Hearings of the
House Committee on Rules
on Points of Order That Guarantee Spending Levels
Ranking Minority Member, Committee on Transportation and Infrastructure
Chairman Dreier, Ranking Member Moakley, and Members of the Committee, thank you for the opportunity to appear before you today to discuss the Transportation Equity Act for the 21st Century (TEA 21) and its guaranteed spending.
Creating the Interstate System and Establishing the Highway Trust Fund
It is altogether fitting that we hold this hearing today – 83 years ago today, on July 21, 1916, the very first Federal-aid highway grants were provided to the states. That began one of the great transformations of this country. Our Nation began this century with macadam and gravel roads with fewer than 10 percent of the roadways surfaced in any way. We end this century with a highway system unparalleled in the world. The crown jewel of our system is the Interstate system, a 42,800-mile network of concrete, asphalt, and steel carries 565 million vehicles and nearly one trillion people each year.
The beginnings of the vision of an Interstate system were seen in the early years of the century. Eighty years ago this month, a young military officer named Eisenhower traveled across the country as part of an Army convoy. He recognized the shortcomings of our Nation's network of gravel, stone, and mud. Thirty-seven years later, in 1956, then-President Eisenhower worked with Congress to establish the Highway Trust Fund to finance the construction of the Interstate system.
The promise of the Highway Trust Fund was quite simple. The Federal government would become stewards for a new partnership with the American people. Motorists would pay a gasoline tax into a Trust Fund and that Trust Fund – which could be used for no other purpose – would build America's Interstate highways as well as other roads and bridges that were in the national interest. Later, the Trust Fund was expanded to support the construction of subways and the purchase of buses.
At the outset of the Trust Fund, the gas taxes were used for their intended purposes and we began to build the highway system we know.
The Unified Budget: the Highway Trust Fund Balance Explodes
Regrettably for the Trust Fund, in 1969, the budget process was changed and we adopted a unified budget. Suddenly, there was an incentive to hoard the gas tax revenues and not spend them for their intended purposes. Prior to 1969 the Trust Fund balance had never exceeded $1 billion. The law provides that these funds may only be used to invest in our Nation's infrastructure. But each year, the budgeteers would hoard a little more of the people's gas taxes to mask the cost of the Vietnam War, to hide the size of the budget deficit, to offset general fund spending, etc. – and three decades later that balance had grown to more than $20 billion.
Transportation Trust Funds Off Budget
Beginning in the 1980's, our Committee fought back. We had had enough of the budgetary sleight of hand and wanted to restore faith with the American people. This led to our efforts to take the four transportation trust funds (Highway, Airport, Inland Waterway, and Harbor Maintenance) off budget.
We moved to take these user-financed trust funds off budget because they have unique characteristics that argue for special budget status:
- They are wholly self-financed by the users;
- They have dedicated revenue sources;
- They are self-supporting, operating on a pay-as-you-go basis;
- They are deficit-proof, with expenditures limited to receipts;
- They invest in capital programs; and
- They finance long-range construction programs that benefit from certainty in funding.
In the 104th Congress, under the able leadership of Chairman Shuster, the House passed H.R. 842, a bill to take the transportation trust funds off budget, by a vote of 284 – 143, including a majority of the Members of this esteemed Committee. Regrettably, the Senate never considered our legislation.
ISTEA Reauthorization: T&I Proposes Off Budget
In the last Congress, we adopted this same off-budget approach during consideration of BESTEA, the House bill to reauthorize the highway, highway safety, and transit programs. The $20 billion Highway Trust Fund balance was intolerable. We proposed to take the Trust Fund off budget and to enable the gas taxes to be used for their intended purposes: to finance highway and transit infrastructure investment.
TEA 21 Guaranteed Funding
During our conference negotiations on TEA 21, many opposed the Trust Fund off budget provisions. The Administration, the House and Senate Leadership, and the Senate authorizing committee all opposed the House-passed Highway Trust Fund off budget provisions.
Yet each recognized the soundness of our position that the principle had been violated: gas taxes are intended for investment, not budget games. We worked with the Administration, the Congressional Leadership, other Committees, and our Senate counterparts to reach an agreement to:
- Keep the Highway Trust Fund on budget;
- Establish highway and transit funding at a level equal to gas tax receipts;
- Guarantee these levels of funding; and
- Offset all funding above historical levels.
