	Funding the Nation’s Transportation System

		Funding Highways and Transit

The major source of federal surface transportation funding is the Highway  Trust Fund, but the revenues that make up that fund are eroding. The  federal motor fuel tax rate has not increased since 1993, meaning that the  18.4 cent per gallon tax on motor fuels enacted in 1993 is worth about  11.5 cents today. This trend will continue with the introduction of more  fuel-efficient and alternative-fuel vehicles that have the potential through  fuel savings to decrease motor fuel purchases and associated tax  receipts. The Congressional Budget Office estimates, as of March 2012,  that to maintain current spending levels plus inflation between 2013 and  2022, the Highway Trust Fund will require over $125 billion more than it is  expected to take in over that period. For this and other  reasons, funding surface transportation remains on GAO’s High-Risk  List. Long-term reauthorization of surface transportation provides an  opportunity for Congress to fund the program on a sustainable basis. The President’s fiscal year 2013 budget proposes increasing surface  transportation funding levels, including a 34 percent increase over the  next 6 years for highways and bridges—funded in part through general  revenue transfers. Congress and the administration are considering various proposals to  expand federal financing tools to help leverage investment in  transportation infrastructure:
Expanding the Transportation Infrastructure Financing Innovation Act  (TIFIA) program. Creating a National Infrastructure Bank. Continuing and expanding federal bonding mechanisms. Funding Aviation

The Federal Aviation Administration’s (FAA) expenditures are budgeted  to continue to exceed forecasted revenues from the Airport and Airway  Trust Fund in future years. FAA operation expenditures not covered by  trust-fund revenues are projected to be paid for by general revenues from  the U.S. Treasury.roughly 20 percent of FAA’s total annual expenditures for about the next  10 years might have to be paid for by general revenues. As the federal  budget continues to be constrained, Congress may face difficult choices  regarding reducing FAA’s appropriations, which could increase FAA’s   According to the President’s fiscal year 2013 budget,  total costs and delay the benefits associated with investments such as  NextGen. Funding High-Speed Rail

The President’s budget for fiscal year 2013 requests $2.5 billion for high- speed and intercity passenger rail—part of a proposed $47 billion for  passenger rail projects over the next 6 years. However, Congress has not  provided funding for high-speed rail since appropriating over $10 billion  through the American Recovery and Reinvestment Act (Recovery Act) of  2009 and the fiscal year 2010 DOT Appropriations Act. We recently  reported that the Federal Railroad Administration (FRA) essentially  followed good grant making practices as it awarded Recovery Act funds,  but we have also identified several challenges facing these projects as  they move forward. For example, project sponsors find it difficult to  secure the up-front investment for construction costs and indicated that  they have or will need some federal funding to develop their projects. Refocusing and Restructuring Surface Transportation Policies and Programs

Long-term reauthorization provides an opportunity for Congress to  fundamentally re-examine surface transportation programs as we have  recommended—another reason why funding surface transportation is on  GAO’s High-Risk List—and to expand on recent efforts to reform the  highway program. From the standpoint of state and local governments,  re-examining surface transportation programs could reduce fragmentation  and the administrative expenses states face complying with myriad  federal statutory and regulatory requirements. This re-examination could  include the following:
Clearly define the federal role in relation to other levels of government  and, thus, create a more targeted federal role focused around evident  national interests. Ensure accountability for entities receiving federal funds, for example,  by moving to a performance-based program. Employ the best approaches and analysis to direct federal funds to  infrastructure with clear national interests. Improving Transportation Safety

Another continuing challenge facing DOT pertains to improving  transportation safety. In recent years, we have seen a remarkable decline  in transportation-related fatalities and injuries, the vast majority of which  occur on our nation’s roads. Traffic fatalities decreased more than 20  percent over the last decade, from nearly 42,000 in 2000 to less than  33,000 in 2010, the lowest level since 1949. Traffic injuries  decreased approximately 30 percent, from about 3.2 million in 2000 to  about 2.2 million in 2010. These encouraging trends are likely due in part  to federal and state DOT efforts. However, even these reduced numbers  of fatalities and injuries are still too many. Implementing the Next Generation Air Transportation System

