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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.







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MARCH 21, 1996

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

WILLIAM F. CLINGER, Jr., Pennsylvania
THOMAS E. PETRI, Wisconsin
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
WILLIAM H. ZELIFF, Jr., New Hampshire
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BILL BAKER, California
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
PETER I. BLUTE, Massachusetts
JOHN L. MICA, Florida
ZACH WAMP, Tennessee
RANDY TATE, Washington
RAY LaHOOD, Illinois

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
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ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ELEANOR HOLMES NORTON, District of Columbia
PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
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    Schenendorf, Jack, Chief of Staff, Committee on Transportation and Infrastructure, U.S. House of Representatives


    Brown, Hon. Corrine, of Florida
    Johnson, Hon. Eddie Bernice, of Texas

Schenendorf, Jack, Chief of Staff, Committee on Transportation and Infrastructure, U.S. House of Representatives, charts:

Support H.R. 842, Truth in Budgeting, Taking the Transportation Trust Funds Off-Budget: Doing Right For America
Transportation Trust Funds Off-Budget Does Not Increase the Deficit By $33 Billion
Budget Authority (President's FY97 Budget)
Trust Fund Cash Balances (President's FY97 Budget)
Highway Trust Fund Cash Balances (President's FY97 Budget)
Airport and Airway Trust Fund Cash Balances (President's FY97 Budget)


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U.S. House of Representatives,
Committee on Transportation and Infrastructure,
Washington, DC.
    The committee met, pursuant to notice, at 3:07 p.m. in room 2167, Rayburn House Office Building, Hon. Bud Shuster (chairman of the committee) presiding.

    The CHAIRMAN. The Transportation and Infrastructure Committee will come to order.
    The purpose of today's hearing is to assess the impact of the President's budget proposals on the transportation trust funds, but before we get into the hearing, I'd like to make four announcements.
    First, the House leadership has scheduled a vote on H.R. 842, the Truth in Budgeting Act, for the week of April 15th—a bill which is co-sponsored by very member of this committee on both sides of the aisle. This is the week we'll be coming back from the Easter break. The Republican leadership will take no position on the issue, so we will be free to battle it out on the floor.

    The House Budget Committee has scheduled a hearing on this issue for next Thursday, March 28. The ranking member, Mr. Oberstar, and I will be the lead-off witnesses, and I'm sure many of the groups in this room will also want to testify.

    Mr. Oberstar and I intend to hold a caucus of committee members next week in order to organize our efforts so that we can ensure a solid majority vote for the passage of H.R. 842. We're very pleased, of course, that we have 225 co-sponsors, a majority of the House, plus several other Members who have told us they are going to vote for the bill. So we're quite excited about that.
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    The second announcement: I'm pleased to announce that Chairman Petri and the Subcommittee on Surface Transportation will begin its ISTEA reauthorization process, with a kick-off hearing to be held next week, Thursday, March 28th. The reauthorization of ISTEA is perhaps the most important work that this committee will take up in the latter part of this decade.

    As with all previous surface transportation authorizations, this process and the ultimate bill will be fully bipartisan.

    The kick-off hearing will focus on the importance of transportation infrastructure to the Nation's future. This hearing will address the critical contribution of infrastructure investment to our Nation's economic productivity and growth.

    We expect that the panel of experts will discuss the economic and demographic trends and the forecasts that will drive transportation demand into the next century.

    The third announcement is that, after the kick-off hearing next Thursday, Chairman Petri and ranking democrat Nick Joe Rahall will hold a comprehensive series of hearings to examine all facets of our Nation's surface transportation programs. The hearing's topics will be grouped together into broad themes that will cut across modal lines to examine how all elements of the transportation system will work together. The themes are listed in the statement that committee leadership has released today.

    I expect that these ISTEA reauthorization hearings will begin soon after the Congress returns from the April recess.
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    Surface Transportation Subcommittee Chairman Petri and I have been working closely with our democratic colleagues, Congressmen Oberstar and Rahall, in formulating our committee's strategy and developing the themes for the ISTEA reauthorization. We're in the process of finalizing the dates for the hearings, and expect to announce a detailed list of hearing topics, as well as the dates, shortly.