The TEA 21 guaranteed funding mechanism was not our Committee's preferred course. We preferred to take the Highway Trust Fund off budget. However, the compromise did achieve the Committee's overriding objective: to restore the promise that Eisenhower and Congress had made in 1956 that motorists would pay a gas tax into a Highway Trust Fund and that Trust Fund – which could be used for no other purpose – would build America's infrastructure.
TEA 21 Point of Order
As a mechanism to guarantee that Trust Fund revenues will be spent, TEA 21 establishes a point of order. Clause 3 of Rule XXI provides that it shall not be in order for the House to consider any legislation (a bill, joint resolution, amendment, or conference report) that would cause the highway and transit obligation limitations to be below the levels set forth in TEA 21. Those guaranteed funding levels, tied to the estimated gas tax receipts, are specifically set forth in section 8103 of the Act. The highway category is adjusted each year to reflect the increase or decrease in gas tax revenues from the TEA 21 estimates. For instance, in FY2000, the level of obligations is $28.085 billion for the highway category (as adjusted) and $5.797 billion for the mass transit category.
These figures for highway and transit funding are easily discernable and have been provided in both the FY1999 and FY2000 House and Senate Transportation Appropriations bills.
This TEA 21 point of order is essential to ensure that the guaranteed funding levels are honored in the appropriations process.
I wish I could say that we would not need such an enforcement mechanism but experience has taught me otherwise. I will not recount the history of the Administrations and Budget Committees of both parties that have projected exploding Highway Trust Balances of $60 billion, and more, to allow more general fund spending or mask the size of the deficit at the expense of our Nation's transportation users.
However, I would like to note some history that emphasizes the importance of the TEA 21 point of order. In 1990, as Chairman of the Aviation Subcommittee, I was intimately involved in developing legislation to increase investment in our Nation's airports and modernize our air traffic control system. Our Committee, in its best tradition of working in a bipartisan manner, reached an agreement with the Budget and Appropriations Committees and the Office of Management and Budget that new revenues coming into the Aviation Trust Fund would be fully spent. In addition, we agreed that the Trust Fund surplus that existed at the time would be gradually drawn down. In the spirit of cooperation, our Committee's reported bill eliminated a penalty clause that we used to limit funding of FAA operations from the Trust Fund if capital development was insufficient. As the Committee report stated: "We believe that we can best meet our common goals by working cooperatively, rather than relying on penalty clauses and other legal forcing mechanisms."
Unfortunately, the Office of Management and Budget and the Appropriations Committee violated that agreement. In our 1990 bill, we required modest amounts of funding for facilities and equipment (F&E) and the airport improvement program (AIP), but they soon went by the wayside. By 1994, rather than spending $2.1 billion for AIP and $2.5 billion for F&E as contemplated by the 1990 agreement, the Appropriations Committees provided only $1.69 billion for AIP and $2.12 billion for F&E. In fiscal year 1991, capital investment was 50 percent of the FAA budget, by FY1998, it was 42 percent. And rather than drawing down the Trust Fund balance, the uncommitted balance in the Trust Fund is now estimated to be $29 billion by 2004 and $81 billion by 2009, if historical funding patterns are continued.
Such experiences do not lend one to support hortatory language as sufficient. An enforcement mechanism is necessary.
Yet, perhaps even more important is the fact that TEA 21 is paid for. We worked with the Administration, the Leaderships, and the Other Body, to offset the funding increases that we provided above historical levels. We made difficult choices. TEA 21 eliminated the Highway Trust Fund surplus ($8.1 billion) and interest on the Trust Fund (more than $2 billion per year). It also included specific offsets. TEA 21 overturned a Department of Veterans' Affairs decision regarding veterans' benefits for nicotine dependence; and it reduced funding for the Social Service Block Grant program. We paid for TEA 21. I did not oppose these offsets because I know that for every $1 billion of additional infrastructure investment that TEA 21 provides, we will help create 45,000 good-paying, high-skill jobs. I would not have supported such tradeoffs if the offsets were not used to improve our Nation's productivity and the skills of its people.
We need the enforcement mechanism of the point of order to ensure that the commitment of these difficult choices is carried out.
As we have begun moving forward under this historic Act, we have had to work through many TEA 21 implementation issues including issues with regard to the point of order. I look forward to working with the Rules Committee to carry out TEA 21, its point of order, and its commitment to rebuild America. Thank you for calling this hearing and for the opportunity to testify here today.
