SUPPLEMENT TO STATEMENT OF HON. SINCLAIR WEEKS

The questions contained in the following portion of this statement are those contained in a memorandum in the letter of March 28, 1955, from the chairman of this committee to me. Since these questions cover a wide range of matters having to do with H. R. 4260 and similar bills, I believe it would be appropriate to include the questions and answers as part of this statement:

Question No. 1

To what extent should emphasis on the national system of interstate highways go in comparative relation to the regular Federal-aid primary and secondary system?

Answer. The national system of interstate highways is composed of about 37,700 miles of highways, 33,300 miles of which are rural and 4,400 miles in urban areas. This system, which by law is limited to 40,000 miles, forms the most important transcontinental network of highway routes within the United States. While it embraces only about 1 percent of the Nation's total highway mileage, it carries more than a seventh of all traffic. It joins 42 of the State capitals and 90 percent of all cities having a population of over 50,000. Aside from serving as a backbone to the general economy of the country, the national and civil defense aspects of the system are of the utmost importance. The system serves as a main trunkline for the transportation of men and material between our major population and industrial centers and seaports. By reason of the high design standards being established for this system, including the matter of control of access, the system affords a much greater degree of service than any other system in the efficient and rapid movement of the increasingly heavier type of military equipment being manufactured. The National Military Establishment has gone on record as recognizing the system as representing the routes of greatest strategic importance. With respect to civil defense, the system, which is composed of the main arterial routes leading out of our major cities, would undoubtedly be of inestimable value for most rapid and least congested evacuation from urban centers. It is expected that there would be many other civil-defense advantages to the system in such matters as clearing debris, logistical supply, removal of casualties, dispersal of industrial plants, and circumferential movement around cities. These factors, together with others pointed out in the recent highway study transmitted by the Secretary of Commerce to the Congress, indicate the need for emphasis on the national system of interstate highways.

Question No. 2

Should the Federal-aid primary and secondary system programs be accelerated along with the special emphasis on the Interstate System? If so, to what extent and by what means?

Answer. In view of the emphasis to be given to the Interstate System, no specific acceleration should be given by the Federal Governmnt at this time to the Federal-aid primary and secondary systems. These systems are far from adequate, but the present authorized Federal aid is the largest ever granted by the Federal Government. This aid should be continued at the existing rate with the hope that State and local governments will not only be able to match the Federal share but, as their revenues increase, to expend more sums on these systems without additional Federal aid. If Federal aid for these two systems were increased at the present time, it is doubtful that all of the States would be able to match such increases. Furthermore, a substantial portion of the funds now being spent on the primary system are for projects located along interstate routes. Consequently, substantial funds will be released to the States for construction of projects on the primary system when they are no longer required to expend primary funds on projects located along interstate routes. Question No. 3

Should a definite period, such as that proposed in H. R. 4260, be fixed for the completion of the National System of Interstate Highways, or should construction be accelerated or decelerated according to the availability of motor fuel tax revenues?

Answer. A definite period such as the 10 years proposed in H. R. 4260 should be fixed for the completion of the Interstate System. Paradoxically, no system of highways can ever be completed, but the plan to build the Interstate System in 10 years to meet the traffic needs of 20 years is as close to perfecting a system as can be devised. The whole concept of this plan is the completion of the

job. It is not based on an acceleration or deceleration of the motor fuel tax revenues. Estimates of these revenues indicate that they are sufficient to carry out the plan. The marshaling of the construction industry for this project can be done on a sounder basis with a definite period of time fixed for its completion. Furthermore, if the Interstate System is definitely planned and located within a comparatively short time, the investments of the persons owning land adjacent to the rights-of-way can be stabilized, and not subjected to the uncertainties of road location which now prevail. Prompt acquisition of rights-of-way under the proposed program should also be much more economical.

Question No. 4

Should the existing ratio of matching for the Interstate System be changed from 60-40 to 90-10, or some other ratio?