    In addition to the hearings to be held in Washington, it's our hope that the committee will be able to conduct a series of regional and field hearings. The timing and the details of these are still being worked out.

    The fourth announcement is that the Committee will hold an oversight hearing on fiscal year 1997 transit and intelligent transportation systems project requests soon after Congress returns from its Easter recess. This hearing will focus on the requests that have been made to the Transportation Appropriations Subcommittee to fund transit and intelligent vehicle project requests—essentially those requests which do not have any authorization. So we will be focusing on the question of whether we do or do not want to authorize any of those requests and what positions we should take should we decide not to.

    This Committee will be called on to respond to fiscal year 1997 funding for the unauthorized transit projects, and we'd like to announce its intention to hold this hearing in advance of the mark-up of the annual appropriations bill. The information we develop at this hearing will be helpful in determining what position we take on any unauthorized funding that may be contained in the fiscal year 1997 DOT appropriations bill.

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    As you know, in the past we've worked closely with the Appropriations Committee on these issues, and so we would hope to be able to give them our position before they deal with the issue.

    I continue to work with Congressmen Petri, Oberstar, and Rahall to finalize the date for this hearing. We expect to announce it shortly.

    Concerning today's hearing, as I mentioned previously, we must testify before the Budget Committee next week on H.R. 842. The bill will come up for a vote on the House floor as soon as we get back from the Easter recess. We therefore thought it timely to have a hearing today on the impact of the President's budget on the transportation trust fund balances.

    What makes this hearing especially appropriate is that the President's budget is illustrative of the problems with the current broken budget process which, over the years, has resulted in excessive cash balances being built into the transportation trust funds.

    According to information released Tuesday in the President's budget submission to Congress, the combined cash balances of the highway and the aviation trust funds, if these budgets submitted by the President were to pass, will grow from $30 billion today to $77 billion in the year 2002.

    For the highway trust fund alone, the balance is projected to grow from $19 billion to over $60 billion, a three-fold increase. A $60 billion balance would be more than two years worth of highway trust fund taxes. In other words, the taxpayers would be paying their gasoline taxes for over two years without a dime being spent to improve the Nation's highway system.
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    For the aviation trust fund, even with the current hiatus in collection of the 10 percent ticket tax, the cash balance is expected to grow from $11 billion to $17 billion. A $17 billion aviation balance also represents more than two years worth of tax receipts.

    I'm very concerned about the low priority transportation has in the President's budget. Even with large cuts in discretionary spending, investments are proposed in education and training, the environment, science, technology, law enforcement, and other priorities, and nobody disagrees with the importance of these particular issues.

    Transportation, however, is conspicuously absent from this list, and the numbers in the budget bear out the low priority given transportation, even though the evidence is overwhelming that building transportation and other infrastructure increases productivity, creates jobs, saves lives, and gives the traveling public more convenience.

    While I am certainly critical of the President's budget, this is not a partisan matter, and I'm not singling out the President's budget. His budget simply perpetuates an ongoing fraud on the American people that past republican as well as democratic Administrations, indeed, in my judgment, have been guilty of. Indeed, I and this committee have criticized past budgets submitted by Presidents Reagan and Bush as failing to adequately fund trust fund programs.

    Similarly, I have not hesitated to point out, when Congressional budget resolutions produced by republicans and democrats, alike, have not sufficiently funded infrastructure.
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    Just last year I went to the Rules Committee to ask that an amendment be made in order, on the fiscal year 1996 budget resolution, to allow these trust funds to be taken off budget.

    For over ten years now, this committee, in a bipartisan effort, has fought to take these trust funds off budget. That effort was carried through by Chairman Howard, Chairman Anderson, Chairman Roe, Chairman Mineta, and in this Congress the same bipartisanship has continued with the leadership of ranking Member Oberstar and the Surface Transportation leadership, Congressmen Petri and Rahall, and the Aviation Subcommittee leadership, Representatives Duncan and Lipinski.

