference between large 
and small transit projects by 
creating an option for smaller projects which may suit a community's 
needs better. Unfortunately, I believe that the current program has 
inadvertently created an incentive for communities to build transit 
based on available funds--not based upon what their needs are. The 
proposed less complicated rating process would go far to correct this 
problem.
    North Carolina is truly an up and coming State in public 
transportation. Our communities are taking a fresh look at public 
transportation as solutions to problems we face with growing congestion 
and mobility issues. With this increased interest from within the State 
and my background in transportation, I look forward to working with all 
my colleagues as we move to reauthorize the TEA-21 law. In addition, I 
especially look forward to working with my old friend Administrator 
Dorn and thank her for taking time out of her busy schedule to join us 
here today.
    Thank you.

                               ----------

              PREPARED STATEMENT OF SENATOR JON S. CORZINE

    Mr. Chairman, thank you for calling this hearing to discuss the 
Administration's proposed budget for the Nation's mass transit needs in 
the next fiscal year. I welcome Federal Transit Administrator Dorn 
today and look forward to her testimony.
    Mr. Chairman, I have strong doubts that the budget that the 
Administration has proposed will be sufficient to meet the needs of our 
Nation's transportation infrastructure. The challenges posed by 
increased traffic congestion, poor air quality, and an aging road, 
rail, and bridge network require a strong level of financial commitment 
from the Federal Government. Unfortunately, I cannot find that level of 
commitment in this proposal.
    With regards to the Administration's 2004 transit proposal, I am 
equally disturbed by the levels, Mr. Chairman. The Administration has 
proposed a Fiscal Year 2004 Mass Transit Budget that is $7.2 billion. 
That is the same as the Administration's Fiscal Year 2003 Budget 
request and the same as the Fiscal Year 2003 Omnibus Spending bill that 
recently passed both Houses of Congress and was signed into law by the 
President. When you factor in the 2 percent rate of inflation that the 
Administration projects, it means that then the Administration is 
proposing a 2 percent cut for transit.
    Additionally, there are other aspects of the Administration's 
transit proposal that I also find disturbing. For example, the 
Administration proposes a 50 percent cap on Federal funding for New 
Starts projects. I am afraid that this will have a negative effect on 
States and localities that do not have the extra funding to pay for a 
New Starts rail projects. And because the Administration does not 
propose a similar cap on highway projects, States and localities might 
be forced to have to choose highway projects over mass transit 
projects.
    I am also disturbed that the Administration proposes to end a key 
bus program--the Bus Discretionary Program--and use part of the funding 
to help pay for New Starts. In these tough economic times, we should be 
doing all we can to provide opportunities for bus travel. By using some 
bus money for New Starts, we are robbing Peter to pay Paul.
    Finally, I would like to take a moment to mention Amtrak. The 
Administration proposes $900 million for Amtrak for fiscal year 2004. 
Amtrak's President David Gunn has said that if he does not get $1.8 
billion for fiscal year 2004, Amtrak will shut down operations. We 
narrowly averted a shutdown in the last Congress, Mr. Chairman. It 
disturbs me that we are again playing a game of chicken with the fate 
of Amtrak in the balance. My State relies on Amtrak more than any other 
State. If there is a shutdown, it will result in not only the ending of 
Amtrak's operations in New Jersey, but also the ceasing of many of the 
operations of New Jersey transit trains that share the same rail 
network. Seventy-five percent of all NJ Transit commuters--82,000 
people--would have to find another way to get to work.
    I understand that the Administration's proposal is subject to 
change. Congress will establish different and hopefully higher highway 
and mass transit levels for each of the next 6 years. I look forward to 
doing this as a Member of the Banking Committee.
    Thank you.

                               ----------

               PREPARED STATEMENT OF SENATOR TIM JOHNSON

    As we work to develop a bill this year on transit funding, I want 
to work with the Committee to address the needs of rural States like 
South Dakota. While the transit program will and should always have a 
considerable focus on big cities, rural transit is an area that needs 
more attention.
    Transportation is a fundamental concern in rural America. In every 
aspect, including highways, public transportation, freight movement, 
air service, and other needs, the vitality of rural areas depends on 
viable transportation infrastructure.
    The focus of transportation in States like South Dakota is centered 
correctly on highways and roads. But rural States have unique transit 
concerns that are not fully addressed. Rural States do receive funding 
guarantees. However, while 32 percent of the Nation's population lives 
in rural areas, only 4.2 percent of the Federal Transit 
Administration's annual budget is devoted to rural transit.
    South Dakotans rely heavily on transit. When the populations of 
Sioux Falls and Rapid City are taken out of the equation--about one 
quarter of South Dakota's population--2.1 million people use rural 
transit in my State annually. For a State with such a small population, 
this is an astounding number. When Sioux Falls and Rapid City are added 
in, it demonstrates the importance of transit in South Dakota. We have 
some very low-density areas in our State and yet they need adequate 
transit service, particularly for senior citizens and the disabled.
    Currently, all of the longstanding pressures on rural transit are 
being compounded by higher fuel and insurance costs. The State of South 
Dakota came up with over one-half million dollars to fund rural transit 
last year in addition to the one-half million already committed by the 
State. With a drought and a slow economy, South Dakota does not have 
the resources to do that this year.
    An adequate investment is required to provide service to meet 
essential needs. In particular, an adequate level of service is 
required to provide transit for senior citizens and the disabled to run 
errands, go to the doctor, and attend to other daily routines. 
Providing sufficient transit needs would allow residents to live in 
their homes, remain independent, and not feel forced to go into 
assisted living. To address this, I am interested in providing each 
State with a specified minimum level of funding for key programs. It 
should be considered in a transit reauthorization bill, so that the 
unique needs of rural areas are met.
    Last year, I cosponsored S. 2884, which provided a reasonable floor 
per State under the funding level for the rural program, for the 
elderly and disabled program, and for small metro areas. Senators 
Allard, Crapo, Hagel, and Enzi are Members of this Committee who also 
cosponsored that measure. That bill also clarified the ability to use 
elderly and disabled program funds for operating assistance and would 
increase the Federal match for operating costs in the rural program. 
Western States do not have transit match parity with highways, as the 
highway match in western States is over 80/20 due to the Federal lands 
adjustment in the highway program. This adjustment should also apply to 
the transit program, at least for the rural program, the elderly/
disabled program, and small metro areas like Sioux Falls and Rapid 
City.
    S. 2884 did not address overall funding levels or how funds should 
be divided between urban and rural areas. I want to work with Chairman 
and Ranking Member on this matter. I believe that the key concepts I 
and others advanced last year should and can be accommodated into our 
work this year, including: Creating 
reasonable per State minimums for the rural, elderly and disabled, and 
small urban area programs; and modernizing the transit matching ratios 
to address operating and Federal lands issues.
    I look forward to working with all my colleagues to improve rural 
transit as part of this important legislation.

