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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.

TUESDAY, JULY 25, 1995

U.S. House of Representatives,

Committee on Transportation and Infrastructure, Subcommittee on Surface Transportation,

Washington, DC.

    The subcommittee met, pursuant to notice, at 10:02 a.m. in room 2167, Rayburn House Office Building, Hon. Thomas E. Petri (chairman of the subcommittee) presiding.

    Mr. PETRI. The hearing will come to order.

    We are meeting today to consider proposals to waive the local match requirements for certain highway projects in the District of Columbia, including H.R. 2017, the District of Columbia Emergency Highway Relief Act, introduced by the delegate from the District of Columbia, our colleague, the Honorable Eleanor Holmes Norton.

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    In general, the non-Federal share required for a Federal highway project is 20 percent of that project's cost. I think even the most casual reader of the local newspaper, the Washington Post, cannot help but be aware of the financial straits in this area, in the District of Columbia.

    D.C. now finds itself in a situation where it cannot provide the $20 million necessary to access over $80 million in Federal highway funds. No highway bids have been solicited in the past 20 months, and at a time when 70 construction projects normally would be underway, the only highway construction in progress is completion of a few old projects.

    If by August 1, just a week away, the District cannot certify that it will obligate its Federal highway funds by the end of the budget year, then that obligation authority will be lost to the District after August 1, and the money that the District would otherwise get will be redistributed to the other states in the United States.

    In response to this situation and to fears about the safety and integrity of certain bridges and roads, last month the Administration transmitted legislation to permanently waive the District of Columbia's local share for certain national highway system projects and other regionally significant projects approved in 1995 and 1996. And as I mentioned earlier, this month Congresswoman Eleanor Holmes Norton introduced H.R. 2017, which would waive the cost share requirements but would also require a pay-back of the amount waived by July 31, 1997, or the District's 1997 apportionments of Federal highway assistance would be reduced by the amount necessary for repayment.

    While the payback provision is certainly an improvement, there are still many issues our subcommittee must consider before taking any action on the waiver. A waiver specifically designed in response to the financial condition of a state has never before, to our knowledge, been provided.
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    While it's true that a few other temporary waivers have been provided in the past, all were general in nature, open to all states, not just specific to one, and were precipitated by changes in the Federal program, such as an increase in Federal program funding, or an increase in the Federal gas tax. The Federal Highway program is based on the principle of cost sharing. And we should be very wary of opening the door to granting individual waivers and eroding this basic tenet of our Federal program.

    I'm also interested in learning just how we've arrived at this situation. Certainly the District is facing a budget crisis, and many cities' services are suffering. But many people would question the priorities and spending decisions that were made when the budget for 1995 is $3,200,000,000, and yet the District is unable to provide about $20 million necessary to access $83 million in Federal highway funds.

    And I understand there are many other areas where the District has lost the opportunity to avail itself of Federal assistance. But this investment of local funds to leverage Federal funds to provide the essential city service of maintaining its roads and bridges seems like a basic and wise decision.

    I later learned as we prepared for this hearing that the District does not appropriate any funds for highway spending, but funds all highway improvements through the sale of general obligation bonds. Since the rating of D.C. bonds has dropped and no bonds were sold in 1995, the District in essence has no highway program this year.

    When I first heard of this waiver proposal, I immediately was curious as to the amount of Federal tax revenues collected by the District and how those revenues are disbursed. I was frankly amazed to find that unlike most other states, the District does not devote any of those gas tax and other highway revenues specifically to highways.
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    The District collects about $35 million in fuel tax revenues each year, an amount more than sufficient to cover the local match. When other vehicle use taxes are included, the number jumps from $35 million to almost $85 million of revenue for the District each year. And yet those funds are deposited into the general fund with priority given to meet the District's obligation to the Washington Metropolitan Area Transit Authority.

    I'll be interested in learning today what consideration the District has given to dedicating its highway user taxes for highway purposes, not only transit purposes, and what consideration will be given in the future so that we do not find ourselves back in this situation in a few years.

    This morning we'll receive testimony from Members of Congress from the Capital region, from District Mayor Marion Barry and other city officials, Federal Highway Administrator Rodney Slater, and a local highway contractor. I know many of those who are testifying had to rearrange schedules in order to be here this morning. But I and other members of the Committee feel it's essential to hold a full hearing on this proposal if we do move ahead with legislation.

    I'd now like to recognize my colleague, the ranking minority member on the Subcommittee, Congressman Rahall, for an opening statement.

    Mr. RAHALL. Thank you, Mr. Chairman.

    I want to first commend our distinguished delegate from the District, Eleanor Holmes Norton, for her determination in bringing this subject matter to the attention of this Committee and of our colleagues in the Congress. And while she's not a member of the Subcommittee, Mr. Chairman, she is a very valuable member of our full Committee, and I would hope with your permission that she does have an invitation to join us after the hearing here for the rest of the day's witnesses.
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    The issues raised by Delegate Norton's legislation affects more than just the District, and more than the neighboring states of Maryland and Virginia, represented here so ably by Representative Morella and Representative Davis, which supported on the basis of maintaining a sound regional transportation system. And that's what we're talking about here, is a regional transportation system.

    This bill does have national and international implications as well, for it is here at the Nation's capital that many American and foreign visitors alike come to witness the seat of the greatest democracy on the face of the Earth. It is unfortunate that in recent years some visitors have been greeted by violence, by crime, but at the very least, at the very least they should not be greeted by bad roads.

    In a sense, the pending measure can be viewed as another element in this Congress' effort to assist the District in addressing its financial crisis. Following on the heels of our enactment of the Responsibility Act, the question now comes as to whether temporary waiver of the District's matching share for Federal highway dollars is an appropriate next step.

    Time is certainly of the essence. For if Congress does not enact this bill or a version of it this very week, on August 1, the District will no longer be eligible to receive about $83 million in Federal highway funds.

    So I do look forward to hearing from today's witnesses, to hearing from our distinguished colleagues from the Washington area. There are many questions that remain to be answered, especially as to concerns over whether this highway funding crisis can be avoided in the future.
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    Mr. Chairman, I thank you for this opportunity and look forward to hearing today's witnesses.

    Mr. PETRI. Thank you. I recognize the Chairman of the full Committee, the Honorable Bud Shuster.

    Mr. SHUSTER. Thank you very much, Mr. Chairman.

    Mr. Chairman, I support the holding this hearing today because I think this is an issue that has to be very carefully evaluated. I'm deeply concerned about the financial plight of the District. The waiver of local matching funds for a particular state, or the District of Columbia, is unprecedented in our 39 year Federal Highway program. So this matter it's got to give us great concern and great pause.

    In fact, several other states have applied and asked for the waiver, and they've been turned down in every case, including Pennsylvania. I voted against my own State of Pennsylvania getting such a wavier because I thought it was bad transportation policy. So it makes it very difficult for me, having voted against my own State, in past years, to support this. However, I haven't closed the door because I know it's important to our colleagues, not only in the District of Columbia, but in surrounding Maryland and Virginia.

    One of my great concerns is, if we do this, are we rewarding financial mismanagement? I'm told the District has failed to apply, or in fact has already lost Federal funds for which it's eligible in several other areas, such as funds continued in the McKinney Homeless Act and the Department of Justice Law Enforcement grants. I'm told that the District doesn't know how many bills it owes, and that millions of dollars of bills are recorded months or even years after they've been paid.
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    In fact, D.C. vendors who provide goods and services to the city remain unpaid. The situation is so bad that earlier this year the Washington Post began to run transcripts of calls that are received from residents with complaints about services not rendered or bills not paid.

    I find it inconceivable that a city with a budget of $3.2 billion can't find the small amount needed, $20 million, of matching funds which are headed here. I am also amazed to discover that the District is one of the few entities that does not dedicate any of its gas taxes to highways.

    But I was truly astonished when I found out that the gas taxes paid by highway users are earmarked for transit purposes, and are allocated to the mass transit account or to the general fund. While D.C. motorists are paying a gas tax of 20 cents a gallon above the national average of 18 cents, the District's highway program is at a complete standstill, and all those millions of dollars that are supposed to be allocated to road contribution are allocated to mass transit.

    I'm also told that the various fees collected by the District on gas taxes and vehicle taxes total $84 million, more than four times the amount necessary to satisfy the District's cost sharing requirement. But perhaps most unbelievable is the final straw: that the entire D.C. highway program is funded each year from the sale of government bonds.

    So I have great concerns about this, and I'm looking forward to today's testimony. I was a member of the D.C. committee as a freshman in this Congress, and I voted for home rule. And you know, there are many times that I wish I had that vote back.
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    I also was interested in an editorial approving in the Washington Post, Bud Shuster's D.C. Roads Block. I was thrilled to see that the Washington Post writes that jobs can be created by undertaking highway projects. I was thrilled to see that the Washington Post thinks it's a good idea to spend money on highways.

    It seems to me we might have a new definition of pork barrel and a new definition of good government. Good government is when you spend 100 percent of Federal money to build highway projects in the District of Columbia. But it's pork barrel when you spend 80 percent Federal dollars with state matches to build highway projects across America.

    Nevertheless, better late than never, and I'm pleased to see that the Washington Post has come out in support of spending money for highways.

    With all those concerns, I'm looking forward to the witnesses today. Thank you, Mr. Chairman.

    Mr. PETRI. Thank you, Mr. Chairman.

    Do other members seek recognition? Ms. Johnson.

    Ms. JOHNSON. Thank you very much, Mr. Chairman. And to the Chairman of the full Committee, members.

    I know that my colleague, Representative Eleanor Holmes Norton, and others anxiously await the opportunity to deliver their case before this Subcommittee. I believe this waiver is necessary so that the District of Columbia can move forward and repair the deteriorating infrastructure on the streets used by commuters and 20 million annual visitors.
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    It would be a tragedy if the District lost the ability to use approximately $83 million in Federal funds this year, and it is my understanding that the $87 million in Federal funds from the 1986 budget also is in jeopardy. This waiver will provide economic viability for a government that is facing severe fiscal crisis. It is my hope that this Congress will allow the District to plan, plan, build and operate its infrastructure which would provide a coordinated, reasoned approach to meeting its mobility needs.

    Most of us are from cities that are part of counties and states, and the cities depend on county and state government for subsidy. We are today listening to people who represent a city that has to be its own county, it's own state, as well as that city. So responsibilities are tripled that that we have back home.

    I would urge my colleagues to listen with an open mind. Thank you.

    Mr. PETRI. Thank you.

    Mr. Shuster.

    Mr. SHUSTER. Thank you for recognizing me again, Mr. Chairman.

    I've just been notified I've got to get to the floor right away to manage a bill which is coming up soon. I want to emphasize that I will very carefully review the testimony here today, and I deeply regret that I've got to leave, but I've got to be on the floor to manage this bill. So I'll be back as soon as I can.
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    Mr. PETRI. Thank you. Can't be two places at once.

    Any other members wish to make opening statements? Mr. LaTourette.

    Mr. LATOURETTE. Thank you, Mr. Chairman.

    I appreciate very much your holding these hearings on proposals to waive the D.C. matching share for Federal aid highway projects. This is an important issue, because as the Congress looks to bring back fiscal stability to the District, we need to ensure that this problem never happens again.

    As a member of the D.C. Subcommittee under the able direction of Chairman Davis and ranking member Norton, I am acutely aware of the city's fiscal crisis. I would like to see the city succeed and become the shining city on the hill that it has the potential to be. We all have a stake in a stable District of Columbia, and from a purely selfish standpoint, if we are able to achieve that goal, it will make the job of everyone in this room a lot easier.

    However, like you, Mr. Chairman, and like Chairman Shuster, it worries me that the District has a $3 billion budget, and it doesn't include a provision for meeting a $20 million match requirement. As you know, granting waivers is rare, in fact, it's almost unheard of. In the case of this city, I think we should use the utmost and extreme caution, as sadly, none of us know the full extent of the District's financial woes, due largely to rather deplorable bookkeeping methods. This is the Herculean task left to the financial control board.

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    Will the District ever have the wherewithal to repay the funds? I must say that when you've got a city government that isn't even sure of how many people are on the payroll, you have to have some doubts about the ability to repay. I'm also concerned that if we set this precedent, we will be opening the floodgates to similar requests. How will we handle subsequent request, and can we say yes and grant extraordinary conditions in this one instance only?

    Should we elect to do this, we will need to place the most stringent, air tight safeguards in place, be that specific language or other restrictions. However, because of the severity of the financial crises here, I don't know if we can ever craft any agreement that will be a sure thing.

