[Congressional Record Volume 142, Number 134 (Wednesday, September 25, 1996)]
[Senate]
[Pages S11303-S11305]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself, Mr. Bingaman, Mr. Harkin, Mr. Cohen, 
        Mr. Domenici, Mr. Pressler, Mr. Grassley, Mr. Leahy, Mr. Gregg, 
        Mrs. Kassebaum, Mr. Akaka, Mr. Lieberman, Mr. Kennedy, Mr. 
        Kerry, Mr. D'Amato, Mrs. Frahm, Mr. Jeffords, Mr. Moynihan, Mr. 
        Thomas, Mr. Dodd, Mr. Dorgan, Mr. Bradley, Mr. Chafee, Mr. 
        Lautenberg, and Mr. Burns):
  S. 2123. A bill to require the calculation of Federal-aid highway 
apportionments and allocations for fiscal year 1997 to be determined so 
that States experience no net effect from a credit to the highway trust 
fund made in correction of an accounting error made in fiscal year 
1994, and for other purposes; to the Committee on Environment and 
Public Works.


                the highway funding fairness act of 1996

  Mr. BAUCUS. Madam President, the cosponsors of our legislation 
include the following Senators, in addition to myself and Senator 
Bingaman: Senator Akaka from Hawaii, Senator Cohen, Senator D'Amato, 
Senator Dodd, Senator Domenici, Senator Frahm, Senator Gregg, Senator 
Grassley, Senator Harkin, Senator Jeffords, Senator Kassebaum, Senator 
Kennedy, Senator Kerry, Senator Leahy, Senator Lieberman, Senator 
Moynihan, Senator Pressler, and Senator Thomas.
  I ask unanimous consent that all those Senators be listed as original 
cosponsors of our legislation.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Madam President, essentially, this is a bipartisan bill 
to correct a bureaucratic, administrative error that has penalized 28 
States under the highway program. It is that simple. This bill is 
identical to the amendment I offered to the Transportation 
appropriations bill on July 31. It is the same bill. Although that 
amendment received the support of 57 Senators--57 Senators voted in 
favor of it--the conference committee dropped the issue from the 
conference report. That is why Senator Bingaman, myself, and my 
colleagues are back here today. Let me briefly explain this bill.
  In 1994, the Treasury delayed crediting the highway trust fund with 
approximately $1.6 billion in revenues collected from the Federal 
gasoline tax. It was an error. They made a mistake. While the money was 
later eventually deposited into the highway trust fund, this delay has 
had very serious ramifications on all of our States.
  As most of my colleagues know, the formulas for distributing Federal 
highway funds to the States were set in place in 1991 in the highway 
bill, otherwise known as ISTEA. Those formulas govern the distribution 
of funds for 6 years through September 30 of next year. That is the 
formula. It is in place. It is in the law for distributing allocations 
of highway funds among our States.
  Of our many categories of highway funding, there is a direct 
correlation between the amount of money a State pays into the highway 
trust fund and the amount of money a State subsequently receives. If 
the revenue the States paid to the highway trust fund are not correctly 
credited to the appropriate accounts, the wrong amount of funds is 
subsequently distributed to the individual States. That is what 
happened.
  When the Treasury made this mistake and delayed crediting $1.6 
billion to the highway trust fund, the amount of money distributed to 
the States under one category, called 90 percent of payments category, 
was skewed, simply because of a bureaucratic delay. Pure and simple 
bureaucratic delay, mistake.
  As a consequence, some States were initially shortchanged in 1996 of 
their distributions, and on this coming Tuesday, October 1, the error 
will be compounded. Some States will receive much more than the 
original highway bill formula called for; others will receive much 
less. A lot of money is at stake.
  In the fiscal year 1997 Transportation appropriations conference 
report, highway spending was set at $18 billion. That is $450 million 
more than last year, a record amount for the highway program. One would 
think that such an increase would mean that each State will receive an 
increase in available funds. Not so. Just the opposite has happened. 
Even with that large increase in total funds allocated, 28 States will 
see a decrease in their highway apportionments.
  Some States will lose up to 17 percent. Others will see an increase 
of up to 30 percent. A good part of these fluctuations is due to the 
Treasury Department error, obviously unfair.
  Our bill fixes this, puts us right back to the status quo, to the 
formula prescribed allocations. It requires the Department of 
Transportation use the correct numbers in fiscal year 1997 when 
calculating the distribution of funds to States under ISTEA, the 
highway bill.
  It also requires the Department of Transportation to correct the 
error in fiscal year 1996. So the distributions errors made in 1996, as 
well as the errors that will be made, unless corrected, in 1997, will 
both be corrected. In other words, I want to completely correct the 
situation. No State should gain or lose Federal highway funds based 
only on a bureaucratic error at the Department of Treasury.
  Now that we understand the tremendous financial impact of this error, 
now that it is discovered, I don't think it should be compounded and 
continued in the future.
  Let me stress to my colleagues that this is not--I repeat, is not--an 
ISTEA formula change. This is not a legislative change to change the 
formula that Congress set back in 1991. This has nothing to do with the 
allocation that was set by legislation back in 1991. In fact, this bill 
will ensure that all States receive the amount of money originally 
authorized under ISTEA, no more, no less.
  Furthermore, this is not a donor State versus donee State funding 
issue, as some would say. It is not that at all. I am disappointed that 
some continue to characterize the situation in those terms. Some have 
even said that States interested in fixing the error are being greedy, 
a few believe. How can a State who seeks to correct an acknowledged 
error be called greedy? We are trying put the situation back to where 
it was as we legislated and intended it to be. This is truly a case of 
correcting an honest bureaucratic mistake. Both the Departments of 
Treasury and Transportation admit that the error was made.
  If some States are not happy with the ISTEA formulas adopted in 1991, 
I say so be it. There is ample opportunity to have that debate next 
year when Congress takes up the highway bill and deals with formula 
allocations. It is going to be a big fight, but that is where the fight 
should be, Madam President. We all know that. It should be in the 
context of the highway bill. But to use a bureaucratic error as a 
backdoor way to change the formulas,