                               ----------

                 PREPARED STATEMENT OF JENNIFER L. DORN
             Administrator, Federal Transit Administration
                   U.S. Department of Transportation
                             March 13, 2003

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to testify today in support of the President's Fiscal Year 
2004 Budget proposal for the Federal Transit Administration (FTA). We 
are looking forward to working with this Committee and with Congress to 
achieve the goals outlined in our budget request. This budget request 
reflects a number of important elements of the Administration's 
reauthorization proposal for surface transportation programs, and I am 
pleased to be able to discuss those with you today.
    The President's Budget is good news for all of us who care about 
public transportation. In the face of enormous and costly national 
challenges--fighting terrorism, protecting our homeland, and promoting 
economic growth--the Fiscal Year 2004 Budget signals the high priority 
that President Bush and Secretary Mineta place on our national 
transportation system. I am especially proud that they support 
sustaining the record $7.2 billion in Federal investment in public 
transportation proposed by the President and enacted in the Fiscal Year 
2003 Budget.
    Public transportation offers a variety of benefits to communities 
and to the Nation. It contributes to a healthy economy, ensures 
community mobility, reduces congestion, helps conserve energy, and 
helps protect the environment. I believe that this budget proposal, 
particularly when combined with other reauthorization proposals, can 
position transit to achieve tremendous success in 2004 and beyond. 
Furthermore, as illustrated in the recently released Conditions and 
Performance 
Report, this budget, with equal participation from States and local 
communities, will keep America on track not only to maintain our 
transit infrastructure at its current ``good'' average rating, but to 
improve it as well.

Predictable Funding
    Last April, I testified before this Committee regarding the success 
of TEA-21 and the opportunities we envision to build upon that success. 
Foremost among these was providing stable, dependable funding streams 
for transit. Dependable formula funds and full funding grant agreements 
have significantly improved the ability of transit agencies to finance, 
to plan, and to execute projects that produce real results for the 
transit-riding public. As I indicated in my testimony last April, 
stable formula funds help agencies do more with limited resources 
because they give financial markets the confidence to support transit 
investments; give communities an incentive to commit long-term 
resources; and give community developers the confidence that the 
transit commitments necessary to support new development will be 
honored.
    It should come as no surprise to this Committee, therefore, that 
our budget reflects a significant shift away from the uncertainty of 
discretionary grant programs to more predictable formula-based and 
multiyear funding programs. In particular, when compared to the 
recently enacted Fiscal Year 2003 Budget, the President's Proposed 
Fiscal Year 2004 Budget would:

 Increase by nearly 20 percent (up $55 million) formula-based 
    transportation funding for rural communities to help address 
    transportation needs in the 40 percent of rural counties that 
    currently have no public transportation services.
 Fund the transportation component of the President's New 
    Freedom Initiative ($145 million) as a formula program to States in 
    order to provide increased transportation services to better meet 
    the needs of persons with disabilities.
 Increase by 21 percent (up $263 million) transportation 
    funding for an expanded New Starts Program so that current full-
    funding grant agreements can be honored, meritorious projects in 
    the pipeline can be funded, and a broader spectrum of cost-
    effective transportation projects can be accommodated.
 Increase by 22 percent (up $16 million) formula funding for 
    State and metropolitan planning, technical assistance and training 
    in order to help States and 
    communities take full advantage of recent advances in 
    transportation planning technology.

    Through these formulae and multiyear merit-based programs, we will 
put Federal public transportation dollars to work equitably throughout 
the Nation, rather than in only half of our States and urban 
communities who receive bus and bus-related discretionary funds by 
earmark each year.

Reauthorization Concepts Reflected in the Fiscal Year 2004 Budget
     Predictable funding is but one of the important goals of the 
programmatic changes proposed in the President's Fiscal Year 2004 
Budget. As we developed the budget proposal, we were mindful of the 
fact that it represents what will be the first year of the reauthorized 
surface transportation act. In anticipation of this, the 2004 Budget 
requests reflects the budgetary foundation for the new legislation that 
will authorize these programs for the next several years. While the 
final details of the reauthorization proposal are still being cleared 
within the Administration, there are a number of concepts reflected in 
our budget that I am pleased to be able to share with the Committee 
today.
     First and foremost, we are proud that this budget proposal 
promotes common sense transit solutions. We know that this is what 
American taxpayers want and expect of public transportation, and we 
want to help every community deliver on this promise. To accomplish 
this goal, we propose to reduce the number of different program 
``silos'' and formularize all programs except New Starts, so that 
States and localities have the flexibility they need to fund local 
priorities. Instead of trying to match projects to specific pots of 
money, we want States and localities to be able to base their transit 
decisions on maximizing mobility and creating seamless community 
transportation networks.
     Second, consistent with the President's call for customer-focused, 
outcome-oriented Government, our budget proposal includes a new 
ridership-based performance incentive program to encourage A-plus 
performance in transit. The program will be relatively small the first 
year--$35 million in urbanized areas and approximately $3 million in 
rural areas. Nevertheless, it will encourage States and urban areas to 
institute the data collection necessary to measure performance, and 
focus attention on the issues that matter most to riders and potential 
riders.
    Third, this budget reflects the President's and FTA's determination 
to keep our commitments, especially to the people who most depend on 
public transportation for basic mobility. By sustaining Federal funding 
at the TEA-21 record-high levels, we will be able to continue to 
provide stable, predictable formula funds to urbanized areas, increase 
funding for underserved rural communities, honor our multiyear funding 
commitments under the New Starts Program, and, perhaps most 
importantly, improve services to the elderly, low-income, and persons 
with disabilities through coordinated planning and predictable funding.
    Finally, this budget supports the President's efforts to champion 
independence and opportunity for all Americans. It proposes the 
creation of a new formula program as part of the President's New 
Freedom Initiative, providing $145 million for new transportation 
services to help persons with disabilities have the opportunity to 
become more fully integrated into American communities. Further, our 
proposed 20 percent increase in funding for rural communities 
represents a ``downpayment'' on our commitment to basic mobility for 
all Americans.

Sustaining the Mass Transit Account of the Highway Trust Fund
     Before I review the specifics of FTA's budget proposal, I would 
like to briefly comment on the issue of split-funding transit programs 
from the Mass Transit Account and the General Fund. Historically, 
approximately 80 percent of the funding for transit programs has been 
provided from the Mass Transit Account, with the 
remaining 20 percent coming from the General Fund of the Treasury. This 
80/20 funding split was carried through each FTA program.
    Under current accounting practice, FTA's split-funded accounts are 
drawn-down (or outlayed) immediately and placed in the General Fund. 
This results in the premature draw-down of the Mass Transit Account, 
and would, if left unaddressed, 
result in the depletion of the account by 2007.
    The President's Fiscal Year 2004 Budget proposal addresses this 
issue by funding as many programs as possible from a single source, 
while maintaining the overall approximate proportion (80/20 percent) of 
funding between the Mass Transit Account and the General Fund. In 
particular, we propose to fund formula programs and research activities 
entirely from the Mass Transit Account; to fund the FTA Administrative 
account entirely from the General Fund; and to split-fund only the New 
Starts Program. By minimizing the number of split-funded accounts, we 
significantly reduce the premature draw-down of the Mass Transit 
Account, thus avoiding the depletion of that account.

