>> and then in their conclusion, they say that the u.s. has been under investing in our transportation systems far too long. the impact is being felt in every state and town. with the interstate system beyond capacity and design life, this underinvestment is costing u.s. businesses and individuals time and money. i think this is very important, so we'll put those in the record and get started with you, doctor.

we are just about finished with those, but go right ahead. >> a little bit busy on the floor this morning, so i apologize. this is wha when i really do wao give my opening statement in. we have an area where senator boxer and i agree closely. i want to make sure everybody knows it. and so i do thank you, and the panelists, for taking time to be here as well. it's no secret i'm one of the strongest advocates of the strong, robust investment of our nation's transportation system. i think a lot of people don't understand, a lot of my conservative friends, the conservative position is to have this, this is what we're supposed to be doing. as cbo reported earlier, absent a new revenue source to address the $14 billion annual shortfall in highway trust fund, we're going to need to cut the current have a program by over 80%. i'm sure the witnesses will agree at a time when the highlights, highways we build

more than 50 years ago are at the end of their useful life and this kind of cut would be catastrophic. there's no hiding from the problem. we still need a substantial infusion of cash just to remain, just to maintain what we have now. in the last month i hosted our new secretary of transportation, secretary fox, in my state of oklahoma and showed him the major project being built with i 44 and i to 35 in oklahoma city. he is in the audience today. this interchange supports over 200,000 vehicles a day, many of which are passing through from other states and income to a railroad bridge crossing as the two structurally deficient bridges over greek bids -- that's. with over $109 of this 231 million-dollar project complete their israel a real possibility that we would have to halt construction after this year without the confidence of a solvent federal highway program. this is just one of a couple of

projects that oklahoma department of transportation has identified in its eight your plan which includes replacement of our structurally deficient bridges. unfortunately, states already backing away from their longtime regional significant projects like i 44 because of disrupting uncertainty in federal action. it's time to look for all options in the general fund of the way for project disruption, public bond default, continue, market is uncertain. i feel very strong that we are prepared to redirect this. i'm committed to work with senator boxer and senator visser -- better to find resources even if that includes dissolving the decision to totally new federal highways back to the states to ensure all users pay their fair share. i recognize removing the prohibition is controversial but

we can't have states and locals bill is to maintain and modernize their obsolete roads while threatening 80% of their budget. so as for the general fund, with $14 billion annual shortfall in highway trust fund, we can't ignore the $202 billion we pay farmers not to farm the land or the $24 billion annually on vacant federal properties or the $47 billion spent on him proper or fraudulent medical costs we pay out of the general fund. so this is what, i would just have to say, there's nothing more significant except for our nation's defense and infrastructure. and to me that should be further up the line in terms of the general fund. so with a lot of things to look at the last thing i would say to my conservative friends, the conservative position is to have another hybrid reauthorization program instead of relying on extensions, which arguably take,

cost about 30% more to do without any of the planning or the reforms. thank you, madam chairwoman, for allow me to coming in late. >> i think your statement is very important, and you nailed it. this is our moment in this committee. and what we do now is going to be critical, because we're going to get a five or six-year bill, and we've got to figure out the way to fund it. we'll work with our friends on the finance committee. i'm going to go see dave camp and max baucus to talk about this. and i've been working to figure out a way where we can replace that gas tax at the pump with a different type of funding mechanism, and i'm hopeful we can come together. we need to come together for the good of the country, and this is the place where, you're right, conservatives and liberals and moderates can come together. i see we've been joined by senator merkley. the you have an opening statement? if so, please proceed.

>> thank you. very briefly. i want to offer special thanks and welcome to my fellow oregonian, great. thank you for coming. he brings extensive experience as an engineer of oregon's second water utility, and your front-line experience is very welcome in this conversation. i have other comments that i'll save for later, so we can get on with the testimony. >> senator inhofe, did you say gary ridley is absent, your friend and my friend? >> yes. our friend, gary ridley, hold your hand up. gary has been a witness at this table more than anyone person to ease our secretary of transportation in oklahoma. he knows what he's doing. >> we will go to mr. ruane, president and ceo, american road and transportation builders association. please proceed. >> good morning -- >> make sure you put on your microphone. >> good morning, chairman boxer,

senator vitter. >> we hear you loud and clear. >> turn it off. [laughter] >> thank you for inviting me to participate in this important discussion about the challenges facing the future of the federal surface transportation program. for too long the primary metrics to gauge the impacts with the federal highway program have been each states apportioned months, highway trust fund rate of return, and in times past, in remarks. unfortunately, these methods of evaluation drastically understate the value of federal highway investment. the purpose of the federal highway program is to ensure the movement of people and goods among states, as a result an efficient national system of roads and bridges is the linchpin, the linchpin for a strong and growing u.s. economy. while this relationship is both intuitive and the refutable, it is sometimes hard to quantify. what is more observable, however, is the contribution of

federal highway investment it makes to each states annual road and bridge improvements. federal funds account for roughly 50% of state roadway and bridge capital outlays, and looking at a very specific state situation is particularly illuminating. the map that's been displayed here behind me shows that 11 states rely on federal highway investment for 70%, 70% or more, of the road and bridge capital improvements. it also shows that federal reimbursement support between 50-69% of capital outlays for some 20 states. for the remaining 19 states, federal highway investment accounts between 35, 49% of the highway construction activities. these figures are a 10 year average of the relationship between federal highway

investment, state road and bridge improvements. although the amount of reliance on federal funds for needed road and bridge improvements may very by state, it is clear, it is clear that for the vast majority of states, in fact, 61%, the effectiveness of highway construction programs are heavily dependent on a strong and reliable federal partner. this is a very good proxy for the importance of the federal program. this makes the fact that the highway trust fund will face, as you know, the fifth in solvency crisis in seven years when map-21 expires at the end of 2014, even more disturbing. we should be clear is continuing saget is not the result of runaway spending. in fact, federal highway investment is less today than it was in fiscal year 2011. we should also be clear that the root cause of this problem is not declining highway trust fund

revenue. the revenues from the federal gasoline, diesel and truck taxes have returned to their pre-recession levels, and the congressional budget office projects continued moderate growth in trust fund revenues over the next decade. the simple fact is the use of these that generate the highway trust fund revenue stream, as you know, have not been adjusted for 20 years. as a result of the trust fund has limped along from in solvency crisis to in solvency crisis since 2008. we've all seen cdos projection that would be necessary to from your action is not taken to avert the revenue shortfall that again looms at the end of 2014. alternatively as congress continues the practice of transferring resources from other parts of the budget to the highway trust fund, you will

have to add some $135 billion to the federal deficit over the next 10 years, or shift about 135 billion from other government activity to the trust fund. neither of these approaches in our judgment are sound, fiscal, our economic policy. chairman boxer, the reformed view in this committee helped to craft a map-21 are deeply appreciated. the remaining impediment that faces us right now is to come up with a long-term, sustainable, reliable source of funding for our nation's transportation infrastructure. thank you very much. >> thank you very much. and now we hear from the honorable michael lewis copresident american association of state highway and transportation officials. we welcome you. >> good morning, chairman boxer, ranking member vitter, senator whitehouse, distinguished

numbers of the committee. i'm president of the american association of state highway and transportation officials. thank you for the opportunity on behalf of aashto in the state beauties to share our views on the need for robust federal investment and service to petition of potential impacts of the impending cash shortfall and highway trust fund. three brief points to make. one, if congress does not back within the next 12 months do you increase the highway trust fund revenues or provide additional funds of what the states be unable to obligate any new federal funds in fiscal year 2015. if congress does not act there will be direct impact to the states it comes with lost jobs and permanently shuttered businesses and substantial additional economic, social and apartment across associate with canceled or delayed projects. if congress does not act, the states even with the local and private partners simply cannot fill the infrastructure funding gap. let me elaborate briefly on each of these. the federal surface transportation program is at a crossroads. the highway trust fund is providing stable and transit funding over decades since 1956.

this is no longer the case. according to cbo, spending is estimated to exceed receipts by roughly $15 billion per year starting fiscal year '14. for the more the trust fund is expected to have a civic cash shortfall in fiscal year 2015. by our estimates states will not be able to obligate any new federal highway funds in fy 2015, a drop from 40 billion a year to virtually zero. in addition to allowing a new obligations it's possible this cash shortage could slow down federal reverse this to states for costs already incurred and from prior obligations leading to cash shortfalls for states. what are the impacts if congress has to act? a significant portion of much-needed highway and transit projects that underpin economic development, improve the quality

of life, will either be delayed or canceled outright, cut back some contracts will mean missed opportunities to pare down the backlog, causing a negative domino effect on construction and deployment exactly when they're starting to rebound after being one of the hardest hit segments in the recent recession. in rhode island if no additional revenues are found for the highway trust fund by october 1 of next year he long lasting impacts will be devastating. without additional evidence states will be unable to operate in 2015. in the worst-case states like rhode island and louisiana could be facing a cliff now in 2014. that's because many large projects are multiyear projects that have committed funding for future obligations to address cash flow needs. a decade ago, rhode island committed to a large number of regionally vital transportation projects using innovative financing, which also pledges future federal funds for debt service. without assurance that we can

expect level funding in fy '15 rhode island will be facing the real possibility that all fy '14 funds will need to be pledged to cover existing obligations for fy '14 and 15. thereby eliminating new contract awards for two full years. not only will this have devastating effects on local construction industry but it comes at a time even with level funding rhode island bridges are expected to further deteriorate from 20% structurally deficient today to over 40% structurally deficient by 2020. third point, a long-term and dependable federal partner is essential to all states, large and small, rural and urban. even though states that increase the revenues and become leaders in infrastructure investment ultimately cannot do it alone. transportation is needed today and any future. going back to the founding days of this nation, article one, section b. of the constitution declares that it's a duty of the federal government to provide support for national transportation investment for the development of post-roads,

canals, highways and airways. transportation investment is an exceptional track record of creating jobs and supporting economic development throughout the country. and summary transportation infrastructure investment is critical for long-term economic growth, employment, household income, exports and overall quality of life. the outlook is unsustainable because the current federal revenues are simply not enough. congress can address this projected shortfall in one of three ways by substantially reducing spending for service in test edition, not something i think we support. i boosting revenues or some combination of the two. we and others have long list of potential revenue options we believe that at a minimum we need an approach that will allow us to sustain map-21 and dust levels in real terms. we believe it's possible to reach this level. potentially devastating economic impact on virtual elimination

funding, we believe the only solution is to find and implement a viable revenue solutions that will work for 2015 and are sustainable over the long term. thank you. >> thank you so much. next we turn to janet kavinoky, a friend of all of us i think. chief executive director of transportation infrastructure, vice president of americas for transportation mobility coalition, united states chamber of commerce. we welcome you. >> thank you, chairman boxer, ranking member vitter, senator barrasso and members of the committee for the opportunity to lay out the case for federal leadership and funding for transportation infrastructure. quite simply, roads and bridges, transit systems, railroads, waterways and ports, airports and air traffic control form the framework that makes economic activity possible. a national transportation network that meets current and future demand enabled mobility for customers, employees, and supports seamless reliable and safe supply chains will boost gross domestic product. a system that is disjointed,

unreliable, unsafe and inadequate for future economic and population growth will drag down the economy. when transportation network support predictable logistics, tested positive and strong correlation with the job creating foreign investment. as the united states transportation infrastructure becomes less competitive with the rest of the world, business will look to invest and employ people in other countries with more efficient fiscal platforms. markets outside our borders represent more than 80% of the worst purchasing power, 92% of its economic growth and 95% of its consumers. more than 38 million jobs depend on trade. one and three manufacturing jobs depends on exports and one in three acres on american farms planted for hungry consumers overseas.

the good news is that map-21 reflects a belief that the federal government plays a role in furthering national interests such as u.s. global competitiveness, international trade, and interstate commerce. in addition the work of this committee provided map-21 with critical reforms such as ensuring accountability for spending money wisely, improving planning and prioritizing, delivering projects faster and stretching user fees farther. now we must focus on the money and the future of the federal highway trust fund, avoiding the impending crisis in 2015, establishing a structurally sound revenue approach for the 2015-2024 and preparing for 2025 and beyond. there are three different paths to choose from. the first is to cut back programs to fit available resources, according to the congressional budget office in july, this means is doing at new federal obligations for highways, transit and safety in

2015, and substantial reductions from current services levels in subsequent years. in the last several years congress has repeatedly voted to reject a dramatic cuts in highway and transit programs. would ask you to do so again. because this path is unacceptable. the second is to continue general fund transfers. we are concerned that this approach may not support economic growth competitiveness in jobs over the long term because the user fees are the key to contract authority and multiyear federal funding commitments. the '30s to increase existing user fees and/or find a new user related revenue sources so that we can address the well documented needs for today and tomorrow. in the years through 2024, there are multiple revenue options that could work alone or in combination, but we continue to believe the simplest, most straightforward and effective way to generate enough revenue for federal transportation programs is the increasing federal gasoline and diesel taxes. in addition we must take full

advantage of private sector capital, innovation, problem solving and collaboration. public-private partnerships and other forms of private sector involvement still require revenue and did not resolve the highway trust fund solvency issue. finally, now is the time to initiate aggressive research and development in anticipation of 2025 when café standard increase in revenues from excise taxes on fuels are likely to require substantial replacement as the primary source of funding. there is no shortage of research that looks to the questions of who pays, how much, and by what mechanism? one thing is for certain, there is no free lunch. there is no creative option, and there is no avoiding the revenue discussion. yes, this nation is faced with the difficult circumstances. however, without proper investment and attention to infrastructure, our economic

stability, job growth, global competitiveness and quality of life all at risk. the federal role is at its simplest, to make sure the nation's transportation system functions well as a whole to support the economy. let's seize the initiative now to set a new path that will ensure adequate funding to support that role for years to come. thank you. >> thank you very much, and we're going to move ahead with mr. gregory cohen and we're very happy to see them. is president and ceo of american highway users alliance. >> thank you, madam chairman, ranking member vitter and members of the committee. i appreciate this opportunity to present you the highway users alliance but i want to emphasize our -- we are taking an epic crisis with solvency of the public trust fund and that he transportation fiscal cliff is approaching rapidly. as america fails to keep up with investment needs, we are sliding on the economic ladder. for decades, american roads were

number one in the world come indisputable. according to the world economic forum, today we are number 18. this is no longer the exceptional system that we inherited it from the greatest generation. federal highway program benefits every state, rural and urban, serves every citizen whether the driver not. my statement discusses the needs in detail but i will select for areas to highlight. first, is congestion. we talk about $100 billion or $124 billion as the cost of congestion. that's just the cost of fuel and time lost. it scratches the surface. when you look at qualitative issues, and safety impacts, logistics, jobs access, access to employees, the stress and health effects of congestion, ems slowing the responses, it's several times probably what we get from the texas transportation institute. let me talk about bridges.