[[Page S11304]]

I think, is underhanded and is not the way the Senate--the whole 
Congress, for that matter--ought to do business.
  We are introducing this legislation before the end of the 104th 
Congress. I want to alert my colleagues that many of us feel that this 
Treasury error is of such magnitude and of such importance that it must 
be addressed in the future.
  I thank my good friend, Senator Bingaman, from New Mexico, for his 
hard work and the welcome support of other Senators. We are helping get 
this error corrected.
  I thank you, Madam President, for your hopeful help, too, as I see 
your colleague is a cosponsor. It is my hope that the other Senator 
from Maine will see the wisdom of his efforts as well.
  I ask unanimous consent that Senator Dorgan be added as a cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Madam President, I send the bill to the desk and ask 
unanimous consent it be printed in the Record and referred to the 
appropriate committee.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                                S. 2123

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Highway Funding Fairness Act 
     of 1996''.

     SEC. 2. CALCULATION OF FEDERAL-AID HIGHWAY APPORTIONMENTS AND 
                   ALLOCATIONS.

       (a) In General.--Except as provided in subsection (b), for 
     fiscal year 1997, the Secretary of Transportation shall 
     determine the Federal-aid highway apportionments and 
     allocations to a State without regard to the approximately 
     $1,596,000,000 credit to the Highway Trust Fund (other than 
     the Mass Transit Account) of estimated taxes paid by States 
     that was made by the Secretary of the Treasury for fiscal 
     year 1995 in correction of an accounting error made in fiscal 
     year 1994.
       (b) Adjustments for Effects in 1996.--The Secretary of 
     Transportation shall, for each State--
       (1) determine whether the State would have been apportioned 
     and allocated an increased or decreased amount for Federal-
     aid highways for fiscal year 1996 if the accounting error 
     referred to in subsection (a) had not been made (which 
     determination shall take into account the effects of section 
     1003(c) of the Intermodal Surface Transportation Efficiency 
     Act of 1991 (Public Law 102-240; 105 Stat. 1921)); and
       (2) after apportionments and allocations are determined in 
     accordance with subsection (a)--
       (A) adjust the amount apportioned and allocated to the 
     State for Federal-aid highways for fiscal year 1997 by the 
     amount of the increase or decrease; and
       (B) adjust accordingly the obligation limitation for 
     Federal-aid highways distributed to the State under section 
     310 of the Department of Transportation and Related Agencies 
     Appropriations Act, 1997.
       (c) No Effect on 1996 Distributions.--Nothing in this 
     section shall affect any apportionment, allocation, or 
     distribution of obligation limitation, or reduction thereof, 
     to a State for Federal-aid highways for fiscal year 1996.
       (d) Effective Date.--This section shall take effect on 
     September 30, 1996.
                                                                    ____