    Mr. Chairman, I want to thank you for your attention to this matter. I urge the panel to weigh all the information we have available before we come to any conclusion. And I would like to add my voice in praise to the ranking member of our Subcommittee on the District of Columbia, Delegate Norton, for her continued efforts on behalf of her District.

    Thank you, Mr. Chairman.

    Mr. PETRI. Thank you, and we look forward to your active involvement as we attempt to work this problem through.

    Mr. Quinn.

    Mr. QUINN. Thank you, Mr. Chairman.

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    I want to join the others in welcoming our colleagues here today. As Mr. Shuster pointed out, I think some of us will be coming and going during the hearing. That doesn't mean that we're not interested, but that we'll certainly be involved as much as we possibly can.

    I also want to welcome the Honorable Marion Barry, who will be here a little bit later, and my good friend Rodney Slater, who's worked with me very closely these past few years on issues affecting not only my district, but the country. So welcome to everybody on all the panels. Rod, it's good to see you.

    Thank you, Mr. Chairman.

    Mr. PETRI. Thank you.

    Other opening statements?

    Mr. POSHARD. Mr. Chairman, I'd like to ask unanimous consent to submit an opening statement for the record.

    Mr. PETRI. Thank you. So ordered.

    [Mr. Poshard's prepared statement follows:]

    [Insert here.]

    Mr. PETRI. Before we begin with our first panel, without objection, also a statement of David Clarke, the Chairman of the D.C. City Council, and a statement by Jeffrey C. Steinhoff, Director of the Planning, Reporting and Accounting Information Management Division of the General Accounting Office on the financial condition of the District will be included in the hearing record.
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    [Mr. Clark's and Mr. Steinhoff's prepared statements follow:]

    [Insert here.]

    We now turn to our first panel. And we are honored to be joined by a number of our colleagues, the Honorable Eleanor Holmes Norton, representing the District itself, joined by the Honorable Constance Morella and Thomas Davis from Maryland and Virginia, and I believe Representative Wolf may be joining us. But we'll proceed.

    Would you like to begin, Ms. Norton?


    Ms. NORTON. Thank you, Mr. Chairman.

    I'd like to begin by thank you, Mr. Chairman, for so expeditiously convening this hearing. As a member of the full Committee, and a former member of this Subcommittee when the ISTEA legislation was passed, I know the kind of preparation it takes to prepare for a hearing on such short notice. If Chairman Shuster were here, I would thank him for his patience, as we struggle to find an appropriate way to bring this matter before the Subcommittee and the Congress.

    The details about the District's program and how it got into, how it got where it is and what it's going to do about it will of course be presented by the appropriate officials. I'd like to request that my full statement be put into the record and I be allowed to summarize my remarks.
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    Mr. PETRI. It will be.

    Ms. NORTON. First, most of the streets we're talking about are streets which are more traveled upon by your constituents and commuters than by the residents of the District of Columbia. I'm afraid that my residents won't see much difference on their own neighborhood streets, because most of this money will go to the so-called gateway avenues and streets used by the 20 million visitors who come into this town every year.

    In order to respond to Chairman Shuster's concern, I have drawn my bill with full repayment and I believe that that is not a matter about which you should have any doubt. The District operates with a control board type authority in place. And I think it can be said without any doubt that that control board will see to it that any promises made are promises kept.

    The District is going through a severe financial crisis, or it would not be here today. The District does not have the cash to pay for its daily operations, including trash collection. It has had to go to the treasury in order to get a loan. A city in that position would not be able to come up with the matching grant. But it will fully repay this money and build this into its budget.

    What we are asking here in substance is not different from existing precedents. And my testimony contains a long list of jurisdictions from 1975, 1982 and 1991 who received similar treatment. The difference is in the time that they applied for and received the treatment. And it's been stated that it didn't come because they didn't have the money. We don't know why it came. They could come, and they got it.
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    The fact is that the District needs it, because it doesn't have the money and it is different from every other jurisdiction that has sought this relief. The District does not have a state to go to. All it has is the Congress of the United States.

    Imagine if the large cities of your state had to pay the entire bill, local and county shares of Medicaid, which is driving states into bankruptcy, for example. Imagine if all the unfunded mandates Congress has dealt with this year had to come from your city alone. And I think you will understand that while the District accepts responsibility for its financial state, that the Congress is not blameless in this regard.

    The District also seeks this waiver in light of the fact that the Congress is quick to remind the District when it seems elementary democracy that it is not only the District of Columbia, it is the capital of the United States. We are asking the Congress, which reminds us that this is everybody's capital, to also be aware that at least partially the capital of the United States is everybody's responsibility.

    May I say in closing how much I appreciate the cooperation that the District, during this crisis, has received from committee chairs and from the new Republican majority, from my own Democratic caucus. The new financial authority bill was written in cooperation with the Mayor and the city council and preserved home rule and the power of elected officials. This could not have happened unless the Republican majority itself respected home rule.

    Speaker Gingrich has appointed task forces that are as we speak working in five areas—education, crime, taxes, housing and welfare reform—to assist the District. And in a particularly unprecedented act, the Speaker will be featured at a town meeting next Wednesday where he will receive the views of District residents themselves on the future of the city.
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    Therefore, we are seeking this waiver with full repayment guarantee as an additional contribution, this time from this committee, and are asking that this waiver be granted as quickly as possible, because we are so close to the July 31 deadline date when all of this will become moot.

    Again, I appreciate your courtesies, and thank you very much for the consideration you have given us.

    Thank you, Mr. Chairman.

    [Ms. Norton's prepared statement follows:]

    [Insert here.]

    Mr. PETRI. Thank you, Representative Norton.

    Representative Morella.


    Mrs. MORELLA. Thank you, Mr. Chairman, and members of the Committee, and I appreciate the opportunity to testify before you today on this important proposal that will help the District of Columbia make much-needed improvements to its streets and highways. And again, I add my voice to those who would say that you did this very promptly, quickly, and it's very much appreciated.
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    I also want to add accolades to Eleanor Holmes Norton, who has done such a yeowoman's job of directing us in Congress in terms of what the needs are and the resolutions, and my good friend who chairs the Authorizing Committee for the District of Columbia, Tom Davis, and of course, Frank Wolf, who chairs the Appropriations Subcommittee on Transportation.

    As you know, I am a co-sponsor of H.R. 2017, the District of Columbia Emergency Highway Relief Fund. And members of this region also are co-sponsors. And I believe kind of in paraphrasing John Dunn's no man or woman is an island, we are all connected to each other, and I think this is reflected with this bill. The District of Columbia does not exist in a vacuum. The economic well-being of the District of Columbia affects Maryland, Virginia, it affects the entire Nation.

    As David Winstead, who is the Maryland Secretary of Transportation, pointed out in a letter to me, he said the District's ability to make much-needed improvements to its streets and highways can make a major difference in the quality of life for the thousands of Marylanders who travel to the District each day for work purposes or recreation. And this also applies to the thousands of Virginians who work in the District, as well as the 19 million visitors from across the country and around the world who visit the Nation's capital each year.

    The Senate is also considering legislation to allow the District to repay its matching share of Federal highway funds by September 30th, 1996. As I previously mentioned, the Maryland Department of Transportation has indicated its very enthusiastic support for this bill.

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    I can understand the reluctance of the Chairman of the full Committee to allow the District to delay repayment of its local matching share of Federal highway funds. Certainly this action is unprecedented. But it is critically important, and the District of Columbia is in a unique situation. I want to assure this Committee that I am committed to working with the members of the Committee under your leadership, Mr. Chairman, to assure that this action does not occur again.

    Again I reiterate, I'd like to add my strong voice in this very brief statement on behalf of this legislation. Thank you again for setting up this important hearing, and I appreciate what this Committee will do to help the District of Columbia and the Nation.

    Mr. PETRI. Thank you.

    Representative Davis.


    Mr. DAVIS. Mr. Chairman, members of the Committee, I'd like to commend the Chairman for calling this timely hearing, and I appreciate the opportunity to address the Committee regarding this deferred payment proposal for the District of Columbia.

    Anyone who drives a car in Washington, D.C. knows this city needs highway money. Practically every street and highway in this town has potholes or broken pavement. Many of the bridges are in dire need of repair or replacement. It seems like every other bridge in the city has at least one heavy metal plate stuck in the pavement to cover a hole in the bridge. The road infrastructure in the District is falling apart. The $82 million in Federal Highway Trust Fund money is absolutely vital if the city is to reverse this trend.
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    But as the Chairman and members of the Committee are well aware, a decaying transportation infrastructure is not a unique problem to Washington, D.C. Many other cities have similar problems. So why should this city receive a total waiver of fiscal year 1996 or 1997 matching fund requirements to get their highway money, as the administration has asked for?

    The District is in this position because of years of fiscal mismanagement. The city could not sell bonds to raise the capital necessary to meet the 20 percent match requirement, because its bond rating is so poor. I don't think we want to reward the District's fiscal mismanagement by waiving the share requirement for 2 years. As the Chairman has pointed out, this would be unprecedented in the 39 year history of the Federal highway program, and it's simply the wrong direction to go in.

    However, I come before the Committee to support H.R. 2017, the District of Columbia Emergency Highway Relief Act, sponsored by Delegate Norton, and which I have co-sponsored with members from the region. This bill asks for a 2-year waiver of the District's matching share requirement but repayment by the District would be deferred until an effective repayment scheduled could be worked out.

    The District's in a budget crunch, one of its own making. But Mr. Chairman, we've acknowledged the mismanagement of the past that brought the District to this position, and we have put in place a control board to bring financial responsibility to the city's budget. That board is in operation, and has already taken aggressive steps to get control of the situation. I can assure the Chairman that there will be budgetary discipline in the future.
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    Mr. Chairman, we're trying to respond to the immediate problem. The District will lose its Federal highway funding by August 1 if we do not act. This waiver is part of the solution we're trying to reach in the District. We're not penalizing the city for past sins by denying desperately needed highway funds. We are deferring payment of the matching share, recognizing the city's immediate cash crisis and structuring a repayment program.

    I would also note, this is not completely unprecedented. I understand that in 1975 and 1987 and 1991, Congress permitted a general delayed payment waiver to all states. And the District of Columbia is not a state.

    In fact, the Constitution gives the Congress a unique oversight function for the District of Columbia that makes it different from other states. In many ways, we function as the state and the District of Columbia being the city, for the city.

    So we have a unique responsibility, I think, to step up to the plate in this case. And I think what Mrs. Norton has proposed is a disciplined responsible approach.

    In granting this waiver, I'd certainly understand if the Committee feels compelled to impose substantial financial restrictions that ensure timely repayment. The Committee might also look at requiring the District to create some kind of a budget fund for highway financing, so we won't find ourselves in this position again. A waiver of this type certainly should have strings.

    I'd ask, however, that the D.C. control board be included in developing a repayment program or a transportation financial program. The board is now trying to get its arms around the total fiscal picture in the District. This is one more component to be integrated in the total financial solution. And I believe some early consultation could be tremendously useful in developing a program that meets the District's needs and results in responsive repayment to the highway trust fund.
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    Finally, I want to point out that this is a regional and a national problem. Hundreds and thousands of people in this region drive through the District daily, and millions of tourists travel to Washington. They have a right to visit the Nation's capital without having their cars swallowed by a pothole, because the District government was not managing its budget properly in the past. We are now moving toward a solution to the District's problems. This proposal and this bill is one more step down that road, and I would urge the Committee to support it.

    Thank you.

    [Mr. Davis' prepared statement follows:]

    [Insert here.]

    Mr. PETRI. Thank you.

    Representative Moran.


    Mr. MORAN. Thank you, Mr. Chairman.

    The District, as my friends and colleagues have said, can't afford the non-Federal matching that would be required to do the necessary road repair. But neither can we afford to let that road repair go undone. In an example, it occurs to me, it was 2 years ago, Congressman Marty Lancaster from North Carolina was one of those tens of thousands of people who use the Southeast Expressway. About 75 percent of the people who work up on the Hill at some point use that Southeast Expressway in order to get to Capitol Hill.
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    And yet we all experienced this requirement to try to evade the potholes, I think, is too generous and limited in expression. We have these major chasms in the road that you tried—craters, craters is the word. And on a couple of occasions Marty was unable to avoid them, and I think he had to go back and get his whole chassis aligned. He wrote several times to Mayor Kelly at the time.