Answer. The existing 60-40 Federal-State participation ratio for the Interstate System should be changed in order that the Federal Government may bear a much greater share of the cost. Federal participation in the system should be increased as proposed in the Clay report and as provided in the pending bills based thereon. There is no direct relationship between volume of traffic and the percentage of the Federal contribution. If the Federal contribution were based on the traffic factor, the percentage of Federal participation would be a variable instead of a fixed figure for each of the States. The approximate 95-percent Federal contribution as proposed in the pending bills is fully justified by the national interest in the Interstate System as outlined in the reply to question No. 1.

Question No. 5

Should our present highway development procedure be modified in any way if the Federal share for the Interstate System is increased, or should all projects on the Interstate System be initiated and constructed by the State highway departments, in cooperation with the Bureau of Public Roads, as is the procedure at the present time?

Answer. There appears to be no need for making any substantial change in the procedures now being followed. It is believed that the States will cooperate with the Bureau of Public Roads as they have in the past in the initiation of highway projects. In the event that this belief proves to be unfounded, and a slowing down in the initiation of projects occurs, necessary modifications in the procedures could be made.

Question No. 6

Will the placing of special emphasis on the Interstate System adversely or beneficially affect the State's capacity to carry on an effective program of construction on the regular Federal-aid primary and secondary highway systems? Answer. Since the Interstate System is the system now requiring the heaviest expenditures for construction, the States are expending a substantial amount of their own funds for projects on this system in addition to the amounts which they use to match Federal-aid funds. To the extent that Federal participation is increased, the States will be relieved of these expenditures. Thus, funds which would be required for the Interstate System could be transferred by the States for improvement of projects on other routes. It would appear, therefore, that additional emphasis on the Interstate System, through increased Federal-aid funds and increased matching ratio, would aid the States in carrying on construction programs on other systems.

Question No. 7

Should the Federal contribution to the Interstate System be financed on a pay-as-you-go basis or a pay-later basis? If neither of these financing plans is deemed feasible, what is an adequate alternative financing plan to complete the Interstate System?

Answer. The need of this country for roads and for the completion of this particular system within a 10-year period is well known. Expenditure on the average of an additional $2 billion per annum over a 10-year period would involve an increase in taxes for the next 10 years of $21⁄2 billion per annum. It was not deemed wise to increase taxes at this time to such an extent, and it was decided that the necessary funds should be borrowed. Roads are a capital asset in a real sense, and it is a common practice for private individuals, and not unknown in the case of Federal Government, to borrow funds to finance the construction of capital assets. The Panama Canal, Union Pacific Railroad, TVA, Boulder Dam, and the St. Lawrence seaway are all examples of borrow

ings by the Federal Government. If roads are needed badly enough, it does not seem to be an unwise or unsound policy to borrow money for their rapid completion. Although borrowing involves payment of interest, the payments will not be made without any returns. The highways would be available within a 10-year period instead of a 30-year period. Use of the highways would undoubtedly generate additional gasoline-tax revenues, and these could clearly be credited against interest charges. Although it is not possible to measure in dollars and cents the contribution that this system would make to the economic development of our country, it is clear that the contribution would be a substantial one. This should also be credited against interest charges. Furthermore, completion of these roads from the national-defense angle alone would make the interest charges well worth while. We are spending $30 billion or more annually on our defense needs. The added amounts to cover this interest charge, in case of need, would be repaid many times over.

Question No. 8

In the event that bond financing is deemed the best method of providing for the Federal cost of the Interstate System, what provision should be made to insure payment of the principal and interest?

Question No. 9

If the bond method of financing the Interstate System is approved, should the bonds be a direct obligation of the United States?

Answer. The provisions in the bills before this committee provide a method of financing which accomplishes the important purpose of providing sufficient funds to service the proposed bond financing without increasing present taxes. The foregoing is accomplished by the creation of a Corporation. The Secretary of the Treasury is directed to pay the revenues from the gasoline and special fuels taxes in excess of $622,500,000 to this Corporation. The Corporation is authorized to issue bonds not in excess of $21 billion for the purpose of raising funds to pay for the construction of the system. The bonds will not be a direct obligation of the United States, but will be the direct obligation of the Corporation.

