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Chairman Shelby, Ranking Member Brown and members of the Committee, thank you for this opportunity to present testimony to the Senate Committee on Banking, Housing and Urban Affairs regarding the next surface transportation authorization bill. I am Michael Melaniphy, President and Chief Executive Officer of the American Public Transportation Association (APTA).
The American Public Transportation Association (APTA) is a nonprofit international association of nearly 1,500 public and private member organizations, including transit systems and commuter rail operators; planning, design, construction, and finance firms; product and service providers; academic institutions; transit associations and state departments of transportation. APTA members serve the public interest by providing safe, efficient, and economical transit services and products. More than ninety percent of the people using public transportation in the United States and Canada are served by APTA member systems. APTA’s member organizations – both public and private – build, operate, and maintain the nation’s public transportation systems.
As an essential, expanding, and increasingly important component of the nation’s surface transportation system, public transportation gets people where they need to go and, at the same time, it allows our highways to work better by reducing congestion. But to maximize the federal investment in public transportation, we need a predictable, multi-year authorization for a growing program that better addresses identified needs. A dependable long-term bill would enhance the industry’s ability to provide good, safe service in communities across the nation, it would be a catalyst for public-private partnerships, and 74% of that funding would flow directly to the private sector, which at the end of the day is really who builds products and provides services for public transportation providers.
Instead, since the expiration of TEA-21 in 2003, we have had 24 short-term extensions, a little more than four years authorization under SAFETEA-LU, and a bit more than two years under MAP-21. More recently, federal transit funding has grown only minimally, from $10.231 billion in FY 2009 to $10.692 billion in FY 2014. The uncertainty of recent federal authorizing laws and anemic growth of the federal transit program have made it nearly impossible for the industry to keep the system in a state of good repair, replace the aging infrastructure and fleets, and address the growing demand for service.
While growing communities compete for limited funds to build a variety of new fixed guideway systems (BRT, light rail, trolley, heavy rail and commuter rail), and transit ridership continues to grow, the deterioration of our systems adversely impacts both efficiency and safety. The U.S. DOT now estimates that we have an $88 billion one-time backlog in state of good repair capital investment needs. And this backlog doesn’t even include the annual cost of maintaining the current system, like replacing aging buses, rail cars, vans, buildings, bridges and stations; the cost of building new capacity; and the more than $3 billion in costs to install positive train control systems at the nation’s commuter railroads.
These are some of the reasons that APTA has urged Congress to enact a long-term authorization bill that grows federal funding for public transportation. We support the preservation of the federal transit program, and we support an increase in the dedicated revenues that go into the Highway Trust Fund for both the Mass Transit and Highway Accounts. It is estimated that at least $100 billion in new revenues is needed just to maintain current public transportation and highway programs, and APTA strongly believes we need to grow current federal investment levels for transit. It should come as no surprise that we strongly oppose efforts to devolve the federal transit or highway programs. Public transportation is an essential part of the overall surface transportation system, and given our growing population and increasing congestion on our roadways, it is more important than ever.
It makes little sense to build and maintain the nation’s transportation infrastructure with short-term extensions. General fund transfers to support current program levels will cost the nation more in the long run by adding to the federal deficit and putting the cost of maintaining our transportation system on our children and grand-children. According to the House Budget Committee, Congress has transferred $63.1 billion into the highway trust fund since 2008 just to support existing program levels. And while these transfers have been necessary, they are not the ideal way to fund our nation’s infrastructure.
We know transit ridership is growing, we know our population is expected to grow significantly, and we believe that the demand for public transportation service in our communities will continue to grow. Our failure as a nation to adequately invest in this essential element of our surface transportation system will only cost the nation more in the long run. Conversely, investment in public transportation will help support a healthy, growing economy, facilitating the efficient movement of goods and people, and stimulating economic development in communities served by vibrant public transportation systems.
