    [Budget of the U.S. Government]
    [VI. Investing in the Common Good: The Major Functions of the Federal Government]
    [19. Transportation]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    [[Page 169]]

                               19.  TRANSPORTATION

      ----------------------------------------------------------------------

                               Table 19-1.  FEDERAL RESOURCES IN SUPPORT OF TRANSPORTATION
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                Estimate
                Function 400                1996   -----------------------------------------------------------------
                                           Actual      1997       1998       1999       2000       2001       2002
    ----------------------------------------------------------------------------------------------------------------
    Spending: \1\
      Discretionary Budget Authority...     13,628     13,782     13,534     14,566     14,722     14,978     15,236
      Mandatory Outlays:
        Existing law...................      2,501      2,450      2,381      2,329      2,151      2,031      1,954
        Proposed legislation...........  .........  .........         35         22          6        -51       -651
    Credit Activity:
      Direct loan disbursements........         47        216        591        791        863        879        879
      Guaranteed loans.................        826      1,065        477        477        477        477        477
    Tax Expenditures:
      Existing law.....................      1,320      1,365      1,405      1,455      1,505      1,560      1,620
    ----------------------------------------------------------------------------------------------------------------
    \1\ This table excludes spending subject to obligation limitations.

      ----------------------------------------------------------------------
       America's transportation network moves people through a combination
    of public and private systems, financed by Federal, State, and local
    governments and the private sector. Maintaining and improving these
    systems requires infrastructure investment, safe operations, and new
    technology.
       Though the Federal Government plays a major role in each of these
    areas, it does not act alone in any of them. With just a few exceptions,
    Federal transportation programs are designed to promote transportation
    access for all citizens, ensure the safe design and movement of
    privately-owned and operated vehicles, help a struggling segment of the
    transportation industry, or advance transportation research. In total,
    Federal transportation spending comes to about $39 billion a year.

     Infrastructure Investment

       America has four million miles of roads, 580,000 bridges, 123,000
    miles of railway, 5,500 public-use airports, 6,000 transit systems, and
    25,000 miles of commercially-navigable waterways. This extensive, multi-
    modal network is essential to the Nation's commerce, and a more
    efficient system would help the economy.
       The Federal Government has helped develop large parts of the system,
    with much of the help financed by user fees and transportation taxes.
    Total Federal investment in transportation represents about half of
    total public investment--that is, $27 billion of the $54 billion of
    Federal, State, and local spending on transportation infrastructure in
    1993.

       Highways and Bridges: About 950,000 miles of roads and all bridges
    are eligible for Federal support, including the Interstate highway
    system, urban freeways, urban and rural principal and minor arterials,
    defense highways, and Federal lands roads. In 1998, the Federal
    Government plans to spend $19.8 billion to maintain and expand these
    roads, with the Federal funds financed by motor fuels taxes, mainly the
    gasoline tax. The Federal gas tax is 18.4 cents a gallon, of which 12
    cents finances formula grants to States for highway-related repair and
    improvement.
       State and local governments provide 56 percent of total highway and
    bridge infrastructure spending, most of which they generate

    [[Page 170]]

    through their own fuel and vehicle taxes. The average State gasoline tax was
    19.3 cents per gallon in 1995. State and local governments also are
    accelerating their infrastructure projects by using debt financing, such
    as bonds and revolving loan funds. Under the new State Infrastructure
    Banks program, the Federal Government is providing funds to States to
    help underwrite debt issuance for highway and transit projects. In
    addition, the new Transportation Infrastructure Credit Program promises
    to provide similar financing innovations for nationally significant
    projects.
       The Interstate highway system is virtually complete, with 45,481 of
    the 45,500-mile system open to the public. Its completion marks the end
    of America's largest-ever public works project, begun during the
    Eisenhower Administration as a ``grand plan'' to meet the transportation
    needs of a rapidly growing Nation.

