INTRODUCTION OF BILL TO TAKE THE AIRPORT AND AIRWAY, THE INLAND WATERWAYS, AND THE HARBOR MAINTENANCE TRUST FUNDS OFF BUDGET -- HON. BUD SHUSTER (Extensions of Remarks - January 06, 1999)

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HON. BUD SHUSTER OF PENNSYLVANIA IN THE HOUSE OF REPRESENTATIVES WEDNESDAY, JANUARY 6, 1999

Mr. SHUSTER. Mr. Speaker, I am again standing before Congress requesting that the Transportation Trust Funds be treated fairly. The bill I am introducing today, referred to as the ``Truth in Budgeting Act,'' is a bill I have introduced in the past. With the support of many members of Congress and of course, my colleague, Congressman JIM OBERSTAR, the Transportation and Infrastructure Committee was successful last Congress in passing into law the appropriate budget treatment for the Highway Trust Fund.

This Congress, we are asking that the remainder of the transportation trust funds be treated fairly. In short, the taxes which transportation users pay should be spent on the intended purposes.

During the past decade, aviation taxes have increased dramatically. In 1990, airline passengers and other users of the air transportation system paid $3.7 billion in taxes and fees for their use of that system. By 1995, taxes had increased to $5.5 billion. Now, in 1999, it is estimated that aviation users will pay over $10 billion in aviation taxes and fees, almost triple the amount that they paid at the beginning of the decade and almost double what they paid just 4 years ago.

This increase is partly due to the increase in passengers and aviation activity. But it is also due to the fact that the tax rates have been dramatically increased over the past few years.

All these taxes go into a Trust Fund that was created in 1970. When this aviation trust fund was created, it was designed primarily to pay for improvements in the aviation infrastructure, such as airport improvements and the modernization of air traffic control equipment.

The problem is that this Trust Fund is part of the unified budget. As a result, it does not operate like a true trust fund. Under current budget rules, there is no assurance that tax revenues deposited in the trust fund will actually be spent on aviation infrastructure needs. Arbitrary budget caps often limit the amount that can be spent.

In fact, over time, aviation infrastructure needs have been dramatically underfunded. And, on occasion, money has been taken out
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of the aviation trust fund to pay FAA salaries or meet general budget needs. More often, the money is not spent, in order to offset increased spending for other programs unrelated to aviation.

As a result, by the end of this year, it is expected that the uncommitted surplus in the Trust Fund will be $6.9 billion and the cash balance will be $12.6 billion. It would be even higher if not for the fact that the taxes temporarily expired a few years ago. In 10 years, if nothing is done, CBO projects that the uncommitted balance will balloon to $57 billion and the cash balance to $63 billion!

This is clearly unacceptable. If the government is not going to spend the money then it should not be collecting the tax. The only thing worse than paying taxes is paying the tax and then not getting the promised benefit from it.

Unfortunately, the same type of problem exists with the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund. Both are part of the unified budget and both are accumulating unacceptable surpluses in the face of enormous infrastructure needs.

The Inland Waterways Trust Fund helps to finance improvements to the nation's navigable waterways, including locks and dams. Notwithstanding the significant cost of keeping these arteries of commerce open and functioning, the trust fund's surplus continues to grow. As of October 1, 1998, the Inland Waterway Trust Fund balance was $342.3 million.

The Harbor Maintenance Trust Fund, which helps to finance navigation needs at the nation's ports and harbors, has an even larger surplus. As of October 1, 1998, the fund's balance was $1.29 billion. Harbor maintenance is critical to jobs, economic development and international trade. There is growing concern about the failure to adequatelymeet port infrastructure needs. There is also concern about the Supreme Court's March 1998 decision that the Harbor Maintenance Tax is unconstitutional as it relates to exports and the possibility it violates international commitments relating to imports. Both concerns emphasize the need for truth in budgeting.

