[Congressional Record Volume 143, Number 27 (Wednesday, March 5, 1997)]
[Senate]
[Pages S1990-S1991]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND (for himself, Mr. Chafee, Mr. Nickles, Mr. Cochran, 
        Mr. Gregg and Mr. Smith of New Hampshire):
  S. 404. A bill to modify the budget process to provide for separate 
budget treatment of the dedicated tax revenues deposited in the Highway 
Trust Fund; to the Committee on the Budget and the Committee on 
Governmental Affairs, jointly, pursuant to the order of August 4, 1977, 
as modified by the order of April 11, 1986, with instructions that if 
one committee reports, the other committee have 30 days to report or be 
discharged.


                HIGHWAY TRUST FUND INTEGRITY ACT OF 1997

  Mr. BOND. Mr. President, I rise today to introduce a measure, along 
with my dear friend and colleague, the chairman of the Environment and 
Public Works Committee, Senator John Chafee, entitled the Highway Trust 
Fund Integrity Act of 1997. Our cosponsors are Senators Nickles, 
Cochran, and Gregg.
  Mr. President, I hope all of us understand that transportation and 
highway funding is critical to our individual States and the entire 
Nation. Good highways link our communities, towns, and cities with 
markets. They link our constituents with their schools, hospitals, 
churches, and jobs.
  An effective transportation system should move us into the 21st 
century. Back in 1956, the Federal Highway Trust Fund was established 
as a way to finance the Federal Aid Highway Program. This was to be a 
dedicated trust fund, supported by direct user fees and taxes. It was 
called a trust fund because once the money went in, we were supposed to 
be able to trust that that money would come back out for use on our 
roads, highways, and bridges.
  However, the 1990 Budget Act eliminated the linkage between the 
revenues raised by the user taxes and the spending from the 
transportation fund. We know now that what we promised ourselves and 
our constituents, that the highway trust fund user taxes would be 
deposited and the trust fund would be used for highways, has not been 
observed. We see now an illogical process that allows highway trust 
fund dollars not to be spent in order to permit spending more in other 
categories. I believe that is wrong. My constituents are telling me 
this is wrong and they have challenged me to find a solution. I believe 
we have come up with that solution.
  Let me explain, briefly, Mr. President, what the bill is: First, it 
is a budget bill, not a tax bill or an ISTEA highway authorization 
bill. This bill would ensure that the highway trust fund dollars are 
spent for the purposes for which they were intended and that it would 
be deficit neutral. The bill would reestablish the link between the 
highway trust fund taxes and highway spending by transferring the taxes 
and the spending to a new budget category--a revenue constrained fund--
that is part of the unified budget. This new category would have its 
own budget rules to ensure that highway programs were fully funded and 
deficit neutral. This bill would restore the trust to the trust fund 
because highway spending would equal the highway trust fund taxes 
collected the prior year. It is consistent with achieving a balanced 
budget because it comes with its own built-in cap--the revenue received 
from the highway trust fund. It does not take the highway trust fund 
off-budget, but it also does not attempt to spend the balances that 
have accumulated or the interest on those balances. We do not attempt 
to resolve the arguments of the past. Instead we have focused on 
developing a workable process for the future.

  I do not believe that the status quo is sustainable, primarily for 
two reasons.
  First, our country has tremendous infrastructure needs. Take my State 
of Missouri alone. A recent report by the Road Information Program 
stated that Missouri has the seventh highest percentage of structurally 
deficient or functionally obsolete bridges in the country, and that 
more than half of its major roads are in poor or mediocre condition and 
in need of improvement. My State has the third highest percentage of 
urban freeway congestion in the Nation, and highway fatalities in 
Missouri have increased by 17 percent since 1993. These statistics will 
continue to grow as vehicle travel continues to grow and the 
infrastructure crumbles.
  Second, I know that my constituents, and I would say the American 
public, will not continue to support a process that sentences 
transportation spending to compete with other discretionary programs 
despite its unique dedicated funding source.
  Mr. President, I do not want to take much more time, but there is one 
more issue I would like to address. Senator Chafee and I have focused 
on the highway account of the highway trust fund. The bill we are 
introducing today does not address the mass transit account of the 
highway trust fund. It is not included due to some concern transit 
advocates have expressed--not in regards to the budget process being 
proposed, but over the level of funding that transit receives. I 
believe it is important that a workable solution be found for transit 
and I am committed to working with the Banking Committee, which has 
jurisdiction for the transit programs, and transit advocates in 
developing a proposal.
  I want to thank my dear friend Senator Chafee for his leadership in 
the area of transportation. We will have ample opportunity to continue 
our work together as the reauthorization of ISTEA progresses. Senator 
Chafee has heard me 100 times stress the need for a formula change so I 
will not get into that one today. I do however want to thank him and 
his staff for their help on this legislation.
  Mr. President, let me close by saying that this bill is the basis for 
a transportation funding policy for the future--a starting point for a 
fairer, more forward-looking transportation funding policy. I hope my 
colleagues will join us and cosponsor this important bill.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

