THE TRUTH IN BUDGETING ACT -- HON. JAMES L. OBERSTAR (Extensions of Remarks - January 07, 1999)

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HON. JAMES L. OBERSTAR OF MINNESOTA IN THE HOUSE OF REPRESENTATIVES WEDNESDAY, JANUARY 6, 1999

Mr. OBERSTAR. Mr. Speaker, I rise today to join my good friend and colleague, BUD SHUSTER, in introducing legislation to take the aviation, harbor maintenance, and inland waterways trust funds off-budget. This legislation will ensure that all revenues contributed by users of our transportation system to develop and maintain those systems are spent for their intended purposes.

For aviation, this legislation has a very simple, but critical, goal; ensuring that the American public continues to travel safely, securely, and efficiently in our nation's aviation system.

The airline and aerospace industries are important contributors to the U.S. economy, providing highly skilled, high paying jobs. They directly employ approximately 1.5 million people, and generate more than $100 billion in wages. The total, worldwide economic impact of air transport was $1.14 trillion in 1994 and this is expected to increase to $1.7 trillion by the year 2010.

However, these economic gains will only be achieved if we have the air traffic safety, security, and airport infrastructure to take advantage of them. Problems in the current system are already appearing and are projected to be even greater in the future. In 1987, the FAA estimated that there were 21 airports at which air carrier flights were delayed by a total of more than 20,000 hours; by 1997, there were 27 airports, and that number is expected to grow to 31 by 2007. In addition, according to Delta Airlines, air traffic inefficiencies cost it approximately $360 million a year. Furthermore, FAA's lack of progress on air traffic control (ATC) modernization has led to suggestions in international forums that current U.S. management of oceanic ATC be taken away. And as the National Civil Aviation Review Commission found ``although 19 out of 20 of the busiest airports in the world are in the U.S., the nation can no longer claim that it has the world's most modern air traffic control system.''

We tried to begin addressing these challenges in 1990, by passing legislation that would have increased investment in airports and air traffic modernization. Under that law, a plan was established to allow new revenues coming into the aviation trust fund to be fully spent and the trust fund surplus, that existed at the time, to be gradually drawn down. In a spirit of cooperation, the reported bill also eliminated the penalty clause that the then-House Committee on Public Works and Transportation used to limit funding of operations from the trust fund if capital development was insufficient. As the report accompanying the bill said at that time: ``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, that agreement was violated by the Office of Management and Budget and the Appropriations Committee. In 1990, we set out 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, instead $1.69 billion was spent 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 $22 billion by 2004 and $53 billion by 2008.

Additionally, the General Accounting Office has confirmed that airport capital needs are $10 billion a year. The present system of aviation financing provides about $6-7 billion a year, with the AIP program contributing less than $2 billion a year to those needs. Furthermore, funding for F&E is woefully inadequate. In fact, F&E is appropriated at $2 billion for FY1999, a level $400 million below an F&E level of $2.4 billion in FY1991. These inadequate levels of F&E and AIP funding contribute to delays for passengers and increased costs for airlines, and increased maintenance costs for FAA due to delayed replacement of obsolete equipment. these results are shameful, especially when money dedicated for investment in airports and air traffic equipment sits idle because of budget constraints unrelated to the needs of the aviation system. In effect, trust fund revenues are withheld to balance the rest of the budget.

To remedy this, we need to build on last year's historic TEA 21 legislation which established that revenues collected from users of the highway system for the Highway Trust Fund should be spent only for the purposes for which they are collected, the development of our highways and transit systems. The same principle should now be applied to the aviation system.

The bill we are introducing today is the first step to reversing the unfortunate recent trends in aviation funding and ensuring that we invest sufficiently to protect an irreplaceable economic jewel: our nation's aviation system. With
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Members' support, we will again be able to make the kind of investments we need in airport development and air traffic control modernization. If we are to ensure an efficient safe aviation system, we must begin to use aviation revenues for their collected purposes: to maintain and enhance our nation's aviation system.

In addition, historically, a general fund payment averaging about 30 percent has been made to support our aviation system. This payment has been made in recognition of both the direct and indirect benefits of our aviation system to our nation's security and economic health. These benefits should be funded by the nation as a whole not exclusively by users of the aviation system. Any off-budget plan passed by this Congress must guarantee this general fund payment continues.

We must also ensure that the money provided to the FAA is well-spent. Full implementation and validation of a cost accounting system, and effective use by FAA management, will be an important step forward. In addition, appointment of the Management Advisory Council--which has been delayed for two years--is absolutely essential. Other reforms will get my full consideration but we must ensure that the critical safety function of the FAA is not compromised or weakened.

The other critical component of this legislation will allow the nation's waterborne transportation system to remain among the best in the world. The nation's coastal ports provide access to foreign and U.S. markets for virtually all international trade, while the inland system provides safe and efficient transportation for both domestic and foreign products.

The contribution of the U.S. navigation system to the economy is impressive. The value of foreign trade exceeds $600 billion annually, creates 16 million jobs, and generates more than $150 billion in annual revenues for the Treasury. Yet, for all these benefits we continue to under invest in maintaining and improving this transportation system.

The inland waterway system is in particular need of investment. By the year 2000, 40 percent of the locks on the inland waterway will be more than 50 years old; 26 locks will be over 100 years old; and, the Nation's two oldest locks opened in 1839. Unfortunately, because of budget constraints, only about 75 percent of the funds available for investment are actually used, and the surplus continues to grow.

The Truth in Budgeting Act will change that.

For coastal ports, the failure to spend receipts is even greater. As vessel drafts increase, there is a continuing need for maintaining and deepening channels. Unfortunately, budget constraints have forced expenditures from the Harbor Maintenance Trust Fund to little more than one-half of available revenues.

The benefits of fully spending the trust fund extend beyond navigation. The Water Resources Development Act of 1996 expanded the uses of the fund to address critical needs related to disposal of dredged material. Environmental concerns dictate that increasing amounts of dredged material not be disposed of in open waters because of contamination of the sediment. Making the trust fund fully available not only benefits navigation, but the environment as well.

In closing, I urge all Members to sign on as co-sponsors of this legislation. Your support will be critical to ensuring the safety, security, and efficiency of our nation's aviation system and waterways.
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