yesterday's hearing talked about the bridge collapse in washington and minnesota. tragedies. but, you know, our bridges, the 25% as the chairman mentioned are now deficient. that is the equivalent of a thousand miles of bridges. you could drive a eyed in all the way from the east coast to the west coast and back, that's the number of bridges. that's the miles of bridges that need work. safety. one thing we can really guarantee is if this program can't find a new project in 2015, there are 33,000 death toll that we are facing is going to go up. and we know our safety projects have a cost to benefit on average of $42 for every 1 dollar invested. it's just crazy not to put in guardrails where they are needed and that's the kind of thing that's going to happen. commerce. particularly for rural needs. 4% of the road networks is our

highway next work system. it carries 40% of the traffic. if nothing else it's a federal issue. these interstate commerce routes certainly are. let me turn the funding. as the voice of highway users, i'll admit that we haven't always jumped at the idea of raising user fees. there are two main reasons we strongly support it now. first, as i mentioned, the situation is critical. second, the reforms and map-21 we really believe what a long way towards restoring public trust in federal transportation programs and trust in the highway trust fund. at this point the committee is focused on preventing a catastrophic cut but there should also be some consideration to mean actual needs. and annulus growth rate of about 1% above inflation is basically what you need just to get the situation from getting worse. of course, it would be better to provide enough funding to actually improve the conditions. here are three principles on

funding we think are important to consider. number one, the mix of funk solutions must be focus on keeping the highway trust fund saw it and robust to any supplements that are beyond the highway trust fund are good, but we need to focus on the trust fund itself. number two, we need to keep attacks broad where everyone pays and everyone benefits. three, let's solve this problem once and for all. the funding solution has got to be sustainable for future reauthorization bills can be enacted with guaranteed funding levels that are a minimum of five to six years. keeping dispensable's, let's get specific. number one, we need to look at raising the fuel tax to make up for what's been lost to inflation since 1993. number two, we need to look at indexing the fuel tax to one or more variables to maintain or increase the purchasing power over time. three, considering, we need to look at what maryland and virginia have done, consider taxing fuel as a percent of fuel costs at the terminal rack and provide additional protections to ensure stability when prices

are volatile. four, and this is really the last, i hear you, madam chair, but this is sort of a lasting it became. if we can't do everything we need to do we might need to supplement certain or off-highway programs with either one time for a small general fund contribution. after all, everyone whether they drive or not benefits from good roads. in conclusion, map-21 was a great example of doing the right thing for the american people. still we can do better. fiscal stability can achieve reforms. it is in the national interest that we solve this problem. the benefits of the federal highway program reach every corner of the country, urban and rural, all kinds of people and businesses, farmers, office workers, truckers and tourist. thank you again for the opportunity to appear today and for your consideration. >> what was your number one again of your list? you said there were four things but i missed number one. >> raise the fuel tax to make up

for inflation lost since 1993. >> thank you. we now are going to hear from our friend from the national construction alliance, richard poupore. >> thank you, chairman boxer, ranking member vitter, and distinguished members of the environment public works committee. the ncaa to that i represent, the partnership the nation's largest construction, the international union of operating engineers, the brotherhood of carpenters and joiners of america, the laborers international union of north america, and the international association of rigid structural and enforcing i'm workers. these four unions of the alliance represent more than 1.5 million workers, many who build our nation's infrastructure. i myself am a member of the opera and engineers out of local 324 in michigan where i spent a lot of time working on transportation projects as a young man as a crane operator.

these four large basic trade unions that i represent built some in the nation's largest projects. we just are finishing up the first phase of the was like well project. we built the wilson bridge a few years ago and which is finish up the hot lanes in this capitol area. movable bit towards the midwest, right now we just heard the ohio river bridges in québec in indiana. we recently finished the hoover dam bypass bridge in nevada and arizona your and a couple years ago, or for five years ago we finished building the tacoma bridge and we are currently underway with the alaskan way viaduct replacement of these pacific northwest which is in the state of washington. bottom line is, madam chairman, we build the nation's infrastructure. this is the most important jobs bill for construction workers that we have. and the reason we here today is because of the crisis of the highway trust fund. we thank you for bring a but his

attention to so fully we can doo something with the with the time we got one year to get this thing kicks. we thank you for the great work you did on map-21, but i would like to turn you and hopefully if you don't have, i've extra copies of this that i included in my submission of testimony. it shows the amount of unemployment we have and construction. this is not a graph of my 401(k). it's worse. this is a graph of, we had and construction 7,490,000 jobs in 2008. we are down to 59,798,000. we've lost almost 1.7 million jobs since 2008. i testified in front of your committee back in january of 2011, and i mentioned what these numbers really mean. and i tried to paint a visual and i used a stadium analogy, the super bowl holds 100,000 people. well, madam chairman, we could

still build 17 super bowl stadiums we cannot of people we have out of work and as you know, these are friends of yours and friends of mine and everybody on the panel. it's important that we get our neighbors, your constituents back to work. simply put, this battered industry cannot sustain the type to blow that would be inflicted if congress fails to enact a multiyear fully funded surface transportation bill when map-21 sunsets. congress cannot allow the highway trust fund to deliberately run off the cliff like thelma and louise. the effects of employment in the construction industry would be catastrophic. so in ca2 offers a few ideas and suggestions on how we might be able to fix the hole in the highway trust fund. we believe congress should allow states more flexible and open up new transportation revenue streams, including lifting the ban on polling for new capacity

in addition programs such as the vehicle miles traveled tax, and other projects should be supported over the duration of the next authorization to explore the viability of these revenue sources. we believe that bonding support of the revenue stream for the highway trust fund may be useful way to sustain the program and we believe that in order to achieve the needed level of infrastructure investment, gas tax increase is necessary, add an ounce of minimum as the long-term strategy of a gas tax must be indexed as part of the solution. the nation's roads and bridges are crumbling before our eyes. millions of american construction workers have left the industry for lack of opportunity. we cannot afford to lose more construction jobs, yet without a solution to the problems and the highway trust fund, that is precisely what will happen. the passage of a robust multi-your transportation bill will stop the bleeding and give the industry a much-needed shot in the arm. we have the power to make this happen, but it will require

leadership. say no to every resident option will not get us there. we need to say yes to investing in this country, raising new revenue. this committee demonstrated that type of leadership in the last congress. we are eager to continue to work with you in this 113th congress to remedy an even bigger problem and, indeed, say the program. thank you, chairman boxer, ranking member vitter, distinguished those of the environment and public works committee for the opportunity to join you this morning. and for all the work that you do that puts construction workers to work, and especially the ones that i represent. i say thank you. >> thank you so very much. and our last speaker is mr. gregory diloreto. we just received a really in depth letter from them, but please proceed. >> thank you. good morning, chairman boxer, ranking member vitter, senator merkley, members of the committee. it's an honor for me to appear

before you today to discuss the status of our nation's infrastructure. my name is greg diloreto and i'm the president of the american society of civil engineers. as you noted, chairman boxer, our nation's infrastructure is in trouble due to the underinvestment in all levels of government as result, asce police all options must on the table as we consider long-term planning solutions for our nation surface transportation system. however as we consider funding solutions, the question arises, how have we gotten and what can we do to fix it? the sort of our transportation infrastructure in this country is the story of our american system, working exactly as it should with a government meeting the needs of the free market. so why does the system not only were? are not the only person here today he was told you that our nation's infrastructure is hurting. but looking to the past, now that we live in a global economy, why is her infrastructure not kept pace with a growing demand? i recently spent time traveling in asia on behalf of asce.

i met with transportation ministers and public works officials from several countries and these countries are spending billions in transportation as they race to be competitive in a global market. and the good news was that we went from a deep into the nine to a d+ in 2013. however, if a d+ is good news, it's time for self-assessment. so what does a d+ mean? does it mean we are one stiff wind from total collapse? no. but it doesn't we're not meeting our country's growing needs. we are not creating reliable funding mechanisms to ensure maintenance of our transportation system. i notice i'm not even talk about

all the new infrastructure. we're going to need to meet new demands. i'm talking about the maintenance of the entire infrastructure system that made this country great in the last century. deteriorating and aging infrastructure impacts are families, our committees, the entire country. as was noted, more than 40% of our urban highways are congested. that means americans ways almost 2 billion pounds of gas a year and that folks spent more than $7 billion on gas idling while in traffic. the point is it indirectly where spending this money and 19 anything for it. highway trust fund is essential for maintaining and improving our infrastructure system. or infrastructure hurts our quality of life and also hurt our economy. we also know that investing in the building and maintaining of her infrastructure create jobs for every american both directly and indirectly. not just jobs for construction crews and manufacturers, or even engineers, but jobs for everyone. in fact, at asce we conducted a

streets of economic studies and found that the curating surface friends with -- will cost the american economy nearly 900,000 jobs in the year 2020 alone. however, if we can increase investment for surface transportation, we can reverse this trend and instead create millions of jobs. since the creation of the highway trust fund in 1956, the highway trust fund has been supported by revenue collected from road users. the system has served america well in the past, allowing states to plan, construct and improve our surface transportation network. now with the trust fund going bankrupt, the states alone cannot solve our national transportation infrastructure issues. to prevent bankruptcy of the highway trust fund in 2015, federal surface transportation investment is estimated to have to be cut i 92%. that's an unacceptable path and what would that 92% mean for your state?

state transportation projects would be delayed. employees would be for it. families would see their infrastructures fall into disrepair. congestion would worsen what basis would not be able to operate efficiently, thereby increasing costs to american consumers. we need your leadership to achieve a long-term revenue solution for the highway trust fund which will help grow the economy, create jobs and improve the quality of life that all americans. we need bipartisan long-term solutions to ensure the highway trust fund can support the transportation infrastructure improvements america needs. asce wants to thank you, chairman boxer, members of the committee for your continued commitment to our nation's infrastructure and for the opportunity to visit with you today. we look forward to working with you, the committee, as it develops sustainable revenue solutions for modernizing our infrastructure. >> i just want to thank this entire panel. sometimes we have great splits and divides in a panel because the democrats pick our witnesses, the republicans pick their witnesses, and we're all

in contention. this has been a very important bipartisan statement of support for making sure that we integrate the highway trust fund, and we have to do it in a smart way. so i'm going to start. i have so many questions but i will stand for my five minutes. mr. poupore, thank you so much. first of all, his chart, it's not a happy read. and we are moving towards 2 million workers out, and what i would ask you, does this not also reflect on the status of a lot of our small businesspeople? these workers work for the contractors. so if you could comment on not only has it been such a disturbing trend for the workers but the businesses who employ them as well. >> you're absolutely right, madam chairman. the way it works with infrastructure, if we can get the funding out there, and the contract has an opportunity to

bid the project. want that reflects with 2 million, almost too many people out of work, there's a lot of contractors not having worked. and i'm sure the agc and peace group will confirm that, that it's been a real struggle. i would also like to put a point that i look at these million have, 1.7 million workers that are out of work, they are small family businesses. they support the family. if they don't have a job, taking anything done without them and it's a bird on the rest of us. anything we can do to get things moving in the right direction, rebuild america and put americans to work, again, appreciate your support. >> ms. kavinoky and dr. ruane and please comment on the impact on our base business communities because when we hear these job losses, the are enormous. but i d don't know how many of these businesses have been impacted. if you could just address that.

>> yes, madam chairman. the exact number according to the census bureau reports in the last five years, we've lost about 740 businesses in this space. our employment is down by over 50,000. transportation construction on talking about, not construction genetically. and that alone is a measure of, some of that is consolidation and mergers, but a lot of this is folks going out of business because i think what's not understood is while everyone at this table and in this room i'm sure is very grateful for the leadership of the congress, the administration on the stimulus program, the fact today is the states, because of their own challenges, many of them are spending much less than what they were spending prior to await their contact the majority are not. answer that is just a understood by the general public so it is not a situation where it's a

robust. we're still at a 9% unemployment rate in construction, down from 20 which is a great improvement, but it's still a very search problem. >> so it's fair to say we're looking at hundreds of businesses? >> yes. >> just as you caught this space. do you have anything to add? >> i would take a step further to the suppliers into the construction industries, and you realize that without a long-term view of where transportation funding is going in this country, it ripples through that pipeline as well. so i think it's safe to say it and be happy to work with artba and others to look more closely at this, that is the trick impact on individuals and businesses directly in the construction industry, but then extending out to the economy as well. >> i wanted to talk to mr. lewis for second. could you elaborate on what would happen to states like rhode island that have prior financing obligations that must

be met? how would they fare under a 100% cut in federal transportation funding in the year 2015? that's what we are looking. we need to be very clear. this is a crisis, and we pushed that crisis down the road with a very good reform bill. i'm so proud of members on both sides by the way. and if i could just take him as a result of our work on the reform side, i say to my ranking member and senator inhofe, and, of course, my democrats, we really don't have that much work to do in terms of more reforms. we just want to make sure these reforms are working, how our work can all be focused on the financing and do it in a way that we can all support. but tell us what it would be like if we fail. because, frankly, i don't want to mince words. what would it be like if we fail and there is the federal contribution? >> that's a very critical question. i don't think there's a lot of awareness of this out there.

in rhode island, and i'll talk about california because we are on opposite ends of the spectrum in scale and geography. in rhode island, because of our past obligations, both in financing, using garvey financing to do big regional projects over the past decade, long-term multiyear projects that require multi-years of obligations, our existing commitment is out there. mean that if we can't rely on 2015 level funding, we are basically in a position of not being able to obligate any new funds can't even next month for fiscal year '14. huge impact of small states like rhode island. louisiana, some other small and rural states. but even in a state like california which has a huge program. california's facing this year without obligations in 15, plant construction of 250 state sponsored projects costing

$2 billion we put at risk. so it's not just the small states that are dependent upon federal funding for a large portion of her program. it's the big states, too. >> you are saying it's already being felt? >> it is being felt, and i don't think that it's truly understood exactly , with all this talk about the cliff in fy '15, the cliff, at the edge now spent that's why we're having this hearing and i'm grateful for college on both sides for the interest. send in of got permission from you, send white house to quit before you? that's very kind of you. >> thank you, madam chair, and thank you again. i guess this is to any or all of you. there's a pretty broad consensus that the gas tax is really not sustainable, middle and long-term.

