H.R. 2400 - Building Efficient Surface Transportation
and Equity Act of 1998
(Shuster (R) PA and 118 cosponsors)

The Administration strongly supports the Spratt amendment, which would extend the current highway and mass transit programs until July 1, 1998, ensuring that important construction projects proceed uninterrupted. This will provide sufficient time for completion of a budget resolution, making clear the offsets required by the high levels of funding called for in this bill.

We are pleased that BESTEA includes many of the provisions advanced by the President last spring. There are significant and solid areas of agreement. BESTEA builds upon the successes of ISTEA by retaining the basic program structure for transit and core highway programs, including the bridge program, as well as continuing the effective metropolitan and statewide planning processes. The bill retains ISTEA's highly successful environmental programs, and firmly supports Intelligent Transportation Systems technologies.

Funding Levels and Off-Budget Treatment. H.R. 2400 would increase surface transportation authorizations significantly above the President's request -- increasing surface transportation outlays during 1998-2003 by at least $34.2 billion above the President's request. Yet H.R. 2400 does not identify any offsets. Without offsets, severe cuts in other domestic discretionary spending programs would be required over the next five years in order to realize fully the authorized levels of transportation spending.

If this transportation bill is fully funded from discretionary spending, it will force billions of dollars of additional cuts -- beyond those already required to live within the BBA. If such cuts were made, the President's request for nondefense discretionary programs would be reduced by $31 billion over five years -- with serious consequences. For example, compared to the President's request 50,000 - 100,000 fewer children would participate in Head Start over 5 years; WIC would be cut by $431 million over 5 years, with an average of 100,000 fewer people assisted each year; Superfund would be cut by $166 million over 5 years; 138,00 fewer low-income students would receive Pell Grants over 5 years; 39,000 fewer AIDS victims would be assisted through the Ryan White program over 5 years; and an average of 572 fewer border patrol agents would hired each year.

It would be extremely difficult for the Congress to find acceptable offsets for this additional spending. To illustrate, the Senate-reported Budget Resolution identified $16 billion in mandatory offsets for transportation spending -- offsets that the President had proposed for funding vital initiatives in education, research, veterans' benefits, food stamps, environmental programs, and other domestic discretionary programs. Even these offsets would provide less than half the amount needed to pay for the increases in H.R. 2400.

We have moved our Nation from a decade of enormous deficits into an era of strong economic growth and budget surpluses -- due in part to the fiscal discipline required when making critical resource tradeoffs under a unified budget. We strongly oppose any provision that would drain anticipated budget surpluses prior to fulfilling our commitment to save Social Security first. The Administration also has serious concerns about the provision in H.R. 2400 which would move the Highway Trust Fund off-budget.

Demonstration Projects. The Administration believes that individual States are best able to define high priority transportation projects. The Administration has serious concerns regarding the number of earmarked projects in the bill and the unprecedented $9 billion in mandatory spending over six years for so-called "high priority" projects. This level of earmarked projects circumvents the usual State planning and selection process, undercutting key themes of ISTEA, including public participation, analysis of alternatives, and environmental review. This is not an appropriate way to allocate billions of dollars of public resources.

Disadvantaged Business Enterprises. The Administration strongly opposes the Roukema amendment, which would effectively repeal ISTEA's disadvantaged business enterprise (DBE) goals for highway and transit projects. First enacted in 1987, the DBE program sets out a 10 percent goal for all federal highway contracts to go to disadvantaged business enterprises. It is essential to continue equal opportunity in competition for transportation contracts.

Safety Concerns. The bill's safety provisions should be strengthened by mandating a .08 percent blood alcohol level as the national standard for drunk driving; enacting a strong companion program to combat drugged driving; prohibiting open containers of alcohol in motor vehicles; and encouraging States to improve their seat belt usage rates to 85 percent or enact primary seat belt laws.

Environmental Concerns. The bill's provisions regarding the National Environmental Policy Act (NEPA), which the Administration strongly opposes, should be deleted. The Administration particularly opposes the proposed pilot program delegating the statutory authorities of Federal agencies to States. The Department of Transportation should continue to be responsible for ensuring that the environmental impacts of projects are considered from a national perspective. Moreover, these provisions would have the negative effect of actually delaying project implementation and reducing the opportunities for public participation. In addition, the bill should extend Congestion Mitigation and Air Quality Improvement (CMAQ) program funding eligibility to potential non-attainment areas that may result from the recently promulgated Clean Air Act standards.

Other Major Concerns. The Administration will also seek amendments to H.R. 2400 in the House or in Conference to address the concerns described below and in the Attachment.

• The bill should increase the funding for, flexibility of, and number of Access to Jobs projects. The current limits on the number and design of projects and low funding levels will make it difficult for States and communities to succeed in moving people from welfare to work.

• The bill should increase the ability of States to leverage their transportation resources by including the State infrastructure bank and credit enhancement provisions as proposed by the Administration. The Administration, however, strongly opposes any provision that would permit direct and indirect Federal guarantees of tax-exempt obligations and the subordination of Federal loans for certain transportation projects in contravention of longstanding Federal credit policies.

• The provision limiting transit preventive maintenance and small urbanized area operating assistance to $400 million per year should be deleted.

• The bill should authorize the full $161 million requested for National Park roads and parkways. The funding levels currently authorized in the bill are inadequate to support these important programs.

• The bill should include a provision allowing employers to offer their employees transit and vanpool benefits in lieu of compensation, thus making the tax treatment of transit and vanpool benefits the same as for parking benefits under the Internal Revenue Code.

• The bill should extend the excise tax incentives for ethanol (but without phasing down the rates of the benefits), thereby supporting the use of alternative fuels to improve our Nation's air quality.

Pay-as-you-go Scoring

H.R. 2400 would increase direct spending by $8.3 billion above the baseline over six years. Most of this increase in mandatory spending would result from the over 1,400 demonstration projects included in this bill. Without any mandatory offsets, if this spending were scored on-budget as it should be, the bill would result in a sequester of mandatory programs as required by the Budget Enforcement Act. A sequester would result in across-the-board cuts in programs such as Medicare, Guaranteed Student Loans, programs of the Commodity Credit Corporation, Social Services Block Grants, and Extended Unemployment Benefits.