          Summary of Highway Trust Fund Integrity Act of 1997


                                general

       Keeps the Highway Trust Fund on-budget, as part of the 
     unified Federal budget.
       Reestablishes the linkage between Highway Trust Fund taxes 
     and spending that was lost when the Budget Enforcement Act of 
     1990 split the Federal budget process into two categories.
       Consistent with achieving a balanced Federal budget by 
     2002.
       Increases funding to meet our nation's substantial 
     transportation needs.
       Creates a new budget category that reflects the unique, 
     revenue-constrained nature of the HTF. This new category, 
     called a Revenue Constrained Fund (RCF) would have its own 
     budget rules to ensure that transportation programs are 
     fully-funded but deficit neutral.


                    revenue constrained funds (rcf)

       The new RCF budget category would be a separate category, 
     and would not be a subset of either the mandatory budget 
     category or discretionary spending category.
       Under the RCF proposal, the spending from Revenue 
     Constrained Funds would be equal to the amount of tax 
     receipts collected for the prior year. Spending would be 
     limited to tax receipts in the prior year to ensure that 
     Highway Trust Fund spending would never exceed actual 
     receipts.


        example of problem under current federal budget process

       One would expect that increased Highway Trust Fund taxes 
     would make room in the

[[Page S1991]]

     budget for increased transportation spending. Unfortunately, 
     this is not the case.
       Under the current rules, gas tax increases do make room in 
     the budget for additional spending, but not for increased 
     transportation spending. Under the current rules, the only 
     way to fund the highway trust fund program at the level of 
     Highway Trust Fund tax receipts is by cutting other 
     discretionary programs. We must reform the Federal budget 
     process to correct this illogical outcome.

  Mr. CHAFEE. Mr. President, I want to congratulate the Senator from 
Missouri for his prime work on this piece of legislation. The money 
that goes into the highway trust fund this year will go out for 
transportation purposes next year, and I believe that is the right way 
to do things. It has varied from some of the other proposals that have 
been put in which provide that the accumulated interest of the 
accumulated principle of the fund be spent. We don't do that. We 
provide that what came in last year through taxes will go out the 
following year for transportation purposes.
  Mr. President, today I join as a cosponsor of the Highway Trust Fund 
Integrity Act of 1997. This legislation, sponsored by my colleague from 
Missouri, Senator Bond, and cosponsored by Senators Nickles, Cochran 
and Gregg, reestablishes the link between highway trust fund taxes and 
transportation spending.
  I believe that our proposal represents a reasonable and responsible 
solution to a problem that faces the Congress as it considers the 
reauthorization of the Intermodal Surface Transportation Efficiency 
Act.
  I hope that this bill will serve as a starting point for further 
discussions with my colleagues, especially my colleagues from the 
Budget and Appropriations committees. I recognize that proposals that 
modify the budget process are by their nature, controversial, and upset 
the status quo. However, I think change is necessary and the status quo 
is no longer an acceptable outcome.