    Now, this was not a road that D.C.'s residents particularly cared about. Because while it is a major thoroughfare, it exists really not for the purpose of D.C. residents, but for the purpose of people who go into Capitol Hill who live in the suburbs.

    But the District of Columbia government, because of pressure from the Congress, made it a priority and in fact got it fixed. But that's the kind of road repair we're really talking about. It is not just for D.C.'s residents, as would occur in most urban areas of the country.

    But it is because the District of Columbia is the Nation's capital, it is in a special jurisdiction, and it has special requirements. And I think it is particularly vulnerable to the kinds of pressures that are exerted upon it from people who don't necessarily live in the city. And I think it's only fair that we take that into account.

    But it goes far beyond the transportation system that is necessary to get people in and out of the city. We're talking about some major economic issues. We're talking about the need to employ people who otherwise would not be employed, but who have skills and expertise, and who we need to keep available to get this road repair done. I don't think that the region or really in many ways the country, because we see two to three million visitors every year use this road system, can afford to go an entire year without the road repair being done.
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    So I think it's a responsibility we have to accept. And the fact that it will eventually be paid back and we have the commitment from the Chairman and the ranking member to see to it that that's done, I think it's the appropriate thing that we make this special exception in this circumstance, because of the fiscal conditions and other factors that really have to be considered. So I would strongly urge the Committee to allow this legislation to go through, of which we are all co-sponsors.

    And I appreciate the opportunity to make our case this morning. Thank you, Mr. Chairman.

    [Mr. Moran's prepared statement follows:]

    [Insert here.]

    Mr. PETRI. Our last panelist is a member of the House who's deeply involved in our Nation's transportation issues, as well as the transportation issues of this region, our colleague from Northern Virginia, Frank Wolf. Welcome, and thank you for submitting a written statement in advance.


    Mr. WOLF. Thank you, Mr. Chairman. I apologize for being late. We were in full committee markup.
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    I agree with what they said, it's the Nation's capital. We want it to be a city on a hill, the city can be better than it is, and I think this would really help. Second, a lot of people visit from all over the world and all over the country. So it isn't just for the citizens here, it's for the citizens of the country.

    Third, they don't have a state capital to go to. They don't have a Richmond, they don't have an Annapolis. And that's why they need this legislation.

    Lastly, I would hope the Committee would move this legislation quickly. Ideally, pass it out, bring it up on the suspension, so it can be passed before we go home for the August break. You don't want to lose the construction season. And with that, I thank you for the hearing and strongly support the legislation, and I'll just submit my statement.

    [Mr. Wolf's prepared statement follows:]

    [Insert here.]

    Mr. PETRI. Thank you very much.

    Are there questions? Representative Rahall.
    Mr. RAHALL. Not at this time.

    Mr. PETRI. Mr. LaHood. Mr. Hutchinson.

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    Mr. HUTCHINSON. I have only one question, and I thank the panel and I agree with so much that was said. I do believe that our nation's capital is a special place.

    But I have this question. In my district in Arkansas, we have one of the most dangerous highways in America by all accounts, with one of the highest fatality rates. It kind of snakes its way through the Ozark Mountains. We have millions of visitors that travel on that highway through our beautiful Ozarks.

    In the State of Arkansas, we pay our teachers less than almost any other state in the Nation. We're ranked at the bottom in most economic categories as opposed to the other states and the District. During my time in the Arkansas State legislature we raised gas taxes twice in order to pay for road construction and to make our state match against Federal funds.

    So the people of Arkansas are doing with less in order to build their roads. And my question is, how can I go back and with a clear conscience face my constituents and say, we're going to grant a waiver for the District of Columbia, when that kind of sacrifice is being made by the citizens of my State in order to make their match?

    Ms. NORTON. I appreciate the gentleman's question, and I appreciate the difficulties that might be raised. But I really do not believe that your residents or residents of anywhere in the United States would object to what amounts to a loan to the capital of the United States to repair roads on which the people of the United States travel.

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    It isn't simply the number of people who come to the District. We are dealing with a unique city, and a unique responsibility of the Congress of the United States that it does not have to any other city or any other state. The quid pro quo it has required from the District, forbearing that responsibility, is considerably less democracy than the citizen of Arkansas or that a state or any territory have. We are told this is everybody's capital.

    The District has never shirked in coming up with its own funds. When you put our Federal taxes with our local taxes, we are the most highly taxed jurisdiction in the United States. We are third per capita in Federal income taxes, and yet we have no representation, voting representation in this body.

    And we have no representation in the Senate at all. The city has shown a great willingness to tax its own citizens and of course, this has driven it into insolvency. Because Mr. Shuster was insistent that even though it is the capital of the United States and even though the Congress has a responsibility and reminds us constantly that it has that responsibility, at his insistence we have in essence asked for a loan and said we would pay it back.

    I don't think that there is a country in the world which would say to its capital city, we won't lend you some money in order to repair your roads where all the Nation's people travel. I don't think that England would do that to London, and I do not believe that France would do that to Paris, and very frankly, I do not believe that the United States of America will do that to the District of Columbia.

    Mr. DAVIS. I will be happy to give you my judgment. The city is not getting one additional penny out of this than they would otherwise be entitled to. As you know, we're simply giving them time to repay it. Because after years of mismanagement, and probably failure by previous Congresses to oversee the District financially, which we're supposed to do under the Constitution, we have a fiscal crisis.
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    But this Congress can take some pride in the fact that we are now exercising that responsibility with the control board. And this is an effort to get the District back on its feet, to bring fiscal responsibility back to this city, but at the same time, not let its infrastructure deteriorate during that time, which would penalize all Americans who come here as well.

    But it doesn't give the city an extra penny. This is just money that otherwise, they would be entitled to otherwise, and they will have to pay the match back.

    Mr. PETRI. Mr. Franks, any questions? Mr. Latham.

    Mr. LATHAM. Mr. Chairman, I guess I just have some real reservations. Basically you're saying that because we've had mismanagement in the past that we should now make a special exception.

    Would you suggest to someone like Orange County, California, I mean, because of financial mismanagement, should now get a special waiver or exemption? And the idea that there are potholes here, I mean, there are potholes all over the country. And we're fighting very hard in this Committee for every dollar possible to help build, and infrastructure is not exclusive to Washington, D.C.

    Mr. DAVIS. The Constitution gives the Federal Government and the city a unique relationship that Orange County or Fairfax County or no other jurisdiction has. And it does not give the city the right to vote in Congress. They do not have the representation that other jurisdictions have as well. We have a unique responsibility of oversight for the city here that the Constitution gives us that we are exercising.
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    And I will be the first to tell you that I think there have been, in terms of that oversight and the way Congress and the city have conducted themselves in the past, there have obviously been shortcomings. I think we can take some pride that this Congress is stepping up to the plate and trying to fix these solutions. And this is part of that overall fix, that over time it's going to be better for everybody.

    Mr. LATHAM. Well, if you're talking about state level, then, what in the future is going to stop Iowa or California or whatever coming and saying, making a very good case for special—

    Mr. DAVIS. Well, that's happened three times in the past. It happened three times in the past—

    Mr. LATHAM. Not for specific states.

    Mr. DAVIS. No, but it has in a general waiver because of financial shortfalls throughout the different states. But this is a city. It's not a state, I would remind you. But in 1975, 1987 and 1991, we granted a general waiver.

    Mr. LATHAM. You make the relationship that the Federal Government is in fact sort of acting as a state to the—right. And that's my point. I mean, I think it's, I'm very concerned about the precedent, and to reward for financial mismanagement, I have a real problem with that.

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    Ms. NORTON. If I could be allowed a response as well, because I can understand the concern. I do not accept the notion, however, that this is the first time anything of the kind has been done. The fact is that there are a ream of states which happened to come at a certain moment in time when they came together who in fact asked for and received the same kind of consideration.

    It cannot be said that the reason they came forward didn't have anything to do with their financial state or mismanagement. All that can be said is that in 1975, for example, when matching share waivers were granted by our Committee that the reasons didn't have to be laid on the table.

    But Arizona, California, Connecticut, Florida, Illinois, Maine, Maryland, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Utah, Puerto Rico and the Virgin Islands in fact got this special consideration. The Committee has always been generous in understanding that it is counterproductive to allow these funds which after all are paid at the gas pump to simply revert and leave the highway money unused or pass it on.

    This Committee will obviously see this as an opportunity to take corrective steps to see that this does not happen again. Probably the control board would have gotten to that over time. They probably wouldn't have gotten to it first up. Clearly, the Committee is going to build in safeguards so that this cannot happen again.

    And I may say that they are probably the kinds of safeguards that will not keep other states from coming forward when there are other highway bills to ask for the same kind of consideration we're getting here. Because they won't have these same kinds of safeguards put on them.
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    Finally, let me say that we're dealing in the end with a bunch of innocent bystanders. Roads are not like city government, where you may be dealing with city workers who don't want to lose their jobs. There are millions of people who come in every year, and there are people who live in the District of Columbia who had nothing to do with financial mismanagement but have to take all the pain from all the roads that are disheveled and not in good condition. I think that the Congress, for all the criticism, much of it is justified, needs to own up to a national responsibility if it regards this as the Nation's capital.

    Mr. LATHAM. I think any community can make the argument that they are unique. And I think Washington, D.C. is unique in that they do get that much tourist business into the city, that they double in population every day with people coming in to work and spend money in the community here. And to make the argument that somehow that Washington, D.C. is not getting its fair share today is simply ludicrous.

    Ms. NORTON. I've never made that argument. The District has gotten its fair share. But it is unique constitutionally. And in that way it's uniqueness cannot be compared to any other jurisdiction in the United States.

    Mr. LATHAM. It is very unique as to the influx of money coming from all over the country and the world every year, also.

    Mr. PETRI. Mr. Latham—

    Mr. WOLF. Mr. Chairman, if I could just comment, too. I think it is unique solely by the Constitution. Second, the city has been mismanaged for so many years and it's the Nation's Capital. And that's why I've been so pleased that the Speaker wants to do things to help the schools here.
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    I had a daughter who taught in the District schools. They are terrible. And this Congress, the Republican party, is going to demonstrate that we care deeply about the people that live at 14th and Belmont and places like that.

    Thirdly, it is unique because there is a D.C. committee. It's the only city in the country that has a committee. And Mr. Davis is the Chairman of it, that oversees it. Fourth, it's their money. And we're not giving them any more. And lastly, I don't want them to ever be a state. I think they are a city. They don't have a Richmond to go to, or they don't have an Annapolis to go to. Since they are a city, and it's the Federal city, and it's designated in the Constitution, I think that is the difference. I would agree, I don't think we should waive it for other states.

    But for the District of Columbia, it's an opportunity for the city. And also by doing this, I think the Republican Party, if I can put in a plug for our party, will have greater credibility in the city to demonstrate, as we try to make other improvements in the schools, as we try to do something about Lorton Reformatory, and other things, things that haven't been dealt with for years by others, we finally are going to do something positive about it. And this will be a very positive step.

    Mr. PETRI. Mr. LaTourette.

    Mr. LATOURETTE. Thank you, Mr. Chairman, and Mr. Wolf, the panel had great unanimity until you sort of mentioned that you never wanted D.C. to become a state. And I saw Ms. Norton sort of blanch at that point.
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    Mr. LATOURETTE. I want to praise Ms. Norton for the drafting of this bill, and in particular Subsection 2(c) that deals with the repayment obligation, and gives a drop dead date of July 31, 1997. And while I think that's a vast improvement from a straight proposal to enact a waiver, and I have to give Mr. Davis credit for picking up Washingtonese and not calling it a waiver, I think he called it a deferred payment, and I appreciate that, too.

    The concern that I have is that when we talk about July 31, 1997, thereafter, as I understand your bill, there will be deductions from future allocations to the District if they don't repay the money. And I think that the task of the Committee is not only to make a consideration of this request, but say how are we going to prevent it from occurring again. And I would appreciate any thoughts that you all have about how we do that.

    For instance, Virginia and Maryland have trust funds. Most states have trust funds. They don't leave all of their gas tax in a mass transit account. They put them for highways. And whatever proposals you would have on that question, I'd be interested in as well.

    Mr. DAVIS. I don't have anything off the top of my head. I think it's a good suggestion. In my opening remarks, we talked about very tight strings on this to ensure it. Not only is this particular waiver, if I can use your term, or deferred payment, secured by the Federal payment, but I think that strings in terms of that gas tax and so on may be appropriate in this case to ensure that we never face this problem again.