    I hardly need to remind this committee of the reasons why these trust funds need to go off budget. The existence of multi-billion-dollar trust fund balances reflects a breach of contract between the Federal Government and the taxpayer. If we're going to collect these user-related taxes and simply pocket the money, it's nothing more than the Government stealing money every time somebody pays at the pump or gets on an airplane with his other airplane ticket.

    Infrastructure needs are enormous. The President's own budget states that just to maintain current infrastructure conditions it will cost each year $43 billion for Federal-aid-eligible highways, $5 billion for bridges, and $8 billion for transit.

    If we address the needs, we will improve the Nation's productivity and the Nation's economic growth.
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    A recently-produced study, which was made available by the Department of Transportation, indicates that the highway network in America has historically contributed 25 percentto GNP, one-quarter of all the productivity growth in the United States over the past 30 or so years.

    Indeed, that study further shows that industry has achieved productive cost savings of $0.24 a year for every $1 invested in highways. Or, stated another way, there is a payback in four years for every dollar invested in improving infrastructure.

    Further, for every billion dollars spent in highway improvement, 42,000 jobs are created. While making people and business more productive, infrastructure spending also provides good highways jobs, and by improving productivity and creating good jobs in America, this is one way to offset some of the negative effects of NAFTA.

    With all the current concern over low economic growth and job losses in this Nation, trust funds off budget is one issue where there is bipartisan agreement on legislation that can restore people's confidence in their Government, spur economic growth, and provide good jobs.

    I must report to the committee that we asked the Department of Transportation to testify, actually yesterday, to simply confirm our understanding of the President's budget. In fact, they said they could not testify yesterday, and we postponed yesterday's hearing in order to accommodate the Department so they could testify today. Unfortunately, DOT has refused to supply a witness today.
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    I might also report that, at DOT's request, we provided this committee room for a briefing of all House staff by Louise Stoll, Assistant Secretary for Budget and Programs from the Department, on Tuesday, March 19th, the day the budget came up.

    So the Department of Transportation asked for the opportunity to give a detailed briefing to all interested parties, on the transportation part of the President's budget. We provided the room, and they gave that briefing in this room last Tuesday. Yet, now yesterday and today we're told that they are not sufficiently prepared to come before the committee.

    Frankly, I'm not surprised. I wouldn't want to defend a budget that calls for deep cuts in highways, mass transit, airport grants, and increases the cash balances in the highway and aviation trust fund to $77 billion. In fact, I wouldn't be a bit surprised if these proposals are more OMB proposals rather than from the Department of Transportation.

    I recall just a few days ago, when we had Administrator Hinson here from the FAA, I asked him the question, ''Why, if you say that expanding our airports' capacity is so important, why are we spending such little money?'' He essentially, you'll recall, said that this is because this is what they were forced to do. Of course, these are OMB-driven, not transportation-driven numbers.

    Well, after the Easter recess we'll try to give the Department an opportunity to testify on its budget, but in the meantime I think it's essential to get this information out before next week's budget hearing and before the floor vote on H.R. 842. Therefore, I've asked our staff to describe the President's budget proposals as they impact the highway and aviation trust funds.
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    And now I'm pleased to recognize the ranking Member, Mr. Oberstar, for any statement that he might have.

    Mr. OBERSTAR. Thank you, Mr. Chairman, and congratulations on a big victory with your leadership on bringing the trust fund off budget bill to the House floor. That is a victory. It's a big achievement. You've put a lot of your own personal self and political capital, as it were, into that effort, and I know that the Speaker had to mediate between you and the Budget Committee and the Appropriations Committee and other interests who didn't want to see this come to pass, and you prevailed.

    I can well understand why the Speaker would want to have hands off on the issue, given all the forces that are contentious, but this is a big victory.

    We had another victory on the House floor last week with your participation and your strong support and that of Chairman Duncan and Mr. Lipinski, on our side, in getting the independent FAA bill passed. These are bipartisan initiatives, worked together, cooperated to bring them about.

    We are about the pass a bill—I think the votes are there to do it—to take the trust funds off budget.

