DEPARTMENT OF TRANSPORTATION

FOCUSING ON THE NATION’S PRIORITIES

    The Department of Transportation (DOT) works to improve the safety and efficiency of the Nation’s transportation system, and these priorities are reflected in the President’s Budget request for the Department. To date, DOT has made great strides improving transportation safety, but now faces difficult challenges to reduce accident and fatality rates further. In addition, across modes of transportation, congestion is a growing problem that the Department is attempting to address through new and innovative approaches.

Improving Transportation Safety

    DOT’s top priority is improving transportation safety. The Budget requests additional funding to improve aviation and highway safety in particular.

FAA safety inspectors check out an aircraft.

    Improving Aviation Safety. The United States has the largest, most complex aviation system in the world. The Nation’s airspace system includes 14,540 air traffic controllers, 3,388 airports, and 316 air traffic control facilities. Because of the comprehensiveness of the Federal Aviation Administration (FAA) traffic management system, commercial aviation is the safest form of transportation. The current commercial accident rate is the equivalent of one fatal accident for every 15 million passenger-carrying flights. FAA has established strategic goals to continue to reduce the commercial and general aviation fatality rates, as well as to reduce the risk of runway incursions (potential collisions on the ground) and reduce cabin injuries caused by turbulence.

    FAA, working with industry, academia, and other Federal agencies, conducts aviation research to improve safety. For example, in 2007 FAA will continue research to: improve weather forecasting; minimize wake turbulence; ensure the continued airworthiness of older aircraft; and prevent uncontrollable in-flight fires.

    In addition, through the Grants-in-Aid for Airports Program (AIP), the 2007 Budget provides $287 million to complete 52 runway safety projects. Runway safety improvement projects involve improving or expanding runway safety areas, installing technologies that can quickly and safely slow an airplane, or modifying or relocating the existing runways. These 52 runways will bring the total number of completed projects since 2000 to 296. Runway safety projects contribute to FAA’s goal of reducing the commercial airline fatal accident rate to 0.01 fatalities per 100,000 departures by the end of 2007.

    Improving Highway Safety. On August 10, 2005, the President signed into law the Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The law provides funding for highways, highway safety, and public transportation totaling $286 billion for 2004 through 2009. SAFETEA-LU addresses a variety of surface transportation issues, such as advancing highway safety, easing traffic congestion, and enhancing public transportation, as well as laying the groundwork to address future challenges.

    One of the primary objectives of SAFETEA-LU is to continue to improve highway safety. In 2005, the highway fatality rate reached an historic low of 1.43 fatalities per 100 million vehicle-miles traveled. While the fatality rate has greatly improved over past decades, the actual number of fatalities has remained fixed at essentially the same level in recent years. In 2005, 42,643 people died in traffic accidents, including vehicle occupants, motorcycle riders, and non-motorists, compared to 1985 when 43,825 people died and the fatality rate was 2.47 fatalities per 100 million vehicle-miles traveled.

    Further gains will require that all levels of government focus on the most important factors contributing to highway fatalities. These include safety belt usage and alcohol-impaired driving. Safety belt usage has steadily improved from 75 percent in 2002 to a record high of 82 percent in 2005. However, more than 16,000 people were killed in 2004 because they were not wearing a safety belt or some other kind of restraint. The National Highway Traffic Safety Administration (NHTSA) has determined that one of the most significant non-user groups is 16- to 24-year-olds. In 2005, this age group’s safety belt usage was 78 percent, compared to 82 percent for adults between the ages of 25 and 69. Even more impressive is the 84 percent safety belt use among adults 70 and over.

    Curbing alcohol-impaired driving is another difficult challenge. Despite NHTSA’s effective “You Drink & Drive. You Lose.” message and a 2.4-percent reduction in alcohol-related driving fatalities in 2005, nearly 17,000 people died that year in alcohol-related accidents.

