This looming fiscal crisis requires a  fundamental reexamination of all government programs and  commitments. Future transportation funding is uncertain. Revenues to support the  Highway Trust Fund—the major source of federal highway and transit  funding—are eroding. Recognizing many of these challenges and the importance of the  transportation system to the nation, Congress established The National  Surface Transportation Policy and Revenue Study Commission  (Commission) in the Safe, Accountable, Flexible, Efficient Transportation  Equity Act—A Legacy for Users (SAFETEA-LU). The mission of the  Commission was, among other things, to examine the condition and future  needs of the nation’s surface transportation system and short and long- term alternatives to replace or supplement the fuel tax as the principal  revenue source to support the Highway Trust Fund. In January 2008, the  Commission released a report with numerous recommendations to place  the trust fund on a sustainable path and to reform the current structure of  the nation’s surface transportation programs. Principles to Assess Proposals for Restructuring the Surface Transportation Program

Through our prior analyses of existing programs, we identified a number  of principles that could help drive an assessment of proposals for  restructuring the federal surface transportation programs. These  principles include (1) defining the federal role based on identified areas of  national interest, (2) incorporating performance and accountability for  results into funding decisions, and (3) ensuring fiscal sustainability and  employing the best tools and approaches to improve results and return on  investment. To what extent do the proposals reexamine current and future spending  on surface transportation programs? Preliminary Observations on the Commission’s Recommendations

The Commission makes a number of recommendations designed to  restructure the federal surface transportation program so that it meets the  needs of the nation in the 21st century. The recommendations include  significantly increasing the level of investment by all levels of government  in surface transportation, consolidating and reorganizing the current  programs, speeding project delivery, and making the current programs  more performance- and outcome-based and mode-neutral, among other  things. We are currently analyzing the Commission’s recommendations  using the principles that we have developed for evaluating proposals to  restructure the surface transportation program. Although our analysis is  not complete, our preliminary results indicate that some of the  Commission’s recommendations address issues included in the principles. We and others have  also identified some of these and other issues as possible areas of national  interest for the surface transportation program. Rather, the proposed cost share  arrangements appear to reflect the historical funding levels of many  surface transportation programs without considering whether this level of  funding reflects the national interest or should vary by program or project. For example, the Commission recommends that the federal government  pay for 80 percent of the proposed intercity passenger rail system. Although the principles do not  prescribe a specific approach to restructuring, they do provide key  attributes that will help ensure that a restructured surface transportation  program addresses current challenges. Performance and Accountability: Transportation Challenges Facing  Congress and the Department of Transportation.
Why GAO Did This Study

The nation has reached a critical juncture with its current surface transportation policies and programs. Demand has outpaced the capacity of the system, resulting in increased congestion. In addition, without significant changes in funding mechanisms, revenue sources, or planned spending, the Highway Trust Fund--the major source of federal highway and transit funding--is projected to incur significant deficits in the years ahead. Furthermore, the nation is on a fiscally unsustainable path. Recognizing many of these challenges and the importance of the transportation system to the nation, Congress established The National Surface Transportation Policy and Revenue Study Commission (Commission) to examine current and future needs of the system and recommend needed changes to the surface transportation program, among other things. The Commission issued its report in January 2008. This testimony discusses 1) principles to assess proposals for restructuring the surface transportation program and 2) GAO's preliminary observations on the Commission's recommendations. This statement is based on GAO's ongoing work for the Ranking Member of this Committee, the Chairman of the House Transportation and Infrastructure Committee, Senator DeMint, as well as a body of work GAO has completed over the past several years for Congress.

What GAO Found

GAO has called for a fundamental reexamination of the nation's surface transportation program because, among other things, the current goals are unclear, the funding outlook for the program is uncertain, and the efficiency of the system is declining. A sound basis for reexamination can productively begin with identification of and debate on underlying principles. Through prior analyses of existing programs, GAO identified a number of principles that could help drive an assessment of proposals for restructuring the federal surface transportation program. These principles include (1) defining the federal role based on identified areas of national interest, (2) incorporating performance and accountability for results into funding decisions, and (3) ensuring fiscal sustainability and employing the best tools and approaches to improve results and return on investment. GAO developed these principles based on prior analyses of existing surface transportation programs as well as a body of work that GAO developed for Congress, including its High-Risk, Performance and Accountability, and 21st Century Challenges reports. The principles do not prescribe a specific approach to restructuring, but they do highlight key attributes that will help ensure that a restructured surface transportation program addresses current challenges. In its report, the Commission makes a number of recommendations for restructuring the federal surface transportation program. The recommendations include significantly increasing the level of investment by all levels of government in surface transportation, consolidating and reorganizing the current programs, speeding project delivery, and making the current program more performance- and outcome-based and mode-neutral, among other things. GAO is currently analyzing the Commission's recommendations using the principles that GAO developed for evaluating proposals for restructuring the surface transportation program. Although this analysis is not complete, GAO's preliminary results indicate that some of the Commission's recommendations appear to be aligned with the principles, while others may not be aligned. For example, although the Commission identifies areas of national interest and recommends reorganizing the individual surface transportation programs around these areas, it generally recommends that the federal government pay for 80 percent of project costs without considering whether this level of funding reflects the national interest or should vary by program or project.