Urbanized Area Formula Programs
     Under the President's Budget proposal, urbanized areas will have 
increased flexibility and more predictable funding. By folding a 
portion of the former Bus Discretionary Program into the formula 
program, we propose to ensure that every community can count on a share 
of these funds each year.
     You will note that we propose to move the Fixed Guideway 
Modernization Program from the Capital Investment Grant Account to the 
new Formula Grants and Research Account. In doing so, we do not propose 
to change either the funding level for this program or the formula used 
to distribute these funds. However, we will accomplish the important 
goal of increasing local flexibility and administrative ease in the use 
of these funds from year-to-year. As you may be aware, some communities 
find that their need for Fixed Guideway Modernization funds can vary 
substantially from year to year, and the priority they give to other 
investments also varies. We propose to give communities the flexibility 
to merge Fixed Guideway Modernization funds with their regular 
urbanized area formula grant, so that they can make more prudent, cost-
effective investment decisions each year. In 1 year, for example, they 
may choose to invest more in buses; while the following year, they may 
require a larger expenditure on rail modernization projects. We believe 
that local decisionmakers should have the flexibility to make long-term 
investment plans that are not driven by the old programmatic silos. 
Furthermore, by funding these programs from the same account, a grantee 
can submit a single application for bus or rail ongoing capital needs 
and preventive maintenance.
     Finally, with regard to urbanized area programs, I would like to 
highlight our proposal to create a new performance incentive program 
that will reward those communities that focus on the customer and prove 
their success in increasing ridership. Participation in this program 
will be voluntary, and a portion of the Fiscal Year 2004 funds will be 
available to establish data collection efforts and baseline 
measurements of ridership among the elderly, persons with disabilities, 
and low-income individuals. Our intent is to ensure that the ridership 
incentives do not adversely affect service to these important 
constituencies.

New Starts /Major Capital Investments
     The President's Budget proposes to increase the New Starts Program 
by 21 percent ($263 million) over the recently enacted Fiscal Year 2003 
amount. This growth is important for two reasons. First, it ensures 
that we will be able to meet the commitments made under existing full-
funding grant agreements and fund the most meritorious projects in the 
New Starts pipeline. Second, it is critical to achieving our goal of 
promoting common sense transit solutions. This increase will permit us 
to fund cost-effective nonfixed guideway transportation corridor 
solutions, as well as the fixed guideway projects authorized under 
current law. With today's technology--particularly bus rapid transit--a 
fixed guideway is not always necessary to create a cost-effective major 
new or expanded corridor system. Currently, however, by making the 
inclusion of a fixed guideway a fundamental requirement for a New 
Starts grant, we encourage communities to consider only these more 
expensive alternatives. Further, some small and medium-sized 
communities that would benefit enormously from the creation of new 
transit options simply cannot generate enough new riders or travel-time 
savings to justify a more expensive fixed guideway system. I also want 
to assure the Committee that we will work closely with you and with all 
of our stakeholders to ensure that, as we make room for these cost-
effective nonfixed guideway transit solutions, we do not compromise the 
intent of the New Starts Program.
    In the context of this change, I would also note that we are 
proposing two additional modifications to the New Starts Program. As 
you know, under current law, any project requesting less than $25 
million in New Starts funds is exempt from the rigorous New Starts 
evaluation and ratings process. Unfortunately, experience has 
demonstrated that early project estimates can be inaccurate. On 
numerous occasions, project sponsors who intend to seek funds without 
participating in the project evaluation process suffer serious setbacks 
when they determine that they do, in fact, require more than $25 
million in New Starts funds. Moreover, small projects that proceed 
without adequate attention to ridership and financial projections may 
find themselves in financial difficulty. Therefore, we propose to 
eliminate the $25 million exemption in the New Starts Program. Under 
our proposal, any project that seeks Federal New Starts funds will be 
required to participate in the New Starts evaluation and rating 
process. At the same time, we recognize that the complexity of New 
Starts projects can vary considerably. Therefore, we are proposing that 
projects 
requesting less than $75 million be subject to a simplified evaluation 
and ratings process. We would utilize the same evaluation criteria 
established by Congress for projects seeking more New Starts funds, but 
develop a less complicated measurement and ratings system for these 
``small Starts.''
     As we enter the next reauthorization period, there are more active 
New Starts projects than ever before. This undoubtedly reflects the 
value that communities place on major transit investments to address 
mobility and congestion issues, and our budget proposal is responsive 
to this dynamic.

State-Administered Programs
    This year, you will find a new line item in the FTA budget--State-
administered programs. Like the urbanized area programs, we are 
proposing to allocate the nonurbanized area share of the bus program by 
formula instead of unpredictable discretionary grants. We believe the 
increased stability and predictability of funding that this change 
produces will make it easier for States to plan for public 
transportation investments and to leverage Federal dollars. The 
uncertainty of continued funding for a program has turned away many 
private funding partners and human service agencies who seek some level 
of certainty of funding from year to year.
    In addition, we are proposing to allocate by formula to States all 
of the funds for transit programs that should be closely coordinated 
with human service programs in a State. Our proposal will continue the 
Elderly and Persons with Disabilities Program that is currently 
administered as a formula program to States, and it will create a 
similar formula allocation of funds for the President's New Freedom 
Initiative. In addition, it will make the Job Access and Reverse 
Commute (JARC) Program a State-level formula program. Currently, JARC 
is administered as a national competitive discretionary grant program, 
and, typically, many projects are earmarked in appropriations 
conference committee reports. The Job Access Program has proven its 
effectiveness, and should now be made more widely available.
    We believe it just makes common sense:

 To give States predictable levels of funding for all three of 
    these programs.
 To give States the tools to leverage their human services 
    transportation funds with their public transportation funds.
 To let each State work with its urban and rural communities to 
    establish funding priorities. The key role of the State in 
    selecting projects would remain as it is today, but State decisions 
    would be based on local community priorities.

Non-Urbanized (Rural) Formula Program
    Over the last year and a half, you have heard me say a number of 
times that I hoped to increase funding for rural public transportation. 
The Fiscal Year 2004 Budget makes good on that promise. This budget 
proposes a nearly 20 percent increase, or $55 million, in funding for 
the rural formula program. This is over and above the rural share of 
bus money and RTAP funds that have historically gone to rural areas. It 
is a real increase in the funds available to rural areas in the formula 
program. It is needed, and it will be well-utilized, particularly if 
Congress accepts important program changes reflected in the President's 
Fiscal Year 2004 Budget.
    In addition, as we have proposed in the Urbanized Area Program, we 
are proposing the creation of a performance incentive program for rural 
areas. The program will be voluntary, but we believe that it will not 
only generate a new focus on transit customers and their needs, but 
also spur the development of a more rigorous transit database for rural 
areas.
     And, finally, like the urbanized areas, States can now count on 
predictable levels of formula funding for rural areas from what used to 
be the Bus Discretionary Program. We believe this will help every 
community by allowing them to make common sense decisions about longer-
term transit investments, and not skew those decisions because of the 
uncertainty of funding.