and yet there still a lot of focus on the gas tax for this next bill. do any of you have the concern that if we did a pretty big heavy lift in this bill and still focus on the gas tax, you know, we are still not getting to a fully sustainable system? >> senator vitter, appreciate that question. look, i think that there are two things going on. one is that the current gas tax, the flat gas tax that has existed since 1993, is not sustainable. but i do think there's some hype out there that gas taxes in general are not sustainable, and that the whole country is not going to be using gasoline or diesel in the near or long-term future, or medium-term future. that is really just not correct. sat at the rate -- right, right and just for the right

variables, and we know the fleet is going to become more efficient, you've got to adjust that -- i just for the. i think the gas tax and that these attacks have a great ability to continue to serve as a proxy as a good user fee for all. there are of courses on vehicles that don't pay any fuel tax at all, battery and electric. and at some point they will have to pay him more in the market place. but for the vast majority i think the gas tax adjusted for the right variables will work. >> does anybody else have any reactions on that point? >> i would say, senator vitter, that the gas tax remains as the most viable, efficient, reliable source of funding for the surface transportation program across the board. nonetheless, i think what's not understood is what makes up the problem. the drop in the revenue to the trust fund in recent years

primarily came from the trucking industry. diesel fuel purchases going down, and the purchases of equipment. the actual drop in gas tax revenues from the average user was about 1%. and that's all coming back. as the revenue from the trucking related fees as well. so our position has always been that needs to be sustained, and many people here, everyone i think there is unanimity about the idea of indexing that. the real issue is we're not doing, what needs to be done with our existing infrastructure let alone the need for new infrastructure. and the purchasing power that's been lost. several people mentioned that. i'd like to underscore that again, is that we've lost a third and over the next five years is going to get up to some 50% of the purchasing power since 93, the last time this was dealt with.

then again, what's the reason i use the chart of the states? some pundits and cynics make the joke about this city. those facts are undeniable. i don't think people get lost in the shell sometimes that the dependence of the state for capital improvements, real-world construction and improvements is heavily reliant, over 50%, for all states, and some you saw the yellow states. my god, it's way, way up there. so the removal of any kind of funding source, gas tax or whatever, or a diminishing of that would have a devastating impact across this country. >> let me ask a related question to my first. there are some users now who aren't paying to that core mechanism. that's at the margins of that will grow over time. do you all have specific ideas about how to address those alternative vehicle users?

>> if i could, senator, i think, when we are referring to other fuels whether natural gas or electric vehicle, i think there's a way to factor in on a step the basis how they will contribute on the user fee. i think that the relatively simple approach. >> describe how that might -- >> well, if come even if it's a vehicle my way of addressing say and electric vehicle that doesn't purchase any fuel. is there a different rate for a natural gas vehicle? i think those are, they are relatively small contributors to the system now, but i think maybe the pilot programs could target specifically at those vehicles spent and final question, i'm running out of time. mr. poupore come in your submitted statement you support

linking revenue from domestic energy production with highway trust fund infrastructure investment. would you also support that? i think you support that for present and past. would you support that for future or expanded energy production, if we could achieve some consensus on some expansion? >> the organizations i represent have been on record supporting that type of revenue. we want to find solutions to fixing the revenue need for mass transit and the highway, so the answer is yes. >> thank you. thank you all very much. >> we -- by the graciousness of sender white house and then will go to senator whitehouse and then will go to senator boozman. >> thank you, madam chairman. i appreciate senator whitehouse letting me go in front of him. we have a conflict that i

certainly can't get out of, but i got a message that i got to deliver here. i'll need your help in doing this. one of the frustrating things that i went through a year ago when we did our small 27 months we authorization was not the democrats but the republicans. i mean, and i can say this, others can't say because i've been ranked as the most conservative republican more than anyone else and yet we have a lot of born again conservative republicans using this issue down on the floor to sound like this is a huge liberal versus conservative issue. and it wasn't. because very clearly, as i mentioned, gary ridley back there and he will not disapproval, it's hard to say just how much more it costs if we rely on extension but if we don't get any, of the reform. i was in shock and i want to applaud the chairman. there are a lot of things that senator boxer went along with that i know she personally disagreed with. but we got the reforms in there, and there are no refunds for to

operate extensions. secondly, the fact you can't plan ahead and we've been using without being challenged about 30% more than a cause. it costs about 30% more to do extensions versus a reauthorization. that's what the issue is right now because the alternative to our passing something that we all of you want to pass is it's going to go back to extensions. now, when i listened to a lot of republicans on the floor, i didn't respond to them because i knew we had the votes to pass it but i went right over. i didn't even, i walked right out the door and wha would overo the house side. i got the t&i committee, also republicans, 36 of them in one room. and sat down with the him and explain why the conservative position and thank goodness for the acu, they came out and i know mr. lewis, you mentioned the constitution. article 1, section 8 of the constitution says that so we're supposed to be doing.

and with the conservative position was as a result of that, i'm sure that something to do with it, because i talked to them before, and after. every single one of the 36 republicans voted for it. now, what does that tell you? it tell you when you really sit down and talk on something that is not liberal, conservative, democrat or republican. and i say that with one other part, and that is where you come in. if we were able to go to some of the states where we have someone who is opposing this, because of spending, transportation, all we have to do is go there and get the people, get a gary ridley's in each one of these states and talk about how this is a conservative position, i have yet to hear one republican in one of these states say, not change his or her mind and say yes. transportation is important. by this has got to be done at the grassroots.

and i know, peter, you are tired of hearing me say this, but that's where you folks coming. we're going to have to be able to go back to the states and let them lean on their own people. and i think we can get something passed, we're going to work hard to come up with a robust bill. and this is something that should be rallied around by both conservatives and liberals. so the only question i have is, would anyone of you want to validate what i just said interns about the extensions versus our reauthorization bill? >> i out so they agree with that. not knowing some years ahead what you can plan for, we can't play in, we can engineer because we don't know if we're going to have a level of funding in order to intimate the construction. so any dollar spent today, the planning or design of a project we don't know is a waste of don't get its money we are throwing away.

in rhode island we have an interchange just west of province, critical to the capital city. it's close to half a billion dollar project. i can't even begin to invest in the planning. i have no idea where the construction is going to come from. >> i would like to have the rest for the record respond to that and let me thank senator whitehouse and the chairman. >> send him off, what you said is really music to my ears because this is a non-ideological issue. if we can't move people and goods, our economy is going to keep up with rest of the world. i think in the chamber of commerce explanation, they said that canada is moving the goods so much more efficiently than we are. we have work to do and i look forward to working with you and with the ranking member. and now we hear from senator whitehouse followed by senator carper, if we don't have a republican president at the time. >> i wanted to follow up on the question that senator vitter

raised, about the gas tax. correct me if i'm wrong, but it strikes me that our vehicles are going to become increasingly more fuel-efficient. so for the same amount of miles that they roll over our highways, the gas tax will generate less and less and less revenue. that's the direction of technology. it only makes sense. and i think we can foresee the considerable growth in both electric and hybrid vehicle markets for a whole variety of reasons. so given that i share he is worried as we go back to just a gas tax, we're putting ourselves on a glide slope that ends back in a bad place all over again. and i know that mike mentioned the possibilities of finding other ways to generate revenue for use of highways from different types of vehicles that burn less gas or no gas, or

whatever. but i'm wondering, w we're going to have to be looking at this pretty quickly, is there anything after that is pretty well-developed about how one might go about doing this? are we going to have to do a lot of research in this committee to sort these questions out? so two questions, and also with greg cohen. then i would go to ray poupore because he was nodding energetically. is this a real problem about the declining and vanishing gas tax? if so, what are the best sources to go to to look at alternatives that have been pretty well-developed and had the consequences and the economics thought through? mr. cohen. >> thank you for the question. look, we have in the tax code a number of different equivalent to the gasoline tax for the 85 comment methanol, and basically

almost any form of fuel can be taxed and equipment energy rate. the one exception i think at this point, and maybe there is a way to do, is the battery and electric vehicle. and some states have expended with ideas and i think we should continue to look at that. >> but even if you -- let's just stick with the gas. there's the tax. even if you don't move anything on it, as whatever the field is, as cars become more efficient which they are naturally going to do, the amount of whatever fuel that they consume is going to be reduced, and that means that the revenues fall and i do see our maintenance costs following in line with that so you end up with the two lines crossing again and there you are at the point of crisis spent aashto i believe in the chart that shows if to 51 -- feed for miles per gallon, at the point i think would lose about 22% in

revenue from the gas tax comes with a valid concern. that's why what i'm suggesting is if we look at all of the variables the index so we don't lose purchasing power, so if that involves having -- >> use the existing methods but index them? >> right. index all of them. >> senator whitehouse, i really don't have a good answer for you, except that no matter how much more fuel-efficient the cars get come they still wear out the roads. that's what we've got to look for, a revenue source to maintain and fix and expand. we have some good suggestions out there i believe, but, you know, and i note senator boxer has been supportive of vehicle miles traveled. and i believe oregon is using that so i will turn over to gr greg. >> you will wrap up a force.

>> as you may know several years ago this day did you of vehicle mile traveled research project on whether not we could generate revenue from vehicle miles traveled as opposed to a gas tax. .. >> we probably shouldn't settle on just one, but we ought to put

together a bunch of them so when one does have a problem, the other one steps up and fills the void. if you're interested in more information, we can certainly prove >> thank you. thank you, chairman. >> thank you. senator fischer. >> thank you, chairman boxer. mr. diloreto, you just said you were from oregon, and you had the dtm there. when i was a state legislator, i met a representative in your legislature, bruce stark, who worked on the btm. how many vehicles did you have involved in that, do you knowsome. >> no. >> you said you're looking to expand it, how many -- >> i do not. >> do you know what the cost of the program was? >> no. but i can get you all that information. i'm not an expert in it, but i can get you everything you need on that, the you bet. >> and do you know how long it would take to set it up? >> we estimate you're looking at probably ten years or more because you're going to have to either retrofit existing

vehicles or wait million you turn over your entire -- or wait until you alternative over your entire fleet. >> okay, thank you. a as a civil engineer, i know that senator inhofe, i was told, asked a question about planning, i believe, to mr. lewis, when i had stepped out. but with for you, sir, as a civil engineer on planning and the uncertainty of planning when you don't know what the funding is, can you tell us a little bit about how you deal with that when you're looking at double digit percentage be increases this construction costs and how that kind of throws a wren in things? plus dealing with red tape in government to move forward on planning. >> well, it's certainly difficult when we don't have a funding source to know how to plan projects in the future. now, we did benefit over the last few years because the economy, we were able to take advantage of that and do a

number of project that is we couldn't have done can -- couldn't have done otherwise. if you don't have a revenue source, you cannot plan long term, and he will stop making those kinds of plans until he knows he has the money to do it. otherwise, as he mentioned, he's wasting his money. you hire engineers, and to put the project on the shelf doesn't make really any sense. >> thank you. mr. lewis, did you have anything you wanted to add on that? i guess i'm interested in knowing if you think the current gas tax that we have now, does that provide you with certainty? and i see the map is back up where we look at how the big division on how the revenue from a federal gas tax is sent back to states. >> well, i think the certainty is that with the existing level of revenue in the highway trust fund, the certainty is it's going to go bankrupt a year from

now. that's the certainty. when it does rebound, it'll be considerably less, maybe two-thirds of what we're used to. it's a certainty, we will have less to invest in transportation. my father always said you want to be best at something. in rhode island it's actually 102% of our program is federally dependent. >> it might be due to your position maybe. [laughter] >> and so it is a challenge, those yellow states and all those states. i mean, and our -- the level of federal investment is actually on a percentage basis on average is dropping as many states are stepping up. but the states cannot -- speaking for rhode island, we just don't have the opportunity to raise revenues because of the size of the state in order to fill that void. we're already -- our state gas tax is ten cents higher than our neighbors in massachusetts. big percentage of our population lives within a few miles of the massachusetts border. you don't have to buy gas in

rhode island. >> in nebraska we have a variable portion of a gas tax too, and we're kind of unique in that where it moves, it flubbing mates due to -- fluctuates due to budgeting and how we handle that in your legislature. do you know if that's been looked at by other states? >> janet -- others may have a comment on that. virginia, for example, and maryland, i believe as well, reformed how they collect their gas tax on a -- rather than an excise tax on a percentage basis sales tax. and i think that's perhaps the form that can address some of these issues that we've talked about on variability. >> did you want to speak to that then, janet? >> i am, i am not able to recall a serious discussion at the federal level where we actually tied the rate of taxation or the level of taxation to needs. however, that would certainly get us closer to figuring out how to address those needs

rather than attempting to address or take some of the needs off the table based on what the available revenue would be. >> if you went through a prioritization process on needs for each state on the federal projects and then tie a variable to that, do you think that would be something your group might be interested in looking at? >> i think that's a very interesting comment. i certainly can't comment on what the chamber policy would be in terms of that. however, i think a clear understanding of what the federal priorities, national interest level projects are in states then could help drive where we need to be with revenue. so if you look back to when the interstate system was created, it was designed on a cost to complete basis. here's what we need to build and we move forward. so i think that is from a planning concept and from a financing concept something that's worthy of further

consideration. >> thank you so much. thank you, madam chair. >> thank you. so we're going to turn to senator carper followed by senator baucus, and we're thrilled that he has joined us, because he will be in that seat making these decision cans. senator carper, who's also on the finance committee. >> and we'll be sitting there looking to make these decisions with you, mr. chairman. [laughter] i want to come back to a couple of you have mentioned bmt fee, it's one of the user fees that we should consider. why do that? let me just ask a show of hands, how many of you think that part not necessarily all of the solution here to making sure that our resources meet the needs, how many of you believe if not a gasoline tax, some kind of user fee that relates to motor fuel taxes is part of the solution? would you raise your hand? all right, thank you very much. i've been interested a while in

bmt proposal, in fact, when we considered map 21, it was suggested that we might create a research program to explore how we might view -- structure a vmt fee. unfortunately, a provision that was included in the bill was taken out in conference. but i think hyde -- like to ask mr. lewis and maybe mr. diloreto, how do you think u.s. d.o.t. could help us support sort of a long-term transition to a vmt fee? could you take a shot at that? >> i think that the statements would certainly support a very robust study on how that would be done in terms of transitioning to a vehicle mile traveled tax. i think there are some technical issues involved with that, there are social issues involved with that, but, you know, these are

things that need to be -- have the light of day and some light put on them and then really look add -- look at a quantified assessment. what about the fleet turnover, what about privacy issues, what about the way it gets collected. one thing about the gas tax today is we have a well-established means of collection. does the vmt change that? those are solvable issues. they have sob identified, put some good, smart people behind them and then air them publicly. >> yeah. mr. diloreto. >>? >> i think my colleague said it absolutely right. those are the issues oregon faced when it went through its project with the federal highway administration a few years ago, so he's absolutely right. solvable, but it would take time. >> one of the pieces of legislation i worked on quite a bit was the 2007 café legislation with senator feinstein and a number of others. during that discussion we talked a bit about all electric

vehicles. they're going to use the roads, highways, bridges and if they never use any gasoline, then are they really contributing to the upkeep? so there's a fairness or an equity question here that i think needs to be addressed. and others have suggested our hope is by the time we get to 2025, we'll have a lot of new vehicles coming onto the road that are even more energy efficient than the ones today. and for somebody who's driving 25,000 miles a year on a vehicle that gets 50 miles per gallon and somebody that's drive anything a vehicle that gets 20 miles per gallon, you know, there's same number of miles, there's a fairness and equity issue there. anybody else just some thoughts for us on a vmt fee? anybody else just some thoughts you think are appropriate for us to keep in mind? anybody? please, mr. cohen? >> i always take an opportunity to speak if it's open to everyone. i think it's, the oregon example

is worth continuing to look at and that the states are really the best laboratories right now forking it. oregon's not the -- for studying it. oregon's not the only state. right now their pilot is 5,000 vehicles. i think there's three different ways of collecting revenue that they're looking at. and it may be that in time this is an interesting way to go. there's positives and negatives. the point of collection is a very good point. right now we have about 1100 terminal racks that pay the gas tax, 250 million seemings paying -- vehicles paying individually would be a difference in terms of enforcement. but on the other hand, it's a more direct user fee. potentially, it could obviate the need for toll roads because you are, basically, collecting from everybody. so you don't have to collect twice on certain roads. so it's something we might want to continue to study.