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    Ms. NORTON. Mr. LaTourette raises an important point. And the District is already in the process of developing a mechanism to keep this from happening again. And when they testify, I think that you will see that a satisfactory way is being found.

    Mr. LATOURETTE. Thank you. And the last observation I would like to make, Mr. Chairman, if I ever got into trouble and needed some help, I'd seek out Ms. Norton's services, because she's certainly a fighter and a champion for her District.

    Mr. PETRI. Mr. Tate. Mr. Martini.

    Mr. MARTINI. Yes, thank you, Mr. Chairman.

    I guess from listening this morning to some of the questions of the other members of this Committee, I think quite frankly we can each make an argument as to why this type of a waiver wouldn't be appropriate to a particular circumstance in our states or in our communities, and then obviously some comments have been made with respect to the Nation's capital having the advantages of revenues being generated by tourists, etc.

    But overall, I think we have to recognize the unique constitutional relationship between the District of Columbia and the United States Government. And I accept that. And I think Mr. LaTourette just touched on really what I was going to ask that that you've begun to answer, and that is, what the appropriate safeguards will be in place for those of us who are inclined to support this bill.

    I think the biggest question we will have to answer to our constituents are, how do we avoid this happening down the road, what safeguards are in place to assure that, what oversight measures will be implemented for this and perhaps other unique circumstances with the District of Columbia as they get through this fiscal crisis.
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    So I think overall those are the types of, that's the type of information which I know I would like to have and have the benefit of, as we go through this process in the next few days and address this bill. It will give us a certain comfort level which perhaps I don't have right now, but I think down the road, if we're going to support this, that's the kind of specifics I know I'd like to have and share with my constituents.

    So thank you very much, and thank you for all your helpful testimony.

    Mr. PETRI. Thank you.

    I'd just like to underline that we can spend a lot of time going through the past, but that's not going to help us deal with moving forward in a constructive way. We're looking for ways of making sure this doesn't happen again and improving it and being sure that we keep faith with our own constituents as good stewards of Federal transportation dollars.

    Just two points here that will help us. Why 1996 as well as 1995? Why not just 1 year in your bill?

    And second, in addition to some sort of trust fund concept, as Maryland, Virginia, and other states have to ensure that the money is there to match in the future, out of the $85 million that is being paid in by motorists for transportation services to the District of Columbia now, nearly three, four times what's needed for the match, do you think it might make sense to set aside a portion of the Federal payment which is currently about $650 million a year to the District of Columbia, so that $25 or $23 million could be used and would be guaranteed to be used for the match to leverage these other Federal dollars into the District? Could you comment on those?
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    Mr. DAVIS. Could I address the first issue? In terms of 2 years other than through, although Ms. Norton drafted the legislation, that gives the flexibility, as I said in our testimony, we need to talk to, or I think it would be helpful to consult with the control board, who is trying to get the city to balance its budget as quickly as possible without the severe draconian cuts that would put the Nation's capital at risk.

    And so whether it's needed for 1 or 2 years, I don't know the answer to that. But our control board legislation gives them an additional 3 years to balance the budget. So from that perspective, we just want to work it out consistent with the control board legislation, which the Congress has already passed.

    Ms. NORTON. Mr. Petri, I prefer to have a more thorough and accurate answer to what I regard as an important technical question answered by the Mayor and his representative who are come on next.

    Mr. PETRI. Good. As you can see, there's a lot of concern. I think there's a general willingness to try to work this problem out. But there's a lot of concern that we do it in a way that will actually be responsible.

    Mr. LaHood.

    Mr. LAHOOD. Mr. Chairman, I just want to make a comment that I think that probably Ms. Norton and Mr. Davis have spent more time than they care to on issues related to Washington, D.C., the capital city, I'm sure that when Mr. Davis was running for election to the Congress, he never dreamed that he'd be involved—
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    Mr. DAVIS. That's correct.

    Mr. LAHOOD.—in these issues. And I agree with those that have said that Ms. Norton is a passionate advocate for her constituents.

    I want to make one other point, though. There is another person in the House who has been a very passionate advocate for the District of Columbia who gets very little credit for that, and that's the Speaker of the House. I don't know of another person, besides you, Ms. Norton, or Mr. Davis, who has taken such a keen interest in the District of Columbia than the Speaker of the House. And I know that from time to time he becomes a whipping boy from some of our friends on the other side of the aisle as being insensitive or not caring.

    And I want to make the point that Speaker Gingrich has taken the interests of the District to heart, and has spent a great deal of time, and I know that you know that, but I want to go on the record and say that. He cares a lot about the people of the District, and he cares a lot about the District and improving what happens in the District.

    And so on the record I want to say that, because I think it's important. I don't know of another speaker that's taken the interest in the District of Columbia that Speaker Gingrich has. He is second only to you, Ms. Norton, and to the work of Mr. Davis. And I compliment both of you. But I also want to make note of his interest. Thank you, Mr. Chairman.

    Mr. PETRI. Thank you.

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    Mr. DAVIS. Let me just add on this, the Speaker has been a great inspiration. I think passing this will help him with what he is trying to do with the city, in trying to work something out in this legislation. But he has been an outstanding leader in this area.

    Ms. NORTON. I think that matter needs to be made for the record, and that as the representative of the District in this body, I need to go on record as saying that the Speaker has been extraordinarily helpful to the District. There have been times when there was nothing else I could do. I have gone to him. He has acted in an utterly and completely bipartisan way.

    You are right, that he has gone beyond what most speakers have done. When the city collapsed around him, he took it as part of his mission as Speaker to, as he said it, go beyond the control board and take proactive steps to make the capital of the United States an urban jewel. He has committed funds, he has committed time, he is going into the District for a town meeting next Wednesday.

    This is a Speaker who cares about the capital of the United States, and clearly believes it is a Federal responsibility and has stepped up to that place in a most extraordinary way. I am most grateful for the bipartisan interest that the Speaker has shown in the capital.

    Mr. PETRI. I'd like to thank this panel for your testimony here today, and we'll continue working with you to try to perfect the legislation that's the subject of this hearing.
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    The next panel is made up of a person who really needs no introduction, the Honorable Marion Barry, who's the Mayor of the District of Columbia. And he's accompanied by Michael C. Rogers, City Administrator, and Larry King, the Director of the Department of Public Works.

    Mr. Mayor.


    Mayor BARRY. Thank you, very much, Mr. Chairman, and members of the Committee. This is my first appearance before this Committee, and I'd like to thank you, Mr. Chairman, and the members of the Subcommittee on Surface Transportation for inviting us to appear before you.

    With me is Larry King, the Director of the Department of Public Works, which has the operational responsibility for everything that you see above the ground in terms of highways and traffic signals and stop signs and also below ground, in terms of our water and sewer system. Mr. Rogers is with us, he is our City Administrator. He is preparing a package to send over to the council involving our 1996 budget. Moreover, I think I can ably represent the views of this administration.

    Let me thank our own Congresswoman, Eleanor Holmes Norton, for a diligent, hard driving, hard charging and passionate commitment to the District. She's always been there with us and for us.
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    I also want to thank Tom Davis. I'm sure when Congressman Davis ran for this office, he had no idea that anyone would ask him to take on this difficult task of chairing the Subcommittee on the District of Committee. And he's certainly been our friend. I've known Tom Davis over 2 years, when he was on the Board of Supervisors in Fairfax. And he and I have, we talk frequently about the District, and I want to commend him and Frank Wolf for his steadfastness on our roads, and the Congresswoman from Maryland, Congresswoman Morella, and Congressman Moran, as far as our regional partners are concerned.

    Let me urge the members of the Congress not to judge the District of Columbia based on what you read in newspapers or what you hear on television or what you hear on the radio. I'm sure, as elected officials, if your constituents were to judge you based on what they hear on the radio or see on television or read in the newspapers, you'd have a very difficult time trying to convince them of your worth in the Congress.

    Let me set a couple things straight here. Congresswoman Norton alluded to the fact that we are unique in terms of our governmental structure as well as we are constitutionally. We have no state to go to. Yet we have hundreds of state functions. For instance, people talk about this $3.254 billion budget, which is a lot of money.

    But in that budget is $127 million to subsidize the operating costs of Metro. Montgomery County and Prince George's County and Northern Virginia get their major share of the subsidy from the State of Virginia and State of Maryland. We only have to look to ourselves for $127 million that the District of Columbia government is subsidizing for the operation of our regional transit system, the Metro, which we all support.
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    Also, until the year 2000, the District of Columbia government is committed, and has paid it on time, $50 million to the match for our construction projects at Metro. And therefore the D.C. Government this year will be spending $177 million to subsidize and to support our Metro system. Also, Mr. Chairman, the District get $35 million of gasoline tax.

    And as part of our commitment to Metro, the regions, the jurisdictions that signed on to the compact, which is Northern Virginia, Maryland, and the District, we had to commit what was called a stable and reliable funding source as part of Metro's commitment to the Federal Government before we could get our construction money. And therefore, our gasoline money goes into the subsidy to Metro. We're not spending it on schools and textbooks or paper and pencils. We're spending it on our Metro system.

    Also, let me say that what got us into this difficulty certainly were some management problems that we've had over the years which are in the process of being corrected. But what got us into the difficulty about our $16 million match was the fact that in 1994, before I became Mayor of our great city again, the city government overspent its budget, operating budget, by $324 million.

    And as a result of that, it caused a downgrading of our capital funding ability on Wall Street. Ordinarily, in the spring of this year, we would have borrowed between $200 million and $250 million for all of our capital projects, including the $50 million that goes to Metro and another $45 that goes to our schools, and the match that would to the Federal highway money. But because we were downgraded, we were unable to go to the bond market to borrow the capital money.
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    Now, there are those who say, well, you shouldn't be using capital money. But maybe we shouldn't in this way. But this was a tradition that started long before home rule, when the Commissioners and the Congress ran our city, they used the capital budget as a way of funding highway projects. And we continue that tradition, as well as the fact that our gasoline money was tied up in our Metro operating costs.

    And it's our view that in the next year and a half or two, with the assistance of the financial management authority, we'll be able to reestablish our ability to borrow from the private sector, or if all else fails, as you well know, the Congress gave us the authority to borrow from the Treasury.

    So it ensures us that first of all, I am committed to repaying this money. I will be in office at least until 1998. And that will be the year we have to pay it back, in 1997. I'll make a personal commitment that we are going to pay this money back. Even if our capital borrowing process fails, the District certainly could take that money out of our operating budget.

    So it can be paid back. We'll have a plan which we'll present to the financial authority on February 1, a 5-year financial plan that will get us into balanced budgets by the year 1999. So let me assure the Congress that this loan, and it's what it is, it's not a gift, it's a loan, will be paid back by the District of Columbia government.

    Let me also say that my attitude is that I want to shape and mold a government that's the best run, best managed anywhere in the world. This is our Nation's capital. I want it to be the very, very best. And we're on our way to improving ourselves a great deal.
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    But let me remind members of the Congress that no other city in America pays for Medicaid. We spent $400 million of our money last year of the $3.254 billion. Also, no other city has unfunded pension liability left by the Congress of almost $8 billion. We're paying $295 million of that $3.254 billion. And so we have all these state functions. We have all the city functions, all the county functions.

    And we are at a point now where we're asking the Congress to defer for 2 years our match. Our roads and streets need repairing. Our roads and streets, particularly the main arteries, are used by over 300,000 cars a day, by people who don't live in the District of Columbia.

    The roads that we're preparing to work on are those main areas, Whitehurst Freeway and North Capitol Street, Third Street Tunnel, which is used by a lot of commuters, Kenilworth, East Capitol Street, New York Avenue, Bladensburg to the D.C. line. All of these streets are traveled by many of these 300,000 cars that don't belong to us who live in the District.

    I'm not going to get into a discussion of the commuter tax. Mr. Davis and I have agreed, I'll mention it from time to time, and he'll oppose it, and we'll go on. But I heard one Congressperson speak about the tremendous amount of money that's spent by those commuters. They spend very little money in the District of Columbia, very little in sales tax, none in income tax, none in property taxes.

    And so the $18 billion that's earned in this town, 70 percent of it goes outside of our city. And therefore, we lose that ability.
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    So I urge the Committee to be sensitive to the pleas of the Congresspeople and of this Mayor, and our city government. We want the city to look good. We want the $19 million visitors who come here to have a great time and have a physical environment that's positive.

    We've launched our own pothole repair program, out of our own local money. Mr. King has a mandate from me to find every pothole, craters included, and fix them. And we've found over 1,000 potholes, and we are daily, with four crews, using our own local money, out on the streets of Washington, trying to make these streets look better and feel better.