Other State-Administered Programs
    Similarly, we have proposed programs for persons with disabilities 
and for low-income individuals that will provide predictable formula 
funds to be administered by States, as the Elderly and Disabled Program 
is now. Specifically, we propose to provide $145 million for new 
transportation services to help persons with disabilities access 
opportunities and services in their communities--a critical component 
in achieving the President's goal of fully integrating persons with 
disabilities into American life.
    With this additional program, along with the formularization of the 
JARC Program, we will not only keep our commitment to, but also will 
improve services for the elderly, low-income individuals, and persons 
with disabilities. The absence of predictable funding has frustrated 
many States that want to leverage other transportation resources 
provided at the State level through such health and human service 
programs as Medicaid. In one Northeastern State, for example, the State 
Department of Transportation knew it had a solution to helping 
thousands of welfare recipients who could work, if they could just get 
to work. The State could make its program funds go twice as far if they 
could get a Job Access grant from FTA, matching it with State Temporary 
Assistance to Needy Family (TANF) funds for transportation services. 
But could they assure their State Human Services colleagues that the 
Job Access funds were really coming? In fiscal year 2002, JARC projects 
were earmarked in law, and this particular State project was not among 
them. As a result, the State Department of Human Services obligated its 
funds to other services.
    Even with predictable funding for these important services, we know 
that finding solutions that work is not always easy. So to help ensure 
that communities can make informed decisions about priorities and 
needs, we are also increasing the funds available for planning, 
administration, and technical assistance. We want the coordinated 
health, human service, and transportation planning that has been so 
successful in the Job Access Program to become a common practice in 
every community. So, we are also proposing that communities establish 
community-wide funding priorities and a coordinated plan for services 
to the elderly, persons with disabilities, and low-income populations. 
These plans will give each community more control over its transit 
planning--and also make it easier to avoid the creation of costly, 
duplicate transportation systems. And, as long as the funds are used to 
serve the intended populations, we intend to ensure that the 
flexibility to leverage the funding for all of these programs exists. 
The bottom line is that we want to promote common sense solutions--
solutions that will save money, and will result in more and better 
service to more riders.

State and Metropolitan Planning
     Good planning is critical to every transit program. That is why 
the President's Budget proposes a 22 percent increase in planning funds 
for State and Metropolitan Planning Programs in this budget. Not only 
do we increase funding for basic planning activities, but we are also 
creating, in conjunction with the Federal Highway Administration, a new 
Planning Capacity Building Program to provide funds for improving State 
and local planning methods and technical capacity. Over the last 
several years, there have been a number of advances in transportation 
planning--new modeling techniques, technology-based forecasting, and a 
variety of new planning tools. We want to help all communities take 
advantage of these important advances.

Conclusion
     Mr. Chairman, in summary, the President's Fiscal Year 2004 Budget 
proposal lays the groundwork for a reauthorization plan that will build 
upon the success of ISTEA and TEA-21. There are, of course, many 
details and additional proposals that are not directly related to the 
budget, and we look forward to a full discussion of those proposals 
with you and Members of this Committee when the Administration releases 
its legislative package. In the meantime, I would be pleased to answer 
any questions the Committee may have with regard to the Fiscal Year 
2004 Budget.

        RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY 
                     FROM JENNIFER L. DORN

Performance Incentives
Q.1. The President's Budget includes a recommendation for a new 
performance incentive program. How will the program work? Would 
you distribute these awards on a percentage basis or on overall 
ridership gains?

A.1. The performance incentive funds in the Urbanized Area 
Formula Program (Section 5307) will be apportioned using an 
administrative formula based on the percentage increase in 
ridership and accounting for the size of the community. The 
formula may also take into consideration the efficiency of 
service provision in the urbanized area. In order to qualify 
for the incentive, transit systems must ensure that levels of 
ridership among elderly individuals, individuals with 
disabilities, or low-income persons are not negatively 
affected. Because not all systems currently collect data on 
ridership by these specific populations, a portion of the 
incentive funds will be made available for enhanced data 
collection in the initial years of the authorization period.
    Because rural transit systems tend to focus their services 
largely on these ``transit dependent'' populations and have 
less administrative capacity, the incentive funds for the 
Nonurbanized Area Formula Program (Section 5311) will be 
distributed based on increases in overall ridership. The 
incentive formula may take into consideration efficiency of 
service in the nonurbanized areas in the State, as well. The 
entire amount available for incentives in fiscal year 2004, and 
a portion of the funds in the next 2 years of the authorization 
period, will be made available to the States to establish data 
collection systems, since rural ridership data is not currently 
reported to the National Transit Database.
    The FTA plans to consult broadly and seek public comment on 
options and plans to implement the performance incentive 
program prior to implementation.
New Starts
Q.2. You have testified on numerous occasions that the New 
Starts Program is oversubscribed. Why not attack the problem of 
over-subscription by only funding those projects that get a 
``highly recommended'' rating or tighten the requirements for 
awarding an FFGA?

A.2. While I have indicated that there are more projects in the 
New Starts ``pipeline'' than ever before, I would not 
characterize the New Starts Program as ``oversubscribed.''
    Projects that receive a ``recommended'' rating in the FTA's 
rigorous New Starts evaluation process have shown themselves to 
be meritorious. A ``highly recommended'' rating merely 
distinguishes certain projects as exceeding the standard for a 
``recommended'' rating. Rather than simply funding only 
``highly recommended'' projects, we believe it is more 
appropriate to continue to refine the New Starts evaluation 
process to more fully capture and measure the transportation 
and economic benefits of proposed projects. In doing so, the 
FTA and Congress will be able to distinguish among projects and 
choose the most meritorious.

Q.3. What additional measures in your budget or upcoming 
reauthorization proposal would inject more private capital 
participation and more public-private partnerships in 
developing new rail or bus rapid transit projects?

A.3. The FTA continues to encourage project sponsors to request 
a Federal New Starts funding share that is as low as possible 
and is seeking legislation in this year's budget and 
reauthorization to limit the Federal New Starts share to no 
more than 50 percent beginning in fiscal year 2004. This limit 
and fiscal year 2004 effective date was first proposed in April 
2001, as part of the President's Fiscal Year 2002 Budget 
proposal. We believe this requirement will provide an incentive 
for project sponsors to seek greater private sector 
participation in their New Starts projects. Additional 
information concerning reauthorization proposals to encourage 
additional private capital participation and public-private 
partnerships will be available when the Administration's 
reauthorization proposal is officially released.

Q.4. The Fiscal Year 2004 Budget again proposes to reduce the 
maximum Federal share for New Starts projects to 50 percent. 
Doesn't the existing rating process already sufficiently reward 
local funding participation? Why statutorily disadvantage 
transit projects when compared with highway projects, which can 
still get 80 percent from the Federal Government? What will the 
impact be in southern and western States where local project 
sponsors may not have the fiscal capacity to match the higher 
level?