>> thank you. a quick note, used to be governor, chair of the national governors' association for a while, and one of the things we had at the center for best practices, clearinghouse for good ideas, and we used to share those ideas, and one of the great things about states, there are 50 of them, 50 laboratories for democracy, and we have the opportunity to test a lot of ideas and see what works best and try to incorporate that in our own plans going forward. thank you all very much. thank you, madam chair. >> thank you. chairman baucus. >> i thank you, chair. i'm just curious, does anyone on the panel disagree with the proposition that highway authorization, highway program has to be a national program? that is, a lot of states -- some states are donor states, and some of the donor states get a little bit upset because they're donor states. donee states say, hey, we wouldn't exist if we weren't a

donee state. that chart, that map over there makes that point. if you look at the states over there that are yellow where 70% of highway funding is federal, it's not state, but it's federal, those are states that, you know, donee states. those are states where there aren't very many people. my state of montana, for example, they used to be first, maybe second in the nation in the number of highway miles per capita. we have very high state gasoline tax to try to pay for our -- contribute our match to the federal. and general eisenhower, as you know, when he put together the interstate system recognized right off the top, we need a national system. not a sectional, but national. some states say let us forget -- just junk this. let our state take care of it, because those are states that tend to be wealthier states, a lot more people.

so-called donor states. today don't can like being donor states. is there anybody that disagrees with the proposition that we need a national program and not a sectoral or regional program if we're going to have the highway system that we need? anybody -- raise your hand the if you disagree with that or disagree with anything you said. >> i'm certainly not going to disagree with that, i'm just going to add to that. i had an opportunity to visit many states and talk with allof my colleagues, and to a person that is an issue we talk as a group. it matters to florida that wyoming has i-08 in good condition because it's got to get its orange juice to seattle. it matters to boston that we don't have posted bridges on i-95 in rhode island because of the commerce between -- >> what about montana and 90? >> i was saving the best for last. [laughter] but i ran out of time. >> okay. yeah.

that does come up frequently. and that point's well understood. okay. >> senator, in our statement is a chart from the census bureau on the actual shipments between states that shows is dependency of one state to their adjacent state or states several states away for the flow of trade, something that they put out every five years, and it makes a convincing case to have a strong interstate system. >> good. no more questions. >> okay. >> thank you. >> well, i just want to say while senator baucus is here that this panel, representing a very broad brush of american thought on this, i would say the whole political spectrum and the rest, they have told us that we're just getting to grips with this problem out there, that there will be no money in the trust fund by 2015.

it's just zero. >> that's right. >> so we have to act. and it's -- and we, and they also make the point that we need to solve this problem for the long term. we have an opportunity to do that. and if it's not solved, we're really talking about millions of jobs and, as janet pointed out and, actually, pete as well, literally hundreds and thousands of businesses. so the country is counting on us, and senator baucus, i know that you have a lot on your shoulders, but we're going to share with you our ideas so that we give you all of them, and then you and mr. camp and senator hatch and i guess -- who is camp's ranking -- sander levin, will have the benefit of this committee's work of which you've been a part and your staff's been a part. and all the people here have been so extremely helpful.

they're not just saying it's up to you, we're out of here. each of them has come forward with a way to handle this, which we're all very quiteful. so thank you, panel one. >> right back up. i don't know if i might? >> go ahead, go ahead, please. >> is there a prevailing view in how to address the deficit? is there a prevailing view? is there a tendency towards a consensus on what we have to do? not done -- >> well, let me try to answer what they told us. >> sure. >> and tell me if i've misstated it. they want to see a user fee. they don't want to see, although there was one exception, maybe you can patch a small amount with the general fund. that is not the consensus of the group. the consensus of the group is we need a user fee, we need a long-term solution, and it should be pretty much related to oil and gas. that, that fee whether it's collected the way it is now and we increase the gas tax, or as i

understand i want, follow the lead of a state like virginia which is looking at a tax, but it's at a different level. a wholesale, it would be at the refinery level and as a percentage of -- >> i appreciate that. >> -- cost. >> does anybody want to add a little texture to chairman boxer's statement, a little context? pete? >> yes, senator. i think moving it up the food chain in terms of some of the states have looked at this and the collection points you can go further up instead of the individuals paying this at the refinery or at the wholesale level. some states have looked at that very closely. i think there's an efficiency argument there from the collection standpoint. so, you know, with most of us i think it's all of the above. and whatever combination is, obviously, going to be what can be done, you know, both economically and politically and everything else.

but one of the points we want to underscore, and i'm a little redundant here s let's not throw the baby out with the bath water. there is a reliable source already there, and if you're going to change that, that's fine, but keep the buying power of that source and whatever new method the congress might come up with. >> thank you. >> okay. >> raise your hand. >> let me just add that the sustainability issue is, i think, something we also talked about. look, this last bill we ran out of money, so we wrote a bill that can only be funded for two years. what would be nice and what would be preferable so that congress doesn't have the deal with this every few years is to chart a course that includes an index so that reauthorizations can be done for six years at a time so that the states can do their plans, big projects can be done, we can achieve greatness again and not just try to get to the point where we run out at, say, 2020 or 2021.

>> how do you deal with the anti-tax crowd that raises its voice around here? >> i represent the highway users, and as i mentioned in my testimony, the users pay, and we have not always been in favor of raising the tax. two things, i think, have changed. one is map 21. tremendous reforms, and i didn't veses this, but the streamlining provisions and that certainly came at last week's hearing were absolutely critical to taxpayer support for paying more. we're going to have to look at them because they haven't been fully implemented, obviously. and secondly, the dire nature of the situation right now. it's not like the old days where we had a big balance, and we could simply draw from the balance. so, you know, we represent the eyes, aaas, truckers, bus companies, and we all agree that we have to pay more.

>> your goal is sustain current levels of construction and repair, or do you want to boost? >> i think -- >> what's the prevalent view here? >> defer to asc here, but sustaining is the absolute floor. you know, we do, i think the country does feed to think and talk and debate additional investment. i think we are falling behind, as janet pointed out, other countries that are investing more on a percentage basis than we are. perhaps the enemy of good is better, you know? we need to get to where we need to at least maintain a little funding. >> yeah. >> senator, i would say that we have to do both, and we have to do them simultaneously. and that may seem like a huge leap for some, but this congress is more than capable of doing that, and what you showed in map 21, the bipartisan nature of the vote, you know, proved it can be done. getting the financing is

obviously a bigger lift. but, you know, the nation's growing by three million people a year, two million new users, new drivers on our nation's roads every year. we are growing. we are a growing country. and to accommodate that growth, we have to not only take care of our existing system, but we have to enhance our system to accommodate that growth alone. >> yeah. well, you're right. >> let me just follow up. the american society of civil engineers gave roads a grade of d. we estimate you need $1.7 trillion over the next eight years to get it into good condition. we have about half of that, not assuming that the highway trust fund was to stay. so the question of do we need more, well, if our goal is to get our transportation system into good condition, meet capacity needs, meet the condition needs, then we're going to have to spend more as americans on it. >> mr. chairman, i want to give you more time to do your opening statement. >> fine. >> okay? and i wanted to make a point

here -- >> you may regret that. >> no, i don't. i don't regret it at all. >> okay. >> but i just want to say this point, your question is important sustaining the current levels for actually moving forward, and i wanted to point out because of our work together, all of us, on tifia, we had a way that was able to dramatically leverage existing funds. so, for example, just by using a billion dollars for tifia which we agreed upon is going to stimulate the economy up to $30 billion. there were other proposals, i think, that your committee will look at. so one idea is to do the basic funding and then look for ways that we can leverage the federal investment. it's just a thought. without putting so much pressure on the user fee. and in any case, you have the floor for five minutes. >> no, i'm fine. >> okay. so thank you very much, and we'll call up panel two. >> madam chair?

>> yes. >> while the -- >> yes, please. >> while the panels are changing, i just wanted to emphasize the point that mike lewis was making, very relevant to senator baucus' question that a lot of places have big projects that are out there, that are looming because of the surge of infrastructure that was built 50 years ago and is now sort of reaching the end of its natural life. and those are never been in any baseline because they've always been unmanageable because we've always been just scraping by with basic maintenance. and at some point those become things that we absolutely have to do. i mean n rhode island route 10, route 6 and route 95 all come together in the center of our capital city, and if the route 10 and route 6 connectors fail, we have a problem that's going to affect the entire eastern seaboard. never got into the budget of the rhode island department of transportation because it was too big to fit in any year's budget. there's always been the hope that someday. well, i think there's a lot of

that out there, and we need to make sure we have the scope in this to take on those big projects that are coming due. >> all right. one moment, take a pause. [inaudible conversations] >> okay. we'll -- well, first of all, thank you to our second panel, very distinguished panel. thank you for waiting around here, and it is my pleasure to start it off with jack basso. i know it's peter j., but i call you jack. peter j. basso and associates, a very important part of my world in advising me. so, please, go right ahead, sir. >> thank you, madam chairman, for those kind comments, and thank the committee, senator baucus and senator whitehouse and other members of the committee. i'm going to be brief but hit on what i think are some important

points. while others on the panel will discuss in some detail what might be considered to address the funding crisis -- and i think it's been discussed heavily the first panel -- what i want to do is discuss, first, what is the magnitude of the problem, and i think it's been stated. it's 100% reduction in fiscal year 2015 in the highway program and also, for that matter, the transit programs. i want to talk a little bit about the evolution of that problem and contrast traditional funding grants and direct funding with financing tools such as the tifia program and how those in combination are critical to infrastructure investment. the highway trust fund and -- and in my written testimony i show -- faces a dramatic shortfall. in fact, the fund has been spending about $50 billion per year while revenue averages about 35 billion a year through the good offices of the

congress, and we've been able to put in $54 billion from the general fund that has kept, so to speak, bankruptcy staved off. fiscal year 2015, if the programs receive no new revenue, we're literally out of business, and i think the impacts are dramatic and very bad for the country. the reduction in capital programs of which the federal funding averages 45% in the states is devastating for both capital investment and jobs. in fact, for every billion dollars of investment, about 28,000 jobs are supported. so we're talking about hundreds of thousands of jobs lost in fiscal year 2015 on the back of a already dramatic decline in construction employment. so how did we get there? a combination of factors created that situation. let's give a little credit to the great recession, because it

did impact it. for the first time in 50 years, vehicle miles traveled dropped in 2008. they'd been growing at a rate of 2-3% a year for 50 years. that translated into a dramatic decline in revenue. combines with another factor -- combined with another factor, heavy truck taxes, the sales taxes on trucks, took a nose dive during that same period. the fund approach deficit and potential similar program reductions in 2008. the congress responded, as i said, by making a series of general fund transfers that have been critical and much appreciated by those of us in the transportation community. however, the real problem lies in the fact that no rate adjustment has been made since 1993, 20 years. and i might note that adjustment was made actually in the comprehensive balanced budget agreement in '93 as to how this

got addressed. so i think that's important to note. a quick word about financing. early 1993 the federal government began promoting a series of tools to allow financing for programs with revenue streams, garvey bonds, state infrastructure banks and in particular, madam chair, i want to note your role in the dramatic twentyfold expansion of the tifia program which is hugely important and hugely useful. also build america bonds, a one-time program, was useful and very helpful to our infrastructure investments. but these things alone cannot substitute for direct funding. so the time has come and causes me to conclude that as we approach reauthorization programs and address funding and to continue the successful financing programs such as tifia and so forth, it is absolutely imperative to the nation's well

being and to the improvements that can be made in our infrastructure investment. and as important to maintain our international competitive position. thank you. >> and we turn to kathy ruffalo, president ruffalo and associates. is it ruffalo? >> it's ruffalo. >> thank you. welcome. >> thank you, chairman boxer, chairman baucus and senator whitehouse, for the opportunity to address you regarding the shortfall in the federal highway trust fund and possible solutions. as a former staff member to this committee, i fully understand the challenges you face regarding reauthorization and the need to fill the funding gap. before i begin, i want to let you know that any opinions i expression are mine and mine only and not any group of entity. jack as done a good job of telling you and the other panel about the trust fund shortfall and what that picture looks like, so i'm not going to go over it again except to reiterate that the crisis is

fast approaching, and it's important for congress to find the appropriate vehicle to address it, through tax reform or a broader agreement on spending and taxes which recent history has shown to be a good option or through other appropriate legislation. i'm going to cover two areas in my oral statement, a an overview of the types of funding options congress can consider, and i'm also going to end with some questions that i believe are key policy and implementation questions for congress as well. if congress agrees that we need to find additional revenue, there are three general ways in which to do so, and my written testimony includes specific examples. number one, raising the taxation or fees of existing revenue spees into the trust fund, number two, identifying and creating new revenue source into the trust fund, and number three, diverting current revenues and possibly increasing the rates from other federal sources into the trust fund. as congress looks at individual funding option, of which there are many, you may wish to evaluate each option based on how much would it cost and how long would it take to put many