    We are also in the process of getting ready to launch a major environmental program to clean up our city. We ordered 300 or 400 litter cans to put on the streets in addition to the 3,000 we already have. We're going to require these businesspeople to do what the law requires, sweep the front of their buildings off.

    And so this money, which we have already contracts waiting to be signed, as soon as we get it, Mr. King is prepared to execute a number of those contracts. We can start work while the season is good. We'll employ a whole bunch of people who are D.C. residents. And in the final analysis, it's the kind of investment that the Congress ought to make to the District. Because it's our capital, and not just mine alone.

    Thank you, Mr. Chairman.

    Mr. PETRI. Thank you, Mr. Mayor.

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    Representative Rahall, do you have any questions?

    Mr. RAHALL. Thank you, Mr. Chairman.

    Mr. Mayor, we welcome you to the Committee today, and certainly want to commend you for your dedication to the city's needs and your determination to bring progress and an uplifting to all the people of our Nation's capital. We appreciate that.

    Mayor BARRY. Thank you.

    Mr. RAHALL. You've mentioned in your testimony that the fuel tax revenues are used to finance Metro and for other purposes. So I guess you've answered my first question, and that is that these funds, then, these revenues, rather, from the fuel tax, are not deposited into a separate highway account or a separate mass transit account, but rather are commingled for other financial needs of the city, is that correct?

    Mayor BARRY. Congressman, the way we keep our books, and cities and counties do this, is that we have what is called a general fund, and the money goes there. But since we're subsidizing Metro by $127 million, it's obvious that $35 million is just a portion of what we use. We have an internal bookkeeping system that lets us know how much money comes in from the gasoline tax and then is part of our quarterly payment to Metro.

    Mr. RAHALL. Let me ask you, if there were no financial crisis in the city and the District properly managed its fuel tax revenues and dedicated them for highway projects, would you then have a sufficient revenue to meet your Federal match requirements?
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    Mayor BARRY. Well, Congressman, it would be a bookkeeping matter. We could put it in a trust fund. And we would then just have to take the Metro operating subsidy out of some other taxes of some kind. It really would end up being a bookkeeping process, but we could do that in terms of—it's not like it's new money. It's the same money just being designated as to where you spend it, as opposed to subsidizing Metro. It could be used as our match for our capital projects from the Federal Highway Administration. Is that your question?

    Mr. RAHALL. Right. Thank you.

    Under the recent Memorandum of Agreement entered into by the District and FHWA, it's my understanding that an independent, revolving fund will be established for Federal aid transportation projects. Will the fund be used to finance mass transit as well as highway projects?

    Mayor BARRY. Mr. King has just informed me that this is an arrangement you wanted to make with the Federal Highway Authority, that this revolving fund would be used exclusively for surface highway projects.

    Mr. RAHALL. Will the District deposit fuel tax revenues into this new fund?

    Mayor BARRY. Well, Mr. Rahall, the idea of this revolving fund is to put $5 million up front, so that contractors can be paid in a very expeditious way. And when the Federal Highway Administration reimburses us, we put it back in. It's really a revolving fund to assist contractors. The initial $5 million would come from our first draw-down on the money. And we just keep that much money in the bank, so that we pay these contractors in a timely way.
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    It's not the traditional kind of revolving fund that you would have, that I think you are probably referring to. So we're putting the Federal highway money into that fund, or if we had our own local match, would have put $5 million of our $16 million into the fund as a way of expediting payments for contractors.

    Mr. RAHALL. Right. Mr. King, would you like to comment on it? You answered my last question right there, and I appreciate it.

    Mr. KING. That's fine. That's what we're going to do.

    Mr. RAHALL. Okay, thank you. Thank you, Mr. Chairman.

    Mr. PETRI. Mr. LaTourette.

    Mr. LATOURETTE. Thank you, Mr. Chairman.

    Mr. Mayor, I just have one question as a follow up to the statement that Ms. Norton was giving concerning legislative proposals. And the question that preys on a lot of members' minds is how are we going to prevent this from occurring again. And referring to this same memorandum of agreement with the FHA that Mr. Rahall was referencing, I believe you've written that there's a pledge on behalf of the District to immediately pursue legislative remedies to prevent this particular situation from occurring again.

    The question I would have is, what legislative proposals have been kicked around District government, what's the timetable, when can we expect some legislative action that would address this situation on behalf of the District?
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    Mayor BARRY. Congressman, I'm a little confused. You said someone mentioned legislation?

    Mr. LATOURETTE. It's my understanding in the June 29 Memorandum of Agreement with the Federal Highway Administration, you have pledged, or those on your behalf have pledged to immediately pursue other legislative initiatives so that the District can manage a streamlined and efficient transportation program.

    And when we were talking a little bit earlier to Ms. Norton, she hinted that there were in fact somewhere on the District's behalf some legislative proposals that would address and prevent the occurrence of this situation in the future, to not only guarantee the repayment of money by July 31, 1997, but to create a situation legislatively where we wouldn't find ourselves in this position again.

    Mayor BARRY. Congressman, I think I spoke to the top part of that in a sense that traditionally, our matches come from our capital borrowings. We intend to, by this fall, but certainly by next spring, either we will enter the bond market using the authority of the financial management responsibility authority, or we'll borrow from the Treasury. We'll have that money available to us from one or two of those sources.

    The memorandum you're speaking of was basically an internal, well, it was an effort on our part to assure the Federal Highway Administration that people who worked on these projects would not be subject to the normal reductions in force and other kinds of things that impede us from doing certain kinds of things. It also was to specify a number of dedicated personnel that work on this project. It really was an effort to streamline getting contracts out, getting contractors paid, and assuring the Federal Highway Administration that our program would be efficiently and effectively run.
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    Mr. LATOURETTE. So when you make reference to a streamlined and efficient transportation program, you're talking about that the work gets done in an efficient and streamlined manner.

    Mayor BARRY. We want this money to be spent in a very timely way, the most efficient way, the most cost effective way that we can find. That's what that was about.

    Mr. LATOURETTE. Okay, my question—

    Mayor BARRY. Are you sure, though, that you understand that the capital money is what has been used in the past?

    Mr. LATOURETTE. Right.

    Mayor BARRY. In fact, last year we spent $49 million of our own capital money, 1993, $39 million in 1992, $35 million in 1991, $37 million, and in 1990, $24 million. We'll then go back to the private capital markets to borrow this money and pay the Federal Highway Authority back. Or if the capital market's not available, under the control board legislation, the board can go to the U.S. Treasury and borrow the money on behalf of the District.

    However it happens, we'll have the money available to pay back this money, and in the future we'll have in our budget, because we either will be able to go back to the borrowing market or the Treasury for 1997, and 1998 and 1999, capital money that we can make this match.
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    Mr. LATOURETTE. That answers my question, and I understand that. But I guess my question then to you is, aside from through the financial board or your good efforts as Mayor of the District to improve the financial rating of the District, which gives you the opportunity to borrow from whatever source in the future, is there no legislation pending either in your administration or in council that would either develop a trust fund or make some other provisions for highway improvements within the District except for borrowing money from either the Federal Government or on the bond market?

    Mayor BARRY. Congressman, we have been discussing that internally to my administration. That may be an avenue that will get us into a better position in the future. A number of other states, as you know, have trust funds, out of highway, gasoline tax or some other ways. And so certainly, it's an option we ought to look at. And if we use that one, it would mean getting us out of the capital bond market and using operating monies for that. And it's not a notion that I would not be interested in trying to pursue.

    Mr. LATOURETTE. Thank you, Mr. Mayor.

    Thank you, Mr. Chairman.

    Mr. PETRI. Representative Norton.

    Ms. NORTON. Mr. Chairman, I just have one or two clarifying questions to my own reference to safeguards that might be taken. I do not have knowledge of legislative safeguards, but the financial authority is in the process of revamping and overhauling the budgetary process in all its aspects. And my reference was to work between the District and the authority to make sure that there is no possibility that it was not a reserve fund necessary to meet obligations.
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    And I just want to ask the Mayor, do you have any knowledge that highway money has ever had to be returned or has not been fully used in a fiscal year for which it was designated?

    Mayor BARRY. I do not have any knowledge of that. Someone made that statement, but that's not true. And someone indicated there other Federal funds we've not gotten. In fact, we have been blessed that we've gotten probably more than we expected in terms of our access to the Federal Government. We just received an $11.3 million grant from HUD two weeks ago as part of our homeless program.

    And we've gotten every penny from that. From the McKinney Act, we've gotten all that money. And so from the Federal highway money, we've never had to turn any back.

    Ms. NORTON. Well, there may have been instances where not all money has been applied for. That is one of the problems that we're dealing with. The difference between that money and highway money, of course, is that you use it or you lose it. And I simply wanted to clarify whether the District had ever put itself—

    Mayor BARRY. We use it ever year, Ms. Norton. We have not turned back, we have not lost any money because of our inability to construct projects and carry out projects and pay contractors to get it done.

    Ms. NORTON. I appreciate that your testimony lists projects down to the cost of each project in your own testimony as an appendix. The District is sometimes criticized, as every large bureaucracy is, for delaying in making things happen. Are you ready to let those projects, or will some more work be required if this money is released by the Congress for use?
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    Mr. KING. Congresswoman North, we would be able to let notices proceed on several of these projects in the next week or two after getting approval. We expect that the rest of those projects on that list we would have out the door within a month. All of these projects are designed, they have been bid, executed and some of them already, I mean, some of them have been executed, some of them need to be executed, and the rest just need a notice to proceed.

    Ms. NORTON. You may experience some hardship, because the District is already experiencing hardship when it comes to making sure that the money is available for this purpose. Is the District prepared to meet whatever hardship may be imposed on the Congress in having simply to come up with funds that it might not have had to come forward with in the past?

    Mayor BARRY. Congresswoman, I'm not sure of the question. Could you—

    Ms. NORTON. I'm just trying to ascertain, Mayor Barry, as we consider that the Committee appears to be ready to work with us and with the control board to make sure that in the future the funds are available and indeed, that the funds are available to pay back the money given the financial condition of the District, that will probably not be easy.

    And I simply wanted your assurance that even if some hardship, some further hardship on the District is created, you are prepared to pay back the money or take whatever steps are necessary to make sure that this situation does not arise again.
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    Mayor BARRY. Let me assure the Committee and the Congress that this is a commitment that we make unequivocally to the Congress, that notwithstanding any other difficulties, we're going to repay this money. And we'll have in place a mechanism for the future, where we can access our local share of the Federal highway money. The numbers we're talking about this year, I think, are $16 million and the same amount next year. So we're talking about $32 million over a 2-year period. We can do that.

    In fact, part of our financial plan will be to begin this process in 1996 as a plan, but just give us a backup to 2 years from being an ideal situation to have. But we can assure the Congress regardless of our other difficulties, we're going to pay this money back.

    Ms. NORTON. Just one final question. You are now, as a result of the work of the control board with the District in the process of making savings in 2,000 positions. Are you fully cooperating with the financial authority to make the savings in this first time out with the new authority?

    Mayor BARRY. We're more than cooperating. We had a good session with them yesterday for a couple hours. Dr. Bremer and I are talking once or twice a week. The executive director of the authority is in conversation with Michael Rogers and my staff. And in fact, we are having a press conference this afternoon at 1:30 to outline our specific plans of action to downsize and right-size our government.

    On the other hand, Congresswoman, as you know, cutting the budget is only a third of this problem. We have to improve our management system, which we are in the process of doing. Our financial management system was installed in 1988. It's antiquated now. We have to improve our procurement system.
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    But on the other hand, as you very well know, we have to take care of this unfunded pension liability of $295 million that we spent and the Medicaid. But the answer is, yes, we're cooperating with the authority, even thought I don't always understand their assumptions. That's not relevant to me now, now that they've made the decisions, we intend to detail how we're going to do that.

    Ms. NORTON. I appreciate your courage in moving forward. Thank you, Mr. Mayor.

    Thank you, Mr. Chairman.

    Mr. KING. Ms. Norton, I had one piece of information that I misspoke. There is one project we still need to advertise, but it's ready for advertisement. And I had said that all of them were ready for construction. We need one advertised. The rest are ready for construction.

    Mayor BARRY. What happened, Congressman, is that in anticipation of this program, not knowing we wouldn't have the $16 million, the Department went through the process of advertising, design, etc. So a number of these contractors have already been selected through competitively sealed bids and they're just waiting to go to work. So the next step, once we get, hopefully, this legislation passed immediately, we can then give a notice to proceed to these contracts and work can begin almost the next day.