Last year, we were confronted by the same problem in surface transportation. People who used the roads were paying gas taxes into a trust fund with no assurance that the money would be spent. We fixed that problem in the TEA-21 legislation by creating ``firewalls'' to ensure that all the gas tax money would be spent on road and transit improvements.

1999 will be the year of aviation. By that I mean, at a minimum, that we intend to do the same thing for aviation that we did for surface transportation last year. We intend to unlock the Trust Fund to ensure that the money can be spent to meet aviation infrastructure needs.

The needs are significant. Airports estimate, and GAO agrees, that meeting airport infrastructure needs will require about $10 billion per year. Currently airports have access to only about $7 billion per year from all sources. Therefore, there is about a $3 billion airport infrastructure funding gap that we need to close.

Over the last 5 years, the number of passengers in the U.S. has grown 37% to 655 million. It is expected to grow to 995 million in 10 years.

Daily aircraft delays were 19% higher in 1996 than in 1995. Mitre estimates that a 60% increase in airport capacity will be needed by 3015 just to prevent delays from increasing above current levels.

FAA's air traffic control facilities and equipment are also very old and badly in need of upgrades. The towers, TRACONs and centers that house air traffic controllers have building design lives of 20 years. Yet the average age of the towers and TRACONs is already 20 years and the Centers are on average 40 years old.

The FAA is still using computers that are so old that they are no longer used anywhere else in the world and replacement parts are no longer manufactured. When the old equipment breaks down, flights must be delayed to prevent endangering passengers.

The FAA is trying to expand airport capacity and modernize the air traffic control system. But this will take money, in many cases, a great deal of money. That money is in the Aviation Trust Fund and could be used if it were not for the current budget caps that are unrelated to the Trust Fund revenue.

Therefore, today, on a bipartisan basis, I am introducing legislation that will take the Aviation Trust Fund off budget. This will ensure that aviation tax revenue can be spent on aviation needs without regard to any arbitrary budget caps. To the extent the needs are demonstrated and the money is in the fund, it could be spent under this legislation.

I recognize that this will be controversial and we are prepared to work with the aviation community and others to perfect it.

As we do so, one of the things that will be absolutely vital to the final legislative package will be the assurance that the general fund payment will continue. I am not undertaking this effort merely to convert general fund obligations to trust fund spending. The general fund now pays a certain portion of the FAA's budget in lieu of taxes to compensate the FAA for government and military aircraft use of the system. In addition, the general fund payment is justified by the benefit aviation provides to the general economic well being of this country.

In TEA-21, the general fund payment for transit is within the ``Firewalls'' and is therefore guaranteed. I am committed to the same sort of treatment of the general fund in aviation.

I am also committed to ensure that the aviation needs are met using existing Trust Fund taxes and fees. I cannot conceive of a circumstance where I would support an increase in federal taxes. The current tax structure, coupled with the general fund contribution, provides enough money to meet aviation needs. If it is fully utilized, there will be no need for any new federal taxes.

The only possible exception involves the passenger facility charge (PFC). There, I am prepared to consider an increase if we unlock the Trust Fund and it does not provide enough for airport improvements. It is my hope that the airlines and airports would work together on this to ensure that airports needs are met while airline interests are respected.

The legislation also provides a unique opportunity to consider fundamental structural reform at the FAA. It is not enough for the FAA to spend more money. We also want them to spend it wisely. I look forward to working with the aviation community, the Administration, and others on this.

Finally, I want to thank Congressman OBERSTAR for his support for this effort. He has been a proponent of aviation infrastructure spending and water infrastructure for a long time. Under this Chairmanship, the Airport Improvement Program achieved one of its highest funding levels ever. I look forward to working with him, Subcommittee Chairman DUNCAN, and ranking member LIPINSKI as we carry this legislation to a successful conclusion. I also look forward to working with Chairman BOEHLERT and ranking member BORSKI of the Water Resources and Environment Subcommittee as they consider water resources development and infrastructure financing proposals.
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