    To help mitigate these factors, SAFETEA-LU combines several of NHTSA’s safety programs into a consolidated grant program. This program offers States more flexibility when administering their grant funds if they develop performance-based highway safety plans. Each State may determine how to best resolve its problems, whether they include alcohol and drug-impaired driving, occupant protection, motorcycle safety, or other issues. In total, the President’s Budget requests $815 million for NHTSA. NHTSA plans to dedicate its additional resources to those programs that most effectively reduce the highway fatality rate.

    In addition, DOT attempts to enhance highway safety by improving the design and condition of the highways themselves. SAFETEA-LU dedicates $5.1 billion through 2009 for highway safety programs administered by the Federal Highway Administration, including State grants aimed at eliminating hazardous roadway conditions. Specifically, SAFETEA-LU authorizes a new $1 billion core Highway Safety Improvement Program that will distribute formula funds to all States. Other highway safety programs target particular areas of concern, such as work zones, older drivers, and pedestrians.

    DOT also works to improve large truck and bus safety. These motor carriers represented four percent of registered vehicles and eight percent of vehicle-miles traveled in 2004. However, of the total number of deaths from vehicle crashes, 12 percent involved motor carriers. Consistent with SAFETEA-LU, the President’s 2007 Budget requests $517 million for the Federal Motor Carrier Safety Administration, which provides grants to States to conduct enforcement and develop and implement regulations, among other safety activities.

Improving Transportation Mobility

An air traffic controller manages air traffic over the Atlantic Ocean.

    As every driver and airline passenger knows, the Nation’s transportation system is becoming increasingly congested. The Budget proposes several measures to help alleviate this problem, which affects people in their daily lives as well as economic growth and job creation.

    Improving Air Mobility. The demand for air transportation is outpacing the ability to increase capacity in some U.S. airports, and FAA forecasts air traffic could triple by 2025. This growth has been fueled by the airline industry’s ability to offer safe, affordable, and fast service. To meet demand, FAA implemented new airspace procedures in 2005 that doubled airspace capacity at high altitudes. This increase in capacity is expected to save airlines and other aircraft operators more than $5 billion in fuel costs between now and 2016. In anticipation of increasing long-term requirements, an interagency team is planning for the Next Generation Air Transportation System. As part of this system, FAA will begin steps toward deploying Automatic Dependent Surveillance-Broadcast (ADS-B) in 2007. The surveillance service is more accurate than radar and provides better surveillance coverage in difficult geographical terrain. ADS-B will be critical in FAA’s efforts to meet the future demand for air traffic services.

    Improving Surface Mobility. Traffic congestion on the Nation’s highways has steadily increased over the past 20 years as the population, the number of drivers and vehicles, and total travel volume have grown. To curb traffic congestion and improve system reliability, SAFETEA-LU encourages the management and operation of integrated, intermodal surface transportation systems. The law authorizes DOT to promote real-time traffic management in all States, which should help improve transportation security and provide better information to travelers and emergency responders. SAFETEA-LU also provides States increased flexibility to use road pricing to manage congestion. Through road pricing, motorists are charged directly for driving on a particular roadway. Local governments can use this tool to create incentives for more efficient use of existing highway capacity. In total, the Budget includes $7.8 billion for programs that address highway congestion.

    SAFETEA-LU authorizes a substantial investment in the Nation’s highways to enhance their physical condition. For 2007, the Budget provides $23.7 billion to maintain and improve the National Highway System and to replace, rehabilitate, and preserve bridges and other infrastructure. The condition of the highway system affects fuel consumption, wear-and-tear on vehicles, and the comfort of travelers. The spending levels authorized by SAFETEA-LU and sought by the Budget will ensure that the progress made during the last decade improving roadway conditions will continue.

    To help close the gap between highway infrastructure investment needs and resources available from traditional sources, SAFETEA-LU advances innovative financing options and encourages private sector investment. For example, SAFETEA-LU expands the private activity bond market by making highway and surface freight transfer facilities eligible for tax-exempt facility bonds. Qualified projects include surface transportation projects, bridge or tunnel projects, and truck-rail freight transfer facilities.