A.4. We do not believe that reducing the maximum Federal share 
for New Starts projects to 50 percent will have a significant 
effect on the ability of transit projects to compete 
effectively with highway projects. The overall Federal New 
Starts share for the 21 projects that have been awarded a full 
funding grant agreement under TEA-21 is 56 percent. 
Furthermore, projects would be able to continue to utilize 
other Federal funds, including highway funds that are 
``flexed'' to transit, to cover up to 80 percent of the total 
project cost. In fact, between 1998 and 2002, $7.1 billion was 
transferred from highway programs to transit projects, an 
average of $1.4 billion per year.
    Twenty New Starts projects located in southern or western 
States were rated in the Fiscal Year 2004 Annual New Starts 
Report. Of these, 13 have proposed a Federal New Starts share 
of 50 percent or less; 5 have proposed a Federal New Starts 
share between 51 percent and 60 percent; and 2 have proposed a 
Federal New Starts share over 60 percent. The FTA will continue 
to work with these project sponsors to identify ways to reduce 
project costs, ``flex'' other Federal funds to the project, 
and/or secure additional State or local funds, as necessary, to 
lower the Federal New Starts share.
New Freedom Initiative
Q.5. Why is it necessary to create a new program in the ``New 
Freedom Initiative'' for persons with disabilities when the 
Elderly and Disability Program already serves that population?

A.5. The New Freedom Initiative Program is intended to provide 
new transportation services for individuals with disabilities 
to meet a wide variety of the unmet transportation needs not 
being addressed by current services, including those provided 
under the Section 5310 Program. Unemployment among persons with 
disabilities is nearly 70 percent, and this population is three 
times more likely than individuals without disabilities to need 
public transportation services. The New Freedom Initiative will 
provide transportation solutions and transportation 
alternatives that go beyond the Americans with Disabilities 
Act, including access to employment and employment related 
services, as well as health and community services.

Bus Discretionary Program
Q.6. Aren't you proposing to reduce the amount of funding 
available for bus needs by taking half of the Bus Discretionary 
Program funding and moving it over to the New Starts Program?

A.6. We propose to eliminate the Bus Discretionary Program. 
These funds that had been available only to selected 
communities through Congressional earmarks will be used to 
increase predictable formula funding and funding for the New 
Starts Program. At the same time, we propose to expand 
eligibility under the New Starts Program to include major 
nonfixed guideway corridor-based transit improvements. This 
would provide support for Bus Rapid Transit or other major new 
bus systems that do not require a fixed guideway. Communities 
could then consider the entire range of appropriate 
transportation solutions, including corridor-based bus systems, 
and become eligible for New Starts project funding.

Q.7. By ``formularizing'' these funds, aren't you implying that 
there are no longer extraordinary needs requiring Congressional 
action, such as responding to September 11, replacing over-age 
buses, encouraging purchase of clean fuel buses, and targeting 
investment to severe nonattainment areas?

A.7. The FTA believes that including the bus capital resource 
in the formula programs is the best way to integrate capital 
funding with the planning process and to promote sound 
decisionmaking at the local level. The replacement of over-age 
buses, the purchase of clean fuel buses, and the provision of 
adequate maintenance facilities are routine capital needs that 
every transit operator must address on an ongoing basis. 
Incorporation of the bus capital funds into the formula 
programs will allow every transit operator systematically plan 
for and meet these major capital investment needs, without 
having to rely on the uncertainties of Congressional earmarks. 
With the certainty of predictable formula funds as collateral, 
transit providers can not only plan their major investments, 
but acquire financing to support them, as well.
    An analysis of the Bus Allocations in recent years does not 
support the assumption that they address extraordinary needs. 
Almost half of the bus capital program has been used to 
purchase buses, and 85 percent of those were replacement buses; 
these are not extraordinary expenses or ones that cannot be 
planned for. Only 11 percent of the program funding was used 
for bus maintenance 
facilities. The remaining 41 percent went to miscellaneous 
other projects, including park and ride lots, terminals and 
waiting facilities, bus shelters, transfer facilities, and 
intermodal centers. These projects did not always represent the 
highest capital priorities identified by the transit operator 
in the area; in fact, some operators were unaware that funds 
had been appropriated for the purpose identified.
    For areas with under 200,000 population, there are 
statutory provisions that permit funds to be transferred among 
programs to address one-time needs. For example, a State can 
reallocate funds among the small urbanized areas within the 
Governor's apportionment. The funds can also be transferred 
between the Governor's apportionment and the State's 
Nonurbanized Area Program apportionment. Major capital needs 
can also be addressed by transfers from STP or CMAQ funds to 
transit use.

Bus Standardization
Q.8. Given the need to make every dollar of Federal assistance 
do more in the current fiscal climate, would it make sense to 
encourage greater use of standardized, performance 
specifications in rolling stock purchases?

A.8. FTA's overall objective with respect to the acquisition of 
new vehicles is to allow the grantee to determine the most 
cost-effective solution to meet its minimum requirements. FTA 
has been supportive of industry efforts to reduce vehicle unit 
costs through the development of standardized bus commercial 
terms and technical specifications. For rail vehicles, this 
type of standardization has primarily occurred at the 
subsystems and component level, such as communications 
protocols, event recorders, passenger information, network 
hardware and software. In addition, the FTA encourages the use 
of multiple grantee rolling stock procurements, which can 
reduce the cost per vehicle for participating grantees.
    We believe it would be impractical to impose standards on 
all transit systems or manufacturers, due to the significant 
physical differences among transit systems (such as the width 
of tunnels or the existence of hills), significant differences 
in operational requirements between the larger urban systems 
and the smaller urban and rural operators, and differing local/
State laws and regulations regarding procurements. In addition, 
we are concerned that the 
existence of Federal specifications could dampen innovation in 
the transit industry in important areas like crash-worthiness, 
brake reliability, or fuel efficiency. Furthermore, the cost of 
establishing, maintaining, and enforcing Federal standards 
could outweigh any cost-savings that such standards might 
achieve.

Private Sector Involvement
Q.9. What in the Fiscal Year 2004 Budget provides an improved 
opportunity to utilize the private sector in the provision of 
transit service?

A.9. There were no specific provisions in FTA's Fiscal Year 
2004 Budget proposal intended to improve private sector 
opportunities in the provision of transit service; such 
provisions will be part of our reauthorization proposal.

Small Transit Intensive Cities
Q.10. The September 2000 study by FTA on small transit 
intensive cities required by Section 3033 of TEA-21 stated that 
``sufficient issues exist to suggest that changes to the 
existing Urbanized Area Formula Grants Program should be 
considered to address the needs of transit agencies which 
provide greater-than-average levels of transit in areas under 
200,000 population. Will the Administration's reauthorization 
proposal contain any proposals to deal with this issue?

A.10. The FTA has not recommended any changes to the formula by 
which urbanized area funds are allocated.

Labor Protection
Q.11. Please provide an update on the status of your efforts 
with the Department of Labor to work cooperatively to ensure 
Section 5333(b) is not a barrier to efficient and effective 
service provision.