                              The Problem

  As most of you are aware, the Budget Enforcement Act of 1990 split 
the Federal Budget process into two categories, one for receipts and 
mandatory spending and the other for discretionary spending. highway 
trust fund taxes, like other revenues, are in the mandatory category, 
but almost all highway spending falls within the discretionary 
category. Each budget category has its own rules, procedures, and 
incentives. Because the highway trust fund is split between these two 
categories, different parts of the highway trust fund are subject to 
different budget rules, and the link between the highway trust fund 
taxes and transportation spending is severed.
  Let me give an example of the problem the current situation causes. 
One would expect that increased highway trust fund taxes would make 
room in the budget for increased transportation spending. 
Unfortunately, this is not the case. Under the current rules, gas tax 
increases do make room in the budget for additional spending, but not 
for increased transportation spending. Under the current law, the only 
way to fund transportation programs at the level of highway trust fund 
tax receipts is by cutting other discretionary programs, such as law 
enforcement and education. We must reform the Federal budget process to 
correct this illogical outcome.


                              The Solution

  Our proposal reestablishes the connection between highway trust fund 
taxes and transportation spending by putting the highway trust fund 
taxes and spending in the same budget category. ``The Highway Trust 
Fund Integrity Act of 1997" transfers all of the highway trust fund 
receipts and outlays into a new budget category that reflects the 
unique, revenue-constrained nature of the highway trust fund. This new 
category, called the revenue constrained fund, would have its own 
budget rules to ensure that transportation programs are fully-funded 
but deficit neutral.

  Under this proposal, spending from the highway trust fund would be 
equal to the highway trust fund tax receipts collected for the prior 
year. Spending would be limited to tax receipts in the prior year to 
guarantee that highway trust fund spending would never exceed actual 
receipts. If tax receipts into the highway trust fund are less than 
expected, transportation spending would be constrained, making the 
trust fund deficit-neutral.
  This bill does not create a new entitlement program. highway trust 
fund spending would be strictly limited by the amount of taxes 
deposited in the prior year thereby ensuring that the highway trust 
fund will be deficit neutral. Other entitlement programs do not have 
this guarantee.


                          Trust Fund Balances

  One of the questions that has been raised regarding our proposal is 
how it treats the balances that now exist in the highway trust fund. 
Our proposal does not specifically address the status of the balances 
that now exist in the highway trust fund. In developing this proposal, 
we have attempted to focus on establishing a workable process for the 
future that reestablishes the connection between the highway trust fund 
taxes and transportation spending. We think we can develop a broad 
consensus on a proposal to spend the taxes deposited into the highway 
trust fund going forward. Such a broad consensus is not possible 
regarding the balances that now exist in the highway trust fund. There 
is significant disagreement about the validity of spending those 
balances, and our bill does not attempt to resolve this disagreement.


                       Congressional Jurisdiction

  Another question that has been raised about our proposal is how this 
proposal would change the jurisdiction of the various committees in the 
Congress over the highway trust fund. Our bill does not change the 
jurisdiction among Congressional committees. It is our intention that 
all of the committees involved in setting transportation policy would 
continue to provide policy input and oversight for those areas 
currently under their jurisdiction.
  The tax committees would continue to play their role in setting tax 
rates of the highway trust fund; the authorizing committees would 
continue to play their role, including determining the program 
structure and distribution formulas for the formula grant programs, and 
the appropriations committees would continue to provide oversight and 
make decisions about the programs under their control.
  Under our proposal, the total amount of highway trust fund spending 
would be determined by the American people who pay the taxes deposited 
into the trust fund. Neither the authorizing committees nor the 
appropriations committees would determine the total level of spending.


                                Transit

  In developing this legislation, we have focused on the programs and 
spending of the Highway Account of the highway trust tund. The highway 
account programs are under the jurisdiction of the Senate Committee on 
Environment and Public Works, the committee for which I serve as 
chairman. The bill we introduce today only addresses the highway 
account of the trust fund; it does not address the Mass Transit 
Account.
  However, as part of the ISTEA reauthorization, I believe a similar 
proposal should be developed for the transit account of the highway 
tust Fund. Senator Bond and I plan to work with transit advocates and 
members of the Banking Committee, which has jurisdiction over transit 
programs, to craft such a proposal.
  The Highway Trust Fund Integrity Act of 1997 is a forward looking 
bill. It is consistent with achieving a balanced Federal budget by 
2002. It does not take the highway trust fund off-budget, but it does 
address concerns that the bond between transportation taxes and 
transportation spending has been broken.
  I urge my colleagues to cosponsor this important bill.
                                 ______