    Mr. PETRI. I do have a number of questions. We're in this new Congressional era, we have to expose you to Republican thinking about taxes. One idea you really probably should study is considering lowering the gas tax with a small area, and a lot of commuters, as you've pointed out, if you could be a couple cents below rather than a couple cents above Maryland, it would be of course a better deal for people who live in the District, but it would also mean that the commuters would tend to buy their gas in the District rather than in the neighboring state. And you might make up in volume what you lose on the rates, which is a big recurring argument we have on tax policy here.
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    But I just wonder if you have done any studies. I notice your gas tax is right about in between. You sort of took the average so people commuting from Virginia probably buy their gas in Virginia, those from Maryland probably buy their gas in the District, because you're a couple cents above Virginia, as I understand. Maybe my figures are out of date. We have yet about 21 cents in Virginia and in Maryland, at about 23 cents a gallon tax. So it's probably kind of a wash on commuters, unless there are a lot more going to and from Virginia than Maryland. I don't know what those figures are.

    But in any event, have you analyzed if you were to lower the rate if you would actually make money and benefit the District residents, by in effect enticing people to pay a commuter tax by buying their gas in the District, or haven't you had a chance to—

    Mayor BARRY. Congressman, that's something we've not looked at recently. We did that several years ago. But not recently. We're very sensitive to the prices in Maryland and Virginia, because we know that a 1 or 2 cent, strange as it may seem, would influence where people buy their gas.

    Mr. PETRI. Especially commuters, because they have to plan out, they're doing it every day. So it's very simple to decide to buy your gas at the beginning of your commute or at the end of your commute, rather than while you're in the District.

    Mayor BARRY. That's something we'll look at. We'll do an analysis of it. I'm sure the service station owners would like to—

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    Mr. PETRI. You'd be their hero. If they were in the District. Maybe not if they were outside.

    The second question has been touched on, but I really think we have to get a pretty specific answer on it. Our whole Federal Highway Trust Fund is built on the principle that highway taxes are paid by the users of the highways, which kind of relates to my earlier question, and that taxes paid by the users should be reserved, and spent to improve and maintain the system that they use. Most states dedicate at least a portion of their gas and diesel fuel taxes for highways specifically.

    What are your thoughts as to why the District apparently doesn't subscribe to that theory, and would you entertain promoting legislation at the District level to establish a transportation trust fund with a portion dedicated to road and bridge use?

    Mayor BARRY. Mr. Chairman, I don't know all about this, but it's my understanding, I know about this part of it, that is, the District took a significant amount of its Federal Highway Trust Fund money, almost $2.5 billion, and put it into our Metro.

    And it seems to me that we're taking the gasoline money to be part of our stable and reliable funding for the operating costs of Metro, that ought to meet that broad picture there, as I see it. Now, you know more about this than I do. But I know that there's been an effort in recent years to take highway trust money in cities and some counties and use it for the construction of rapid transit or other alternative transit.

    So it seems to me that the $35 million we get from the gasoline tax is being used to subsidize Metro, that meets the basic philosophy of the legislation, as I understand it.
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    Mr. PETRI. Well, there's no way over the long term basis that you can borrow capital for maintenance. It just doesn't work. And at some point the capital has to be repaid. So it's the same sort of a thing. And—

    Mayor BARRY. Ideally, Congressman, the ideal situation for any city, county or state would be to take current revenues to do major construction projects and thereby save the interest costs of having to borrow this money. But I think in this country, the tradition goes the other way, where cities, counties and states, for a lot of different projects, borrow it rather than use operating money. It's really like deferring to the future that which you ought to take care of today. And we will look at a new configuration.

    Mr. PETRI. Actually, in my part of the country, a lot of the local towns and counties have a terrible problem, because what they really want to do is establish sinking funds where they will take tax revenues, set it aside for a capital project down the way rather than borrowing anything at all. And they're sort of forced by some court cases to fund over a period of years, and therefore to bond.

    But they have the tendency, if they possibly can, to establish sinking funds and other contingency reserves to get around those court cases so that they in effect save in advance, so that when they need to build a courthouse or a bridge or something, the cash is there and they don't have to pay interest on it. They earn interest in the meantime.

    So hopefully someday we can get the residents of the District lower taxes by having less interest and not funding current operations out of capital borrowing. But it's tough to turn something around, we know that, and it takes some time, we know that too.
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    But we're just eager to work with you and to try to find responsible guidelines and requirements that we can work with you and the control board and others in putting in place, so that we don't needlessly interrupt the flow of Federal funds to your District, but that we don't just continue to let things slide, and in the future we have some real assurance in District legislation, if possible, or else in strings attached to Federal money going to the District or something, to be sure that any arrangements that are made are going to actually be fulfilled, because of the local legislation and sinking funds or whatever.

    Mayor BARRY. Mr. Chairman, Congress always, I'm not advocating this, in fact, I wish we weren't in this situation to even be here in the first place, but we're here. The Congress, as you know, appropriates the annual budget for the District. And not that I advocate that they do something that the city doesn't want, but just in case you had a different kind of administration than me, who wants to get it done, the Congress has the final option in this annual appropriation, to direct certain appropriations, which to me is the ultimate assurance. Because you have the ultimate authority.

    Mr. PETRI. Mr. Latham.

    Mr. LATHAM. Thank you, Mr. Chairman.

    It's an honor to have you before us, and I appreciate what all you're trying to do. I guess I expressed some concerns earlier. And I continue, I guess.

    I'm very concerned about coming to the Federal Government. I mean, we just had an audit here of the House, and the management. And it has shown that things are in such total disarray here that they cannot make any kind of rational decisions, even as to where the dollars have gone, what our current state of Congress itself is. And we are $5 trillion in debt in the Federal Government.
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    Is there something in the water in Washington as far as the management? I mean, when you look at the way Congress has been, the last Congress, anyway, there's no regard for any kind of bookkeeping or responsible actions. And it seems like the same thing coming from the District.

    Where have we lost our—there's something like 53,000 lawyers in town here. And it would seem like one of them would understand, or accountants or something. But do you share some of the responsibility, going back to your previous administration, and again, I recognize you're not totally responsible. There was an administration in between here, being mayor here. Do you ever see getting out from underneath this?

    Mayor BARRY. Yes, sir, I do. Congressman, I share some responsibility in the sense that I should have recognized earlier on that the District needed a new financial management system to let us know exactly what we were spending and how we were spending it, that earlier on the District should have started the process of downsizing or right-sizing itself. So that at least we could have corrected the internal management problems.

    Now, on the other hand, Congressman, there are those who say that if we got rid of all the waste, all the mismanagement, this problem would be solved. That's not true. I would encourage you to, and I'll get a copy to you, to read the McKenzie Report. This is a major consulting firm which looked at the District, which says a combination of spending cuts and management improvements and lack of revenue base for the city.

    So I bear some responsibility. And that's why I am working awfully hard to get us to a point where we are managed efficiently and effectively. We want to present a budget in February that gives a clear cut direction as to how we can begin to balance our budget by the year 1999. You were talking about the audit of the Congress, and I was talking to a friend of mine last week, and he jokingly said, maybe the Congress needs a control board to control its spending.
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    Mr. LATHAM. I agree. Hopefully, with the new Congress, there are some basic principles of accounting going on to at least know where you're at. I mean, it's like the blind leading the blind around here. And it seems ironic, because of mismanagement in D.C., that now you come to Congress which can't manage itself any better or has not in the past, at least, managed—

    Mayor BARRY. Maybe you need to go to ours.

    Mr. LATHAM. That's right. Well, we've got a budget surplus, we're looking to give back some of the taxpayers money.

    Mayor BARRY. I'm going to visit with you so I can figure out how you all did that.

    Mr. LATHAM. I appreciate it very much, it's an honor to speak with you.

    Mayor BARRY. Mr. Chairman, let me also mention, since the Congressman mentioned our new Congress, to give some accolades to our Speaker. Mr. Gingrich and I met February 17, and quite frankly, ideologically and otherwise, I didn't think we were going to hit it off. He didn't think so, either. You know, I'm supposed to be a ''liberal'' Democrat, and he's supposed to be a conservative Republican.

    But we found a common interest in Washington. And he's been in the forefront of trying to get beyond just the control board, get to the big picture, the big vision of our children and public safety and economic development. So I want to again join Ms. Norton and others, Mr. LaHood, in commending our Speaker for his keen interest in Washington.
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    And we're looking forward to a continuing relationship with him starting next week on August 2, at a town meeting. And this is really, some Democratic friends of mine have pointed out that even when the Democratic party was in office, the Speaker, who was a Democrat, never offered to come have a town meeting. So I want to commend our Speaker for his commitment to our city.

    Mr. PETRI. Thank you. I should mention that Representative Latham is one of the new members of the House, and he's a tough minded businessman from Iowa. And we're looking forward to you helping us get something in place here that will help the residents of the District and the Federal taxpayers as we move forward.

    Are there other questions? If not, Mr. Mayor, you've been very generous with your time. Thank you very much.

    Mayor BARRY. Thank you very much, Mr. Chairman. I would urge the Committee to expeditiously mark this up and get it to the full Committee and get it to the House and the Senate, and we can see some road construction in a couple of weeks. Thank you very much.

    Mr. PETRI. Thank you.

    There's a vote on the floor. We'll run over and be back and resume this hearing in about 10 minutes.

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    Mr. PETRI. The hearing will resume with panel three. I'd like to invite the Administrator of the Federal Highway Administration, Rodney Slater, accompanied by David Gendell, the Administrator for Region 3, to give us their testimony. Administrator Slater.


    Mr. SLATER. Mr. Chairman, I'd like to join all who have commended you and the members of the Committee for this expeditious hearing today, a hearing on a very, very important matter as relates to our national capital.

    I would also like to mention the presence of Mr. Dave Gendell, who is our regional administrator for this area of the country. Dave is one of most talented and seasoned employees within the Federal Highway Administration, and is serving currently as the chair of a task force co-chaired by our division administrator, Art Hill, to work with the District to formulate a plan for addressing the District's transportation concerns, especially as relates to highways.

    I would be remiss, Mr. Chairman, if I did not note the fact that as I sat and listened to the testimony, I took note of the fact that we have here today not only Congresswoman Norton, who clearly as has been noted, brings compassion and vision to her task as the representative of the District, but also joining her in making the case for this special action we have Congresswoman Morella from Maryland, and also Chairman Davis, Chairman Wolf and Congressman Moran from Virginia, making the case for the District.
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    This is clearly an effort that is bipartisan in its support, regional in its scope, and also national in its scope, in that many visitors do visit the greater Washington metropolitan area on an annual basis to enjoy all that it has to offer.

    I'd also like to note for the record that we have received letters of support from the States of Virginia and Maryland, as relates to their Department of Transportation officials, expressing their support for this initiative. Also, the Northeastern Association of State Transportation Officials recently expressed their support for this initiative as well. That includes an organization of transportation officials from throughout the northeast region.

    Finally, I note the unanimous support of a similar bill in the Senate Environment and Public Works Committee just a few weeks ago, and the unanimous consent offered by the Senate in response to that committee action, really express the broad base of support along with those who have been present here today, as they have expressed it through their comments.

    Much has been made of the fact that the Speaker is very supportive of initiatives to improve the quality of life in the District. And he, too, has been noted as being supportive of this effort. And I'd also like to mention that the Administration, in offering forth its proposal, views itself as being a good neighbor. The President, before he was sworn in, visited the District and made the point that the Administration would view itself as being a good neighbor and working with the District in partnership to respond to its needs and concerns.

    An urban jewel, a city on a hill, no less important than London to England, Paris to France. Clearly, with this proposal, we are dealing with a city of great importance. The need is present in that the city faces a financial crisis that makes it unable to meet its match obligations. Also the need is urgent, because it suffers the possibility of losing some $82 million in obligation authority in 1995, a bit more, approximately $87 million in 1996.
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    But a solution is at hand. And it is a solution that has broad based support, though there are legitimate questions that have been raised. We have the Administration's proposal, we have Senate Bill 1023, and now we have Congresswoman Norton's bill, H.R. 2017. All of these provisions provide for a temporary waiver and a deferred repayment of the match obligation of the District.

    I note that the District of Columbia unique, because the District in a sense wears two hats, that of a state highway department as well as a city agency responsible for local roads. We, because of our presence here, our headquarters presence, also the presence of the Congress, the White House, and because it is the seat of our Nation's Government, we work hand in hand with the District. Our relationship is close and cooperative.