A.11. The FTA continues to work closely with the U.S. 
Department of Labor (DOL) to ensure that the labor protections 
mandated by 49 U.S.C. Sec. 5333(b) are not a barrier to our 
grantees' delivery of efficient and 
effective public transportation services.
    Since 1996, when DOL's current guidelines took effect, we 
have seen a steady improvement in the administration of the 
Section 5333(b) requirements. Moreover, FTA has trained DOL 
personnel in the use of FTA's electronic award and grants 
system, ``TEAM Web,'' which is now the primary mechanism for 
FTA grantees to submit grant applications to DOL. The use of 
``TEAM Web'' has enabled DOL to expedite its certifications of 
grant applications. As specified in DOL's guidelines, FTA 
provides technical advice and assistance to DOL with respect to 
the validity of any objections to certification terms submitted 
by representatives of either transit labor or transit 
management. This technical assistance is also contributing to 
the more efficient delivery of Federal grant funds.

 In fiscal year 2002, DOL certified a total of 1,319 
    grant applications or amendments.
 All but one of the 1,319 were certified within the 60 
    days contemplated by DOL's guidelines.
 The average certification time was 16 days, including 
    those certified following referral and without referral.
 The average certification time for projects referred 
    was 19 days from the date of referral.
 The one certification that exceeded the 60-day 
    requirement took 63 days to permit conclusion of 
    negotiations by the applicant and affected unions.

    A small number of applications (61) submitted to DOL did 
not provide adequate information, thus DOL put them in an 
``incomplete'' status until the grantees provided the necessary 
information.

        RESPONSE TO WRITTEN QUESTION OF SENATOR CHAFEE 
                     FROM JENNIFER L. DORN

Q.1. How will the changes to the Urbanized Area Formula Program 
affect transit funding in the State of Rhode Island, in 
particular funding for new and existing bus programs?

A.1. The State of Rhode Island would receive $8,945,016 in 
Urbanized Area Formula resources in fiscal year 2004 under the 
Administration's proposal. This is a $101,663, or 1 percent 
increase over the fiscal year 2003 enacted level. Funding for 
Nonurbanized Areas in Rhode Island would increase from $320,432 
in fiscal year 2003 to $466,716 in fiscal year 2004, a 46 
percent increase. We believe these increases in predictable 
formula funds will make an important difference in the ability 
of both urban and rural operators to maintain existing services 
and plan for new bus services in the State of Rhode Island.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED 
                     FROM JENNIFER L. DORN

Resources /Budget
Q.1. While there may be some potential for FTA to do more with 
less by streamlining its procedures and the like, how do you 
conform your proposed budget with the fact that the U.S. DOT 
reports that it will cost $19.5 billion to maintain current 
conditions and 
improve transit performance and State officials believe the 
same amount would be required simply to maintain conditions?

A.1. The Conditions and Performance Report makes long-term 
projections of investment needs and reports a single ``average 
annual'' investment requirement from all sources for the entire 
20-year period. The 2002 Report estimates that the average 
capital investment needed to maintain transit conditions and 
performance is $14.8 billion annually. Due to a variety of 
factors, including the fact that the amount of transit 
infrastructure to be maintained will grow as new investments 
are made, the estimated investment needs in the near-term are, 
as one would expect, measurably lower than the projected 
investment needs in the out-years. The model projects that, in 
2004, $12.1 billion in capital expenditures would maintain 
current conditions and performance.
    Between 1990 and 2000, total transit capital investment 
spending from all sources doubled, from $4.5 billion to $9.1 
billion. The considerably faster pace of growth in local 
spending drove down the Federal share of capital investment 
substantially over the decade, from 58.1 percent in 1990 to 
47.2 percent in 2000. FTA's Proposed Budget for Fiscal Year 
2004 requests Federal capital investment funding of 
approximately $7 billion. This level of Federal funding, 
combined with projected State and local funds, is projected to 
be sufficient to not only maintain conditions and performance, 
but to begin to improve transit conditions and performance, as 
well.

Q.2. The President's Budget assumes an inflation factor of 2 
percent. Does your budget keep pace with that? Does it keep 
pace with the demands of your projected ridership increase of 
1.5 percent?

A.2. The Fiscal Year 2004 Budget for FTA sustains the record 
$7.2 billion funding level authorized for fiscal year 2003 by 
TEA-21. We believe that the program streamlining and 
consolidation we are proposing will make Federal funding go 
further to help meet the growing demand. In addition, over the 
6-year life of the next authorization, the President's Budget 
proposes a 26 percent increase in FTA funding over the TEA-21 
guaranteed level of $36.3 billion for that authorization 
period. For rural areas, our program restructuring and proposed 
20 percent increase in funding from fiscal year 2003 to fiscal 
year 2004 is designed to focus more resources on areas with 
unmet transit needs.
    The estimated average annual capital cost for the 20-year 
period from 2001 to 2021 to maintain transit conditions and 
performance is $14.84 billion per year (expressed in year 2000 
dollars). This figure represents the investment required from 
all sources--Federal, State, and local governments. This 
estimated funding level would allow transit to keep the 
conditions and service quality at current levels, while growing 
ridership at the modest 1.6 percent per year average rate 
included in the Metropolitan Planning Organizations' long-range 
plans.

Q.3. During your testimony and response to questions you 
mentioned that over the life of the Administration's TEA-21 
reauthorization proposal that transit resources would increase 
26 percent. Is that for transit alone or all transportation 
activities?

A.3. The President's Fiscal Year 2004 Budget proposes transit 
funding over the next authorization period (fiscal year 2004 
through fiscal year 2009) of $45.8 billion. This is a 26 
percent increase over the TEA-21 guaranteed level of $36.3 
billion.

Transit Security and Terrorism
Q.4. It is my understanding that prior to the transfer of the 
Transportation Security Administration from the Department of 
Transportation to the Department of Homeland Security that the 
FTA and the TSA were supposed to sign a Memorandum of 
Understanding on transit security. Has the memorandum been 
finalized? If not, what is delaying this agreement?

A.4. Before the transfer of TSA to the Department of Homeland 
Security, FTA and the other modal administrations worked with 
TSA to draft Memorandum of Understanding (MOU) that were 
intended to more formally define the working relationships 
between TSA and other DOT modal administrations. The Department 
of Transportation is committed to maintaining a close 
partnership with TSA on transit matters, and believes that 
consistent collaboration and cooperation will avoid both 
overlaps and gaps in our security efforts. Given the practical 
working relationship that has emerged, it is no longer clear 
that a Memorandum of Understanding is necessary.

Fuel Cell and Hydrogen Powered Buses
Q.5. Is there anything in the FTA's budget request for a 
hydrogen fuel cell bus program?

A.5. The FTA would anticipate funding research related to 
hydrogen fuel cell buses under the National Research and 
Technology Program. Among the important undertakings in this 
area, the FTA is working with the Department of Energy to 
ensure that the research and infrastructure necessary for 
fueling and maintaining fuel-cell-powered buses will help 
support and augment the research and infrastructure necessary 
for fuel-cell-powered automobiles and light trucks.
Rural
Q.6. Why do 40 percent of rural areas lack transit? Why don't 
these States flex their Federal highway dollars to meet this 
demand for transit?

