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PRESIDENT CLINTONS FISCAL YEAR \M 1995 BUDGET PROPOSAL Y 4. B 85/3: 103-20 Presioeat Clittoa's Fiscal Year 199... HEARING BEFORE THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS SECOND SESSION FEBRUARY 22, 1994 Serial No. 103-20 Printed for the use of the Committee on the Budget ' 6 f U.S. GOVERNMENT PRINTING OFFICE 7&-S14CC WASHINGTON 1994 : ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-044086-6 PRESIDENT CLINTON'S FISCAL YEAR \0 BUDGET PROPOSAL 1995 Y 4. B 85/3: 103-20 Presideit Clinton's Fiscal Year 199. HEAEING BEFORE THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS SECOND SESSION FEBRUARY 22, 1994 Serial No. 103-20 Printed for the use of the Committee on the Budget JUL 6 U.S. GOVE11NMENT PRINTING OFFICE 76-814CC WASHINGTON 1994 : ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments.CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-044086-6 COMMITTEE ON THE BUDGET MARTIN OLAV SABO, Minnesota, Chairman RICHARD A. GEPHARDT, Missouri JOHN R. KASICH, Ohio DALE E. KILDEE, Michigan J. ALEX McMILLAN, North Carolina ANTHONY C. BEILENSON, California JIM KOLBE, Arizona HOWARD L. BERMAN, California CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., WestVirginia OLYMPIA J. SNOWE, Maine JOHN BRYANT, Texas WALLY HERGER, California CHARLES W. STENHOLM, Texas JIM BUNNING, Kentucky BARNEY FRANK, Massachusetts LAMAR S. SMITH, Texas JIM COOPER, Tennessee CHRISTOPHER COX, California LOUISE McINTOSH SLAUGHTER, New WAYNE ALLARD, Colorado York DAVID L. HOBSON, Ohio MIKE PARKER, Mississippi DAN MILLER, Florida WILLIAM J. COYNE, Pennsylvania RICK LAZIO, New York BARBARA B. KENNELLY, Connecticut BOB FRANKS, New Jersey MICHAEL A. ANDREWS, Texas NICK SMITH, Michigan ALAN B. MOLLOHAN, West Virginia BOB INGLIS, South Carolina BART GORDON, Tennessee MARTIN R. HOKE, Ohio DAVID E. PRICE, North Carolina JERRY F. COSTELLO, Illinois HARRY JOHNSTON, Florida PATSY T. MINK, Hawaii BILL ORTON, Utah LUCIEN E. BLACKWELL, Pennsylvania EARL POMEROY, North Dakota GLEN BROWDER, Alabama LYNN C. WOOLSEY, California Eileen M. Baumgartner, ChiefofStaff Richard E. May, Republican StaffDireaor (ID CONTENTS Page Hearing held in Washington, DC, February 22, 1994 1 Statement of: Peha, Hon. Federico, Secretary ofTransportation 2 Prepared statements, letters, supplemental materials, etcetera: Peha, Hon. Federico, Secretary of Transportation, prepared statement of 8 Sabo, Hon. Martin Olav, a Representative in Congress from the State ofMinnesota, prepared statementof 1 (III) PRESIDENT CLINTON'S FISCAL YEAR 1995 BUDGET PROPOSAL TUESDAY, FEBRUARY 22, 1994 House of Representatives, Committee on the Budget, Washington, DC. The committee met, pursuant to call, at 2:15 p.m., Room 210, Cannon House Office Building, Hon. Martin Olav Sabo, Chairman, presiding. Members present: Representatives Sabo, Mollohan, Price, Blackwell, Browder, Woolsey, Kolbe, Franks, and Smith of Michi- gan. Chairman Sabo. The Budget Committee will come to order. And welcome, Secretary of Transportation, Mr. Pena. I have a statement. I will put it in the record. And it is good to have you here today. We have to tell you, we hear lots of good reports on your work in California. This is a true national emergency. You and other members of the Federal Government responded in a very appropriate manner and it is what we are supposed to do. And we think you did an outstanding job. We know you have a tough job ahead ofyou. We have a budget with very tight spending caps. You deal with some of the basic infrastructure that is so important in this country and you have to make a lot of recommendations to us that are not easy. Some ofthem, I expect, we may have differingjudgments on. But in the end if we want to add something, we have to subtract something, the same process that you went through. And we are just pleased to have you in the leadership oftransportation and dealing with the vital transportation issues ofthis country and we look forward to hearing from you. Welcome, Mr. Secretary. [The prepared statement ofHon. Martin Olav Sabo follows:! Prepared Statementof Hon. Martin Olav Sabo, a Representative ln Congress from the State ofMinnesota Welcome, Mr. Secretary. It's good to haveyou here today. First, I would like tojoin the President and the people ofCalifornia in congratu- lating you on your timely, compassionate, and effective response to the California earthquake. Ifyou're not careful, you could give government agood name. You have also developed a strategic plan in anticipation of the transportation needs of our country as we approach the 21st century. Clearly, the investments of today mustbe made with the needs oftomorrow in mind. In the meantime, I'm sure you've had an interesting few months balancing the merits ofall ofthe programs managed byyour agency. It's probably been even more interesting tryingto live within the tightbudget limits that were installed last year. As you know, the spending caps we put in place are very tight, but our budget discipline has already begun to have positive effects on the economy: virtually all (1) economic