    While ISTEA provides that states will get more and more control when it comes to highway projects as they deal with them on a project by project basis, and our responsibility at the Federal level will become more oversight as relates to process and programs. When it comes to the District, because of our special relationship with the District, we will continue our project by project oversight providing direct technical assistance to the District as needed.

    As relates to this particular initiative, we have also entered into a Memorandum of Agreement that was signed by the Mayor on June 29, 1995, that outlines specific action that will be taken on the part of the District to ensure that the commitment we make in partnership to the Congress, and the commitment that the Congress makes if it approves this proposal, will be to move forward expeditiously with the work of investing in the infrastructure of the District.
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    To do so, the Mayor has delegated complete authority to the Director of the Department of Public Works to move on these transportation jobs, highway jobs. Also, the Memorandum of Understanding includes an independent revolving fund in which will be deposited the resources that the agreement will cover. And then finally, a commitment has been made as relates to organizational capacity, and that which will be necessary to deliver on the promises and the commitments here made.

    Finally, let me close by saying that legitimate questions have been raised about the conditions of the road system here in the District, and how we plan to work to respond to the flexibility requested as a result of the proposal now before the Committee. Also questions have been raised about road conditions across the Nation, Iowa, Arkansas, Illinois, West Virginia, Wisconsin and others.

    Let me assure the members of the Committee that just as we are working here through the use of innovation and creativity, we have done so in responding to needs of cities and communities all across this Nation, whether it was the midwest floods, the Northridge earthquake, or through our innovative financing and innovative contracting techniques, assisting states and locales in moving literally billions of dollars worth of projects that had stalled and probably would not have been able to move but for the creativity and the innovation.

    The same holds true here. And we make a commitment to the Committee to uphold the opportunity afforded us in this proposal. And we will make a commitment also to report to the Committee, as we did to the Senate, as to the progress of our efforts in this regard.

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    With that statement made, Mr. Chairman, I'd like to once again thank the Committee, thank you for this hearing, and for the opportunity we have to come forth to express our opinion on this matter.

    Mr. PETRI. Thank you. And thank you for your patience as the hearing has lasted a little longer than you might have anticipated.

    Ms. Norton, have you any questions?

    Ms. NORTON. Only briefly, Mr. Chairman. First, I'd like to say for the record what initiative and leadership Mr. Slater has provided for this whole process. We could not have moved forward without cooperation from the Administration and Mr. Slater has not simply stood behind us to wait to see what we could do. He's been right up front with extraordinary assistance, including technical assistance.

    I have written the President, Mr. Slater, to indicate that we hope to have the kind of help you have given to the city from other agencies. In a real sense, we think you have set the pace for how the Administration could begin to equal what the Speaker has begun to do. And I have specifically cited you and wanted to thank you on the record.

    I have just one question. You indicate in your testimony, page 5, that in the Memorandum of Understanding that the District would establish an independent revolving fund account to be managed by the Department of Public Works. And I ask this question, because several members have been concerned that action be taken so that the situation doesn't arise again. Are you prepared, let me just say as a preface or predicate to this question, there is often concern that the District does not do what it says it's going to do.
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    As I have looked into the reason, the city is so burdened administratively with trying to get itself out of administrative morass that very often it cannot or does not pull itself aside to take on a new task, because it's simply trying to stay afloat. In order to make sure that any commitments that the city makes in a time of great crisis, when its administrators are pulled in every direction, I'm asking whether or not the Highway Administration is prepared to offer technical assistance to the District to help it with tasks such as establishing a revolving fund that would assure the Congress that the situation does not arise again.

    Mr. SLATER. We are committed to providing that kind of technical assistance. We have also talked with the District, Mr. King most specifically, about the possibility of even placing some of our staff in the offices of the Department of Public Works to work them in partnership to ensure that the joint commitment we make to the members of the Congress is actually fulfilled.

    Ms. NORTON. I cannot emphasize how much I appreciate that. When the District has that kind of on-site technical assistance, it's able to get things done, because it has people there that can help it without taking it off of all manner of things. Just let me say as evidence of that, the District has come to testify, the police chief came to testify before one of the Speaker's task forces or committees.

    And in the testimony, they offered an extraordinary statistic showing that crime has gone down all across the country, and rape, assault, burglary and the rest, but that crime had gone down more in the District, significantly more than it had across the country. And one of the reasons for this is that the FBI and other Federal officials have been assigned by the Administration to help the District in what was an extraordinarily situation. So I know that with technical assistance, it can be done. And I very much appreciate your commitment, and appreciate the Chairman's courtesies.
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    Mr. PETRI. Thank you. I do have a number of questions we might be able to get through fairly quickly.

    First, do you believe that this waiver is, in fact, different in nature than previous waivers, since previous ones were all general in nature, were utilized by several states, and were in fact in response to changes in the Federal programs, such as increased Federal funding under ISTEA, which involved the states having to change their programs, and with their legislative schedules and so on, it often took them more than the immediate year at issue?

    Mr. SLATER. In all three instances, 1975, 1982, and 1991, we did have instances where authorization bills had been passed to bring more, to bring additional monies to the table. So it is correct that in those instances, the states did find themselves operating in a different kind of environment.

    Also, I think Congresswoman Norton made this point earlier, that there was no inquiry at the time as to whether the states were actually experiencing difficult financial straits. They just made themselves available for the exemption and it was granted. I would think that in each instance, you probably had states dealing with their particular financial situation at the given time, and they saw benefits in taking advantage of the provision.

    In those instances with the District, now that the repayment provision has been added, it is very much similar to the general availability made to states in the past. And the language that was selected by Congresswoman Norton actually mirrors that is found in the 1991 ISTEA legislation. So in that regard, the situations are somewhat the same.
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    But clearly here, we have a specific reference to the District. And that was not the case in the past, where a piece of legislation was passed to assist a particular governmental entity. That's why I go back to what I saw manifest itself this morning, where you had Republicans and Democrats, where you had members from the surrounding areas as well as Congresswoman Norton, all supporting this initiative, because of the unique character of the District itself.

    And also because of the joint commitment, I believe, as expressed by many, that the District does have the potential for becoming an urban jewel, or really coming to realize its position as a jewel or a light on a hill, representing the strongest and most dynamic democracy of all of human existence.

    Mr. PETRI. Do you believe we're setting a precedent that may lead your agency into difficult situations in the future? In particular, how will you respond when the next request for a waiver is made by a state in severe financial difficulty?

    Mr. SLATER. Let me just say that the good thing we've seen over the last 2 years is that all states are obligating all of their, utilizing all of their obligation authority. I think that that really speaks to the need that's out there for infrastructure investment.

    If we have an instance in the future where a state comes to us, I think we would look at the individual circumstance and we would make a judgment on a case by case basis. I would say this, that if any state had come to us in the condition of the District, we would have responded as we have responded here. And I would hope that we would have received the broad bipartisan support that we have received here.
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    I would also say that I must commend Dave Gendell and Art Hill and other members of the staff who basically accepted our charge to figure out what could be done. And they brought to bear all of the experience, all of the expertise, all of the creativity, and I might add, the compassion, also, of the Federal Highway Administration, to bear.

    And they narrowly tailored an approach, and they brought to me the reality that we would have to get certain commitments from the District to carry their part of the load. Those communications were held, the commitments were gained and then we came forward as an Administration with the proposal. So a lot of care and effort has gone into what is now before the Committee.

    And I would say that if a similar case were brought by any state in the future, then we would approach it with the same kind of resolve and commitment to craft the best possible solution as narrowly tailored as possible to fit the situation. So that's how I would respond to that, Mr. Chairman.

    Mr. PETRI. But it must have been clear that the District would be unable to come up with its match earlier in the budget year. Did your department work with the District or pursue other options before this waiver proposal was prepared last month?

    Mr. SLATER. What we have done over the last 2 years is really sort of spur the District on in moving on some projects that we knew were ready to go. I can recall a couple in particular, Barney Circle in particular, but also a lot of the major thoroughfares that are being addressed with this bill.
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    We did not know the degree of the problems financially until much of that became public. From day one, Mr. King was in contact with Art Hill, our Division Administrator, talking about how we could strengthen and enhance the partnership that had existed over the years to move a lot of these projects forward.

    One point we made was there was a need for the District to focus on main thoroughfares, those national highway system routes, because the District not only has to handle the travel demands of its citizens, but it also has to handle the traffic demands of commuters and a 20 million visitor, tourist industry.

    And Mr. King came forth with a commitment to work with us, and to work with the State of Maryland, the State of Virginia, in addressing the concerns. And it was during that kind of give and take that conversations were also held regarding the financial condition of the District. And it was when we became knowledgeable of how acute that situation is that we started to work with Mr. King and his staff to craft the proposal that is currently before the Committee.

    Mr. PETRI. The bill before us by Ms. Norton and other proposals that have been submitted provide that eligible projects for the increased Federal share are either national highway system projects or projects that are ''regionally significant'' as determined by the Secretary. And I'm informed that the report to accompany the Senate-passed bill to deal with this situation states, ''under this legislation the Secretary could determine that certain transit projects are of regional significance.''

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    Are you intending to provide 100 percent Federal funding for transit projects if this legislation is passed?

    Mr. SLATER. It's not our intent. We understand that there are a number of transit projects that are ready to proceed. But the matching funds for those projects will be provided by the recipient agency. That's our understanding, or the agency with primary responsibility for moving those projects.

    When we speak of projects of regional significance, we're talking about mainly those that are not on the National Highway System, the proposed National Highway System (NHS). Massachusetts Avenue and the bridge over Rock Creek Park, Eastern Avenue, portions of North Capitol Street and the like. That's what we have in mind when we talk about those projects of regional significance.

    And I would add this, though, that it has been noted earlier in testimony by Mr. King and by the Mayor that the District does have significant responsibility to the region when it comes to meeting certain air quality standards. And in some of those instances, they do have to get into investments and activities such as I&M inspection station projects and the like.

    Those are not the kinds of projects that will be the general, that will govern the general expenditures. But clearly, when the District considers its overall transportation responsibilities, it has to have in its own mind a program that's broad enough to include those kinds of considerations as well.

    Mr. PETRI. What is your professional assessment of the District's highway program? How would it compare with highway programs of similarly sized states? Do you feel that bids are being properly let and that costs are in line with costs for similar projects in other parts of the country? And do you see any reforms that could be implemented to provide for a more efficient and streamlined program?
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    Mr. SLATER. Let me respond to the last part of the question first. Clearly, there are things that the District can do to enhance its operation of its transportation program. And the things that we have identified are contained in the Memorandum of Understanding. Those relate to delegating to the Director of the Department of Public Works sign-off authority when it comes to moving work expeditiously. That memorandum and that commitment was made by the Mayor.

    Also, establishing an independent revolving fund account to serve as the home, if you will, of those transportation dollars that are used to make improvements on Federal aid projects, rather than having those funds mixed in the Department of Public Works capital account, that too is a part of the Memorandum of Understanding that was signed by the Mayor.

    And then finally, as the District downsizes, there is the need for the requisite amount of organizational capacity within the Department of Public Works to deliver on the commitment that we're jointly making to the Congress and to the President as the head of the Administration when we ask for this kind of special consideration. And that, too, was a commitment that was made in the Memorandum of Understanding as signed by the Mayor.

    There have been other questions raised here today, and I would hope that as we move forward, and as the District starts to really pull its finances in order, that some of those concerns can be addressed as well. I would add that I have had at least a conversation with the control board to just give them an understanding of what we're trying to do here, and to note that there might be other concerns that would be raised as we move forward, and just letting them know that at some point, there may be the need for the Congress or for the Administration to talk to them about more specifics that would be important to be implemented, if we were to give the District the kind of program that we really wanted to have.
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    The final point I'd like to make is that, and this is a point that's been made through the course of the hearing, and your question alludes to it, and that is just the condition of the road system here in the District. It is frankly a system that faces many of the demands and the challenges as faced by systems across the country, in Wisconsin or in West Virginia or in other states represented by the members on the Committee.

    There are those deteriorating effects of the transportation system that all are experiencing. The good thing is that over the last 2 years, we've been able to put an additional roughly $5 billion into the hands of states beyond the average Federal aid allotments, so that those kinds of improvements could be made. And we've seen an increase in the quality of the overall system.