    I think this hearing today is very important on the status of the transportation trust funds. There are $30 billion of trust fund revenues that haven't been spent. And, given the budget realities that we've been seeing last year on the House floor, and even now as we speak, the amount of unspent funds is likely to grow substantially over the next seven years, no matter whose budget prevails.
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    That growth in the budget surplus is not limited to what the President has proposed. It will also occur under the Kasich budget. The basic problem is that all of these major budget proposals will either reduce or freeze spending for all domestic programs, including the trust funds.

    But I maintain, as you do, and as we have done, as you cited, under previous committee chairs, that the trust funds are unique. They are a special, unique compact between the American people and their government that, in exchange for a tax dedicated to a special purpose, those funds will be used for that special purpose.

    At the same time these surpluses are building up, there is no proposal to reduce the tax. And since there is no reduction of the tax, the revenues will simply grow, as highway traffic and aviation traffic increases, which it is clearly going to do and always has done.

    The inevitable result is trust fund revenues will exceed expenditures by ever-greater amounts.

    We should have had the Administration here today. The Department of Transportation should be here today to explain their budget. They have had weeks to put it together.

    I will say that, as in past Administrations, once the budget leaves the department it goes to the Office of Management and Budget, and the process there is an alchemy that never changes, no matter which Administration it is, and it goes off and it disappears into the vast, dark vastness of the Office of Management and Budget. And when it reappears, the department often never recognizes the same document that they sent out, and I think that's the case with DOT.
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    I would have been happier to have them come here and have them say, ''We don't understand the budget that we sent out. Give us a little time to figure it out.''

    But all those trends, as you pointed out, began back in the Johnson Administration when funds were withheld from the highway program, ostensibly then to control or contain inflation.

    Then they were withheld in the Nixon years to offset the growth of the pressure of the Vietnam War budget.

    And in the Reagan and Bush Administrations the Surface Transportation account grew from $500 million surplus in 1983 to $9.8 billion in fiscal year 1992, and the aviation trust fund grew from $1.2 billion in 1983 to almost $7 billion in 1992 until we put a stop to it with the very unique bipartisan agreement that began to draw that surplus down.

    The last Reagan budget would have—did project—I served on the Budget Committee at that time—a transportation surplus of $44 billion over five years. We've looked at the Kasich budget, and it does not have the degree of detail that the Administration's Budget does. At least the Administration budget went to some length to be detailed enough that we could calculate a $77 billion surplus. They can't explain why it happens, but it's there.

    But if you take the 14 percent reduction in budget function 400, transportation, under the Kasich budget, it does include trust funds. It does not plan reduction in trust fund taxes. And if my calculations are right from my budget years experience, that produces a $60 billion surplus in the year 2000.
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    Well, those are bipartisan surpluses and they're bipartisan wrong, and we need to set about correcting it, and we need to move ahead with the process of ISTEA reauthorization. The schedule you've laid out is solid. Former Chairmen of this Committee, along with the Eisenhower Administration, crafted the highway trust fund, a user tax that's the most successful tax in the history of this country. It was intended to create a dedicated revenue stream for the construction of long-term investments that the country needs and that will take a long time to build.

    If we could take that and the aviation trust fund and the waterway trust fund off budget, we will have served the traveling public enormously well, served our national productivity enormously well.

    Private productivity depends on public productivity. If the public sector is doing its job of maintaining the roads, filling the potholes, replacing the bridge decking, making sure that there is enough runway capacity, that our sewers aren't clogged and our water treatment and sewage treatment systems work, then the private sector can do its job of creating long-term permanent jobs and producing for America.

    That's what this committee is all about, and that is what our task has to be in the years ahead.

    There are many, many examples of shortcomings of infrastructure in our country.

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    We're launched, under your leadership, Mr. Chairman, on a new program of providing for clean drinking water. New York City wastes in one day more water than London uses in a whole month. Those are the kinds of losses that can be translated into economic terms that we need to address.

    But the most serious of those is in the trust fund arena. We've got to move ahead. The case has been made, and we will make it together, shoulder-to-shoulder in the Budget Committee, the Rules Committee, on the House floor, for taking the trust funds off budget.

    Thank you very much, Mr. Chairman.

    The CHAIRMAN. Thank you, Mr. Oberstar.