    SAFETEA-LU also continues the Federal Government’s strong support for public transportation to ensure that both urban and rural commuters have alternatives to highway travel. Following the funding increase authorized in SAFETEA-LU, the Budget requests $7.3 billion for formula grants to States for investment in buses, rail cars, and maintenance facilities. The Budget also includes $1.5 billion to fund capital investment in 27 existing or new fixed-guideway projects. These New Start projects are distributed across 15 States and numerous counties and cities. When complete, the projects will have the capacity to carry approximately 74.2 million passengers who would have otherwise used automobiles for their trips.

RESTRAINING SPENDING AND MANAGING FOR RESULTS

    The President’s Budget targets Federal spending at the most critical program areas. Where there is not a clear need, the Budget proposes spending reductions. Moreover, DOT continually strives to ensure that Federal funds are used effectively and that its programs make progress toward achieving their goals.

Focusing Aviation Resources

    The 2007 Budget proposes a funding level of $2.75 billion for AIP capital grants, marking a $765 million reduction from 2006. The Budget proposes reducing grant spending to increase funding for FAA’s salaries and expenses program, which will enhance operational safety by funding the hiring of 1,136 air traffic controllers and 116 safety inspectors. The proposed funding level for AIP grants is robust by historical standards—AIP was funded at just $1.9 billion as recently as 2000. The Budget request would fund construction of all planned new runways, which is the most effective way to add capacity. In the last eight years, 12 new runways have been opened, allowing 1.7 million more annual takeoffs and landings. Five new runway projects will be commissioned in the next two years, allowing these airports to accommodate 250,000 more takeoffs and landings annually. In addition to relying on AIP, airports can meet infrastructure needs through revenues generated from passenger facility charges.

Eliminating a Questionable Loan Program

    The Budget also attempts to control spending by proposing to terminate DOT’s railroad loan program. Through the Railroad Rehabilitation and Improvement Financing program, DOT offers ultra low-cost loans to private railroads for infrastructure improvement projects or refinancing debt. All railroads regardless of size, including publicly traded corporations, are eligible for this assistance. SAFETEA-LU made substantial changes to the program, including blocking DOT’s discretion over whether or not to issue a loan to a questionable applicant. In the event of a loan default, the Federal Government would be responsible for covering any unsecured losses, which could be significant because the program has been expanded from $3.5 billion to $35 billion. Furthermore, railroads already benefit from recent changes to the tax code, which eliminated the tax on rail diesel fuel. The Administration recognizes that where there is a market failure or a compelling public interest, it may be appropriate for the Government to offer some type of credit assistance. However, in this case, there is not clear justification for the Federal Government to extend such favorable loan terms to private rail companies.

Reforming Intercity Passenger Rail

    Thirty-five years after its creation, Amtrak remains a money-losing, Government-sponsored monopoly. A 2005 Program Assessment Rating Tool (PART) review of Amtrak found significant shortcomings in Amtrak’s design and a lack of clarity about its purpose and mission. While other countries have turned to new models for providing passenger rail service, the American approach is unchanged. The Administration has consistently called for real reform of intercity passenger rail and underscored its dissatisfaction with the status quo system in the 2006 Budget. This has led to some progress on multiple fronts, but much more action is required to address Amtrak’s entrenched and well-documented problems.

    The Administration believes that scarce taxpayer dollars must be spent wisely. As a private corporation, Amtrak must make hard choices to reduce costs. For example, Amtrak’s 15 long-distance trains that travel along World War II-era routes required $529 million in subsidies in 2005. The DOT inspector general recently highlighted the disproportionately high cost of running sleeper cars on long-distance trains where per-passenger subsidies can be as high as $627.

    While Amtrak has struggled to maintain a long-distance network, important parts of the system have experienced persistent underinvestment. For example, the busy Northeast Corridor between Washington, D.C. and Boston, MA, which Amtrak mostly owns, has a several billion dollar backlog of capital projects. Because Amtrak has not made the highly populated corridors its top priority, operating performance has suffered. The system-wide on-time arrival rate fell between 1999 and 2005 from 79 percent to 70 percent.

