Thank you Madam Administrator for coming before us to testify on the President’s 2004 budget request. This request contains many good features. Of course there are some aspects that I feel need attention. And I am certain we will be able to work cooperatively to address my concerns.
I regret that I must begin by noting that we still have not received your reauthorization proposal for TEA-21. As a result, we have no way of thoroughly assessing your budget request. It is simply a bunch of numbers with no policy behind them. I must also add that both your reauthorization proposal and your budget request become less relevant with each week that we do not have your reauthorization proposal.
The House and Senate Budget Committees are well on their way drafting the Budget Resolution that will lay out the budgetary framework for reauthorization. One of my greatest concerns is that the President’s budget request did not include firewalls for highways, but I understand that your reauthorization proposal will likely include them. I suggest that you move ahead on this immediately to help ensure firewalls are included in the Budget Resolution.
With that said, I will turn to the specifics of the Administration’s 2004 budget request for Federal-Aid Highways. This request is a reasonable starting point. I think it contains some very good ideas. But it is only a starting point.
I’m very pleased to note that the request maintains the link between highway funding and the user fees deposited into the Highway Trust Fund. That is an essential foundation for any reauthorization proposal. The proposal sets each year’s funding level from the trust fund $1 billion above that year’s estimated trust fund receipts. The additional $1 billion reflects a spending of the large cash balance in the Highway Trust Fund that has accumulated from unspent highway user fees. Unfortunately, the cash balance in the trust fund remains too high under the President’s proposal. We need more responsible cash management in light of the existing needs. I would like to see the cash balance spent down significantly below the $14.8 billion average under the President’s request.
I am also pleased that the President’s budget request returned the 2.5 cents from tax on gasohol currently deposited into the general fund back into the Highway Trust Fund. The gas tax is a true user fee and it simply does not make sense that any of it is deposited anywhere except the Highway Trust Fund. Cars burning fuel blended with ethanol take up the same amount of space and cause as much wear and tear on the roads as cars burning gasoline. They should pay the same amount into the Highway Trust Fund. Therefore, I will work to ensure that the subsidy on ethanol is paid for out of the general fund rather than the Highway Trust Fund. This would result in an additional $1.5 billion a year available for investment in highway infrastructure.
As I said, this budget request is a starting point. Unfortunately, the investment levels are too low when compared to the system’s needs. The 2004 request of $29.3 billion would be a $2.5 billion cut from 2003. And highway investment would not get back to the 2003 level until 2007 under the budget request. In fact, the 2009 requested funding level would be $2 billion less than if we simply grew the program at the rate of inflation. We need a highway funding level that will improve safety, congestion, and economic growth.
These low investment levels are problematic because highway needs today are staggering. The 2002 Conditions and Performance Report published by this Administration estimates that the annual federal investment in roads must increase by 17 percent simply to maintain the nation’s existing highway and bridge system. Improving the system will require 65 percent more than is currently invested. TEA-21 was a great step forward in terms of improving our nation’s highway safety and road conditions. We need to build upon this success, not take a step backwards. It would be irresponsible to cut highway funding to such a great extent.
The budget request does provide a couple of highlights of what we can expect to be included in the Administration’s reauthorization proposal. From what I’ve seen so far, there are some very good ideas included. I look forward to hearing more detail on these policies.
Thank you for your time and I look forward to working with you on reauthorizing TEA-21.