    I'm pleased to recognize the distinguished chairman of the Surface Transportation Subcommittee, Mr. Petri.

    Mr. PETRI. Thank you, Mr. Chairman.

    This afternoon the committee will review the fiscal year 1997 budget for the Department of Transportation as proposed and released by the Administration on Tuesday, and its effect on the various transportation trust funds.

    I join you in regretting that the Department chose not to send a witness to appear before the committee to defend and to explain its budget, particularly since we rescheduled this hearing to try to accommodate their wishes.
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    While at first consideration this budget appears to present relatively good news in terms of transportation infrastructure spending for the coming year, a closer look at the long-term budget numbers reveals startling implications for the future of our transportation programs.

    As we've heard, cuts in highway and transit spending beyond the next fiscal year are so draconian that within just five years the balance of the highway trust fund would balloon to more than $60 billion, triple the already substantial balance of the trust fund today.

    The budget submitted by the President illustrates the necessity of taking these trust funds off budget so that the revenues in the trust fund can be spent for transportation purposes, for which there is a pressing and an overwhelming need.

    And yet, while the revenues in the trust fund are expected to continue to increase, under this budget our highway and transit programs will shrink over the next several years.

    While this particular budget is a stark illustration of the need to take the trust funds off budget, we must admit that the previous Administrations and other committees here in the House have, in the past, also restricted trust fund spending.

    That's why our Committee has historically pursued the off-budget initiative and will continue to do so to ensure that the fees paid by the users of our various transportation systems are used for their intended and their mandated purposes.
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    It's critical that we continue to invest in our Nation's infrastructure so we can maintain and improve our transportation network that is so essential for continued economic growth, vitality, and productivity.

    As our chairman, Bud Shuster, has indicated, it's against this backdrop that the Surface Transportation Subcommittee will begin a series of comprehensive hearings on the reauthorization of ISTEA which have been developed on a bipartisan basis.

    Our kick-off hearing next Thursday will examine our future transportation needs and the type of investment that is needed to support a growing economy and to ensure mobility and access for Americans into the 21st century.

    This will be followed by a series of hearings that will stretch over the course of the next several months where we will examine many issues under various general themes. The Subcommittee will review, as mentioned earlier, transportation in the 21st century, the Federal interest in our transportation program, and the maintenance and improvement of our transportation infrastructure.

    We'll thoroughly review financing options for transportation improvements, including the status of the highway trust fund and innovative financing proposals.

    We'll also look at various other factors and programs that affect our transportation programs, including: environmental concerns, the enhancement of safety, and methods to deliver a product more efficiently and at less cost.
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    We are also looking at the possibility of conducting regional hearings, and I believe it would be of great benefit to get out into the field and gain a first-hand perspective of needs around the country and an assessment of ISTEA programs from those who are actually implementing them at the grassroots level.

    These hearings will provide the foundation for this Committee to prepare and move legislation early in 1997.

    Finally, next month the Subcommittee will conduct a hearing on requests for 1997 funding for transit or other unauthorized projects. Although Chairman Wolf has remained steadfast in his opposition to funding highway projects, he's shown no such restraint regarding other types of transportation projects.

    Last year, this Committee authorized several transit projects in the National Highway System bill which passed the House last September and which were included in the fiscal year 1996 appropriations bill.

    It's important that we, the authorizing Committee, maintain our oversight an involvement in setting priorities for transportation funding.

    Mr. Chairman, I commend you for calling this hearing, and I look forward to working with you, Congressman Oberstar, Congressman Rahall, and the other members of the committee, as the Surface Transportation Subcommittee begins its work in ernest next week on the important effort of reauthorizing ISTEA.
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    The CHAIRMAN. I thank the distinguished chairman of the subcommittee.

    Without objection, all members may put their opening statement in the record.

    If there are no further opening statements, the Chair is pleased to recognize the chief of staff of the committee, Jack Schenendorf.

    Mr. RAHALL. Mr. Chairman, parliamentary inquiry. Is it in order to ask the witness to be sworn in?



    Mr. SCHENENDORF. As the Chairman has stated, the focus of this hearing is very narrow—it's on the impact of the President's proposed budget on the highway and aviation trust funds.

