the membership one-twenty-fifth of 1 percent of our volume to tell this story.

Mr. SCHWENGEL. You ought to make it higher than that. This is an important story.

Mr. GILVIN. This was in January of this year.

Mr. SCHWENGEL. It has got to be done. My guess is when we get this study completed and I challenge all those that come before us that have the capability to do this thing, and it is going to be a tremendous story.

What does it do to the economy? Highway 80 goes through my State and boy, you cannot imagine the new businesses that have brought people there and kept them there because Highway 80 goes through there and the little towns that thought they were going to suffer are not suffering at all.

Why is this? Because little industries are building up in these communities. They are close to a transportation system and it has had a tremendous impact on the economy of that part of the country. Mr. Chairman there is another loss that comes in, a slowing of the economy, the growth and expansion of the economy because we slow down the building of the transportation system.

Mr. GILVIN. Well, we had a minor depression when this first Highway Act was passed in 1956. In 1954 and 1955 we had a minor depression. I remember that well. Something happened right after that, and things got better in the country.

Mr. SCHWENGEL. No small part of that came as a result of improving the opportunities to move men and goods.

Mr. GILVIN. In fact, right after that I bought equipment that was made in Iowa.

Mr. SCHWENGEL. We can make a lot more equipment there for you.

Mr. KLUCZYNSKI. Mr. Schwengel is one of our outstanding members on this committee.

Mr. GILVIN. And I also bought some made in Illinois.

Mr. KLUCZYNSKI. Mr. Schwengel said something about your public relations. I was at your convention in Houston and was very happy to know that you fellows taxed yourselves or assessed yourselves to get some money and sell America to the public and informed the public what is happening.

You know, I have been on this committee for 16 years now, and I remember the 1956 act and that you played a big part in it. Everybody is asking where we are going to get the material, where are we going to get the engineers, where are we going to get the architects?

What about the heavy machinery? We took care of that before we even got the money, but you are loosing a good opportunity here. It is not as easy to pass the Highway bill today as it was 18 or 20 years ago. I remember one or two fellows who were independent. Today, they are organized and want to grab into the trust fund.

As you know, we are working on this legislation and we have had a lot of witnesses. I want to listen to everyone. I am going to stay here as long as is necessary. I want everybody heard and every member of this committee to ask all the questions they want. We have to sell America as I said, and we have to get public relations.

Needless to say, you gentlemen are doing a fine job. Notify the public as to what is happening. You know, they are asking us for $400 million a year for highway safety for 5 years which is $2 billion to be taken out of the trust fund.

I must have remarked many times that there will not be $1 taken out of the trust fund only for the building of highways, construction of highways. But here it is safety. I will have to vote for that. I am trying to cut down the killings on our highways and I am going to vote for this $400 million for 5 years, or $2 billion. But as you know most everybody is trying to grab from this trust fund. It reminds me of a fellow that has a lot of money and barely closes his eyes and shakes off the salt and says we will spend it for sureties and other things.

Well, I want everybody heard. I care not whether they are for mass transit or not. If you can raise money for mass transit, well, OK. I am for the third trust fund that they talked about. I do not know where they are going to get the money, but that is their problem. We had ours in 1956 and we worked it out and it is OK. Any further questions or comments?

Gentlemen, it is a pleasure to have you before this committee. Mr. GILVIN. Well, it is a real pleasure to be here with you gentlemen.

Mr. KLUCZYNSKI. Our next witness is Mr. John Gray, commissioner, Vermont Highway Commission.

At this point I will turn the Chair over to Mr. Roncalio.

(Mr. Roncalio assumed the Chair.)

Mr. RONCALIO. Gentlemen, you may proceed in any fashion you choose.

STATEMENT OF JOHN GRAY, COMMISSIONER, VERMONT HIGHWAY COMMISSION; ACCOMPANIED BY BRIAN HARWOOD

Mr. GRAY. Mr. Chairman, members of the committee, I thank you very much for the opportunity to appear before you today.

I am John Gray, commissioner, Vermont Highway Commission. I have a prepared statement which I would like to submit for the record, but then I would also briefly summarize a few of the facts contained therein to shorten and speed up the hearings.

Mr. RONCALIO. (presiding). We will be happy to do that and will request that your statement be included in the record at this point in its entirety.

(The full prepared statement of Mr. John Gray follows:)

STATEMENT OF JOHN T. GRAY, COMMISSIONER OF HIGHWAYS, STATE OF VERMONT Since 1956, Vermont has discharged its full responsibility in partnership with the Federal Government to construct the Vermont segment of the National System of Interstate and Defense Highways.

Of the 321 miles of Interstate Highways allocated to Vermont, 232 miles are open to traffic, 38 miles are under construction and the remaining mileage (51) is in stages of preparation which would permit completion and availability for public use by November, 1977.