RECORD RIDERSHIP AND GROWING PUBLIC DEMAND
Nationally, public transportation ridership continues to set record levels. In 2014, people took a record 10.8 billion trips on public transportation—the highest annual ridership number in 58 years. Some public transit systems experienced all-time record high ridership last year. This record ridership didn’t just happen in large cities. It also happened in small and medium size communities. In fact, some of the biggest gains came in towns with less than 100,000 people with ridership growth of double the national average. This record growth in ridership occurred even when gas prices declined by 42.9 cents in the fourth quarter. From 1995-2014 public transit ridership increased by 39 percent, almost double the population growth, which was 21 percent. The estimated growth of vehicle miles traveled was 25 percent. This proves that once people start riding public transit, they discover that there are benefits over and above saving money.
One only needs to ride a train or bus during the morning commute to recognize the growing demand, and to experience firsthand the strains that that demand is placing on systems. The demand and support for public transportation is also reflected at the ballot box. Last year, 69 percent of ballot initiatives seeking taxpayer support for transit investment were approved by voters. Clearly, citizens are willing to pay for improved transit service. These local ballot initiatives are an affirmation of the stability of the local partnership, but they are not a substitute for the federal partnership.
A LOCAL, STATE, AND FEDERAL PARTNERSHIP
Providing public transportation choices has always been a partnership, involving public sector agencies at all levels of government working with non-profit and private sector stakeholders. The planning, development, and construction of hundreds of public transportation projects annually is carried out predominately at the local level by transit agencies – working with state, local, and private sector partners. All of these partners, and the communities they serve, benefit from the projects. In addition to improving mobility, transit projects shape land use and development patterns, generate jobs, and stimulate productivity gains that benefit the nation and advance national goals. In short, well-designed transit service is a catalyst for economic growth. The federal government’s longstanding role helps to ensure that these locally-derived benefits are fully integrated into the national multimodal transportation network that is so essential to ensuring U.S. competitiveness in our global economy.
While federal funding supports more than 44% of transit capital spending, states and localities support another 32% of these costs. And while the federal government supports less than 9% of transit operating costs, fares and transit agency earnings cover more than 37% of such costs, with states and localities supporting about half of operating costs. While most formula programs under federal transit law distribute funds on the basis of population, density, and service provided, many less urban states rely on the federal government for a significantly higher proportion of their transit capital expenditures than more urban states, and many smaller communities depend on federal funding for a substantial share of operating costs as well.
For example, Alabama, Idaho, Tennessee, Louisiana, South Carolina, South Dakota and Kansas do not spend as much on transit as other states like New York. However, more than 46% of what these states do spend on transit comes from the federal government. In fact, almost 86% of the transit capital equipment these states have purchased over a five year period was bought with federal funds. By comparison, the State of New York derives only 10.5% of their total transit funding from the federal government, while 37.6% of their capital funding come from the federal program.
RETURN ON THE FEDERAL INVESTMENT
For every dollar we invest in public transportation, we generate about $4 in economic returns. And $1 billion in federal transit investment fosters productivity gains that create or sustain 50,000 jobs. It is important to note that 73% of federal transit capital funds flow through the private sector. In fact, much of the bus and rail equipment is manufactured in rural areas and provides high wage jobs in those communities. For example, bus original equipment manufacturers have plants located in Alabama, North Dakota, Kansas, Minnesota, South Carolina, California and upstate New York. Rail Cars are manufactured in places like Nebraska, Idaho, Illinois, Pennsylvania, and upstate New York. Components and subcomponents are being manufactured all across this country. As these investment metrics make clear, local and regional transportation improvements yield national benefits.1
On a very fundamental level, federal transportation funding keeps this economic engine running, as transit agencies can only plan and advance large, multi-year capital projects when they can be confident the resources will be there when they are ready to break ground.
APTA’S RECOMMENDATIONS FOR THE NEXT AUTHORIZATION BILL
Many changes adopted in MAP-21 produced important improvements to the Federal Transit Program and were consistent with the recommendations of APTA and the public transportation industry. However, in the context of a relatively level-funded bill and growing demand for transportation infrastructure investment, even consolidated formula programs could not adequately meet the requirements facing our public transportation agencies and the communities they serve.