  Mr. BINGAMAN. Madam President, let me speak briefly about a bill 
entitled the ``Highway Funding Fairness Act'' that Senator Baucus is 
introducing today, and which several of us are cosponsoring, to correct 
a serious problem in the calculation of fiscal year 1997 Federal-aid 
highway fund apportionments and allocations. It is our intention to use 
whatever vehicles are available, including the omnibus appropriations 
bill, to try to correct an error that exists in the transportation 
appropriations bill that was earlier passed in this body and sent to 
the President.
  Senator Baucus will describe in more detail the technical mistake 
that was made by the Department of Treasury in 1994, which resulted in 
faulty projections for this fiscal year. It is my understanding that 
the Department of Transportation has previously been instructed and 
empowered by the Office of Management and Budget to apportion highway 
funds on the basis of this error being corrected. And, in fact, 
baseline budget projections for the Department of Transportation 
reflect this agreement.
  Somewhere between then and now, signals have changed and States are 
about to get either unfairly rewarded or unfairly punished because of a 
flawed apportionment formula.
  Many of us in this Chamber thought that the problem had been fixed 
when we passed Senator Baucus' amendment as part of the fiscal year 
1997 Transportation appropriations bill. This amendment, like the bill 
we are introducing today, would have corrected the accounting error.
  When the conference report emerged, however, the amendment that would 
have fixed the problem had been dropped. Unfortunately, when we voted 
on this issue last Wednesday night, very few Senators were adequately 
informed that the correcting amendment which Senator Baucus had 
previously offered was no longer included and that many of their States 
would be taking serious, unexpected cuts in spending authority for 
highway projects.
  I have asked the President, as have many other Senators, to try to 
fix this by working with the Department of Transportation to apportion 
funds based on their original baseline projections, as understood by 
the Office of Management and Budget and the Congressional Budget 
Office, or if the President determines that is not possible, to then 
veto the legislation and return it to the Congress so we can fix the 
problem. I believe our States are not well-served by this legislation. 
We must use all opportunities available to call attention to this error 
and correct it before the Congress adjourns.
  What is even more disturbing in assessing the impact of the error is 
that overall highway spending will increase in fiscal year 1997 to $18 
billion, $455 million over current levels, the highest amount in 
history. It is not reasonable for States like my own, New Mexico, to be 
taking a $20 million reduction in highway funds when the overall 
accounts are being increased to their highest levels.
  It is not acceptable to me or to the residents of my State of New 
Mexico to accept outcomes that are the result of accounting errors.
  Let me list the funding reductions that 28 States are about to 
receive in fiscal year 1997 highway fund distributions unless we are 
able to correct this problem before we leave town.
  The States that are losers under the bill as it now stands would be: 
Alaska, $22 million less than the current year; Colorado, $1.2 million 
less; Connecticut, $37 million less; Delaware, $8 million less; Hawaii, 
$13 million less; Idaho, $7 million less; Illinois, $71 million less; 
Iowa, $21 million less; Kansas, $22 million less; Maine, $7 million 
less; Maryland, $3 million less; Massachusetts, $73 million less; 
Minnesota, $32 million less; Montana, $21 million less; Nebraska, $15 
million less; New Hampshire, $9 million; New Jersey, $44 million; my 
own State, as I have indicated, $20 million less; New York, 
$111 million less than current year funding; North Dakota, $11 million 
less; Ohio, $19 million less; Rhode Island, $14 million less; South 
Dakota, $12 million less; Utah, $4 million less; Vermont, $8 million 
less; Washington State, $33 million less; West Virginia, $17 million 
less; and Wyoming, $12 million less.