The burden of this effort has been heavy for a State with 400.000 people and limited resources. Additionally, the Interstate program itself has generated attendant problems, many of them not anticipated in 1956 and others which have appeared in more recent years.

As briefly as possible, I would like to advise you of these issues and to recommend in particular areas, action that would assist both Vermont and the nation.

First, it should be recognized that Vermont has the second highest allocation of Interstate mileage in New England. Massachusetts alone, leads Vermont with 405 miles. Apart from construction costs, this substantial mileage has serious implications for Vermont in terms of continuing maintenance in the years ahead. In Massachusetts, 136 miles of the 405 miles of Interstate constitute a toll highway which supplies revenue for maintenance and operation of the facility in addition to funding the full cost of construction. Maine, New Hampshire and Connecticut also have toll segments of the Interstate.

This medium of finance is not available to Vermont since traffic volume would not be sufficiently heavy to finance the 100 percent cost of construction.

On the basis of population, the burden of this national road system carried by Vermont is heavier than other New England States and indeed heavier than many more populous States. It must be pointed out that on a per capita basis, Vermont ranked 3rd highest in the nation on expenditures for highways in 1970. It was $164.11 while the national average was $80.84. At the same time, Vermonters ranked 32nd in the nation on the basis of per capita annual income. Second, Vermont's share of the cost of the Interstate, both direct and indirect, is considerably higher than the formula figure of 10%. The effective matching arrangement for Interstate construction is 88.1% Federal and 11.9% State. Therefore the State of Vermont, because of Federal interpretation of their regulation, has spent through December 31, 1971 $5,986,112 more than the amounts intended by the Congress. More significant from a cost and program point of view, Vermont has been forced to use a substantial volume of Federal ABC funds for the construction of spurs and connectors to the Interstate.

The actual cost of the Interstate to Vermont is thus materially increased, and the use of ABC funds for this purpose has diverted a large volume of State and Federal funds urgently needed for essential construction and improvement of other highway system.

Third, the concept of the Interstate as a national highway connecting the principal metropolitan areas, cities and industrial centers of the nation has resulted in a route configuration which unfortunately and unavoidably denies service to many areas of major regional significance.

This is illustrated in the western region of Vermont, an area which contains many major population centers and which accounts for a significant share of Vermont's commercial, industrial and tourist economy.

This entire region, reaching 121 miles from Bennington in the south to Burlington in the north, is separated by the barrier of the Green Mountains from the Interstate which moves northward along Vermont's eastern border and through the center of the State to Burlington and Montreal.

To supply the arterial type highways essential to secure the economy of this region, Vermont has invested heavily in a construction program which supplements the Federal-State program with much of the construction financed from 100% State funds.

Thus, in a typical year, Vermont's total, comprehensive construction program requires an expenditure of some $15 million in State funds, supplemented by some $25 million in Federal funds.

Much of the State share of this cost comes from borrowed money, and on the basis of existing authorizations, Vermont's highway bond debt for principal and interest will reach $150 million by 1976. Amortization of this debt level represents over 27% of Vermont's estimated revenue for 1976 from Highway User taxes and fees.

We are convinced however that the return on this investment is well worth the cost and already Vermont is receiving dividends in the form of increased tax yields and expanded economic activity.

With the completion of the Interstate and the program in the southwestern region, Vermont has no plans or intention to construct significant segments of new highway mileage.

In this connection. I would point out that there is a definitive distinction between new highway construction and highway improvement programs, a distinction that is obvious to the Members of this Committee.

Unfortunately, this distinction is clearly not comprehended by those who allege that highway agencies are dedicated to the goal of obliterating the landscape under vast areas of asphalt and concrete.

In Vermont we frequently encounter this sort of paradox; urgent pleas by municipal officials to relieve choking congestion and removal of hazardous highway sections, accompanied by demands from the community's news media that highway funds be diverted to more productive purposes.

In Vermont, as elsewhere in the nation, there is a great deal of highway improvement business left unfinished.

Thus, when the basic, new construction program now underway is completed, we look with some concern to the later seventies. At this point, with a heavy burden of debt and increased demand on resources to finance the maintenance and operation of the Interstate, we simultaneously face the imperative need for substantial improvement of existing highways by accomplishment of projects long deferred to meet Interstate priorities.

In the previous planning, we have anticipated that the level of Federal Aid for the ABC systems would increase following the completion of the Interstate System. Our planning further contemplated such completion by the mid-seventies based on previous actions by the Congress.

It now appears that the final completion of the Interstate will be delayed into the late seventies or early eighties, a circumstance which affects Vermont adversely for several reasons, as follows:

Vermont's management of the Interstate program has been directed to reach final completion by November, 1977. We are still capable of meeting this goal since engineering, right-of-way activities and other preconstruction requirements are still on schedule.

We are presently denied this goal by two factors. The first is the policy which provides for simultaneous completion of the system and the distribution of funds in a manner which implements this policy.

