July 25, 2001

Mr. Chairman, my name is David King. I serve as the Deputy Secretary for Transportation of the North Carolina Department of Transportation. My responsibilities include, ferries, aviation, bicycles and pedestrians, public transportation and rail.

I testify today on behalf of the States for Passenger Rail Coalition. The States for Passenger Rail Coalition is a grass roots organization of state departments of transportation. North Carolina is one of 21 states in the group ably chaired by Secretary Terry Mulcahy of the Wisconsin DOT. I serve as the Vice-Chairman and Ken Uznanski, Manager of Washington State's Rail Program, is our Secretary-Treasurer. Our growing membership is drawn from around the country and includes states with existing passenger rail service as well as those in the implementation stages. Large states and small states, we span the continuum of partisanship, varied interests and geography. We are quite a diverse group and we are a national group. Our strength is that it is a bottoms-up initiative, created and supported by the states because we share a common goal.

Five Basic Principles Provide The Foundation Of The States For Passenger Rail Coalition:

First, high-speed passenger rail complements existing intercity passenger and freight systems. Those systems, mainly road and air, are increasingly saturated to the point that safety and reliability are compromised. The states and the private sector are meeting the challenge by investing record amounts of money in those systems. Increasingly we have made the business decision that we receive a greater return on investment by increasing the capacity of passenger rail than by making alternative investment decisions. An example would be when the cost of adding a lane of interstate is much more expensive than improving a segment of rail.

Second, because intercity passenger rail trips tend to be 100 to 500 miles in length, many of the corridor development planning, analysis, and construction management tools routinely used at the state level apply. States plan, build and maintain interstate transportation corridor systems. We meet a myriad of environmental, planning, and safety standards. These are multi-million dollar projects we deliver daily.

Third, improved intercity passenger rail is attractive to states because it is incremental. Because our programs are publicly funded to deliver public services, states must make prudent investments. We recognize that new transportation infrastructure cannot be built overnight, but we need to start where we are today and work to improve those systems. Our stockholders, the citizens of our various states, have very high expectations.

Fourth, states recognize the importance of partners in this process. Because railroading is both a capital and labor-intensive business, we must have the full participation of the freight railroads and labor. The freight railroads own most of the assets outside the Northeast Corridor. Publicly and privately held railroad assets are currently shared in part with commuter agencies. Our emphasis will be to assure safety and reliability for our freight carriers and our customers. The burden is on the states to understand the needs of and work with our partners effectively.

Fifth, the federal government has a role to play in intercity passenger rail because this financial investment is in the national interest. Beyond the direct interest of the thirty-six states that comprise the eleven federally designated corridors, it also is in the interest of the Nation to have a network of vibrant, well built, well operated intercity rail corridors. These corridors contribute to a national commitment to improve mobility and the social and economic quality of life for all our citizens. States, however, cannot accomplish this laudable goal alone or even collectively; a national transportation system dictates a role for a federal partner.

Capital Formation Is An Essential Role For The National Government In Transportation Federalism.

The federal government fulfills a vital role in highway, public transportation, aviation and inland water transportation by creating a series of excise taxes and fees, placing them in trust funds and allocating those resources. As capital markets have become increasingly restricted, States and the Class I railroads are working together to develop public-private partnerships that can build increased capacity for rail passenger and freight operations.

We need a federal partner who will help us provide a stable, dedicated, long-term financial commitment for all modes of transportation.

More specifically:

• The complex, long-term nature of corridor development dictates a multi-year programming tool.
  
• The federal government, through the tax code, can provide a useful means of attracting and organizing larger amounts of private investment capital.
  
• States are making significant investments in intercity passenger rail. These funds can be used to match federal investments. In fact, the issue of matching funds deserves a more thorough and complete examination. States are creatively using a broad array of public and private resources to provide improved rail service. Both of these public and private matching efforts should be counted on the corridor level. Expansion of tools to recognize the value of matching efforts is to the common good and should be encouraged.
  
• The combination of federal, state and other funds can help achieve both economies of scale and funding levels attractive to investors.
  
