Press Release
Sunday, March 22, 1998

WASHINGTON -- A coalition of organizations opposed to legislation that would take transportation trust funds "off budget" today sent a letter to Congress warning that such a move would eliminate any effective means of controlling transportation spending in the future.

The proposal to take the four trust funds off-budget, included in the "ISTEA" reauthorization bill, would pave the way for transportation spending levels far above those set by the 1997 bipartisan budget agreement.

If approved by Congress and signed by the president, the bill would exempt transportation spending from the annual appropriations process, as well as the strict discretionary spending caps other programs are subject to. In effect, transportation spending would become an entitlement.

"All parts of the budget should be on the table when Congress is making tough budget-cutting choices," the letter states. "No set of programs or interest groups should be exempt from consideration, including transportation."

Attached is the full text of the letter, along with a list of the signatories.


March 23, 1998

Dear Representative:

We strongly oppose the provision in the ISTEA reauthorization bill to move the four transportation trust funds off budget.

Our organizations have different perspectives on fiscal policy and different reasons for opposing this provision. Some of our groups are concerned that it would seriously harm the prospects for maintaining budget balance. Some worry that it would balkanize the federal budget and further complicate, confuse, and weaken budget processes. Some fear that it would result in deep cuts in domestic discretionary programs beyond the 10 percent reduction already required by the 1997 bipartisan budget deal. However, we are all agreed that taking these trust funds off budget is extremely unwise and should not be enacted.

All parts of the budget should be on the table when Congress is making tough budget-cutting choices. No set of programs or interest groups should be exempt from consideration, including transportation. Once the transportation programs are off-budget, there will be no effective way the budget process can control how much they spend.

One of the most deceptive myths about these trust funds is that they pay for all related program expenditures. False! The earmarked taxes bear little relationship to the actual use of or damage to the nation's infrastructure. Furthermore, trust fund spending has been greatly supplemented by federal spending from general revenues for the same purposes -- more than $50 billion in general fund appropriations since 1980.

Supporters of this provision erroneously claim that the surpluses in these trust funds have been used to mask the deficit. This is not true! The surpluses in the highway trust fund result from paper interest earned and compounded on trust fund surpluses dating from before 1980. In fact, from 1980 until 1997, total trust fund spending exceeded total gas tax revenues by over $13 billion. In 13 of those 17 years, spending from the Highway Trust Fund has exceeded tax revenue. Thus, if anything, the trust funds have increased the deficit, not masked it.

The bill as a whole already increases transportation spending by nearly 40% compared to the previous ISTEA authorization. If Congress wants to increase transportation spending above levels allowed in the 1997 bipartisan budget agreement, it should muster the courage to make tough choices to cut or control other spending year by year in light of overall priorities. It should not permit this one-time end run around the budget process to lock in not only a high priority for transportation spending but also the necessity of major reductions in other programs.

Some signers of this letter are deeply concerned that taking transportation trust funds off budget could necessitate as much as $34 billion in reductions from other discretionary programs from 1999 to 2003, in addition to already planned reductions in such programs, if the budget is to remain balanced. Some signers believe, further, this would have serious consequences for other programs funded by the general fund -- including education, environmental protection, science and technology, health research, assistance for poor children, law enforcement, veterans? benefits, and investments in areas that could lead to stronger economic growth.

There are 167 trust funds, and all of them are on-budget currently except for Social Security. There is no compelling rationale for transportation spending to be accorded special treatment not given to other major functions of the federal government, and doing so would severely damage the budget process.

We urge you to oppose any action to take transportation trust funds off budget.

Martha Phillips Concord Coalition Citizens Council

Thomas H. Miller Blinded Veterans Association

Michael Replogle Environmental Defense Fund

Carol Cox Wait Committee for a Responsible Federal Budget

Ralph De Gennaro Taxpayers for Common Sense

Dave Hirsch Friends of the Earth

Wenonah Hauter Public Citizen

Amy Moritz Ridenour National Center for Public Policy Research

Thomas A. Schatz Council for Citizens Against Government Waste