place the structure to collect revenue in a new way and what administrative, legal and enforcement issues would need to be addressed, what's the impact to urban and rural users of the system and what's the applicability to other levels of government? if finding new revenue were easy, it would have been done already. each has supporters and policy recommendations. here are my key questions for you to do. number one, with the highway trust fund balances nearing zero, which funding options can be implemented most quickly? if congress wants to prevent dramatic cuts to transportation partners, the time necessary to collect revenue from any option becomes critical. you can't forget that new revenue would have to be corrected prior to 2015 or possibly another general fund transfer would have to take place. in other words, the time to implement any funding option has to be considered. as you explore any list of options, you may want to categorize them into short-term,

intermediate-term and long-term in order to calculate the time necessary for a new funding scenario to be fully implemented. question two, how might any new federal revenue option impact our state and local funding partners? several possible funding solutions are currently used by states, local governments and transit agencies to collect revenue. if the federal government were to add a new fee on to the existing non-federal funding source, the federal government might crowd out the ability of transportation partners to raise revenue from these sources in the future. question three, should we retain the user fee concept? we had some discussion about that on the previous panel. do we see the benefit of having the funding source tied to beneficiaries of the information transportation system or the case that funding from anywhere is what matters most? what would the lack of user fee basis mean in contract authority? contract authority's what makes this program unique, and it allows the states and local governments to plan projects with limited funds on a long-term basis. and finally, what's the public

appetite for funding sources? given how controversial and difficult it is to raise almost any tax or fee, you may wish to consider the implications of choosing multiple sources of revenue and the level of option decision that -- opposition that may entail. others would necessitate new collection, administrative and enforcement systems. at the end of the day, we need to remember there are real men and women behind all of the numbers and statistics that we use, thousands of jobs depend on federal transportation funding -- not just direct jobs, but indirect ones as well. whether to get to work or maintain our quality of life, the federal government is an important partner. i know that with your leadership, madam chairman, senator baucus' leadership and other committees, congress will resolve the insolvency and provide the funding to continue having bl transportation investments. thank you for providing me with the opportunity to share my thoughts and perspectives with you today. >> thank you, that was very

helpful. and our next speaker is jack schenendorf of counsel, covington and -- [inaudible] welcome, sir. >> >> [inaudible] >> thank you, madam chairman. you've already heard from a number of witnesses today, so i will be brief. it's a special honor to appear before this committee. for almost 06 years ago, it was the leaders -- 60 years ago, it was the leaders of this committee, democrats and republicans together with president eisenhower who had the vision, the wisdom and the political will to make a major investment in america's future by creating the interstate system. if there was ever a time to take a similarly daring look at our nation's surface transportation system, it is now. if recent decades -- in recent decades the united states has underinvested in the national surface transportation network. as a result, the aging congested network is in need of repair and does not have adequate capacity

to accommodate future population and economic growth. how did we get from having one of the world's preeminent transportation systems to an overburdened system that is steadily falling into a state of disrepair? the heart of the problem is this: while we have been benefiting from the expenditures of the generation that helped build the interstate highway system, we have failed to make adequate investments of our own. it is time for republicans and democrats to come together again and put in place a vision for the next 50 years that will insure u.s. prosperity and global preeminence for generations to come. map 21 took an important first step by modernizing our nation's surface transportation policies for the 31st century. -- 21st century. my testimony today will focus on what map 21 left undone, insuring an adequate level of investment in our national surface transportation network.

i'd like to make three points for your consideration today. point one, fixing the highway trust fund and increasing investment in our national surface transportation network must be a foundational element of any pro-growth economic agenda. according to a recent report by mcends si global -- can mckenzie global institute, our infrastructure imposes unnecessary additional costs on the u.s. economy and american taxpayers. they've estimated that increasing road congestion is costing the nation $85 billion a year. on a per-traveler basis, that works out to a little over $1,000 for travel in you urban s and about $400 in suburban and rural areas. at a time of increasing global competition and uncertain economic growth, the united states can't afford to undermine the benefits that a well-functioning transportation

system provides or allow inaction to impose additional costs on u.s. travelers. u.s. jobs, the u.s. economy and this nation's position as a global economic leader are at stake. point number two, i want to emphasize one of the principles i identified in my written testimony for evaluating appropriate solutions. that is, the need for a truly national investment policy. modernizing the 233,000-mile national highway system which makes up just 5.7% of the nation's road mileage but carries 55% of the vehicle miles traveled annually will require significant, sustained investment over a considerable period of time. the highway trust fund is uniquely suited for this type of investment. the focus in creating the federal aid highway system and the national highway system in particular was the concept of a country unified by a nationwide

infrastructure. in today's highly-competitive global economy, this vision is more important than ever. only a strong federal role will help realize this unity, allowing for systemic improvements in both high-travel and low-traffic states. point three, we must not underestimate the magnitude of this problem. according to cbo, it will take the equivalent of a ten cent gas increase just to close the hole in the highway trust fund. the policy and revenue study commission that i served on as vice chair estimated that we should be spending about 25-40 cents additional in the gas tax in order to start meeting the needs of the nation going forward to rehabilitate the existing system and provide the additional capacity. i have in my written statement

identified a number of options for raising these revenues. i subscribe to both what jack and kathy have said about the revenue options. i want to bring your attention particularly to the first page of the chart and attachment a which is a color chart which shows a lot of these options and the way that we evaluated them. and i also wanted to call your attention to a paper that i've also attached that an associate at covington and myself wrote on federal user fees, an alternative way to raise funds if you are unable to raise any of these ore taxes -- other taxes. >> . [inaudible] >> thank you. >> [inaudible] >> in closing, the honorable sean connaughton, you've looked at a new way to fund your transportation in virginia. you're the secretary of transportation. we're very pleased you're here. thank you, sir. >> chairman boxer, members of

the committee, thank you very much for the opportunity to be here and tell you a little bit about what we've done in virginia. first of all, let me preface by saying every state's a little bit different in your transportation programs and some of their challenge, but one thing that is the same for the states and for the federal government has been about what's happened to the gas tax. in virginia we had not raised the gas tax since 1986. the guying power of the gas tax had gone down 54% in that time period. we are seeing the impacts of much more fuel-efficient vehicles. in fact, we can actually track that we have in virginia more cars registered, more vehicle miles being driven, yet our gas tax revenues are actually going down. another thing is the increase in the cost of materials. asphalt binder, which is a basic construction material, maintenance material that we use has gone up alone 350 president over the last ten years -- 350%, so revenues are flat, costs are going up, and we just are, obviously, like everyone else,

having major problems with our major source of revenue. virginia's what we call a maintenance first state. we must use any of the rev views coming into our transportation fund first for maintenance, then for construction. we've had to take just in the last ten years $3.3 billion of construction money, move it over just to do basic maintenance. and so everyone knew that there was a problem in the state, and the legislature has been looking at this for almost ten years. one of the challenges is like something that you're very familiar with. we have a house that had one position, a senate that had another. the house is very, very strongly conservative republican and wanted to see more diversion of existing revenues to transportation. the senate initially was, senate majority -- democratic majority, now it's tied. but, essentially, the position of the body was that they wanted to see additional revenues come in. so in other words, we didn't have anything happen for almost

ten years. we took office, and this is one of the things that we really took on as an administration on how we were going to deal with transportation. the first thing is we want to take all the, i'm going to say, the excuses off the table. we've done everything that anybody has ever talked about regarding transportation funding and reform in our program. we've done audits, we laid off people, we ended up becoming a model, i think, for the country for public/private partnerships. last year we had the most projects closed in the country. in fact, if we were a country, we would have had the second most projects closed in the world. we've ended up doing bonds, issues over $be 3.3 billion of bonds. we ended up establishing our own infrastructure bank to lend money to our localities to help hem move projects forward. we've done all types of i.t. and better traffic management including on the expressway, expressway lanes you can see on 95 with dynamic tolling.

we've even proposed a very controversial tolling 95, and then we also look for ways to maximize some of the revenues coming out of -- well, everything from naming rights to sponsorships to everything else. we did all that over three years, and even with a all that, we were able to show to our legislature that we were not going to have enough money even to do our federal match by with 2017. by taking, essentially, all these arguments off the table, showing that we were serious about reform -- i'm going to say renewing public trust in our program -- we came forward with a very, very bold program or legislative proposal this year, and that was to, essentially, do away with the gas tax, move over to a revenue source that we see growing. in virginia, that's a sales tax. that actually passed our house, the senate took it and replaced it all with a big increase in the gas tax. the conference committee came together, and we came to a compromise. and it was a compromise that

ended up having, essentially, we lowered our gas tax and switched over to a sales tax. we split off the diesel, that actually increased the diesel tax and made that a sales tax. we ended up increasing the state's sales tax statewide. we ended up putting an alternative fuel vehicle fee on all vehicles whether electric or other alternative fuels. we took a little bit more general revenues and devoted it to transportation. ..

this is a piece of legislation that i think has become a lot talked about throughout the country, and it's something that we think will solve our transportation problems out in the future. >> thank you very much for that. senator baucus. >> thank you, madam chair. i'd like you all for to give advice on how we proceed and everybody agrees. we've got to fill up the sole. the question is how, and quickly, what way? ms. ruffalo, you get several criteria, one is how quickly and also how it affects states, raise revenue and whether to a more funding from users, what's

the effect of that. but the question is how we politically proceed. some suggest that we're more likely to get the funding, which i think most in this room agree is necessary. maybe through tax reform but to an omnibus bill, through some other vehicle, some larger legislation, rather than standalone, rather than straight highway legislation. the need to fill the gap in the trust fund is clear, but sometimes it's easier to address revenue questions in the context of larger legislation. so could any of you sort of give us advice you can what's the history -- my recollection is, increases in gasoline tax in the past are part of larger bills.

it's not just straight highway. so could some of you all, maybe i will start, i don't have a lot of time here, but why don't you go ahead? kathy, you can connect. >> thank you, madam chair. yes. in fact, i can actually recollect in 1990 the and is a summit which i worked on, the staff work for which actually increased gas tax and addressed deficit reduction. 1993, president clinton and congress similarly addressed it, and they came together. frankly, the last time we, standalone raise the fuel tax was 1982. in the reagan era at that point in time. so that's instructed to me as to how one could move us forward. the thing that we face though i think, and here's the problem, we don't have in front of us two or three years to deal with this. we have a situation where the

opportunity presented itself in a comprehensive solution, to my mind we ought to take that and take it as quickly as possible. beyond that we've run out of money at the end of fiscal year 2014 to sustain the program. we're going to have to have a backup solution as well, but i commend to basically the congress that the question, what is the best way to take this on politically? and i'm not unmindful of how difficult it is. >> mr. chairman, i would agree with what jack said. certainly recent history show that being able to raise these revenues as part of a larger comprehensive package of spending and revenue discussions is what makes sense but i agree, i totally defer to congress as to which vehicle presents itself and when it presents itself. but i would just say, you know, as an industry, and i say my

silver spur the interest, most people sitting behind and people at this table, we have done a really lousy job of explaining to the american people what they pay today at the federal level for transportation. people think they are paying thousands and thousands of dollars each year in federal fuel taxes to pay for transportation. that's just not the case. the average is 250, maybe $300 a year for an average family of four. when you look at what you receive him for that amount of money, i just think we've done, not done a good job providing that push from the grassroots for this kind of investment. and i do think as an industry we have to do a better job of providing you with that cover athlete to make these tough decisions, whether it's tax reform or some other vehicle that may present itself. that's the charging need to give to all of us as we move forward, is to give you that grassroots support for this kind of investment. >> want to add a couple points on this.

the first is, not only do i think it's political easier to include in a larger more comprehensive bill, but i do think that larger more comprehensive bill allows you to do some of the things which help to the extent that you're raising revenues which will need to be done in the transportation sector. you can do other things in the larger bill to help offset that and impact that would have on various classes by the business or individuals. so i think there's a real policy advantage to including it in that larger bill and will make it easier to sell to some of your colleagues in the senate. the only caveat i would make is i don't think anybody knows when that big bill is going to come. and if it doesn't come before the end of next year, then something's going to have to be done for the trust fund in the standalone bill. because it won't have been as many grand bargain or grand bargain or tax reform bill.

support of it is going to depend on the timing. >> that's true. chairman dave camp, the house ways and means and i and many others here are working on tax reform, and has been for a couple of years. it has not been on the radar screen but a lot of staff work has been done working for the administration, the treasury on technical details and how these various provisions work. it's my goal to have a markup this year on tax reform, and i know chairman camp has the same goal. it's going to be difficult to pass tax reform this year, but i think it's quite possible to get tax reform passed in this congress. next year. last year was, 86, that was an election year. so if elections didn't get in the way. in fact, it became quite popular

tax reform, late summer, early fall of 86 before election. it's certainly a tax reform does reduce complexity. it does close a lot of loopholes. and also it helps with growth and jobs in and of itself makes america more competitive in rate reduction. all that can become quite popular. you make a good point. no, get this all wrapped up in time to fill the gap in the trust fund? there's a lot of ways to skin a cat. you could have another temporary transfer to all kinds of things we can do, pending final approval of the tax reform. other thoughts any of you have? secretary, i didn't let you -- >> senator, we in virginia have been fighting about this for 13 years. every session fighting about this, and a few things, looking back on, the first was we had to take all the excuses off the table. people wanted to hold

facilities. then everybody started saying maybe gas tax increases or other increases minot be a bad thing. people were complaining about our program was too top heavy. we made those reforms. we took all the excuses off the table. i think we did some very good things to the public, had confidence that if we were to put more money into the system, was going to actually to transportation improvements. and then we were very clear from the executive branch that this problem, that this problem we were heading towards a cliff. and i think if we did all these other things and we could show the numbers, people bought into it. it took enormous amount of leadership. i think we had a lot of national groups coming in, became very active in trying to stop this, our proposal, basically because

implications mashup but it took leadership. it does take some bold proposals, different proposals and it just really took getting all of these excuses off in making sure that people -- i will say one thing that is the challenge for us all. when we talk about this issue we talk about trillions of dollars worth of needs out there. it's very hard for the public to get their arms around that when we could articulate what the media problems were, how much we could raise and how much we could do it made a major difference. >> so in virginia, transportation reform part of a larger effort or was the standalone in the state of virginia? >> it was a standalone. we have a standalone special fund. >> the changes and how you finance the transportation system? >> yes, sir. >> that was purely focus on transportation? nothing else? was a part of the budget?