    Also, through innovative financing techniques, we've been able to move 60 some odd projects in more than half of the states around the country. And those are projects that probably would not have moved but for some creativity and commitment to really work together in partnership to do some things differently. And many of those provisions are now a part of the NHS legislation that is moving through the Congress. And we would hope that in the House, those kinds of considerations would be added to the designation legislation as well.

    Mr. PETRI. Well, let me ask you, Mr. Gendell, in your region, how does the District's highway program compare with that of other states in the region, of similar size, if there are any? Delaware may be close. Are costs in line or out of line with costs in other parts of the region for similar projects?

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    Mr. GENDELL. We have absolutely no reservation in terms of the way the Federal aid program is administered within the District of Columbia, along the lines of your question. The Congress has very carefully crafted Federal legislation with a lot of safeguards. And the Federal Highway Administration takes great pride in working in partnership with the District and the states to ensure that the projects that are advanced are of high quality and provide transportation service that the traveling public desires and really deserves.

    And I've no reservation at all that the projects that have been advanced by D.C. are quality in terms of the product that's produced, as well as comparably priced in terms of projects of a similar nature in other states. In the District of Columbia, as other states, are required to use competitive bidding in procurement of the construction for highway contracts.

    And we find that in many cases, the contractors working in D.C. are the exact same contractors working in other states as well, particularly on the major Federal aid projects of the nature that this legislation addresses.

    Mr. PETRI. Finally, Administrator Slater, are you aware of any other state with a highway program totally funded through the issuance of general obligation bonds as is the case with the District?

    Mr. SLATER. No. No system that is totally funded.

    Mr. PETRI. Thank you. Any further questions? Mr. Rahall.

    Mr. RAHALL. Thank you, Mr. Chairman.
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    Good morning, Mr. Administrator.

    Mr. SLATER. Good morning.

    Mr. RAHALL. Good to see you again, Rodney, and Mr. Gendell.

    Earlier we heard quite a bit of praise for Speaker Gingrich, perhaps justifiably so, I don't know, in regard to his commitment to the concerns of the city. You've been here all morning, Rodney, and I commend you for that. You've also shown your concern and commitment to the District on behalf of the Administration on a number of occasions.

    I believe, if I'm not mistaken, you were the one that had to go into the lion's den, so to speak, immediately upon the announcement that Pennsylvania Avenue would be closed for security reasons in front of the White House, and you had to face a rather frustrated D.C. City Council. You've addressed and helped the city on a number of occasions, that one in particular. And so I just praise you and Secretary Pena for your commitment as well. This, as many other projects, in which you are in charge of administering, you have done an excellent job.

    You heard me here earlier also ask the Mayor about separate accounts for their fuel tax revenues. Do most states maintain separate accounts for fuel tax revenues?

    Mr. SLATER. Most states do.

    Mr. RAHALL. If you do not have it off the top of your head, could you list those that do not have such separate accounts or provide them at a later date for the Subcommittee?
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    Mr. SLATER. We'd like to provide that to the Committee at a later date. We'll follow up expeditiously on it.
    [The information supplied follows:]

    [Insert here.]

    Mr. RAHALL. Thank you. Appreciate it.

    Do you see a need for the District to establish a permanent account into which it dedicates its fuel tax revenues, with such account limited to funding highway projects?

    Mr. SLATER. I would say that that would be an improvement to the program. I do believe that the revolving fund is a step in the right direction, and we have had conversations with the District about that very issue. I know that, and clearly Mr. King would probably be in a better position to talk about this in detail, but currently, what the District is trying to do is mesh what has been the tradition with new approaches that they understand must be employed now to deal with the challenges at hand.

    And it is our understanding that with the waiver and the deferred repayment opportunities that we are providing that during that interim, this kind of consideration can be given full thought and analysis and that it could quite possibly in the future become a part of their overall funding and accounting strategy.

    Mr. RAHALL. That's all the questions I have. Thank you, Rodney.
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    Thank you, Mr. Chairman.

    Mr. PETRI. Thank you.

    You can't dedicate the same funds twice, and there seems to have been some effort to earmark these funds for the Metro when it was first established. So we're going to have to explore as to what reliance, if any, there was on that, and what freedom we do have to earmark responsibly all or a portion of these funds for future use.

    Mr. SLATER. Mr. Chairman, we would commit to provide the Committee any technical assistance that would be necessary to try to craft an approach that would be agreeable to the members of the Committee, understanding the ultimate desire to do this, to grant the waiver, to grant the deferred repayment. Yet also, wanting to be truly responsive to the broader questions of how the District over the long term positions itself to handle the incoming and exiting of resources.

    Mr. PETRI. Gentlemen, thank you.

    Ms. NORTON. Mr. Chairman, if I could just make one clarification. Because I think that both you and Mr. Rahall in different ways have made a point about the uniqueness of the District, for example, in going to the bond market. I just want to clarify the notion of how Maryland and Virginia pay for their Metro funds. The state comes in and helps the county or in one instance, I think pays for the entire thing.

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    And here's the District sitting here, having to come up with 100 percent of the Metro funding and pay other bills at a time when the city is in steep decline, and there's an urban crisis in every city. And I think if we see the District's special problems in light of its special structure, richer counties don't have to pay their Metro share, I think you can understand why the District has chosen an approach that others did not have to consider.

    Thank you.

    Mr. PETRI. Very good. Thank you both for the time you've put in today to be with us.

    Our last panel is a panel of one, Mr. Carroll Harvey, who is representing the Metropolitan Washington Road and Transportation Builders Association, which I know has an ongoing interest in this program.

    Mr. Harvey.


    Mr. HARVEY. Good afternoon, Mr. Chairman and members of the Committee. I am Carroll Harvey, Chairman and Chief Executive Officer of Faith Construction Company. We are a Washington asphalt paving and manufacturing company. And I'm here today representing the Metropolitan Washington Road and Transportation Builders Association.
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    We are the voice of the highway, bridge and transit and airport construction industry in Washington and in the region. And I thank you for having me here today.

    I'd like to thank Congresswoman Eleanor Holmes Norton for introducing another really needed piece of legislation, H.R. 2017, the District of Columbia Emergency Highway Relief Act. The Metropolitan Washington Road Builders wholeheartedly support this legislation and believes that its passage is vital to our industry and to the city overall.

    Our industry is literally in a position where we are dying on the vine. We are in medical terms, in intensive care, and we need resuscitation immediately. It's been more than 18 months since the District has let and awarded a contract. But it was October 1993 when our last street paving contracts were bid. This means that companies like mine have done all their work, we've laid off our work forces, and we're in terrible straits.

    What it means relative to the city, though, is if you realize 85 percent of our streets are classified as either poor or fair, 85 percent, 65 percent of our bridges are classified as either structurally deficient or functionally obsolete. You asked the question earlier about how did we compare to other cities or other states, this is a part of the operational analysis. It costs the average driver in the District $111 a year for repairs and maintenance on vehicles because of the condition of our infrastructure.

    We need to do something, and we need to do it rapidly. My company is an example of how we've been damaged. I've had to lay off 65 employees. And that 65 in a company where my size is 71 people tells you the devastation we're facing. And I'm one of the smaller companies. Overall, for the industry in total, hundreds of employees have been laid off and we're losing not only from the work force, but most of our employees are really District residents. And 90 percent of my employees were minority workers themselves.
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    We are having an intensive and destructive impact on population of greatest need and we can help very quickly if in fact we get the kind of relief that's being proposed by Congresswoman Norton in her legislation.

    The Road Builders also supports the adoption of a dedicated user fund, or trust fund, for the District of Columbia, in which all the gas tax revenue generated by the city would be placed in that fund and used for highway and bridge improvements. And really, we're only saying here, the gas taxes, which represent $35 million.

    But if you look at the other user taxes from licensing fees, fines and from registrations, they're another $117 million. In fact if the user funds were focused on user needs, including all the transportation, we could have a pay as you go system and save those costs.

    By the way, this is not new for the District of Columbia. In another life, I was chief of program planning for the old Department of Highways and Traffic. In those days, we had a dedicated trust fund. We had that fund and our street system and our bridge system was in much better condition than it is today.

    I'd just like to say that we really urge you to support the passage of this bill. We appreciate your having us here to testify.

    Let me add one other thing. You asked a question about costs. The level of competition is so high in the District that we are literally bidding projects at 1986 and 1987 costs. This is a very competitive market. And the District of Columbia is doing, I'd say, very well in terms of its pricing.
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    Thank you. If you have any questions, I'll be pleased to entertain them.

    Mr. PETRI. Representative Norton.

    Ms. NORTON. Mr. Chairman, I just want to welcome Mr. Harvey, and to assure you that he is one of our most dedicated and efficient contractors. Mr. Shuster, our Chairman, indicated that he was pleased that the Post did not regard the work that is put out as a result of the Committee's result as pork. Indeed, as you've heard Mr. Harvey testify, we keep conditions so competitive in this city that in this instance the District does get a very good deal.

    And the provision of jobs, I know that our Committee has never considered pork when those jobs are, in fact flow from the necessity to repair the streets as opposed to make-work. We know that there is a necessity here.

    And in the case of the District, this work will aid the District's recovery as well as meeting a crying need.

    Finally, may I just say, Mr. Chairman, to you, since I intend to take the microphone not again this morning, how much I appreciate the way you simply pitched in, got this Subcommittee going as soon as Mr. Shuster made it clear that it was appropriate, the difficulty of doing so with a jurisdiction that is not the ordinary subject matter before this Committee, the generosity you have shown to me and to those I represent and to District officials.

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    And finally, the pointed questions that you have raised which very frankly I think needed to be raised on the record in order that all members could feel comfortable in going forward. And I thank you once again.

    Mr. PETRI. I think some of them still have not reached the desired comfort level. But we're going to continue working on it. And I think it was useful both ways, so people could understand, who for one reason or another feel that Congress should be acting, why in order to act we want to be sure that we're not just pasting over the problem one more time and putting off the day of reckoning.

    But this is more or less the day of reckoning and we want to try to deal with it and turn it into a long-term plus for this area. But we can't do that without trying to get down to fundamentals.

    Which leads me to my question, Mr. Harvey, in another life you indicated you had some responsibility for the Public Works program here in the District. And it was under a trust fund. Why did they abandon that approach? Is there something we should know about? Or did they just do it for expediency at the time and make a mistake?

    Mr. HARVEY. It happened and it may have been a mistake, Mr. Chairman. It happened at the time when the home rule change came over, and a number of financing arrangements were changed at that time. But a part, of the problem, in those early days, or it was immediately following a time when there was this great, almost contrived competition between transit and highways.

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    Clearly, none of the professionals in Highways and Traffic over then what was the predecessor to Metro had any of those beliefs. But it had been made to believe that all the bad guys were over here, the road builders, and all the good guys were in transit. Therefore, what made these bad guys effective was they had available to them that trust fund. And so there was apparently just a political decision that was made by that early council to take that away.

    And I'm not suggesting that we override any of the home rule legislation at all. But this discussion needs to take place because in truth, it is a way of financing the road system and the transportation system that is working around the country and it has worked here previously. What we have now is not working well.

    Mr. PETRI. Very good. Well, clearly, in the area, and in the District itself, there needs to be a balanced program. And there is a certainly a place for mass transit, and a big place. But there also is a need for roads an infrastructure, bridges and the like. And I think we are going to have a more balanced approach in the future.

    Mr. HARVEY. If we look at the $117 million of other user funds, with $35 million of funds out of gas tax, you put the $153 million, it can handle both of these transportation needs, Mr. Chairman, on a pay as you go basis, without going to borrowing and literally getting one-third of the value that when you add that 30 year interest payment onto that cost.

    Mr. PETRI. Very well. Thank you for putting the time in this morning and this afternoon and coming here to testify. You and your association's members as well as the people of the District of Columbia are going to have to live with the program.
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    So you have a big interest in making sure that it's set up or reorganized in as effective a way as possible, and for a long term, sound approach. We would be very eager, in the short time that's available, to get your input and comments on anything that we come up with. So that we don't have to keep revisiting this, if we're going to do it, we might as well try to work with everyone, as long as they're all focused on this problem right now, and see if we can't help the District get a viable infrastructure program back in place.

    So we'll be happy to get your input toward that end, because we know that you will probably have as big a stake as anyone in the success of this.

    Mr. HARVEY. Thank you very much, Mr. Chairman.

    Mr. PETRI. The hearing is adjourned.

    [Whereupon, at 12:59 p.m., the subcommittee was adjourned, to reconvene at the call of the Chair.]

    [Insert here.]