Communities across the country know that public transportation is a smart investment and have found creative ways to advance projects, but they cannot do it alone. Only through sustained, robust investment at all levels of government can we maintain what we have built and grow for the future. The more than 10 billion trips riders took last year are, in part, the product of decades of Federal support. In our authorization proposal, APTA seeks increased Federal funding in a multi-year bill.
Closing the Infrastructure Investment Gap
As our impending revenue shortfall makes clear, funding uncertainty delays capital investment and drives up project costs. To ensure the reliable, long-term funding best suited to infrastructure investment, APTA urges Congress to enact a 6-year, $100 billion authorization for the federal transit program that includes robust funding to grow the program from $10.7 billion in the current year to $22.2 billion in 2021. Revenues into the Highway Trust Fund (HTF) must increase to support this much needed growth.
Our funding proposal is robust because our needs are real. APTA’s authorization recommendations are based on needs identified in eight categories of equipment and facilities funded under the current federal program. They are based on the need for six-year investment from all sources—fares, local, state, and federal—of $245 billion. APTA’s investment requirements include the cost of bus replacements, demand response vehicles, rail vehicles, state-of-good-repair spending, New Starts and core capacity projects, and other costs.
We ask that Congress identify dedicated funding that supplements current HTF revenues to ensure the long-term health and growth of federal public transportation and highway programs through and beyond the next long-term reauthorization bill. We support the preservation and growth of revenues that go into the Mass Transit Account of the Highway Trust Fund and oppose efforts to devolve existing federal surface transportation programs.
Our proposal calls for increased funding across the federal transit programs for Capital Investment Grants, State of Good Repair, Bus and Bus Facilities, and formula programs. We do not support the growth of any existing program at the expense of another – we need growth in all areas. Recognizing that large but infrequent bus rolling stock and facility projects are challenging to address with a limited formula program, APTA has recommended a discretionary component to the bus program, combined with restoring the overall bus program funding to pre-MAP-21 levels, without sacrificing growth for all major programs.
Leveraging Limited Public Resources
Transportation funding resources are constrained at all levels of government. Transit agencies continue to explore ways to make their limited funds go farther, including program reforms, cost-reduction measures, and greater leveraging of public dollars. While grant funding will remain the largest and most crucial source for transit capital investments, APTA supports a broad range of funding and finance solutions, including preserving tools that work, supporting a range of new tax incentives to encourage greater private investment in infrastructure, and improvements to make federal transportation credit programs more useful and affordable to smaller project borrowers. We also believe that one of the best ways to encourage private sector participation in transit projects is enactment of a robust, multi-year federal transit authorization bill, under which federal grant funding can be matched with private sector dollars.
For several programs where transit stakeholders face common challenges nationwide, the federal government is best suited to take the lead. These national priorities include the Transit Cooperative Research Program (TCRP), Technical Assistance and Standards, and Human Resources and Training. To restore funding predictability to these programs, we recommend they be authorized as a $25 million annual set-aside from the urban formula program. We also call for increased flexibility to use formula funds for training. With greater funding certainty, we can maximize the returns on this relatively modest investment: practical research results that are ready to deploy, common standards and best practices to improve safety and efficiency at all systems, and workforce training solutions for our increasingly sophisticated industry.
Assisting communities in the wake of disasters will remain a fundamental role of the federal government. We support MAP-21’s new Public Transportation Emergency Relief Program and urge Congress to fully and promptly fund transit relief and reconstruction projects in times of need.
As we face record-high transit ridership on increasingly aging systems, reaffirming the federal commitment to the millions of Americans who ride public transportation is more essential than ever. Therefore, we urge this Congress to authorize a federal transit program with a six-year investment level of $100 billion. The next program will require a wide variety of funding and financing options, but the base program must restore and increase the purchasing power of the federal motor fuels user fee. In the most mobile nation in the world, public transportation links people, neighborhoods, and businesses – efficiently, safely and reliably. Investment in public transportation is much more than building physical infrastructure; it is an expression of our collective national will to keep moving forward.
Chairman Shelby, we thank you and the Committee for allowing us to provide testimony on these critical issues. We look forward to working with you, Ranking Member Brown and the members of the Committee as you work to develop this next critical authorization bill.