Question No. 10

Will revenues from the present Federal motor-fuel taxes be sufficient (at the present rate) to continue the present Federal-aid highway program and service the bonded debt? If not, should such taxes be increased for this purpose?

Answer. The estimates made by the Treasury Department and the Bureau of Public Roads indicate that present motor-fuel tax rates would be sufficient to service the bonded debt and continue the present Federal-aid highway program as outlined in H. R. 4260 and similar bills.

Question No. 11

It has been proposed that the bonded debt under the suggested pay-later plan for construction of the Interstate System be paid off over a period of 30 years. In the 20-year period extending from the completion of the Interstate System to final repayment of the interstate bonds, what is the prospect for continuing the regular Federal-aid highway system out of revenues then available?

Answer. H. R. 4260 and similar bills contemplate continuation of the regular Federal-aid highway program at its present level until the bonds authorized under the bill have been liquidated. As indicated in the reply to question No. 10, it is estimated that the revenues from present tax rates would be sufficient to liquidate the bonded indebtedness and continue the regular Federal-aid program at the current rates. This, of course, would not preclude additional Federal aid in the event that Congress determines that such additional aid is necessary. Question No. 12

It has been suggested, and it is provided in H. R. 4260 et al. that all Federal motor-fuel tax revenues in excess of $623 million annually be made available for paying the Federal share on the Interstate System, including bond retirement and interest payments. The effect of this proposal would be to limit funds available to the Federal-aid primary and secondary systems to $623 million annually for as many as 30 years. Should funds for the Federal-aid primary and secondary highways be so limited?

Answer. If the present tax rates on gasoline and special fuels are not increased and the entire balance of tax revenues from these sources are needed to service the bonds, then, of course, there would be no funds available from these particular

sources. However, it would be possible for Congress to raise these particular tax rates so as to provide additional funds for the Federal-aid primary and secondary systems.

Question No. 13

What will be the effect of introducing the Federal Highway Corporation into our national highway management program, now the joint responsibility of the Bureau of Public Roads and the State highway departments?

Answer. The Federal Highway Corporation would not be concerned with the existing Federal-aid highway system except for the Interstate System. The present joint program between the Federal Government and the States will continue, but the Corporation would be given the power of arbitration in the event of a disagreement between the Secretary of Commerce and a State. The Chairman of the Board of the Corporation would be required to maintain a liaison with the various States. Another duty of the corporation would be the fixing jointly with the Secretary of Commerce, of certain costs in connection with the credit provisions of the bills. In general, the existing procedures whereby the State highway departments initiate action subject to approval by the Secretary through the Bureau of Public Roads would continue to be the mode of operation. Question No. 14

What will be the extent of the Federal Highway Corporation's functions under subsection 102 (d) of H. R. 4260?

Answer. Specifically, the Corporation would be an informal administrative court of appeal or arbitrator between the Secretary of Commerce and the States. The cooperation between the Federal Government and the States for almost 40 years in the road program is one of the high marks in the whole history of FederalState relationships, and disputes have been few. The pending bills propose a method for resolving such disputes if they affect standards for the Interstate System, or determination of the scheduling and priority of construction thereon. It is possible that other disagreements of policy might also be settled by this method.

Question No. 15

Should there be control of access on all segments of the Interstate System, or, what would be the effect of unlimited access on the Interstate System highways? Where States do not have necessary legislation to acquire access controls or are unwilling to exercise such rights for various reasons, should the Federal Government acquire the right-of-way and retain sufficient margin of interest to assure control of access on rights-of-way so obtained?