  Madam President, in contrast, there are some very large winners 
because of this accounting error. Texas, for example, is receiving a 
$183 million increase in next year's funding, which is about a 19 
percent increase over the current year. Arizona, which borders my home 
State of New Mexico, will receive a 24 percent increase. California 
will receive an additional $122 million over current year funding.
  My home State's total highway funds will be cut by 12 percent unless 
we can correct the error that the amendment of Senator Baucus seeks to 
correct. In our State, we have six highway department districts that 
will have to shoulder the burden of these cuts, resulting in each of 
those districts receiving something around $3 or $4 million less than 
in the current year.
  Albuquerque, and that portion of my State, will be hit harder than 
other regions because it generally receives more Federal highway funds 
than other regions. Our State and Federal funding contributions now 
hardly extend far enough to manage maintenance and upgrade of existing 
highways, not to mention initiate new projects. This impact will most 
likely mean that few, if any, such new projects will be initiated.
  My real concern, Madam President--and I will conclude with this--my 
real concern is that the impact of this accounting error is that my 
State of New Mexico will proceed, as will all the

[[Page S11305]]

other States I have mentioned, into the debates on the reauthorization 
of the Intermodal Surface Transportation Efficiency Act (ISTEA) 
legislation in a disadvantaged position. There are going to be lots of 
discussions, debate, and back and forth negotiations about highway 
funding formulas. This is going to severely harm the 28 States that are 
going to have to enter those discussions with a lower baseline of 
funding, a baseline of funding that should not have ever occurred.
  The bottom line in all of this is that we are allowing an accounting 
error to drive our legislative outcome, rather than the collective 
intent of the Senate. This is unacceptable. I strongly urge my 
colleagues to work with us in correcting this problem and to support 
Senator Baucus' lead on this. We have time before we leave town to 
legislatively address the issue, particularly when we have the 
opportunity to amend the omnibus appropriations bill, which will be 
coming to the floor in the next few days.
  Madam President, we were not sent here to legislate based on 
accounting errors. I hope we can correct this one.
  I thank the Chair, and I yield the floor.
  Mr. BAUCUS. Madam President, I thank my good friend, Senator 
Bingaman, from New Mexico, for his statement. The words he spoke are 
true. He very well characterized the nature of this problem. I 
appreciate his assistance.
  Mr. LAUTENBERG. Mr. President, I join my colleagues from Montana and 
New Mexico in introducing a bill that will correct an accounting error 
made by the Treasury Department in calculating highway allocations. The 
Highway Funding Fairness Act of 1996 does not change any formulas 
established in ISTEA, it does not affect any existing donor-donee 
relationship.
  Simply put, the bill merely corrects the fact that the Department of 
the Treasury misinterpreted revenue reports because these reports were 
put in a new format. This error is acknowledged by the Treasury 
Department and the Federal Highway Administration. The unfortunate 
result is that the Treasury Department grossly overstated the amount of 
gas tax receipts to the highway trust fund during 1994. With the 
passage of this bill, States will receive the funding that they are 
entitled to --no more, no less.
  This amendment will not deny any state the full 90 percent of 
payments that they are due through the Federal Aid Highway Formula 
Program. What this amendment will do is set these payments at 90 
percent of what the States actually paid, rather than 90 percent of the 
Treasury's erroneous estimates.
  Mr. President, this body is familiar with the problem this bill seeks 
to address. During consideration of the Transportation appropriations 
bill, the Senator from Montana, Senator Baucus, offered an amendment to 
correct the mistake. This bill is identical to that amendment. After 
significant discussion, the Senate adopted the provision directing 
first that the Treasury and Transportation Departments ensure that 
there was indeed an accounting error, a mistake, and second, that 
Treasury would be directed to correct the error.
  Again, Mr. President, the Senate adopted that amendment. 
Unfortunately, it was dropped in conference. And here we are again, 
faced with the prospect that, without a correction, States would 
receive the wrong highway funding levels to which they are entitled.
  The logic behind the Highway Funding Fairness Act of 1996 is simple, 
it is fair. Congress, in 1991, passed the landmark ISTEA law, 
containing the highway funding formulas. Congress should ensure that 
those formulas are adhered to when the administration calculates 
States' highway funds. This bill will correct the bureaucratic error 
and ensure that States receive the accurate amounts calculated under 
the highway funding formula.
  I urge my colleagues to join me in cosponsoring the bill, and I look 
forward to its swift passage.
                                 ______