    Let me say at the outset that the hearing focuses on a problem that has existed in the budget process since President Johnson created the unified budget in the late 1960s to mask the cost of the Vietnam War.
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    Under the unified budget, there is pressure to treat transportation trust fund programs the same as general fund programs, despite the fact that they are financed from user-funded, deficit-proof trust funds, and that these user taxes cannot be used for any other purpose.

    As a result, most budgets over the past 25 years, whether Executive or Legislative, whether republican or democrat, have funded transportation programs at levels below what the trust funds can support. The result has been the buildup of cash balances which today total approximately $30 billion in the highway and aviation trust funds.

    It is this problem that has led the committee to push for H.R. 842, the Truth in Budgeting Act.

    President Clinton's proposed budget is a good example of what can happen to transportation programs under the current budget process. In the budget supplement, in chapter one, ''A Vision for the Future,'' the Administration states its goal to balance the budget in the year 2002. ''The budget reaches balance in seven years by cutting unnecessary and lower priority spending. At the same time, it invests in education and training, the environment, science and technology, and other priorities, to help raise average living standards and the quality of life.''

    Chapter 25 of the volume entitled, ''Analytical Perspectives'' provides the details on how the Administration plans to balance the budget by 2002. It contains spending levels by function, subfunction, and major program. It shows what programs are proposed for increases and what programs are proposed for cuts.
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    [The charts follow:]

    [Insert here.]

    Chart A—and all the Members have a copy of these charts in front of them—Chart A shows how the highway, mass transit, and aviation programs are treated in the Administration's proposed budget. For highways, the budget authority levels for 1995, 1996, and 1997 are what they are in ISTEA.

    The Administration proposes cutting the program from about $22 billion in fiscal year 1997 to $14.1 billion in fiscal year 2000, a 36 percent cut. Highway spending would then increase to $18.1 billion in the year 2002, still 18 percent below fiscal year 1997 levels.

    The story is similar for mass transit. It would go from ISTEA levels of $5.4 billion in 1997 to $3.2 billion in fiscal year 2000, a 41 percent reduction, and a 22 percent reduction from the fiscal year 1996 levels.

    Mass transit would then increase to $4.2 billion in the year 2002, which is roughly equivalent to the fiscal year 1996 levels and 22 percent below the fiscal year 1997 levels.

    Aviation spending, overall spending stays approximately level during the period fiscal year 1997 to 2002, but within that, based on the breakdown runs that we have gotten from OMB, the airport improvement program would go from $1.45 billion in 1996 down to $1 billion in a year 2000, which is 26 percent reduction from fiscal year 1997 and a 31 percent reduction from fiscal year 1996.
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    The impact of these funding proposals on the trust fund balances are significant, and is shown in table B.

    If you look at table B, you can see that the cash balances in the highway trust fund will grow from $19 billion to $60.4 billion by the year 2002. The balance in the aviation trust fund will go from a low of $8.3 billion to $17 billion in fiscal year 2002. Totals mean that the trust funds will go from approximately a $30 billion cash balance to a $77 billion cash balance.

    Chart C that you have in your packet shows graphically what these numbers mean, and just a little bit easier to see. Again, this is the highway trust fund going from $19 billion up to a total of about $60 billion in the year 2002.

    Chart number D in your package is the same thing for the aviation trust fund. Again, it's currently at about $11 billion. It will dip to $8 billion roughly as a result of the ticket tax having been suspended, but then will go up to $17 billion by the year 2002.

    Mr. Chairman, that concludes our presentation.

    The CHAIRMAN. Thank you very much.

    I'll reserve my questions for a moment and ask Chairman Petri, do you have any questions you'd like to ask?

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    Mr. PETRI. Have you—my understanding is, from communications we've had with some of the people in charge over at the Transportation Department, that they've been having a little difficulty getting a clear understanding so that they could present accurately what is in the budget submission and answer questions because of what subcategories are like.

    Do you feel that the these charts really are accurate and represent what the President will be submitting or has submitted to the House and Senate?