A.6. Many small cities and rural counties now have viable 
transit systems that provide essential mobility for riders who 
are primarily elderly, persons with disabilities, and low-
income individuals. These systems also provide essential access 
to medical and social services, and to jobs. The remaining 
areas that do not yet have transit service include some of the 
most difficult areas in which to provide service. Low 
population density, far-flung regional facilities, rugged 
terrain, and difficulty in securing local matching funds are 
some of the difficulties that these rural transit markets face. 
In addition, in the heavily auto-dependent rural culture, local 
political leaders may not always be aware of the need for 
transit and the benefits to the community.
    States have also used flexible funds to pay for rural 
transit. Since flexible funds became available in fiscal year 
1992, a total of 30 States have transferred $229.1 million to 
the Nonurbanized Formula Program. And flex funds accounted for 
10.5 percent of FTA obligations under the Nonurbanized Formula 
Program during the period 1992-2002. In fiscal year 2002, 21 
States transferred a record high $42.2 million for rural 
transit. Flex fund transfers continued to increase at the same 
time that the guaranteed funding level for rural transit under 
TEA-21 increased. These increases in funding have resulted in 
making transit service more effective and more widely available 
in rural areas. This success has, in turn, demonstrated the 
benefits of rural transit and laid the foundation for 
introduction of service in many of the remaining markets.

        RESPONSE TO WRITTEN QUESTIONS OF SENATOR CARPER 
                     FROM JENNIFER L. DORN

Budget Level
Q.1. The flat budget request submitted by the FTA for 2004 
defers the necessary investment needed to meet the system 
preservation requirements identified in the DOT's own 
``Conditions and Performance Report.'' Won't deferring these 
expenses simply add to the cost of maintaining and improving 
our transit services in the years to come? As someone with 
experience in dealing with Amtrak and their needs, I know the 
outcome of deferring Federal support for capital investments 
and I certainly hope that we would not follow a similar path.

A.1. The Conditions and Performance Report makes long-term 
projections of investment needs and reports a single ``average 
annual'' investment requirement from all sources for the entire 
20-year period. The 2002 Report estimates that the average 
capital investment needed to maintain transit conditions and 
performance is $14.8 billion annually. Due to a variety of 
factors, including the fact that the amount of transit 
infrastructure to be maintained will grow as new investments 
are made, the estimated investment needs in the near-term are, 
as one would expect, measurably lower than the projected 
investment needs in the out-years. The model projects that, in 
2004, $12.1 billion in capital expenditures would maintain 
current conditions and performance.
    Between 1990 and 2000, total transit capital investment 
spending from all sources doubled, from $4.5 billion to $9.1 
billion. The considerably faster pace of growth in local 
spending drove down the Federal share of capital investment 
substantially over the decade, from 58.1 percent in 1990 to 
47.2 percent in 2000. FTA's proposed budget for fiscal year 
2004 requests Federal capital investment funding of 
approximately $7 billion. This level of Federal funding, 
combined with projected State and local funds, is projected to 
be sufficient to not only maintain conditions and performance, 
but to begin to improve transit conditions and performance, as 
well.

Q.2. Where needs significantly exceed available funding as in 
our current transit program, the ability to shift money from 
one need to another is no substitute for additional resources 
into the program. While I am supportive of State flexibility, I 
think it needs to be accompanied by adequate resources. Could 
eliminating specific program funding categories and pitting 
competing programs against one another without adding more 
resources lead to lower funding for important, but perhaps less 
popular or glamorous, programs? How would we prevent this?

A.2. There seems to be some confusion about whether the FTA is 
proposing to ``consolidate'' or ``combine'' programs for older 
adults, persons with disabilities, and low-income persons. We 
are not proposing a program consolidation; FTA proposes to 
maintain separate programs for the Job Access and Reverse 
Commute, New Freedom Initiative, and Elderly and Disabled 
grants. Funding for each of these programs will be allocated to 
every State by formula that includes a minimum allocation for 
each program. States will allocate these funds to urban and 
rural transit providers throughout the States. The funding for 
each program must be used for its intended purpose.
    We believe that State administration of these grant 
programs will foster greater collaboration and greater 
coordination with other transportation-related programs 
administered at the State level, including transportation 
services funded through Medicaid and the Temporary Assistance 
for Needy Families Program, and result in increased 
transportation services at lower cost.

Q.3. Why is the Administration allocating additional resources 
in its 2004 request to the highway program, yet only 
maintaining the current transit program funding levels (which 
is in essence, a decrease including inflation) when we see 
equally high demand for both programs? Shouldn't we grow both 
programs? Or perhaps subject the highway programs to a 50 
percent non-Federal match to spread Federal highway funding to 
more beneficiaries in the face of such high demand? If that 
makes sense for transit, why not highways?

A.3. In the face of enormous and costly national challenges--
fighting terrorism, protecting our homeland, and promoting 
economic growth--the Fiscal Year 2004 Budget signals the high 
priority the President places on our national transportation 
system. Our Fiscal Year 2004 Budget sustains the record $7.2 
billion in Federal investment in public transportation provided 
in fiscal year 2003, and draws upon both the Mass Transit 
Account of the Highway Trust Fund and the General Fund. Highway 
funding, in contrast, is drawn solely from the Highway Trust 
Fund, which can support additional spending in fiscal year 
2004.
    With respect to the Federal matching share, the New Starts 
Program is a discretionary grant program, and as such FTA is 
required by law to consider the level of local funding when 
rating New Starts projects. In contrast, the Federal-Aid 
Highway Program is a formula program. No Federal decisionmaking 
criteria are required or applied to the distribution of these 
funds. This is similar to FTA's formula grant programs that 
have a statutory match of 80 percent Federal and 20 percent 
local funds.

Flatlining of Certain Programs
Q.4. FTA freezes funding for programs such as the Elderly and 
Persons with Disabilities and Job Access and Reverse Commute 
Programs that are generally regarded as highly successful. In 
my State and across the Nation, the Job Access and Reverse 
Commute Program has been an essential part of welfare reform. 
Without transportation, a job, health care, and child care, 
welfare recipients face tremendous barriers to entering the 
workforce. Why does FTA not put more resources into programs 
with a record of success?