Answer. There should be full or partial control of access on all segments of the Interstate System. The benefits of fully controlling access to highways carrying substantial amounts of traffic are clearly recognized both from a standpoint of accident reduction and the prevention of a progressive reduction in capacity due to the interruption of the free flow of traffic by vehicles entering and leaving the highway from an ever-increasing number of roadside business establishments. The economy of control of access is an additional factor of extreme importance. Many cities have gone through the experience of constructing a highway on new right-of-way when obtainment of the easement with control of access would have cost little, if any, more than without control of access, and then have found that the highway deteriorated in its ability to handle traffic because of the development of roadside businesses. Consequently, the construction of another highway is required to handle the through traffic and the same process in a very few years results in searching for an alinement to construct still another highway. The lack of proper and adequate control of access in the first instance results, therefore, in the ultimate waste of public funds. An exception to the need for full control of access exists in those rural areas of the country which are sparsely settled and sufficiently distant from urban areas to be outside their inffuence from a traffic standpoint. In situations where the highway department of a State or subdivision thereof is unable to acquire the necessary rights-of-way, including the control of access thereto from adjoining lands, or to obtain possession and right to enter upon and use the rights-of-way, improved or unimproved, with sufficient promptness to expedite construction, reconstruction, and improvement thereon, the United States Government should have authority, upon request of a State, to step in and acquire such rights-of-way. The Government now has such authority with respect to defense access roads as provided in section 14 of the Defense Highway Act of 1941

(55 Stat. 765). Similar authority with respect to projects on the Interstate System would materially expedite the construction and improvement of such system.

Question No. 16

To what extent should there be reimbursement to States for toll roads and other primary roads included in the National System of Interstate Highways? Answer. The reimbursement feature contained in H. R. 4260 and similar bills was designed to provide equity for those States which have initiated and advanced improvements on the Interstate System. It is only fair to so compensate the benefited States for their initiative, and the formulae for reimbursement appear to be reasonable and equitable.

Question No. 17

Should there be reimbursement for toll roads constructed after 1955 or should eligibility for reimbursement terminate in 1955? What should the reimbursement policy be with respect to nontoll roads incorporated in the National System of Interstate Highways?

Answer. In order to attract private investment funds to the total highway program, and thereby decrease to some extent the public funds which must be raised through taxation, the reimbursement feature for toll roads should be continued after 1955 as provided in H. R. 4260 and similar bills. Continuation of this feature after 1955, would permit construction of additional toll road mileage with private investment funds. Demands for public funds would thus be decreased by substantial amounts. The reimbursement policy to be followed with respect to nontoll roads incorporated in the Interstate Highway System should be that provided in H. R. 4260 and similar bills.

Question No. 18

Should there be compulsory or optional retirement of toll road bonds by States under a program of reimbursement?

Answer. H. R. 4260 and similar bills provide for optional retirement of toll road bonds under the reimbursement program. This option is necessary because of the different needs situations in the several States which would be affected by the provision. To the extent that toll roads continue as toll roads after reimbursement is made under the provisions of the bill, the total highway income would be supplemented by an amount equal to the amount of tolls which would be collected. In view of the urgent need for highway funds from whatever source, there should not be diminution of any source of revenue. Optional retirement of toll road bonds is, theerfore, preferable to compulsory retirement. Mr. FALLON. Mr. Secretary, I understand from your statement that you recommend this bill and recommend the method of financing? Secretary WEEKS. Yes, sir.

Mr. FALLON. Mr. Secretary, there has been a statement or there have been several statements made that I read in the press that other categories other than the Interstate System would suffer under this bill. Is it not a fact that the States would have more money to use in other road categories if this bill is adopted?

Secretary WEEKS. I am certain in my own mind, sir, that that is true, from two standpoints. In the first place, under this bill we have a schedule that shows that the States would share in more construction at a lesser matching cost than is the fact today.

Additionally, if you construct the Interstate Highway System you are constructing a road which is much more costly than the primary and secondary highway construction involved. Supposing the State is matching funds today on a 50-50 basis for the construction of the type of road involved in this Interstate System. Let's say that the State is putting up $3 million, for example, in matching funds. Their obligation to participate in this type of Interstate Highway System construction will henceforth be limited to the $116 million that they are paying under the 1954 act. So they would have this $3 million available to spend on less costly types of roads. I believe that they