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Orleans from $5.32 per ton to $5.47 per ton, or plus 12-cent bushel. Such rates do not appear sensitive to variations in the 43-percent cost-coverage assumption, since a plus 10-percent change equals plus 1-percent rate change.

The proposed charges would generate $75 million to $100 million annually across the Nation. User charges were not recommended for recreational boaters.

The Iowa DOT urges further study to determine whether the 300-mile section studied is nationally representative in its maintenance costs, standards, and the analytical methodology used.

In evaluating our proposal, you must address yourselves to five questions?

One: Is the 43-percent recovery figure realistic?

Two: Is the 30-mile stretch of river analyzed representative of the system?

Three: Is a $75 million to $100 million annual recovery adequate ? Four: How should such a system be phased in?

Five: Can you answer the above questions without involving the States, especially those that depend heavily upon river commerce?

I am available to answer any of your questions.
Thank you.

Senator DOMENICI. Well, I really appreciate the testimony, and I think obviously your State has a significant interest and has done an excellent job of analyzing.

Let me ask you, what prompted the Iowa DOT water user charge proposal, was it the trouble that Rock Island Railroad got in or something else?

Mr. LIGHTSEY. Well, actually, Senator, one of our goals is to identify the critical transportation issues in each mode and we consider locks and dam 26 and user charges to the critical issue in river transportation. We also are concerned about railroads and, as you may know, Iowa is the only State that gives State aid to railroads.

Senator DOMENICI. I just have a couple of questions.

There has been some contention that locks and dam 26 and the imposition of user fees are not logically attached together. Do you feel that there is justification for considering them together?

Mr. LIGHTSEY. There certainly is justification for considering them at the same time. I personally don't feel, nor does our department of transportation, that one should be necessarily influenced by the other. We think user charges are in order, and we think the river system, to avoid obsolescence, should be repaired. We separate them as much as we can.

Senator DOMENICI. Do we know enough to begin the implementation of user fees?

Mr. LIGHTSEY. As you will recognize when you read our user charge proposal, we didn't address the issue of implementation. However we—the Government-know how to collect fuel tax at the pump and also we feel that a collection of a lockage fee should be very simple.

We are asking to have this looked at on a larger scale. The river division of the Iowa Department of Transportation has only three penple, and we realize our study was small and would like someone else to take a look at our proposal.

Senator DOMENICI. You raised one interesting question in your list of questions at the end. I am generally critical about doing things that affect the States and then letting them complain afterward. And you ask the question, should these decisions be made without involving the States?

I wonder if maybe the bill we have in mind couldn't lend itself to that. Perhaps we could consider the imposition of some kind of counsel in that study period of 18 months that would be made up of representatives of the affected States to go through the rule making process with the corps so that they would have some input and some evaluation. That comes to me as you talk about it.

Do you have any other ideas, or what do you mean by the question !

Mr. LIGHTSEY. I was implying just what you said, Senator, that there be a forum set up to sample the opinion of the people directly in contact with the river from day to day.

Senator DOMENICI. I will say to you that we will send your waterway user proposal to the Department of Transportation. They are in the process of evaluating user fees. The President's message stimulated them, and we will make sure they have this and they might be able to answer some of the questions you raised about the authenticity of the 300 miles being relevant to the entire system and whether the 43 percent is correct or not.

I have no further questions. We will stand in recess until 9:30 in the morning.

[Whereupon, at 3:12 p.m., the subcommittee recessed, to reconvene at 9:30 a.m., Wednesday, April 20, 1977.]

STATEMENTS AND ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD REFERRED TO IN

IN TODAY'S PROCEEDINGS

JACK FAUCETT ASSOCIATES 5454 WISCONSIN AVENUE • SUITE 1150 CHEVY CHASE, MARYLAND 20015 • (301) 657-8223

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SUBCOMMITTEE ON WATER RESOURCES
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

UNITED STATES SENATE

APRIL 19, 1977

INTRODUCTION

My name is Robert M. Gidez. I am Vice President of Jack Faucett Associates, Inc., a public policy and transportation consulting firm located in Chevy Chase, Maryland. In 1972, when I left the Federal service, I was Chief of the Economics Branch in the Office, Chief of Engineers. I have also served as the Executive Director of the New England Regional Commission and the Planning Director of the Appalachian Regional Commission. For the record, I would like to note that in my capacity as a public policy consultant, I served as principal consultant to both the State of West Virginia and the Appalachian Regional Commission on railroad reorganization issues. I am appearing here today as a consultant to the American Waterway Operators, Inc.

MAJOR CONCLUSION - NEED FOR FURTHER STUDY

The witnesses who have preceded me on this panel have forcefully noted a number of very real issues and potential impacts that could result from the imposition of user charges on the Nation's inland waterways. In the context of these issues and impacts, the primary purpose of my statement is to provide an overall summary and pose the basic public policy questions that must be assessed and evaluated prior to any Congressional action on user charges.

This statement briefly reviews the results of several of the more important impact studies that have attempted to address the major issues. The focus is on the adequacy of the analysis and results of these studies in providing essential information and data for the Congress in addressing the critical questions of public policy.

This statement neither argues for nor against the imposition of user charges or taxes. Given the complexity of the issues involved and the deficiencies of past and current impact studies, it would be desirable, prudent and necessary for the Congress to seek that information and data needed to shed more light on the issues and impacts before accepting any decision for a change. To some, the argument for further study will be construed as the predictable bromide for delaying a decision. On the contrary, as one begins to see the array of complex issues and questions and the information and data needed for their assessment, the justification for further study as the next needed step will become clear and obvious.

THEORETICAL PERSPECTIVE

Before the issues are summarized and the impact studies reviewed, it is important to place in proper perspective the economic theories that have advocated user charges or taxes. These arguments, some of which have been articulated in the earlier testimony of Professor Vickrey, are often persuasive and compelling. While their logic and coherence may be unas sailable from the standpoint of economic theory, one must question theoretical validity alone to serve as the only basis for evaluation of user charges. Rarely in the real world do the conditions that underpin these arguments ever materialize. The public policy concerns, as discussed subsequently are far more complex than are the relatively simple postulations found in economic theory on this subject. In fact, Professor Vickrey both in his statement and in his colloquy with members of this Committee pointed out on more than one occasion several public policy concerns. In evaluating user charge proposals, Vickrey notes the possibility of inequities occurring "when there is a sudden shift in policy that results in the disappointment of the legitimately formed expectations of some, and windfall gain to others." This observation, certainly suggests that in the interest of fairness and equity, that prior to making such a policy change, the known and predictable impacts of user charges be evaluated as comprehensively as possible so as to prepare those who would be impacted. This is clearly supportive of the need for further analysis and study.

EFFICIENCY AND EQUITY ISSUES AND IMPACTS

Now to the major issues and impacts. Achieving national transportation objectives is cited as one of the major reasons for imposing waterway user charges. Clearly, a major

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