did have a budget that was part of a? >> well, there was some discussion about making part of a bigger reform effort for tax reform in the state, generally. we actually bought the standalone because we didn't know where the broader issues, whether broader tax reform would go come with we felt very confident that once we could get the tax reform for transportation isolated we could get it through. >> one question, i know it's been something you've been asked, these funds that are one off. everybody talks about, not everybody come a lot of people talk about trapped cash overseas, ma large multinationals have trapped cash overseas given our current tax system. and so the question is, should we bring that back, tax at a lower rate, not the current 35%? bring it back to lower rates and

dedicate that to highway trust fund? what do you think of that? >> we are trying to do that with supporting your marketplace fairness act. just for internet sales tax. >> that's a whole different subject. >> yes, sir. but we are dedicated to any revenue, the revenues that come from once the constructor collected those internet sales taxes would all be dedicated to transportation. >> from the marketplace fairness act of? >> yes. >> it depends. there's $2 trillion overseas. it depends on the rate. you can set any rate. the repatriation rate is like five and a quarter, something like that. might be a higher rate than that, but if someone off. not continual, you know, that's just the real question here. my time is expired.

anyway, the point i'm making is, we need to figure out politically how to get the revenue we need, and clearly we need a lot of revenue that you're talking about. and i sense that the highway trust fund could be an engine that pulls a train near. because people do want to solve this. they know it has to results. madam chair, you saw this article. i was just stunned when i saw this article a few days ago, four or five days ago. surface transportation, not highway but service. about china is up and running these massive high speed passenger train systems. 180 miles an hour. it's connecting china. more people travel trains in china than but there your when

you go to china, all of the airlines around and so forth. it's done which many of you said, it's helped to create growth, and people get on a train to go two hours and go someplace. different this is such a. it's efficiency and speed of a top notch transportation system. so if we get our highways going here, it's clearly going to have a big impact, secondary and third degree on growth and jobs. we have to break for gridlock around here, figure out how to get. >> sender, i want to thank you for being here. i don't have any questions abour the panel but i want to wrap up this way. center in half with you and you get a very strong proponent doing something. you may be right, maybe this pulls the train, but if it doesn't poll the drink and i think we've got to be prepared

to separate it out. because what's at stake here, as you know, in your state particularly, rural states, everything is at stake in terms of roads. the other aspect of all this is what the extreme weather conditions, is even putting more stress on our roads and whatever used to have. we have to get this done now. what i want to say is we are so fortunate to have senator baucus here because he's the chairman of the subcommittee that deals with highways, plus he's the chairman of the finance. so it's a very important thing. i'm going to do my part as chairman of this committee to just give as many ideas as i can't over the senators baucus and camp, levin and hatch it and i just want to thank all of you. you've been terrific. i want to look at your paper to see the other ideas that you could come up with. but we are meeting and we are

going to do everything we can. to me, failure is not an option. period. this is on our backs. this is our responsibility. we have to be here at this particular time. and i would say, mr. schenendorf, i would take exception with a tiny bit of your critique. you made a summit we haven't had anything since president eisenhower, and i do think we've picked this up. i think we've kept it going. i do think despite all odds we were able to keep this going. so i'm feeling certainly part of that segment of the congress that believes that this is an absolute obligation. that this is a no turning back point, and we have to come through. i would love to be a part of the big package, i would say to my colleague, it would be wonderful because there's lots of other reforms that are important. but where i think we have to be prepared as you said, we have to go separate.

and on repatriation, count me in. indeed, very much, everybody. we stand adjourned. >> we don't have anymore low-hanging fruit to back fill the general fund, to reimburse the trust fund. >> i made that point. we don't. we are struggling. >> we are running out of stuff. >> you can't pull out that magic trick you did the last time, a time before. all these things i never thought i would ever hear. thank you all for being here. you've all been very helpful, and be prepared because we're going to work together as never before. and thank you to virginia for setting an example on how to move forward. stand adjourned. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

>> democrat terry mcauliffe and republican ken cuccinelli faced off wednesday with their second televised debate. in the race to become virginia's next governor. the fairfax chamber of commerce and nbc4 washington hosted the debate. with nbc's chief white house correspondent chuck todd as the moderator. from mclean, virginia, this is about an hour. >> and good eating. i'm chuck todd, and welcome to the virginia gubernatorial debate between republican ken cuccinelli and democrat terry mcauliffe, hosted by the fairfax county chamber of commerce and nbc4. this debate is airing on nbc stations across the commonwealth. also nationally on c-span and streaming live on nbcwashington.com. i want to begin by quickly covering the rules of tonight's event. the debate will last one hour and we will begin with

two-minute opening statements from each candidate. then our panelists and i will pose questions directly to the candidates. i should note these questions are determined by nbc news and the panelists and have not been reviewed by the candidates over the fairfax chamber. each candidate will have one minute and 30 seconds to respond and the candidate answering first will have an additional one minute response. i as moderator reserve the right to follow-up as needed. we will conclude the debate with one minute closing statement. it is a device that will notify candidates of the remaining time and when time is expired and in interest of trying to cover as much ground as possible we asked the candidates to adhere to these time limits so that we don't have to be, timekeepers. let's welcome our panel. julie carey is nbc4's northern virginia bureau chief who has been carried virginia politics for over 20 years. ben pershing covers the d.c., maryland and virginia political scene for the "washington post." he joined the post in 2008 as the congressional blogger after a decade at the capitol hill

newspaper, roll call. last but not least we have aaron gilchrist, co-anchor of news for. now let's welcome the candidates for governor. the former chairman of the democratic national committee, terry mcauliffe and the attorney general of the state of virginia, commonwealth of virginia of course, republican ken cuccinelli. let's give a round of applause. [applause] >> moderator: by virtue of an earlier coin toss you will go first. co-head treachery thank you to the fairfax chamber for hosting us tonight and to all virginians were watching at home. i would like to recognize my wife dorothy was here with me tonight or for the last two decades we've been raising our five children here in fairfax county. achilles industries is simple. which candidate is going to govern from the mainstream come work with both parties and focus

on those economic issues that virginians are concerned about. during this campaign i have proposed commonsense solutions on issues of education, transportation, and workforce development. i've also been proud to earn the support of so many prominent republicans. many of whom have never supported a democrat before. the bipartisan coalition that we have assembled during this campaign reflects the approach that i would take as governor, following in the successful model of mark warner. just a few weeks ago my opponent changed his campaign staff and his tactics, probably because he was concerned that a number of republicans were no longer supporting his campaign. result has been a sharp increase in the most personal of attacks. they have been called deceitful and false by the press. so i expect more of those kinds of attacks tonight. but what virginians do expect from us is to hear how we are

going to bring folks together in richmond. with the department of defense drawing down its overall spending, and now with the sequestration, the next governor will face serious economic headwinds. we cannot afford the next four years in richmond to be like the last four in washington. gridlock driven by the tea party is once again risking a government shutdown that would be devastating to the virginia economy. in virginia, we have a strong record of working together, democrats and republicans, and with the challenges that lie ahead, we must embrace the tradition of mainstream solutions. we need those solutions now more than ever. and that is what i look forward to talking with you tonight. >> moderator: mr. cuccinelli come your opening statement trying to i want to thank you for hosting us today, chuck and the panel for their participation, and kerry for being here as well. it's nice to be right here in

the backyard at where i grew up. i'm the only candidate in this race with a lifetime of fighting for virginians, whether it's preventing sexual assault, helping the homeless, or working to help those suffering from mental illness, a passion of mine for more than a decade and a half. i've also served in state government for over 10 years and i know how it works. i'm the only candidate in this race who won't need on the job training if you elect me your governor this year. in this campaign, my opponent has spent a lot of time telling you why you shouldn't vote for me for governor, but not much time telling you why you should vote for him. you may not always agree with me in this race, but you always know where i stand and why i hold the positions that i do. when it comes to the economic competitiveness, job creation and higher education, i know we can all work together to make virginia a better place to live with lasting results. but it takes a governor who will fight for those issues and not

for their own self interest. where does my fight come from? my italian grandfather didn't have more than a sixth grade education. he was one of the toughest, hardest working folks i've ever known. whether it was as a welder or in a scrap yard where he worked for years, or as a bareknuckle boxer during the depression, probably his toughest job is all, he was proud to work to support his family. today, ordinary folks all over virginia, like my grandfather, want nothing more than to share in the dignity of work. i have a plan that will create 58,000 new jobs here in virginia. creating jobs, fighting for the middle class, and fighting for a good education for our children our priorities in my campaign and will be for my governorship. i've proposed detailed policy ideas for each, and i'll begin on day one fighting to put those ideas into action if you are like me on november 5. >> moderator: you guys are pretty good there. only about five seconds over for both of you. i'm thinking we're all putting

with you tonight that that was your talking points and try to answer our questions. to let me begin, it's going to be a similar question to both the year. mr. mcauliffe, you get the first question. every $29 is spent on tv ads in this race. 75% have been negative. both of you. i want it to you to respond to the stereotype you been trying to create about the other. mr. mcauliffe, the stereotype of you is that you're an operator, cheerleader more than a legislator or governor, that you don't have a expense and you're a man in a hurry who is willing choose political connections sometimes in very high places to take shortcuts. your response. mcauliffe: i'm a young man who grew up in syracuse, new york. i start my first business when i was 14 because i to help pay for college. i've been involved in a number of businesses since that time, chairman of the bank by the age of 30. built thousands of homes. i've been involved in a wide

variety of different businesses. i want to bring that business approach, that experience. i think it's important someone in the governor's office as those business experience is, understands the ups and downs of business, understands that risk is inherent in our economy and is willing to put everything in to make sure we grow and diversify our economy. with sequestration, with the budget cuts that we have seen in the department of defense with $500 billion, the stimulus is over to the next governor's real challenge is how do you grow and diversify our business to? how do we create new economic activity? we load up her five children stay in virginia but in order to stay in virginia we need of those jobs of the 21st century, cybersecurity, nanotechnology, bio life sciences. those are what we need to do to grow our economy. we've had different ads and their differences between the two of us. my opponent has spent most of his career in a social ideological agenda. he has pushed personhood legislation which would outlaw

most forms of contraception, would make the pill illegal in virginia. he bullied the board of health and what shutdown the women's health centers. women are 50% of the workforce of the united states of america. you cannot grow an economy by putting was up around virginia. >> moderator: 90 seconds to respond. cuccinelli: thank you. in this race, of course we got our ads on television. i'd point you to the kinds of ads we've been running. right now you all can see running the ads about a case that i'm very proud of, want about thomas haynesworth. thomas haynesworth holds the record in virginia for setting more time in prison while innocent than anyone in the history of the commonwealth. he's out today on a sex-4 vote on a court of appeals because i took that case and joined his side and we won. that's the kind of story where trying to tell chuck in this embrace. that's a story i'm very proud of. i think there are reasons not to vote for mr. mcauliffe for

governor. we make that case as well. we have a positive record to look back on in my case. we've done a great job in the attorney general's office fighting health care fraud. internet predators. we've worked even with capital one as we sit here on some justice issues. justice access issues. those are things near and dear to my heart. that's where we have focused industries. i'm the only candidate who has gotten both of the major business endorsements so far in this race from the northern virginia technology council's tech back and just this week from virginia's small businesses, the nfib has endorsed me as well with her 5500 small business mentors. they think that my preparation and my plans for growing the economy here in virginia is best not just within to make virginia a better place to live and raise a family. >> moderator: you get your 60 seconds to respond here. i want to deal with this issue. the one time said to the new times i've met all of my

business contacts in politics but it's all interrelated. we've looked at and a lot of it is logical to get out of all of the ethical woes in richmond with the current governor, why shouldn't that give the voters posit that is going to be some ethical questionable deals with too many political figures in your life? mcauliffe: i spent a lot of my life volunteering. i'm committed, passionate but as i said i started my first business at a very young age. i've been successful in business but i want to bring that experience. met an awful lot of folks. but listen, i stand everything i've done in my life. i'm very proud of my accomplishment. dorothy and i decide to move to virginia about 20 whinges ago because we knew this was the best place we could raise our family. there's a difference when the attorney general who is in the middle of the star scientific scandal, the same gentleman who gave all the gifts to the governor gave my opponent $18,000 worth of gifts. star scientific, they will virginia about $1.7 million instead of taking them to court,

he was in taken to to nuke city who is a 5000-dollar turkey dinner. that's a lot of turkey. he was using his house the taxpayers of virginia were owed that money. and instead of going and collecting what was our money, my opponent was actually taking gifts from the gym and he was buying stock and he wasn't disclosing it. >> moderator: we'll get to that. mr. cuccinelli, 90-second question to you. let's talk about the stereotype that's been painted to be. that you use your governorship to push a social agenda on abortion, gay rights, climate change. that you get a governor simply for conservatives and you would not consider those were liberals or moderates in your governing. your response to this stereoty stereotype. cuccinelli: one of the best responses to this is the broad array of support that we're getting from democrats, independents and bipartisan groups like the northern virginia technology council to back, the small businesses

across virginia and the national federation of independent businesses, the farm bureau, the police. we are getting a broad array of support across virginia because i have put forward well thought out plans that start with an understanding of how virginia government works, and that we can move those plans forward because people can look at my record and see that what i campaigned on is what i pursue. as attorney general right here in fairfax county, fighting back against overreaching regulations on a bipartisan basis with the fairfax board. we save fairfax county taxpayers in virginia tax payers about $250 million. look, i believe, i have some basic beliefs that are fundamental to me. but overwhelming proportion of my time as attorney general has been spent moving virginia forward economically and protecting liberty in our constitution. that's something you can continue to expect from me as your next governor. the comparison here is someone who's told "the new york times,"

you help me, i help you, that's politics talking about a case where he was an unindicted co-conspirator in a teamsters election money laundering case. i mean, if terry is elected governor we're going to have to change the state model the quid pro quo. just today in the "washington post" they have an article about how his higher ed policy change on a dime when he got certain support. some of them are republican. that kind of trading off without thinking through the policies, particularly in an area that's going to make colleges less of able to virginia's -- drama we had a bit of an air there. i know you've found the time that was on your table but you got a little more time. you get about 95 seconds, mr. mcauliffe, to respond and six he has run on jobs and transportation when he runs for office but he gets into office and he runs answer is with an

ideological agenda, whether the women's health centers where people with the board of health and shut them down. he sponsored legislation to outlaw most forms of contraception that would make the pill illegal. he has referred to gay virginia's as self-destructive and soulless human beings. he was 1.3 of attorney general when the act was being reauthorize in the united states congress, 47 attorney general's signed the letter, violence against women, not controversial. he is one of three who refused to sign the. it has been a pattern and as relates to his attack on gay virginia's, when he was attorney general he sent a letter to every college and university saying they could provide no protections against is commission based upon sexual orientation against protesters and students. what happened? northrop grumman which was about to move their national headquarters to virginia, it was between maryland and virginia, i visited employees squawked at that. what happened?