    Mr. SCHENENDORF. These numbers are directly out of the document entitled, ''Analytical Perspectives,'' and these are the proposed spending levels for these programs for this current budget proposal.

    Obviously, in future years—this is a rolling process, and exactly what the budget request will be next year for the next fiscal year, obviously those things are subject to change. But this is the current proposal that has been set forth as how to balance the budget by 2002.

    Mr. PETRI. One other question. Is most of the increase due to sort of accruing interest on the existing balances, or most of it due to actually taking in new gas tax revenue and, in effect, spending it for other purposes? I know this is an argument we have with the budget people all the time as to what you do about the interest build-up on it.

    Mr. SCHENENDORF. Well, these numbers all do include interest being credited to the trust fund, and it varies trust fund by trust fund. The highway trust fund, the revenue projects are actually fairly flat over this period. They don't increase significantly. The main thing that you're seeing in the highway trust fund area is the result of the declining funding levels, is really what's generating the balances there.
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    Aviation is a little bit different. There the growth in the trust fund revenues is projected to be greater than in the highway trust fund, and the spending levels are flatter, and that's what's causing the increase in the aviation trust fund.

    Mr. PETRI. Looking just at the highway charts or figures, it's my impression that we're—we already—at least there has been testimony before this committee from a number of State and industry experts that we already are significantly under-funded, that there is a growing bridge problem, a growing maintenance problem on not just our Federal but our State and local roads throughout the United States.

    We here in the Washington area are acutely aware of that, because there is even a pothole program. I guess there is all over the country every spring. That doesn't necessarily show up in municipal or city or State budgets, but it shows up in family or business budgets.

    In other words, under-spending on infrastructure doesn't save money; it ends up costing money in increasing maintenance, more rapid depreciation or breakdown of equipment, less on-time delivery.

    So what we're seeing is really a great increase in cost for our society rather than great savings. Sure, some savings in the Government numbers, but overall it seems to me we may be almost raiding the pocketbooks of businesses and families all across America.

    I don't know if that's accurate.
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    Mr. SCHENENDORF. Yes, sir. We are under-investing even just to maintain the current system.

    Mr. PETRI. Thank you.

    The CHAIRMAN. Mr. Oberstar, do you have any questions?

    Mr. OBERSTAR. Thank you, Mr. Chairman.

    We have to distinguish among cash balance and obligations against cash balance in order to get to surplus. In aviation, is the $17 billion the cash balance?

    Mr. SCHENENDORF. Yes, sir. The $17 billion is the cash balance.

    Mr. OBERSTAR. Against which there are obligations of roughly $12 billion?

    Mr. SCHENENDORF. Some obligations. As I understand it, in the aviation trust fund, by the year 2002, $11 billion of the balance will be uncommitted.

    Mr. OBERSTAR. That's $11 billion that will be—your projections is there would be an uncommitted balance of $11 billion?

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    Mr. SCHENENDORF. Right. The cash balance would be about $17 billion, and the uncommitted balance would be about $11 billion.

    The CHAIRMAN. Would the gentleman yield?

    Mr. OBERSTAR. Yes.

    The CHAIRMAN. I want to make sure I understand this, state it a slightly different way.

    Is it true that the highway trust fund, alone, can accommodate highway spending of $12 billion a year higher than the President's request without putting the fund into a deficit?

    Mr. SCHENENDORF. Yes. I'm told the answer to that is yes.

    The CHAIRMAN. Thank you. Excuse me.

    Mr. OBERSTAR. Of course, the Administration's aviation budget assumes that the ticket tax is reinstated; is that correct that that assumption is somewhere in the analytical perspectives?

    Mr. SCHENENDORF. August 1st reinstatement.

    Mr. OBERSTAR. I wonder how they came up with that magical date? I haven't seen it. Does someone know something up here that we're going to get that ticket tax reinstated by then? It would be nice to know that.
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    In the transit fund, as I reviewed that portion of it, looks to me like a 40 percent cut. Is that right, over the seven-year period?

    Mr. SCHENENDORF. Yes, sir. That's about right.

    Mr. OBERSTAR. Budget authority for all of the ISTEA programs drops 36.8 percent?

