Transportation: Key Issues and Management Challenges

What GAO Found

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. According to the President’s fiscal year 2013 budget, 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 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 highspeed 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.

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.

Why GAO Did This Study

This testimony discusses key issues and management challenges facing our nation’s transportation system, as well as the Department of Transportation (DOT), as Congress deliberates transportation policy and funding issues. A safe and efficient transportation system is critical to our economy and affects the daily life of most Americans. Our nation has built vast systems of roadways, airways, railways, transit systems, pipelines, and waterways that help move people and goods. However, these systems are under growing strain, and the cost to repair and upgrade them to meet current and future demands is estimated in the hundreds of billions of dollars. Yet, calls for increased investments in the systems come at a time when traditional funding sources are eroding. Funding is further complicated by the federal government’s financial condition and fiscal outlook. GAO’s long-term simulations show that, absent policy changes, the federal government faces unsustainable growth in deficits and debt.

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 DOT’s mission.

Although our nation’s 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 missions—primarily focusing on mobility and safety—that are carried out by its various operating administrations (such as aviation, highways, transit, railroads, and others). For fiscal year 2013, the President’s 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

For more information, contact Phillip R. Herr at (202) 512-2834 or herrp@gao.gov.