governor bob mcdonnell had to interject himself to stop his attorney general and say that you. 300 high-paying jobs right up the street from where we are today. they are consequences to this mean-spirited attack on women's health, and on gay virginia's. if we're going to build a new economy in virginia, we're going to do it by bringing everyone together. >> moderator: mr. cuccinelli, as you prepare your 60-second response to mr. mccullough i was hoping you could respond to what republican lieutenant governor said about you and the entire republican ticket. he said it's the most ideologically driven ticket at the gop has ever put forth, and he is worried that is pushing away mainstream vote. what do you say? spent until he stepped out of my raised by a lot of measures, he is more conservative than i am. i think that hits and comments based on not being in this race. the northrop grumman charge is false. the soulless comment is

offensively false. the kind of personal attacks that terry opened up his remarks with today by saying this is been going on are coming from terry mcauliffe. you all are seeing the ads. it's overwhelmingly negative. it is unbelievably false and no one up here, know what appear has done more to protect women, which is a focus of his attacks, than i have. weathers back when i was in anything student and a friend of mine was sexual assaulted. my response was to start a new organization that is still functioning there to protect young women, and is a first of its kind in the country. we run multiple domestic violence programs in the attorney general's office and we started from scratch by fighting human trafficking and we've done a great job of it. >> mr. mcauliffe, you propose be more money on teachers how to appreciate education them on community colleges and we have heard quite enough specifics to put an exact price tag but we're wondering how exactly to pay for

that, especially of the general assembly doesn't approve medicaid expansion? mcauliffe: what i said is responsibly can first of all when governor will look at the efficiencies we can bring to the government and then we work together to get that medicaid expansion if we don't get the medicaid expansion we can't bring in the efficiencies, that i agree, there's not money to be spent. i think it's proven budgeting first determine how much money you have come to when have you can apply to your priorities. this is quite a difference. my opponent has proposed a $1.4 billion tax cut per year. he doesn't say how he would pay for it. just the other day his lieutenant governor said that ew jackson and ken cuccinelli want to get rid of the corporate income tax in virginia. let me tell you what would happen to our budget. you will see hundreds of many of those come out of education. you could see thousands of teachers being laid off at a time that we need to compete on a global basis as i talk about cybersecurity and all these

important new businesses, we're not going to be able to do that because money will come out of education. it's important for me that the medicaid expansion. when i talk about my budget i said it's important to get how much money you have and then prioritize and put the money in to his plan, $1.4 billion a year, doesn't say how we would pay for it. that's 6 billion over the course of the next four years. vince callahan, former republican chairman of the house appropriations committee said it would put a check and ago in our budget. the idea that you could cut 6 billion out of the budget, get rid of the corporate income tax, not take medicaid expansion he didn't want to transportation 6 billion, there's just -- >> moderator: mr. cuccinelli, 90 seconds to respond. cuccinelli: it's hard to find inefficiency in government you don't understand. terry mcauliffe doesn't know how virginia government works. he doesn't understand the issues related to virginia government. he can talk at the top one level like anybody could get the read a few talking points.

but he doesn't know how virginia government works. this came out in the nbc sea-tac interviews and would have if he didn't try to blow them out of their endorsement but he did. so there was reporting on it and people noted that understood the issues and he did and i was a serious candidate when it came to the subject matters that matter to them. and terry wasn't. a few don't start with a fundamental baseline knowledge, you don't have an easy time finding inefficiencies. folks, governor is not a good entry-level job. but that's what it would be for terri. and i already know what works well, and there are things that work very well in virginia government, and there's plenty of them. but there are areas where we need to do much, much better. i would point to medicaid, not the expansion. medicaid itself, one of the biggest parts of our budget. we are one of the best health care fraud fighting offices in the whole country, my office. i've learned an awful lot about how medicaid works, and what

does and. we could do a whole lot better just to talk about one area, to make it more efficient, to make it serve virginia's poor better than it does today. but i'm the only one prepared to do that. and who has a plan that balances the budget drama when you get your response, you didn't give us a price tag. you've been running for governor for were used to like them to give us a price tag on what you want to spend? what's the price tag? mcauliffe: first of all i want predict an early childhood development. i think it's very important. i talk about what we need to do. on teacher pay. we need accountability i've called for a total reform of the sol's. they don't work. we don't have accountability. our students are being taught to memorize good teachers are being taught to take tests and how to give test. that's not how you build the cognitive mind creative reasoning. we need to be involved in the process of early to make sure we have progress-based data can not these memorization does. i talk about the community

colleges. chuck, the qb the medicaid expansion a guy who said the. my opponent doesn't want. i want it. it's bipartisan to the fairfax temper, there's gym in the front row. fairfax to support the medicaid expansion at the virginia chamber of commerce supports the medicaid expansion. so does lieutenant governor go bowling. is a bipartisan mainstream. we're going to bring back to virginia over the course of the next seven years, $21 billion of our money that we are paying him. why would we not bring that back? it will create -- let me finish this 33,000 new jobs created, check. this is so important. tremont i just want to clarify, no price tag? mcauliffe: determined for some which have been you can do with your priorities time the next question. >> mr. cuccinelli, your economic plan cuts taxes by 1.4 bundles when fully implemented. you propose creating a commission to find ways to pay for the big tax cut. how do you respond to virginians

who say, i'm not voting for, i'm voting for governor, i'm not voting for a commission? is in the leadership about providing some specifics in this case on tax breaks and loopholes that would go away? cuccinelli: yes. more job creation, put more money in the hands of our businesses so they can reinvest it and in our families budgets. it's been analyzed and found to grow about 58,000 jobs if we can fully implement it. it will include lowering the personal income tax to 5%, the business income tax to 4%. and by the way, i would note north carolina two months ago past a package where their business income tax the behalf of hours if we don't act. and even if we achieve the goals i set out to getting down to 4%, they will still giunta asked if they meet the revenue estimates. my friend on the other side of the river just announced for governor in maryland, is talking

about the fact that virginia's eating merritt alive in this front and that they need to bring their taxes down to compete with us. we need to compete and do it effectively. i'll eliminate about 15% of corporate loopholes and tax breaks that don't work as was the other 85% and will also cap growth in spending at about 3.5% to pay for this package. this is a federal government. we don't print money, so both sides of the ledger have to match. the "washington post" in my opponent three pinocchio's for the statement you heard tonight of he has no way to pay for it. we've put a process in place that will accomplish the financial goals we need to figure the tax cuts and if we don't get the cats -- we don't get to do the tax. mcauliffe: indicated the attorney general's plan, virginia will be in financial ruin. he did not support the governor on the transportation, a bipartisan transportation bill. i was all income $6 billion were

going to be able to stomach transportation to win every to be new to this beautiful all, you went underneath a new silver line which my opponent said he was really statewide official to come out against it and he said he would actually kill it after us halfway completed. i talk about education. this is so important. we need to invest in education. his tax plan takes six going out of the budget over the course of the next four years. d. four years. d. and e. w. jackson believe we should also get rid of the corporate income tax. he doesn't want the medicaid expansion. is called for the end of the department of education. we cannot grow 21st century economy. we cannot be those global leaders. we need to replace the sequestration. we've all seen the numbers. we know what his tax plan would do to the local communities. sherron, what it would mean to fairfax county to be losing its revenue, what it would mean to sherron and fairfax county and the loss of teachers at a time we should be investing in our

teachers, invested in those s.t.e.m. courses science, technology, engineering and math. you can't do that. is plan literally would force us to lay off thousands of teachers. as i said, vince callahan, the former chairman of house republican appropriations committee came out as it will put a hole in our budget. senator mark working out the other day in one mr. cuccinelli, you just said and loopholes. we all do that. wwe don't know whether what that it sounds like you're afraid to tell us what you think about cutting because it's too much before the election. cuccinelli: what are going to do with the loopholes in the extension is ranking. we all know what they are. have all been identified. >> moderator: what are they? cuccinelli: literally scores of them. the standard of eliminating one is what's critical here. if all we're doing is giving money to a business interest, that's not something that's working for the people and for them which is the taxpayers of

virginia. if instead out of that tax credit we get other economic benefits that return to the people, virginia's people paying for it, that's a tax credit to keep. those wer are the ones that we t to grow our economy. but on a bipartisan basis we've got to be able to find at least 16 of them, about 15%, that don't perform, that don't meet that standard. that's all we have to do to get our 50,000 job creating tax plan put in effect. i'm the only candidate with a plan to grow jobs, other than to say the word jobs repeatedly. >> moderator: julie carey has the next question spent the tragedy at the navy yard is once again cast a spotlight on gun laws. mr. mcauliffe, as for your plan to strengthen virginia's the city can you say you support universal background checks, limiting the size of magazines, a return to the one gun a month purchase will. missing from the list is an assault weapons ban, something he said as recent as december of

2012 that you supported. so the two-part question. had to change her mind about an assault weapons ban? secondly, how they get priority would you make it as governor to change virginia's gun laws? mcauliffe: i haven't changed my mind. it's a very pertinent question for tonight. after the tragedy we just had at the navy yard, the tragedy we had in virginia, virginia tech, aurora, newtown, connecticut. as a father and as a husband, i can speak for everybody in this audience. when we drop our children off at school and we drop our loved ones off the work, we want to know that there going to be safe, that our communities are safe. it is so important. that's what i'm for responsible gun ownership. i have called for universal background checks. my opponent doesn't support that. i'm a strong supporter of the second amendment. i encounter. i own guns. i've gone through background checks. they take just a couple of minutes.

we have a gigantic loophole in virginia. you can buy guns through mail order. you can go to these gun show loopholes. there are certain individuals who just should not own a gun. there are individuals that have mental illness. i think this is such a critical issue for us. how many people have to be killed until we wake up to have sensible gun ownership? now, i was very dismayed with the united states senate this year. 91% of americans support universal background checks. the senate refused to even bring it up for a vote. as governor, i'm going to push, we need universal background checks are going to keep our loved ones -- >> moderator: could you address what all of the recommendations from the virginia tech review hasn't been implemented including background checks? cuccinelli: for those of you who

know me and know that i have been deeply involved in working with people suffering from mental illness for years, and one of the common themes in the most public tragedies is that we are dealing with people who suffer from mental illness. i would tell you they'll that the more common tragedy in mental illness is a day-to-day, one person at a time, that you don't read about in the paper. it's a suicide, it's a family struggling and they are at their wits end to try to get one of the family members on a path to recovery and sustainability. we have not found gun control to the fact that. to be effective in that area. what we've done in virginia is we have become the number one state per capita in screening out people with mental illness from gun purchases. we ar are the best states as tht in the country. we are also the number one state, that i'm aware of, the

department justice doesn't keep iit on all income all of them cs of prosecuting people who attempted buy guns illegally. that's the best way is to be aggressive and proactive. i'm running against the only as great a candidate from the nra. the only one of all six running statewide. i will support the second a minute. it deserved support as does our own constitution. but i will continue to focus on where i believe the main source of this problem is and that is resolving mental health issues. mcauliffe: he absolutely nothing with the response of his it relates to gun control. we both believe in investing in mental illness, mental health and what we need to do. i can tell you this, without the medicaid expansion money there's not a penny for any investment in mental health. not a penny. with his tax plan that would take all of this money out of the budget, there's not that many. it's really just talk. whatever in i may get from the nra, i'm going to stand here and tell you today that as governor, i want to make sure that every

one of our citizens in the commonwealth of virginia are safe. every one of our children when they going to classroom should know that they are safe. when anyone of our loved ones goes into work, what happened at the navy yard the other day is continued pattern of what's going on. we need to eliminate guns from the folks who should not own guns. there are many reasons why individuals were dangerous, 11 issue of mental illness, and a background check, i've done it. it takes two, three, four minutes. >> moderator: we will get the boss for a brief commercial break. we will be right back with many more questions for the candidates of the governor of virginia. after the debate you can join me and news for northern virginia bureau chief juli julie carey fr special google hangout on nbcwashington.com. we will be right back. [applause]

>> moderator: we are back live here i in mclean with a to candidate for governor of virginia, terry mcauliffe and ken cuccinelli. this next question you both get 90 seconds respond it has to do with the stuff that's going on across the potomac. just a few miles away, of a government shutdown which will affect thousands of virginia's as you both know. a quick 90 seconds for both of you on this. mr. cuccinelli, i want you to go first. did you support ted cruz efforts to use any means necessary to -- and try to come to think president obama has shown the right leadership to resolve this stalemate? cuccinelli: first of all, i'm in northern virginia. virginia. i've lived here my whole life. none of us want to see the government shutdown. we don't want to see that across the river big wouldn't be good

for america. we're already seeing in the virginia economy the problems associated with the uncertainty of federal budgeting as it is. both in northern virginia and in southeastern virginia, hampton roads area and that's causing all sorts of problems here in virginia. but since i'm running for governor what i want to tell you is that this is not the kind of thing that you would see happen in my governorship as we put together a virginia budget. 10 days ago 11 days ago last weekend my opponent repeatedly said that he wouldn't sign a virginia budget that didn't have the medicaid expansion in it. you've heard him here tonight talk over and over and over about how this is basically his funding mechanism for everything he wants to do. so it's clear he is very committed to the medicaid expansion the i understand that. but it is not the be all and end all of virginia's budget, particularly if you're willing to shut down virginia government just to get the medicaid expansion, which he said repeatedly he won't sign up budget without medicaid expansion into.