An additional challenge that I would like to address pertains to the  implementation of the Next Generation Air Transportation System  (NextGen)—a complex multiagency undertaking intended to transform the  current radar-based system into an aircraft-centered, satellite-based  system by 2025. FAA has taken some steps to improve NextGen  implementation and is continuing to address critical issues that we,  stakeholders, and others have identified over the years. For example,  FAA has made progress in streamlining its processes and improving its  capacity to develop new flight procedures that have led to measurable  benefits, such as fuel savings. FAA has also set NextGen performance  goals through 2018. However, as our recent and ongoing work has  shown, FAA faces several challenges in keeping key NextGen  acquisitions within cost estimates and on schedule, delivering NextGen  benefits, and addressing changes in management and governance,  including vacancies in key leadership positions. Improving Information Security

DOT relies on more than 400 computerized information systems to carry  out its financial and mission-related operations. Effective information  security controls are required to ensure that financial and sensitive  information is adequately protected from inadvertent or deliberate misuse;  fraudulent use; and improper disclosure, modification, or destruction. Ineffective controls can also impair the accuracy, completeness, and  timeliness of information used by management. The need for effective  information security is further underscored by the evolving and growing  cyber threats to federal systems and the dramatic increase in the number  of security incidents reported by federal agencies, including DOT. From  fiscal years 2007 to 2011, the number of incidents reported to the United  States Computer Emergency Readiness Team (US-CERT)increased by more than 140 percent.
Why GAO Did This Study

The challenges facing DOT and Congress regarding transportation priorities and funding cannot be addressed by simply spending more money. Despite large increases in expenditures for transportation in recent years, system performance has not commensurately improved. Congestion continues to grow, particularly in urban areas, and looming problems from the anticipated growth in travel are not being adequately addressed. As performance degrades and the system grows increasingly unreliable, the economic and environmental implications are significant, including wasted fuel and lost time, as cars idle in traffic, airline passengers confront delays, and businesses incur increased costs. As always, safety remains a primary concern, and improving information security is critical to DOTs mission.
Although our nations transportation system is owned and operated by multiple levels of government and the private sector, DOT is the principal federal agency responsible for implementing national transportation policy and administering most of the federal transportation programs. DOT has multiple missionsprimarily focusing on mobility and safetythat are carried out by its various operating administrations (such as aviation, highways, transit, railroads, and others). For fiscal year 2013, the Presidents budget has requested $74.5 billion to carry out its activities.
This statement today focuses on five key issues and management challenges that DOT and Congress face. These areas are
funding the nations transportation system,
refocusing and restructuring surface transportation policies and programs,
improving transportation safety,
implementing the Next Generation Air Transportation System (NextGen), and
improving information security.
This statement is based on a body of work that we have completed from March 2008 through March 2012, including recommendations we have made to both DOT and Congress.