In what would appear to be a penalty for progress achieved, Vermont's Interstate apportionment for Fiscal Years 1972 and 1973 was reduced from the previous level of $27.5 million for Fiscal Year 1971 to $20.7 million, with a resultant decrease in construction capability.

This problem was aggravated by action in the executive branch which further reduced Interstate funds available to a $15.4 million obligational release level. I am aware of the Congress' concern over these actions which have introduced a new, erratic and exceedingly troublesome element into highway programming. I would like to emphasize however, that reductions in Interstate funding as a result of apportionment shifts or executive action, creates serious problems for Vermont.

Vermont's construction costs will be greater in later years because of the rising trends in such matters.

A second result is the distortion of the pace and rhythm we have established for the orderly management of Interstate construction contracts. Under present procedure, the Highway Department coordinates the flow of Interstate funds to permit the award of construction contracts in precise stages.

The first stage provides for all construction with the exception of the riding pavement. The first layer of pavement is applied under a separate contract as a second stage and the final layer is applied as a third stage, also a separate contract. The advantage of the third stage is to permit the highway to age for a period under traffic conditions before the final pavement is installed. A further and distinct advantage of this procedure is to make more individual contract opportunities available to contractors. This in turn offers greater opportunity for continuity.

The operation of this process in Vermont has increased competition among bidders on Interstate projects with more favorable project costs from Vermont's point of view.

Funding stability is of course essential to such a process. Our current experience demonstrates that we are unable to anticipate funding with any degree of assurance. Decisions in this area by the Department of Transportation are often sudden and impulsive, frequently confusing as to their intent and subject to subsequent adjustment and change.

The result in Vermont as in other States has been delay and disruption in construction projects, increased costs and denial of Interstate facilities to the traveling public as promised and planned.

Against this background, I would respectfully offer the following suggestions for your consideration:

1. Adjustment of the current Interstate funding policy as directed by 23 USC 104 (b) (5) to one which would permit those States in a current position to do so, to complete their segments of the Interstate in advance of simultaneous completion in all of the States.

It would appear that this adjustment can be financed within the traditional $4 billion Interstate appropriation, first as a result of the implementation of Section 124 of the Public Law 91-605 which presumably will reduce the current designated mileage of the Interstate, and second, through use of a portion of the existing balance in the Highway Trust Fund. To remain on schedule, Vermont would require for Fiscal Years 1974, 1975 and 1976 an apportionment factor of .592% based on a $4 million national Interstate authorization. This would produce the $69,600,000 estimated currently on the basis of 1970 costs, as necessary Federal Aid for Vermont to complete its 321 miles on schedule.

2. It is my understanding that the Secretary of Transportation has recommended an apportionment factor of .382% for Vermont's Interstate apportionment for Fiscal Years 1974 and 1975. Assuming a $4 billion appropriation, this would reduce our apportionment from the present $20 million level to approximately $15 million.

A reduction from $27 million in 1971 to $15 million in 1974 would have chaotic results, not only in the construction area and attendant activities, but also in the operations of the Department of Highways.

In the event that my first recommendation is beyond achievement, I would urge most earnestly that a minimum apportionment be provided similar to that included in the 1972 Highway Act.

If serious difficulties are to be avoided, Vermont would require a minimum of at least one half of one percent of the appropriation. But for reasons outlined previously, I would respectfully recommend that the minimum be increased beyond that level if at all possible.

3. As this Committee is aware, the actual construction of a highway is preceded by years of preparation and planning. If Vermont and other States are to maintain a capability for conducting effective highway improvement plans in the later seventies, planning for these years must begin immediately.

A crucial factor in this planning is the projection of funding programs to finance scheduled improvements. For these reasons, the State would be enormously assisted by action by the Congress to develop firm and definitive plans for a Federal-State highway program in the post-Interstate period.

The continuation of the Federal commitment through the medium of the Trust Fund is, I believe, indispensable to the continuation of the highway improvement program needed to adequately serve the nation.

If Vermont and other States are to continue in effective collaboration, Federal assistance approximating the present level of total Federal funds will be required. Early and firm decisions relative to these issues are of paramount importance both to the States and the nation.

Finally, may I take this occasion to express to this Committee and to your colleagues on the Public Works Committee, our high regard for the sustained, informed and concerned effort that has been offered in support of the FederalState highway program.

The benefits of this contribution have been enormous and we are confident that your efforts will continue, with a continuing, intelligent response to immediate needs and a sound vision of the future.

Mr. GRAY. Mr. Chairman, Vermont speaks as a small State. We are a population of 400,000 which is probably considerably less than most of the cities in the United States that are on the SMSAS.

Mr. RONCALIO. Would you allow me to interrupt? Let me say welcome. I am from Wyoming and we have only 300,000 people and you are a big State.

Mr. GRAY. Thank you, sir.