i disagree with them on medicaid expansion, but this is not an appropriate tactic for virginia. this is a washington tactic. if you like the washington works, you will like him. if you don't think washington works right, if you think it's dysfunctional as i do, and i'm your candidate in this race. >> moderator: you for your answer, you didn't answer the ted cruz portion. did you -- you don't support his effort what he's doing? cuccinelli: he finished sort of a filibuster day. at some point you've got to vote. >> moderator: judo support what he's doing. cuccinelli: out like to see obamacare pulled out a federal law but we've got to keep moving forward and make compromises to get the budget going. mcauliffe: let me answer the question if i could for a second time when the question about whether you think president obama has shown the right leadership. mcauliffe: no government will be shut down in virginia over the

medicaid expansion. i will work in a bipartisan way to get it done. that is why over a dozen former republican legislators have endorsed my candidacy. many of them who had never endorsed a democrat before. just last week in virginia beach, the mayor, republican mayor of the largest city in virginia who has never endorsed a democrat in his life, mayor will sessions, endorsed our candidacy. i now have six of the seven mayors in hampton roads. why? they know we worked together to get things done. we won't have any government shutdown. the only one on this stage that almost have that effect was ken cuccinelli. when you almost get the virginia budget when he was trying to defund planned parenthood. so he's the only one on the stage that has tried to shut down our government. i think it's a disgrace was going on in washington. it's not working. it's just not working as it is today.

sequestration should never, these issues that we have going on. it was supposed to be so onerous that they would never happen. it's now having. these things should never be used as bargaining chips for our budget. so until they get a result i say shame on everybody. >> moderator: including the president? mcauliffe: on everyone until this gets done. >> we will talk more about medicaid presently knows next week enrollment for the new health care exchanges begins. mr. cuccinelli, we all know that you're from against virginia expanding medicaid to get health care coverage to a family of four making $32,000.500 a year. what do you say those to those low income virginians who would not be able to get medicaid coverage with governor could you know that could if they simply lived across the potomac in maryland or the district? cuccinelli: right now we have approximately 1 million of virginians and forefront in our medicaid program, and they can

work a lot better for the folks who are in it. 40% expansion of medicaid cuts would help make it work better. governor mcdonnell took a broad view of government reform and i have a narrow and deep view. and it is focuses on the dod and focus on dean as. i've an awful lot of time as their attorneys to spend learning about those two agencies. there's an awful lot more we can do. earlier terry said we can move money around and medicaid. yes, we can. we can address mental health more if we move money from one waiver program to another within medicaid effects are pretty. for me it is a priority. i think we need to make the medicaid system we have now work better for the people who are in it. there are ways to do that. we are losing doctors and nurses and a medicaid program. we're trying desperately to keep them in. that's a tremendous struggle. i believe we on to lower the liability for medical practices

for those who are working in our medicaid program like a good samaritan standard that we have for doctors, the come across accidents. this is the low-cost medical care that we're getting for virginia's poor. overwhelming the system we have now that struggling as it is isn't a way to get good health care for other virginians. mcauliffe: this medicaid expenditures are important to its support in a bipartisan and its mainstream. let's be clear, we should just walk through the nursery quickly. beginning next year, 400,000 virginia's will get access to quality life-saving care. number two, this is our money. it is now the law of the lead. 29 other states have agreed to accept it. some very conservative governors have agreed to accept the. we are bringing back government going to pay 26 billion over the next 10 years into the federal government. why would we not bring 21 million of our money back into virginia economy, to turbocharge our economy, use

that money to bring more efficiency to the health care delivery system, make it more cost-effective? if we don't take the medicaid expansion money, then many of our rural hospitals could be jeopardized. the federal dish payment, that is slowly being ended. so today with a low income individual goes to a hospital to get reimbursed by the federal dish payment, that may go away. in addition it frees up over the next eight years $800 million in the general fund which we can use for our priorities. i go back to the point, he continually, big federal issues but he was absent on one of the most important federal issues that we had, the reauthorization of the violence against women act. he was one of three attorney general's in our nation that refused to sign a letter. 47 other attorney general's. i don't know why he would not want virginia women are directed against violence. mcauliffe: first of all, unlike my opponent i do my homework.

i called congressman ryan about the federal match that we were promised. the reigning down money that terry is lying on defund everything he is promising everyone all over virginia. and congressman ryan told me, ken, it is a matter what the democrats are in charge of your or republicans. we don't have the money in the federal government can meet these matches that are proposed in a federal health care bill. so the question then becomes, for a state, when with any of giving in, whether you trust that the money will be there, even if you have a plan to fund the state chair, which my opponent does not, i'm not willing to risk virginia's budget when the federal government is already taking the position, many of them taking the position, that they can't afford it even if they wanted to. the hole in our budget when this is fully implemented now is $200 billion a year. that will explode when they

don't find it at the federal level. >> moderator: the next question for mr. mcauliffe. >> the new nbc4 poll shows 54% of virginia voters support gay marriage. you are among those who support that but you say the legislature would not be able to overturn the state's ban on gay marriage. why not use the office to lead on this issue? mcauliffe: and we certainly could. i do have some tremendous challenges because of the issues of economic development, job creation that i need to focus on. but i have come out for marriage equality. irish catholic kid growing up, dorothy and i spent a lot of time discussing this issue. what really turned for us is probably the "don't ask, don't tell." the idea that we could send our men and women across the globe to fight for us and then they come back and they don't have the same equal opportunities and equal rights i just think was plain wrong. so i support marriage equality and i said that. this is quite a difference my opponent.

he has referred to gay virginians as soulless and self-destructive human beings. i made a point earlier, it almost cost us the northrop grumman deal and he said it isn't true. well, "new york times" reported governor mcdonnell administration official told "the new york times" that his actions almost cost him the deal. so i would just go back to governor donald administration ask the individual why he said that them. this is a very important issue. i was out early on issue. and if we can get a bill through the general estimate and all my desk as governor, i would sign it. >> moderator: mr. cuccinelli? cuccinelli: it's a constitutional and so never comes to the governor, but to your point, a governor can still lead on the issue but it will never come to the desk of the virginia governor. well, i understand and respect the fact that this is a sensitive issue to a lot of virginians. but i'm one of those who do believe that the institution of marriage should remain between one man and one woman. i would note that my opponent

appears poised based on some of his comments during a campaign to not defend our state constitution to now look, as attorney general i've defended laws whether i like them or not. as pointed out by former democratic attorney general, tony troy, a pattern for terri that's been emerging is that he seems to think he gets to decide which laws and which parts of the virginia constitution that you're obligated to defend as the virginia governor. we have two lawsuits running right now on this matter, and the duty of the attorney general and the duty of the governor is to defend our constitution. if they want to change it, one could lead as the question suggested to try to get a general assembly to make those amendments and put on the ballot, but the officer's duties that come with it. i respect the office and to respect those duties. i respect virginia's history but and this is part of it now. it may change in the future but right now the next governor is obligated to defend our

constitution. i intend to do that. mcauliffe: i will support legislation that allows equal rights for individual, the virginia. i said continuously that might opponent has continued to attack gay virginians, and you cannot grow a business by doing the. clearly ever get to the gym assembled we go to referendum, we come back as it relates to gay marriage. i had bi the issues i'm facing ready for me. he talks what his duty in office. i've got to chile, we have thousands of landowners in southwest virginia who had nothing cast taken off their property. they were owed money by to out of state energy companies. now, what was the attorney general's office and their responsibility? what they were doing was secretly telling this to out of state energy companies how to get out of the deal and giving advice how to beat the landowners. now, might opponent to $100,000 in contributions. while he was taking contributions from the folks who

were owed money, thousands and thousands of virginia landowners, were denied their money that was due them from methane gas that had been taken off their property. he's not doing his job as attorney general. >> moderator: the next question for mr. cuccinelli. >> mrcuccinelli. >> mr. cuccinelli, why do you think johnny williams gave you the state's top law enforcement official $18,000 in gifts? we know you wrote a check to jennifer that amount but why were you willing to accept those gets in the first place given that your office has said he was not a close friend of yours? cuccinelli: , i would say that, you know, i meant ironically i met him mr. williams to the governor. and at the time, you know, what was going on there didn't seem like a big deal. i didn't know about any business he had before virginia. and as far as i know, except for the tax case they had been. don't think we did in the tax case was opposed them.

vehemently. they never got a break from us and they're still fighting it today. we are still, through free counsel to the taxpayers if any that. and i did give the $18,000 to a charity because i thought it was the right thing to do. it took a while to get that together. that was a hard thing to do. i also called this summer for a special session for ethics reform. and i wil will remind some youth adventure don't remember in 2009 when i ran for attorney general i've put forward an ethics platform. we got about half of it achieved, including the inspector general which was a big deal to me when i was in the state senate and when i was attorney general, and i think that's a big step forward for gene. we have a lot more to do in that area, i would say that this isn't a that of lead on as attorney general when i ran for the office. i've run on a platform this time. i would'v would have liked to he gotten it done during the summer the governor didn't agree spent you talk a lot about -- can you

find what you haven't returned companies more of their tax returns? you push mitt romney to do this and you said by not releasing the imagination runs wild. mcauliffe: i've done a lot with a other governors have done. i've got up and the other. but the issue by the attorney general and star scientific and let's be clear. star scientific of the state $1.7 million. this suit languished for two years, for nearly two years. instead the attorney general i say going after that can bring that money back to virginia taxpayers, he was being taken to new york city. he was being taken to a smith mountain home lake resort. he spent time and disgusted at his house in britain. he took $18,000 worth of gas. he bought stock in the company anand it wasn't as close to that company business before the attorney general. that was his legal responsibility. that's what i've called for ethics reform. i've called for a bipartisan

commission, number one. and number two, i have called for a $100 gift been to any state elected official cannot to get him more than $100. i'm going to propose that the day i'm and doctorate as governor, and i'm not going to wake up going to issue an executive order for myself, my family and my appointees that they cannot take anything over $100. i would say to the attorney general can join in this. clearly, you cannot a lot of turkey for 100 bucks. cuccinelli: first of all, the starving trails are, i reported and. it's important for virginians to know i brought this forward. i disclosed the. i called a press conference to do. that's how committed to transparency i am for virginians. i understand there were problems there but i'm the one who brought them for. i turned it over to democratic prosecutor, and he clued me. does anybody think terry mcauliffe would've ever done that if the roles were reversed? i released eight years of my tax

returns to me. he won't release any come even though the company he is chairman of our was chairman of, that's not altogether clear, is under securities and exchange commission investigation. and department of homeland security investigation. i think now more than ever we need transparency from people who seek to have the trust of the folks of virginia to assume the office of governor. it's pretty rich to have a guy who rented out the lincoln bedroom, sold seats on air force one, was an unindicted co-conspirator in a teamsters election law and money-laundering case be talking about ethics now. >> moderator: good news for you guys is we've got a little bit of time, i'm going to do a lightning around for you saw want you to take 30 seconds. deal with this cushion. would you be open for virginia, thank you for us, for virginia join most of the state and country unlike school districts to start school before labor day? somehow not allowed in this state. mcauliffe: no. is too important for business.

the change would result in virginia's, causes a $369 million. tourism is a vital part. it is our second biggest industry. agriculture and forestry are one in three. $79 billion -- >> moderator: even the kids could fall behind with the test. mcauliffe: i was done in newport news. the achievable dream, they go an hour longer during the day to day go every other study. but there's many things we can do but we cannot with these economic headwinds give up $369 million. >> moderator: mr. cuccinelli,, go ahead. cuccinelli: i bought this bill on behalf of the democrat board of school board of fairfax county when i was in the state senate. children outrank tourism. now, there are changes we could make to take the pressure off the pre-labor day start. like appropriate reforms to the standards of learning. because we focus on that day very much. there are things we can do to make this easier until we get before labor day, but ultimately

locality should have the opportunity to make that decision. >> moderator: before closing statements, i have one weird sports question for you, the redskins. should they change their name? is it offensive to a lot of native american. mcauliffe: i do think the governor should be telling private businesses want to do. i do think the government should be telling private business -- and what do you have a personal opinion? mcauliffe: i'm not going to do a dance that or anybody else what to do with her business but i want to congratulate the redskins tickets is the tag your -- >> moderator: mr. cuccinelli, do you think it's time for the redskins to change the name? trent lowe i think that is up to them and how did i think 80 years of history with 19 is kind of hard to leave behind but i understand that. i also don't think rg3 should've been played in the second order of the playoffs last year. [laughter] tournament i had a little fun. that concludes our questions and a mr. mcauliffe, you have a one minute housing statement.

mcauliffe: thank you once again to the fairfax chamber for hosting us tonight. there is a real choice in this election about who will grow and he will diversify our economy. we must work in a bipartisan way and want to create jobs. my opponent talks a lot about experience. but his experience has been in dividing people, by pursuing his own ideological agenda, introducing legislation that would outlaw most common forms of birth control. and bowling the board of health, which resulted in the shutting down of some women's health centers. greatly, i think virginia women have had just about enough of ken cuccinelli's expense. the approach that i'll bring to richmond is different. building on bipartisan coalitions that we establish and brought together in this campaign, i will work with both parties to find mainstream solutions to the problems that we face. it's the approach that worked

for mark warner and it's an approach that we desperately now need in virginia. >> moderator: you get the last words. cuccinelli: that tech pac and small independent businesses have endorsed me this week or last week because they know i'm best prepared to fight to grow virginia's economy. my opponent is the only one in this race was driven jobs from this state and he has no plan to bring them back. terry sold more visas to chinese citizens as part of green tech and his failed company has sold cars. his jobs issue with green tech is terrible. i'll be a government that fights for you. terry will fight for terri, because he always has. has. if you were given your support on november 5, i'll fight for education and economic policies that grow jobs for the middle class, and by leaving families and businesses with more of their own money so that they can invest those hard earned dollars right here in virginia. my jobs plan will grow 58,000

good, full-time jobs in virginia. i have faith in the people of virginia that if we remain true to our noblest ideals and principles like -- strong families that we will be better in the future than we have been drama thank you both. voters from its up to you. don't forget to vote. thank you to the chamber, nbc4 for hosting this very lively debate between both candidates, ken cuccinelli and terry mcauliffe. thank you both for participating. we will see you. thanks to our great panel of reporters. stay with nbc for all election long. to buy. by. [applause] >> according to a new "washington post" poll, terry mcauliffe leads with 47% among likely voters. ken cuccinelli has 39% of the return carry the robert service, 10%. >> the u.s. senate is about to start the day with more work ahead on a bill providing temporary funding for the federal government from

october 1 through december 15, known as a continuing resolution, or c.r. passed by the house last week, it would also he funded health care law. yesterday majority leader reid filed an amendment that would strip the health care law defunding language and would shorten the length of the c.r. by one month from december 15, to november 15. the next procedural vote is scheduled for tomorrow, although senators may agree to push that up to today. a final passage vote is expected by this weekend. now live to the senate floor on c-span2. the chaplain: let us pray. god of love and light, you never fail those who trust you. as people make contingency plans for a possible government shutdown, give us your grace in