indicato—rs are positive, the projected size of the deficit is down, and jobs are beingcreated 1.9 million lastyear alone. As we begin work on this year's budget, there is no question that we will again meet the spending caps we established last year. It is within that context that we will review the programs your agency overseas, and begin the process ofdetermin- ing which ones may be cut, which may be eliminated, and which may be increased. There is no question that an efficient, effective, safe, environmentally sensitive transportation system is critical to developing and maintaining a strong and grow- ing economy. Whether it's moving goods from place to place or getting people to their jobs, a transportation infrastructure that moves people and goods safely and dependably is essential. I am looking forward to hearing your views on the current state ofourtransportation network, and your projections and suggestions for the future. For instance, we are very eager to hear your report on how effective the $155 billion Intermodal Surface Transportation Act of 1991 has been to date. Looking to the future needs ofour coun—try, I h—ave long supported mass transit and—Intelligent Ve- hicle Highway Systems IVHS which is basically—using technology instead ofthe more costly widening and extending of highways to move traffic programs efficiently and effectively. I am encouraged to see that IVHS programs are slated to receive funding increases in the President's budget. I am also looking forward to hearing your views on transportation research and development programs. The use oflightweight, composite materials and other tech- nological advances hold out the promise of stronger, safer, more fuel efficient vehi- cles. Whe—n one considers that we import app—roximately 50 percent of our oil from overseas to the tune of$50-60 billion a year the promise ofmore fuel efficient ve- hicles as a way to reduce pollution and reduce our dependence on foreign oil be- comes all the more compelling. In the final analysis, we must continue to emphasize a safe, secure, efficient, inte- grated, and environmentally sound transportation system that meets the needs of Loday and anticipates the needs oftomorrow. I look forward toyour testimony today, and I look forward to working with you and the President to achieve those goals. STATEMENT OF HON. FEDERICO PENA, SECRETARY OF TRANSPORTATION Secretary Pena. Thank you, Mr. Chairman, and good afternoon. Mr. Chairman, as usual, I have a formal statement for the record which I will submit. Chairman Sabo. We will put the entire statement in the record. Secretary Pena. Thank you, Mr. Chairman, and Members of the committee. I have some opening comments I would like to make and then will be very happy to address your questions. am I very pleased to appear before you to discuss the Depart- ment ofTransportation's budget request for fiscal year 1995. Chairman Sabo. Before you start, I should indicate to the committee that Mr. Kasich is having weather problems and is due in shortly, but he would be here otherwise. Secretary Pena. Thank you, Mr. Chairman. I would like to first begin by taking this opportunity to explain how we approached the fiscal year 1995 budget and the priorities that shaped our budget request. We have always been a Nation in motion. Americans have moved farther and gone faster and made more progress in our short his- tory than any other country on earth. Together the transportation industry represents 17 percent or about $1 trillion dollars of our gross domestic product. The capital stock of our transportation infrastructure is valued at $1.4 trillion. As we approach the next century, our transportation system re- mains critical to the well-being of our Nation. The result of these priorities is the budget for 1995 that sets unprecedented levels for transportation investment in our country. This budget is about investment. It is about jobs, infrastructure, safety, technology, and most importantly, in America's competitive future. The challenge that we had, Mr. Chairman, in putting this budget together was to provide for our key investment priorities, while meeting the budget targets and achieving our deficit reduction goals. The bottom line is that we are asking the Congress to provide $39.7 billion in appropriations and obligation limitations for programs administered by the Department ofTransportation. The process that we followed in putting this budget together was to ask each of the modal administrators and each of the assistant secretaries to do a thorough bottom-up review, to cut back wher- ever possible, to eliminate activities that were no longer appropriate, and to preserve what was very fundamental to DOT's mis- sion. Our tough budget process has resulted in a number of program cuts and terminations, but it has also preserved a strong an—d grow- ing budget for infrastructure, for research and developme—nt which will keep American goods and people moving efficiently address- ing environmental concerns and moving our transportation system toward the 21st century. We developed a strategic plan which was recently completed