    Mr. SCHENENDORF. We have the highway program would be about a 36 percent cut by the year 2000, and we had about a 41 percent reduction in transit from the fiscal year 1997 ISTEA levels.

    Mr. OBERSTAR. But the available funding, given projections of traffic growth, travel, highway travel growth, and constant tax dollars in the highway user tax, would mean growth of the amount that Chairman Shuster just said a moment ago, so you could accommodate a $12 billion annual increase above?

    Mr. SCHENENDORF. Over the year 2000—as I understand, by the year 2002 it would be a $64 billion gap under the Byrd rule for what the highway program could spend, and approximately a $10 billion gap in mass transit for what the transit program could spend.

    Mr. OBERSTAR. Have you done any comparable analysis of the Kasich budget?
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    Mr. SCHENENDORF. Not this current year. I believe the current budget will be based on similar assumptions to what was in last year's budget, and there were very high cash balance projections as a result of that. I think the numbers that we had were up in the $56 billion range last year's budget, and I assume it will be at least that high this go-round.

    Mr. OBERSTAR. Well, we have the advantage of some detail in this budget to understand what they're doing. I think the case needs to be made—although I think there's somewhat—it's somewhat speculative that the highway dollars are going to grow as much as even the Administration projection is, because, while miles traveled are growing, the smaller size of cars and the fuel efficiency of vehicles has been keeping revenues at a somewhat lower level than the miles traveled might project.

    Do you know of any source that has studied this matter, Jack, and could give us a—provide the committee with more detailed information?

    The CHAIRMAN. If the gentleman would yield, staff has given me a document which shows that the President's current projections use conservative estimates of increases in trust fund revenues. For example, highway trust fund tax receipts are only expected, in the President's projections, to grow from $24.6 billion in 1996 to $27.1 billion in the year 2002, and that's less than a 2 percent increase a year. So they seem to be pretty conservative.

    Mr. SCHENENDORF. I was under the impression that the model took all that into account, but we could certainly check on that.

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    Mr. OBERSTAR. Well, I think that's something we need to take into account ourselves when we're talking about surpluses that far off into the future. One lesson is very clear to all of us in transportation—that when you're talking about projections we've always under-estimated rather than over-estimated growth in transportation travel.

    The one factor that is different now is the greater fuel efficiency of cars. You can travel further on less gas.

    Thank you very much.

    The CHAIRMAN. I thank the gentleman. The Chair will be happy to come back if any other Members have questions that they want to ask afterwards. If not—I see no Members indicating—I thank the gentleman.

    Mr. HORN. Mr. Chairman?

    The CHAIRMAN. I'll recognize the gentleman for 30 seconds.

    Mr. HORN. I find it rather ironic, when you note that the Administration is stressing retraining and all this. I happen to be an advocate of that, but I can recall 26 years ago our university having a grant to retrain aeronautical engineers as civil engineers. Right now we've still lost 400,000 jobs in Los Angeles County in aviation. It seems to me if you're going to be retraining people, there ought to be jobs to go to, and when you don't use that trust fund money to build infrastructure for highways and airports, there are no jobs available. They can retrain them, but there is no end to the retraining.
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    I find that rather ironic.

    The CHAIRMAN. I thank the gentleman for his statement, and the Chair will recognize Mr. Baker for 30 seconds.

    Mr. BAKER. Thirty seconds. Also, the airport improvement program is budgeted in this current, proposed budget at $100 million less than last year, even though surplus has continued to increase. I'm going to ask that we agree on a figure like $2 billion. It's now $1.35, down $100 million, so I guess it was $1.45.

    The CHAIRMAN. Well, the gentleman will have that opportunity as we proceed.

    Mr. BAKER. If we can all, as a committee, agree on a figure, the airports then could come to us with their matching proposals, because most of the money comes from the airports, themselves.

    The CHAIRMAN. I thank the gentleman.

    If there are no further statements, there is a vote on the floor. I thank the staff for their outstanding briefing.

    The committee stands adjourned.

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    [Whereupon, at 3:52 p.m., the committee was adjourned, to reconvene subject to the call of the Chair.]

    [Insert here.]