• States are responsible for delivering a broad array of transportation services. This requires program stability and a reliable and predictable source of revenue. In large measure this stability is derived from the latest multi-year surface transportation bill "The Transportation Equity Act for the 21st Century" or "TEA-21."
  

House Bill 2329: "The High Speed Rail Investment Act Of 2001" Is A Financial Innovation For States And Their Partners.

The structure of HR 2329 benefits all levels of transportation federalism. For the federal partners it provides significant additional capital without unduly straining budget resources and the appropriations process. From the State's perspective this is a first step toward meeting the test of providing a stable, long-term, dedicated funding resource.

HR 2329 maintains the integrity of TEA-21 by protecting the highway trust fund.

States For Passenger Rail Coalition Supports Enactment Of House Resolution 2329.

I believe four areas merit perfecting language:

First: Project development; What constitutes a worthwhile project? Characteristics of an appropriate project need to be described in greater detail. For example, station construction is an eligible project on non-high speed corridors but not on federally designated high-speed rail corridors. While States already make good use of available funding to renovate existing stations, new station construction also will be necessary.

Second: Project selection; Is there a more effective means of ensuring that the most meritorious projects move forward? The speedy issuance of program regulations is essential to sustaining project momentum and development.

Third: Project management; States should have a deciding role in managing the projects. States and the Class I railroads have a proven capability to develop and construct large-scale transportation projects. That project management capability should be utilized.

Fourth: Project Funding; States should be encouraged to bring together funding from a variety of sources, including private railroads and commuter rail agencies. While HR 2329 allows private companies to make financial contributions, the bill contains language that seems to be in conflict with the objective of coordinating with commuter agencies. The Secretary of Transportation is directed to give preference to projects that "improve commuter rail operations" yet States and commuter agencies could be prohibited from using currently available federal funds for certain of these projects.

We do not believe that these are insurmountable problems. Individually and collectively we would be more than willing to work with the committee, the subcommittee and others to clarify the language to strengthen the bill.

Clarification can promote the success of the bill. A clear understanding of the roles and responsibilities of the partners will lead to prompt implementation. All the partners should focus on the strengths and experiences they bring to the effort. In this regard we view Amtrak as a partner whose primary strength is to operate passenger rail services. This bill should not be seen in any way as an alternative for Amtrak funding. Our National Railroad Passenger Corporation has a continuing need for capital investment at the levels provided in its authorizing legislation.

States Are Ready To Move Forward, Now.

In closing I want to assure the Committee that many states are ready to implement this legislation now. States have developed innovations in highway-railroad crossing safety, passenger equipment design and manufacturing, and in railroad signaling systems. States renovate and construct new multi-modal stations and help attract new development to our inner cities. States are making investments in commuter, intercity and high speed rail systems that serve state, multi-state and national interests. States make these investments in concert with local communities and commuter agencies, with Amtrak and the Class I railroads, and with adjoining states. The federal government should not expect the States to build a national high-speed rail system. States need federal leadership and a federal funding partner to undertake this task.

States also are working with business leaders to develop solutions to our congested highway and airport networks. For example, the Southeastern Economic Alliance (SEA) comprised of thirteen Chambers of Commerce from six states has been formed with the goal of achieving high-speed rail in the southeast. The leadership of the SEA already is having an impact on transportation decisions in out state capitols, and I believe business leaders around the country will mirror their example. Our business leadership is not motivated because they are a fan of rail transportation, nor do they simply advocate for more government. Rather, their impetus comes from a business analysis that our current transportation system has a serious weakness, and that weakness hampers our ability to compete in world markets. The lack of mobility is a tax on goods and services.

Development of a high quality, high-speed intercity passenger rail network can help mitigate congestion. Development of high-speed rail transportation will help stimulate economic growth by creating new jobs and by increasing mobility. Development of a national system of high-speed rail is predicated on a program of public-private investment that includes the active participation of States and the federal government.

We look forward to working with you to develop this critical program. Thank you for the opportunity to testify before you today.