       Transit: As with highways, the Federal Government plays a partnership
    role with State and local governments on mass transit. Two cents a
    gallon of the Federal gas tax goes to fund transit grants to
    municipalities and States. Federal capital grants comprise about half of
    the total spent each year to maintain and expand the Nation's 6,000 bus,
    rail, trolley, van, and ferry systems. Together, States and localities
    invest over $3 billion a year on transit infrastructure and equipment,
    including funds to ``match'' Federal grants.
       In 1998, the Federal Government plans to spend $4 billion on transit
    capital. The Federal role is especially important to finance capital-
    intensive urban rail systems and low-volume rural bus and van networks.
    About 80 million Americans depend on public transportation due to age,
    disability, or income. Furthermore, transit use by commuters eases
    roadway congestion and reduces polluting emissions.

       Passenger Rail: The Federal Government will invest about $424 million
    in 1998 to support the passenger rail system's infrastructure and
    equipment needs. The extension of the Northeast Corridor high-speed rail
    to Boston highlights the partnership between the Federal Government and
    private sector to improve passenger rail. The Federal Government funds
    the electrification of the rail line, while the private sector helps to
    finance the high-speed trainsets that will begin operating in late 1999,
    introducing three-hour service between New York City and Boston.
       Airports: The Airport Improvement Program (AIP) provides grants to
    States, localities, and airport authorities to maintain and enhance
    airport safety, preserve airport infrastructure, and expand capacity and
    efficiency throughout the system. The AIP typically funds a fourth to a
    third of all capital development at public use airports, while airport
    revenues (e.g., concession revenues, landing fees, passenger facility
    charges) finance the rest.
       Other Transportation: With regard to commercial shipping
    infrastructure, Federal loan guarantees facilitate the construction of
    new vessels and the renovation of existing vessels. Port development is
    left largely to State and local authorities, which have invested over
    $14 billion in infrastructure improvements over the past 50 years. Of
    America's 541 private freight railroads, the largest 11 moved over one
    trillion ton-miles of freight in 1994--about a third of the total ton-
    miles shipped. Freight railroads finance their own infrastructure,
    spending over $7 billion a year to upgrade and maintain track and
    structures.

     Safe Operations

       The Federal Government works with State and local governments and
    private groups to mitigate the safety risks inherent in the
    transportation system. It regulates motor vehicle design and operation,
    inspects commercial vehicles, educates the public about safe behavior,
    directs air and waterway traffic, and rescues boaters in danger.
       A broad range of Federal activities are designed to cut the number of
    deaths and injuries from highway crashes, which number about 41,000 and
    five million a year, respectively. Due to Federal, State, local, and
    private efforts, safety belt usage reached an all-time high of 68
    percent in December 1995. Federal programs reach out to State and local
    partners, including health care professionals, to identify the causes of
    crashes in each community and develop new strategies to reduce deaths,
    injuries, and the resulting medical costs. These programs will be
    increas-

    [[Page 171]]

    ingly important as the number of young drivers grows. In addition
    to coordinating national traffic safety campaigns, the National Highway
    Traffic Safety Administration (NHTSA) regulates the design of
    automobiles and light trucks, investigates reported safety defects, and
    distributes traffic safety grants to States. The budget proposes $333
    million for NHTSA, a 10-percent increase over 1997.
       The Federal Government's most visible safety function is operating
    the air traffic control and air navigational systems. The Federal
    Aviation Administration (FAA) handles about two flights a second, moving
    1.5 million passengers to where they want to go each day. The FAA also
    uses its regulatory and certification power to ensure that every aspect
    of aviation is safe--from aircraft design and maintenance to the flight
    crew. In 1996, the FAA performed over 300,000 inspections to ensure
    compliance with safety regulations. To meet safety needs in 1998, the
    Administration plans to spend $7.2 billion on FAA operations and
    capital, five percent more than in 1997.
       The Federal Government also plays an operational role on major
    waterways. The Coast Guard places and maintains waterborne aids-to-
    navigation, operates radio navigation and distress systems, guides
    vessels through busy ports, and regulates vessel design and operation.
    The Coast Guard helps ensure safety on minor waterways and inland lakes
    by providing boating safety grants to States, and by supporting a
    35,000-member voluntary auxiliary that performs complimentary boat
    safety inspections and educates boaters about safety. In 1998, the Coast
    Guard will invest $3.1 billion in its operating and capital programs,
    which are mainly dedicated to safety.
       The National Motor Carriers Program, for which the budget proposes
    $100 million in 1998, provides grants to States to enforce Federal and
    compatible State standards for commercial motor vehicle safety
    inspections, traffic enforcement, and compliance reviews. Uniform
    standards help coordinate law enforcement activities, and simplify the
    safety requirements of interstate trucking. Federal grants are designed
    to help States boost safety.