    The Administration remains committed to fundamental reform and changing the manner by which intercity passenger rail services are provided. Passenger rail service must be customer-focused, well-managed, and economically viable. In 2003 and again in 2005, the Administration sent to the Congress its Passenger Rail Investment Reform Act, which proposed opening passenger rail service to competition from outside operators, giving States freedom to develop custom rail services, and focusing the Federal Government’s role on funding capital investments as it does with airports and highways. In the 2006 Budget, the Administration issued a call to action.

    In response, the Congress took some action to encourage cost efficiency and accountability, including giving DOT increased authority over Amtrak’s funding; requiring Amtrak to achieve savings in its food, beverage, and first-class service; and mandating that the Secretary assess fees to recover direct capital and maintenance costs for using the Northeast Corridor. Likewise, Amtrak, through its Board, has acknowledged the urgent need for reform and issued a Strategic Reform Initiative plan that mirrors major elements of the Administration’s plan, such as introducing competition; empowering States to participate in infrastructure decisions; reducing operating subsidies; and enabling management to separate Amtrak’s train operations from its infrastructure management.

    To sustain Amtrak while it undertakes further reforms, the 2007 Budget provides $900 million. This level will enable Amtrak’s new management team to keep the trains running and act on its mandate to reshape the company. The request includes $500 million for capital costs that, when combined with collections from Amtrak partners, will assist in the restoration of the Northeast Corridor. For operating costs, the Administration proposes that DOT be given authority to issue $400 million of discretionary grants to Amtrak. DOT would be able to target funding based on Amtrak’s progress in implementing reforms. The Administration believes Amtrak, working with DOT, could achieve needed savings by moving aggressively in a number of areas, including:

• Phasing out costly overnight trains and restructuring its train schedules to emphasize regular short trips;

• Overhauling money-losing food and dining services;

• Considering opportunities for competition, such as contracting with non-Amtrak operators; and

• Addressing the imbalance of Amtrak’s labor costs exceeding its ticket revenues.

    Fundamentally, only a constrained budget will force Amtrak to change the way it conducts business. With $900 million Amtrak would need to manage its resources much more strategically, which is key to bringing costs under control and improving operating performance, so that a new and better model of intercity passenger rail can begin. The reforms proposed in the Budget are also essential for improving Amtrak, and the Administration would consider additional funding only if the Congress adopted these proposals.

Financing Reform for the Air Traffic Control System

    FAA is funded by a combination of aviation excise taxes and general fund contributions. The rapid growth of low-cost carriers and continued pressure on ticket prices has made the stability of the current tax structure unpredictable. Among users there is widespread recognition that the FAA’s financing system needs reform. FAA aims to create a more direct relationship between user fees collected and services received, thereby creating incentives to make the system more responsive to user needs and more efficient. Such an approach would reduce costs for users, the taxpayers, and consumers.

    DOT has concluded that the problems faced by the air traffic control system require bold and fundamental changes. FAA’s programs and taxes expire on September 30, 2007. Accordingly, DOT will propose a new cost-based financing system for FAA in spring 2006. This proposal will fulfill the goals developed by the Administration, which are:

• Continue to control costs;

• Create a more direct relationship between revenue and use of the system; and

• Establish a more stable and predictable source of revenue and equitable treatment of stakeholders.

Rethinking Human Capital

    Approximately 73 percent of the current air traffic controller workforce will be eligible to retire by 2015. To ensure that adequate staffing is available and is fully trained to perform this critical safety function, FAA must hire 11,500 air traffic controllers in the next decade.

    In 2005, FAA issued its 10-year strategy for future controller staffing. An update to the plan will be released during the second quarter of 2006. The plan helps ensure that FAA will have the right people to fill open positions as they become available. In addition, the plan details cost savings and productivity improvements that will enable the agency to reduce staffing requirements 10 percent by 2010. The Budget requests a funding increase to hire 1,136 new controllers, which is consistent with the updated staffing plan.