which provides a framework for the budget. Mr. Chairman, I have with me today a copy of our seven-point strategic plan which we are happy to provide. It is a summary of a much more detailed doc- ument. Our challenge was to shape the 1995 budget to respond to the priorities we identified in our strategic plan. So today I would like to present the budget reflecting those seven goals in our strategic plan. The first goal is what we call tying America together. This goal is to develop an effective intermodal transportation system to help us meet the challenges of the 21st century global economy by en- hancing all ofour different modes oftransportation and their links, allowing us to travel at lower cost and with fewer delays. In December of last year, we announced the National Highway System which was submitted to Congress, and ISTEA suggested that it be adopted by 1995. But that same day I announced the ef- fort to engage in a year-long process throughout the country to develop a National Transportation System, which is to find a way to connect all of the forms of transportation we have in our country into a national system following the process we used in developing the National Highway System. To do that, we found at least three modes of transportation that needed significant support if we were to put together a truly Na- tional Transportation System. Those three were, number one, aviation; second, the maritime industry; and third, passenger rail. Our budget reflects those three priorities. In aviation, a 7 percent increase to $2.3 billion for Facili- ties and Equipment for major projects to improve and modernize air traffic systems and $1.69 billion for the airport improvement grant program. The budget does not reflect the Federal corporation for the air traffic control system. Recommendations will be available to me in April of this year. We think that because this is the only government entity that regulates an entire industry, that we have to look at how we can restructure it. It is bound by personnel and procure- ment and budgetary restraints, which we think do not give it the entrepreneurial flexibility to bring on new, modern equipment, to continue our commitment to safety and to deal with difficult pro- curement issues that we have to grapple with. I won't elaborate the historical problems that the FAA has had to deal with, but we think the cooperation will help significantly. Second is the maritime industry. We believe that it is critical to our Nation's competitiveness. The 1995 budget proposes a 10-year, $1 billion Maritime Security Program. This will help to maintain our U.S.-flagged commercial fleet and provide payments of $2.5 million per vessel in the first 3 years. That will then drop to $2 million per vessel for the remaining 7 years. I think it is significant to note that this is the first time the President's budget has incorporated funding for a new maritime assistance program. We are also calling for a second year of support We for the shipbuilding industry. believe that our shipbuilding proposal for 1994-95 will allow us to leverage $1.5 billion in new ship construction for our country; obviously, very important to that industry. And the third mode that we are very concerned about is passenger rail. That is why our 1995 budget proposes a 15 percent increase for Amtrak operating and capital assistance for a total of $788 million. We are also proposing $32.5 million for our next Gen- eration High-Speed Rail Program, which I will discuss later on in my testimony. So if we can focus on those three modes and keep them healthy, I believe we will be able to put together an effective National Transportation System as we work through that this coming year. Our second goal is to invest in infrastructure. That is one of the President's key themes and priorities. The Department of Trans- portation's budget continues to grow in this area to a level of $28.2 billion in fiscal year 1995. The increase in highway funds will help those areas that are impacted by NAFTA, for example. Not only does infrastructure spending account for the predominant portion of our budget, 71 percent, but our infrastructure budget at the De- partment accounts for over 83 percent of the total Federal budget for infrastructure. The President demonstrated his special commitment to our Na- tion's infrastructure by fully funding key programs at ISTEA levels. Mr. Chairman, I know there will be lots of questions on this point, and let me address it head on. When we are talking about full funding, there has been some definitional disagreement among parties who talk about full funding. When we talk about full funding, we mean the primary highway and transit formula programs of ISTEA that affect every State and transit agency and are the major areas ofState and local decision making. We are proposing that the core categorical Federal highway grants be funded at $18,332 billion, up 4 percent from 1994. We are recommending that mass transit formula grants be at the au- thorized level of $2,865 billion, an increase of 19 percent over 1994. We urge your support ofthese recommendations.