     Research and Technology

       The Federal Government has long led efforts to advance transportation
    technology. Federal transportation research has focused on building
    stronger roads and bridges, designing safer cars, and reducing human
    error in operating vehicles of all types. Today, the increasing
    congestion of roadways and airways is colliding with Federal budget
    constraints and with environmental and land-use concerns. Consequently,
    transportation planners believe that better management of the existing
    infrastructure is a cost-effective alternative to building more highways
    and airports. In 1998, the Federal Government will spend over $1 billion
    on transportation research and technology.
       The Federal Highway Administration's Intelligent Transportation
    Systems (ITS) program is developing and deploying technologies that will
    help States and localities improve traffic flow and safety on their
    streets and highways. These technologies include intelligent cruise
    control, passive tolling and inspection, and automated highways. The
    private sector, which works closely with the ITS program, will initially
    deploy many of the technologies developed with ITS funding.
       The FAA's research, engineering, and development programs help
    improve safety, security, capacity, and efficiency in the National
    Airspace System. For instance, the advanced traffic management system
    and the early introduction of satellite navigation capabilities will
    improve the aviation industry's competitiveness and the FAA's
    efficiency. In general, FAA research focuses on the causes of human
    error; aircraft safety and fire protection methods; aviation weather
    research; quieter engines and reduced aircraft emissions; and security
    and explosives detection systems.
       The National Aeronautics and Space Administration's Aeronautical
    Research and Technology program funds partnerships with industry that
    may revolutionize the next generation of airplanes, making them faster,
    more efficient, and more compatible with the environment. These
    activities include programs to advance the capabilities of sub-sonic
    aircraft, to help develop large, high-speed civilian airplanes, and to
    enhance the performance

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    of aeronautics-related computing and communications facilities.

     Regulation of Transportation

       Federal rules greatly influence transportation. Over the past two
    decades, deregulation of the domestic railroad, airline, and interstate
    trucking industries has contributed to the Nation's economic growth.
    More recently, deregulation has continued. In 1993, for example, the
    Federal Government deregulated intrastate trucking, saving shippers and
    consumers an estimated $3 billion to $8 billion a year.
       The Federal Government also issues regulations to spur safer, cleaner
    transportation. The regulations improve safety--of cars, trucks, trains,
    and airplanes--leading to substantial reductions in transportation-
    related deaths and injuries. In addition, they help reduce the number of
    oil spills and provide a faster response when spills occur.
      The Government has taken other regulatory steps to meet
    transportation-related environmental and safety goals in a cost-
    effective manner. For example, between now and 2015, the costs of oil
    shipments to the United States will fall by hundreds of millions of
    dollars due to ``lightering zone'' regulations that permit older,
    single-hull vessels in the Gulf of Mexico to off-load oil. The Federal
    Government is also making its regulations parallel with those of other
    countries. An agreement on aviation safety rules--now under negotiation
    with the European Community--promises to save airlines at least $100
    million, and possibly $1 billion, over 10 years.

     Tax Expenditures

      Employer-provided parking and transit passes are, for the most part,
    not subject to income taxes, costing the Government an estimated $6.9
    billion from 1998-2002; the estimate does not include the value of
    employer-owned parking. To finance infrastructure, State and local
    governments issue tax-exempt bonds whose costs to the Federal
    Government, in lost revenues, are reflected in the General Government
    and Community and Regional Development functions.