Employing Private-Sector Efficiencies

    To increase Government performance, the Administration has attempted to take advantage of private-sector efficiencies and expertise. Under its competitive sourcing initiative, agencies compare the costs of performing a function in-house or through the private sector. In 2005, after completing a thorough analysis, FAA determined it would be most cost effective for a private contractor to operate 58 automated flight service stations, which provide weather data to the general aviation community. FAA’s competition was the largest public-private competition conducted by the Federal Government. By contracting with a private vendor, the Federal Government will save more than $2 billion. The contractor selected has offered employment to all of the affected 2,300 FAA employees who submitted an application.

Making Highway and Transit Dollars Go Farther

    DOT provides more than $40 billion annually in highway and transit grants to States, which are responsible for managing these resources. DOT has recently redoubled its efforts to make every Federal dollar count through its Financial Integrity Review and Evaluation (FIRE) program. The program tries to reduce project construction cost and schedule overruns, identify inactive funds, and generally ensure that States manage their Federal grants responsibly. In the case of the Federal Highway Administration, each of its State division offices must conduct a review identifying the largest financial risks facing their respective States. The FIRE program was introduced in 2005, and should be fully implemented in 2006.

Understanding the Results of Spending Decisions

    Like all Federal agencies, DOT needs to know what programmatic results it can expect to achieve based on a certain level of spending. DOT estimates the “marginal cost of performance” to identify how changes in funding, both increases and decreases, impact program performance. For example, NHTSA evaluated the timeliness of vehicle safety information for consumers through its New Car Assessment Program. By improving the timeliness of safety information for consumers purchasing a new vehicle, DOT estimates the number of safe vehicles on the road will increase. The results of NHTSA’s evaluation indicated that the increased funding would make available safety ratings for an additional 32 make/models, representing 3.5 million vehicles.

Update on President’s Management Agenda

    The table below provides an update on DOT’s implementation of the President’s Management Agenda as of December 31, 2005.

	Human Capital	Competitive Sourcing	Financial Performance	E-Government	Budget and Performance Integration
Status
Progress
Arrow indicates change in status rating since the prior evaluation as of September 30, 2005. With strong Departmental leadership and support from the Operating Administrations, DOT continued to strengthen its human capital management. Several of its accomplishments include provisional certification for a Senior Executive Service (SES) Performance Plan and an SES pay plan that links pay to organizational performance; moving all employees to performance plans with multi-level systems that make distinctions between levels of performance; and reducing hiring timeframes. While DOT received an unqualified financial audit for 2005, it continues to have three material weaknesses, causing its financial management status score to remain red. DOT has implemented E-Government initiatives, such as online rulemaking, business gateway, and Grants.gov, which provide the public and regulated community easier access to the Government. Over the next year, DOT will continue to improve the security of its information technology systems and implement controls to address “at risk” programs in the Department. DOT continues to expand its use of performance information, including in justifying its budget. In 2006, DOT plans to expand its efforts on estimating the marginal cost of performance to all modal administrations. DOT’s budget formulation process also incorporates PART results in the funding requests for each DOT modal administration and provides DOT executives with a tool to use when considering funding tradeoffs between programs.

Initiative	Status	Progress
Real Property Asset Management
Eliminating Improper Payments
Arrow indicates change in status rating since the prior evaluation as of September 30, 2005. In 2005, DOT took several steps to improve the management of its real property, including enhancing its management system to be consistent with newly created Government-wide standards, implementing performance metrics, and establishing an agency-wide strategic and operational plan for managing real estate. With these tools in place, DOT is now working to “right-size” its real property inventory by identifying assets suitable for disposal or reinvestment. Regarding improper payments, during 2005, DOT conducted a research project with the State of Tennessee’s highway department to develop a statistical methodology for testing for improper payments at the local level. Starting in 2006, DOT plans to use this methodology to review States’ use of Federal grants when rebuilding highways and bridges damaged by Hurricane Katrina.