What GAO Found

Funding the Nations Transportation System:
Funding Highways and Transit : The major source of federal surface transportation funding is the Highway Trust Fund, but the revenues that make up that fund are eroding. The federal motor fuel tax rate has not increased since 1993, meaning that the 18.4 cent per gallon tax on motor fuels enacted in 1993 is worth about 11.5 cents today. This trend will continue with the introduction of more fuel-efficient and alternative-fuel vehicles that have the potential through fuel savings to decrease motor fuel purchases and associated tax receipts. The Congressional Budget Office estimates, as of March 2012, that to maintain current spending levels plus inflation between 2013 and 2022, the Highway Trust Fund will require over $125 billion more than it is expected to take in over that period. For this and other reasons, funding surface transportation remains on GAOs High-Risk List. Long-term reauthorization of surface transportation provides an opportunity for Congress to fund the program on a sustainable basis.
The Presidents fiscal year 2013 budget proposes increasing surface transportation funding levels, including a 34 percent increase over the next 6 years for highways and bridgesfunded in part through general revenue transfers.
Congress and the administration are considering various proposals to expand federal financing tools to help leverage investment in transportation infrastructure:
Expanding the Transportation Infrastructure Financing Innovation Act (TIFIA) program.
Creating a National Infrastructure Bank.
Continuing and expanding federal bonding mechanisms.
Funding Aviation : The Federal Aviation Administrations (FAA) expenditures are budgeted to continue to exceed forecasted revenues from the Airport and Airway Trust Fund in future years. FAA operation expenditures not covered by trust-fund revenues are projected to be paid for by general revenues from the U.S. Treasury. According to the Presidents fiscal year 2013 budget, roughly 20 percent of FAAs total annual expenditures for about the next 10 years might have to be paid for by general revenues. As the federal budget continues to be constrained, Congress may face difficult choices regarding reducing FAAs appropriations, which could increase FAAs total costs and delay the benefits associated with investments such as NextGen.
Funding High-Speed Rail : The Presidents budget for fiscal year 2013 requests $2.5 billion for highspeed and intercity passenger railpart of a proposed $47 billion for passenger rail projects over the next 6 years. However, Congress has not provided funding for high-speed rail since appropriating over $10 billion through the American Recovery and Reinvestment Act (Recovery Act) of 2009 and the fiscal year 2010 DOT Appropriations Act. We recently reported that the Federal Railroad Administration (FRA) essentially followed good grant making practices as it awarded Recovery Act funds, but we have also identified several challenges facing these projects as they move forward. For example, project sponsors find it difficult to secure the up-front investment for construction costs and indicated that they have or will need some federal funding to develop their projects.
Refocusing and Restructuring Surface Transportation Policies and Programs: Long-term reauthorization provides an opportunity for Congress to fundamentally re-examine surface transportation programs as we have recommendedanother reason why funding surface transportation is on GAOs High-Risk Listand to expand on recent efforts to reform the highway program. From the standpoint of state and local governments,re-examining surface transportation programs could reduce fragmentation and the administrative expenses states face complying with myriad federal statutory and regulatory requirements. This re-examination could include the following:
Clearly define the federal role in relation to other levels of government and, thus, create a more targeted federal role focused around evident national interests.
Ensure accountability for entities receiving federal funds, for example, by moving to a performance-based program.
Employ the best approaches and analysis to direct federal funds to infrastructure with clear national interests.
Improving Transportation Safety : Another continuing challenge facing DOT pertains to improving transportation safety. In recent years, we have seen a remarkable decline in transportation-related fatalities and injuries, the vast majority of which occur on our nations roads. Traffic fatalities decreased more than 20 percent over the last decade, from nearly 42,000 in 2000 to less than 33,000 in 2010, the lowest level since 1949. Traffic injuries decreased approximately 30 percent, from about 3.2 million in 2000 to about 2.2 million in 2010. These encouraging trends are likely due in part to federal and state DOT efforts. However, even these reduced numbers of fatalities and injuries are still too many.
An additional challenge this testimony addresses pertains to the implementation of the Next Generation Air Transportation System (NextGen)a complex multiagency undertaking intended to transform the current radar-based system into an aircraft-centered, satellite-based system by 2025. FAA has taken some steps to improve NextGen implementation and is continuing to address critical issues that we, stakeholders, and others have identified over the years. For example, FAA has made progress in streamlining its processes and improving itscapacity to develop new flight procedures that have led to measurable benefits, such as fuel savings. FAA has also set NextGen performance goals through 2018. However, as our recent and ongoing work has shown, FAA faces several challenges in keeping key NextGen acquisitions within cost estimates and on schedule, delivering NextGen benefits, and addressing changes in management and governance, including vacancies in key leadership positions.
Improving Information Security : DOT relies on more than 400 computerized information systems to carry out its financial and mission-related operations. Effective information security controls are required to ensure that financial and sensitive information is adequately protected from inadvertent or deliberate misuse; fraudulent use; and improper disclosure, modification, or destruction.Ineffective controls can also impair the accuracy, completeness, and timeliness of information used by management. The need for effective information security is further underscored by the evolving and growing cyber threats to federal systems and the dramatic increase in the number of security incidents reported by federal agencies, including DOT. From fiscal years 2007 to 2011, the number of incidents reported to the United States Computer Emergency Readiness Team (US-CERT) by DOTincreased by more than 140 percent.