A.4. The level of funding requested in the President's Budget 
for fiscal year 2004 remains at the fiscal year 2003 funding 
level for the Elderly and Persons with Disabilities Program; 
however, the President's proposed budget would provide $25 
million more than Congress appropriated in fiscal year 2003 for 
the Job Access and Reverse Commute (JARC) Program. In addition, 
the President has proposed a new program, the New Freedom 
Initiative, to be funded at $145 million that will provide 
additional transportation services to persons with 
disabilities. Furthermore, the budget proposal includes a 
number of provisions that will enhance services to populations 
served by these programs. FTA is proposing to distribute funds 
for all of these programs by formula in order to provide an 
equitable and predictable stream of funds to each State for 
these purposes. States will suballocate funds for all three of 
these programs based on coordinated community planning and 
project proposals to ensure a collaborative approach to meeting 
the needs of the populations served by these program.
    We have also proposed to allow other Federal funds, such as 
Medicaid and Temporary Assistance to Needy Families, to be used 
to match FTA funds under each of these programs, just as the 
JARC Program currently permits. We believe that this will 
foster partnerships at the State and local level to plan, to 
fund, and to operate services that meet the transportation 
needs of the elderly, persons with disabilities, and low-income 
individuals. In addition, up to 15 percent of each State's 
annual apportionment can be used for planning, technical 
assistance, and administrative costs to further enhance 
collaboration and coordination among all relevant stakeholders.
    Finally, we are proposing a funding increase of 20 percent 
for the Nonurbanized Area Program. While services under this 
program are for the general public in nonurbanized areas, 32 
percent of the riders in rural areas are older adults, low-
income, or persons with disabilities.

Transportation Spending Creates Jobs
Q.5. It is my understanding that an investment of $23,810 in 
transportation creates one job, in addition to the 
infrastructure improvements that the project is creating. Using 
the Administration's own inflation estimate, the cost of simply 
increasing the transit program at the rate of inflation is $144 
million. That $144 million would create 4,788 jobs. Why does 
the Administration not support at least keeping this program 
constant with the rate of inflation and in the process creating 
nearly 5,000 jobs?

A.5. The current level of Federal investment in public 
transportation is $7.2 billion, which represents a 56 percent 
increase over 1998 funding levels. Between 1998 and 2003 the 
inflation rate has been less than 1.9 percent per year, as 
reflected by the Implicit Price Deflator of the U.S. Gross 
Domestic Product. Over the past 6 years, public transportation 
funding has increased at a much faster pace than inflation.
    The President has proposed to maintain this record level of 
funding for public transportation in fiscal year 2004. Given 
the vast and costly challenges we face as a Nation--
particularly the fight against terrorism and protection of our 
homeland--we believe that the Fiscal Year 2004 Budget signals 
the high priority President Bush and Secretary Mineta place on 
our national transportation system.

Small Transit-Intensive Cities
Q.6. The FTA study on the Urbanized Area Formula Program and 
the Needs of Small Transit Intensive Cities that was mandated 
by Section 3033 of TEA-21 identified 75 communities in 30 
States between 50,000 and 200,000 population that would be 
considered ``transit-intensive.'' The American Public 
Transportation Association has proposed a $35 million ``tier'' 
within the Section 5307 Formula Program that would distribute 
funds to these communities using a formula that would reward 
their levels of transit intensity, as indicated in the FTA 
study, compared with the average transit intensity of their 
larger counterparts. Do you consider this a reasonable and 
equitable solution to the significant and unique capital needs 
of these communities?

A.6. FTA does not advocate a change in the formula by which 
urbanized area funds are distributed. We believe current 
provisions of the law provide States with the flexibility to 
address any unique needs in these communities. For areas under 
200,000 population, the law permits funds to be transferred 
among programs to address one-time needs. For example, a State 
can reallocate funds among the small urbanized areas within the 
Governor's apportionment. Funds can also be transferred between 
the Governor's apportionment and the State's nonurbanized area 
program apportionment. Major capital needs can also be 
addressed by transfers from STP or CMAQ funds to transit use.
    Furthermore, changes proposed by the Administration can 
provide additional flexibility and resources to meet unique 
needs in these areas. Under the Administration's proposal, 
States will administer not only the Elderly and Disabled 
Program, but also the Job Access and Reverse Commute Program, 
and the New Freedom Initiative. These funds are to be 
suballocated to local areas based on need and local funding 
priorities. Additionally, the Administration will be proposing 
a number of changes that will simplify the administrative and 
grant requirements for small urbanized and for nonurbanized 
areas.

Q.7. Administrator Dorn, you have indicated your support for 
program changes that would reward transit agencies that 
demonstrate significant ridership increases. Is the Bush 
Administration also considering ways in which to reward 
communities with high levels of current service that might not 
have the capacity or resources to absorb higher ridership, 
particularly in areas under 200,000?

A.7. The relatively modest proposed incentive program is 
intended to focus attention on the key transit outcome--
increased ridership. There are a variety of ways that 
communities can improve ridership without investing in 
additional capital equipment, including improvements to routes, 
customer relations, route information, and reliability. While 
we appreciate that some communities have higher ridership 
levels than average, our goal is to encourage efforts to 
improve ridership in every community. We believe current 
formulas and provisions that permit the transfer of funds among 
programs appropriately recognize those communities that have 
higher than average transit use.

Q.8. The current FTA capital grants formula for transit 
agencies serving populations over 200,000 includes incentives 
for high levels of service, but the formula for urbanized areas 
under 200,000 only distributes funds according to population 
and population density. In the absence of Federal recognition 
of the funding needs of small transit intensive communities, 
how would you suggest these areas meet their current transit 
needs in the face of declining revenues, and increasing rider 
demand and responsibilities in areas such as handicapped 
accessibility and air quality?

A.8. The Administration does not propose a change in the 
funding formula for urbanized areas under 200,000. However, we 
will be making proposals to streamline administrative 
requirements for smaller areas to allow transit operators to 
spend less time and money on administration and more on the 
service provision. Our reauthorization proposal will also 
include provisions to enhance coordination with human service 
transportation programs and provide new sources of matching 
funds, thus increasing the resources available for services to 
persons with disabilities, older adults, and low-income 
populations.
    A number of provisions under current law provide the States 
with the flexibility to balance the needs of the smaller 
urbanized areas by transferring. For example, funds can be 
transferred within the Governor's apportionment for cities 
under 200,000 population and between the Nonurbanized Formula 
Program and the Governor's apportionment. Furthermore, there is 
no limit on the amount of FTA funds that can be used for 
operating assistance in the small urbanized areas.
    One source of funding for small urbanized areas that has 
not been tapped as fully as it might be is CMAQ and STP funds 
that can be transferred to transit programs. While $8.5 billion 
was transferred to transit between fiscal years 1992 and 2002, 
only $273.1 million of that was for cities between 50,000 and 
200,000 population. In contrast, the States transferred $682.9 
million for use in areas under 50,000 and $737.7 million for 
cities between 200,000 and 1,000,000 population. All but three 
States have made some use of flexible funding to support 
transit programs.

Oversight Tools
Q.9. I am aware of the thorough rating system and other 
oversight tools the FTA uses to ensure we make sound and 
efficient investments in our transit system. As we look to ways 
to focus our dollars on the best transportation projects 
through reauthorizations of TEA-21, can these tools be applied 
to help oversee spending and projects in other modes, such as 
highways?

A.9. The FTA is proud of its New Starts project rating process 
and its financial and project management oversight programs to 
effectively manage our capital transit investments. These 
activities have proven to be invaluable tools in both the 
evaluation of potential funding candidates and in the ongoing 
monitoring of current capital projects. An assessment of the 
applicability of a similar system to the highway program would 
be best made by the Federal Highway Administration.
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