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                                                       Calendar No. 422
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-163

======================================================================



 
                    HIGHWAY FUNDING RESTORATION ACT

                                _______
                                

                 June 17, 2002.--Ordered to be printed

                                _______
                                

   Mr. Jeffords, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1917]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred a bill (S. 1917) to provide for highway infrastructure 
investment at the guaranteed funding level contained in the 
Transportation Equity Act for the 21st Century, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill, as amended, do pass.

                               Background

    The Transportation Equity Act for the 21st Century (TEA-21) 
created a budgetary mechanism to tie funding for the Federal-
aid highway program to highway user fee revenues deposited into 
the Highway Trust Fund. Known as Revenue Aligned Budget 
Authority (RABA), this mechanism adjusts the guaranteed amount 
available for highway funding to reflect the most recent 
estimates of trust fund revenues. The intent of the RABA 
adjustment is to more closely align the trust fund's receipts 
to its outlays. The RABA mechanism accomplishes this by 
``looking back'' at the prior fiscal years receipts into the 
trust fund and ``looking ahead'' to the trust fund's projected 
receipts for the coming fiscal year. The highway obligation 
limit and the highway category discretionary cap then are 
adjusted by the amount of the resulting RABA calculation.
    After three years of positive annual RABA adjustments in 
fiscal years 2000, 2001, and 2002, the fiscal year 2003 RABA 
adjustment was a negative $4.4 billion due in part to a 
downturn in Highway Trust Fund revenues. Included in the 
President's budget proposal, this negative adjustment equated 
to an $8.6 billion swing from the 2002 enacted highway funding 
level, a 27 percent cut.
    The committee strongly supports the principle behind the 
RABA calculation. But the committee also has received testimony 
that there is a need for some adjustment of the RABA mechanism 
to mitigate year-to-year fluctuations.
    The committee introduced S. 1917 to provide predictability 
and sustainability to the Federal-aid highway program. As 
amended, S. 1917 deems the fiscal year 2003 RABA adjustment to 
be zero, restores the TEA-21 guaranteed funding level for 
fiscal year 2003, and increases that amount by an additional 
$1.2 billion, setting the obligation limit for the coming 
fiscal year at $28.9 billion.

                      Section-By-Section Analysis


Section 1. Short Title

    The Highway Funding Restoration Act

Section 2. Federal-aid Highway Program Obligation Ceiling

                                Summary

    Section 2 amends section 1102 of the Transportation Equity 
Act for the 21st Century (TEA-21) to set the fiscal year 2003 
obligation limit for the Federal-aid highway and highway safety 
construction program at $28.9 billion and directs distribution 
of the funds in accordance with section 1102 of TEA-21.

                               Discussion

    This section sets the obligation limitation for fiscal year 
2003 at $28.9 billion. This figure represents a level of 
highway funding sustainable by current cash balances in the 
Highway Trust Fund.
    This section also directs the distribution of the restored 
funding levels according to section 1102 of TEA-21.

Section 3. Increase In Discretionary Spending Limit and Obligation 
        Limitations for Highway Category

                                Summary

    Section 3 amends section 251(c)(7)(A) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 and section 
8103(a)(5) of TEA-21.

                               Discussion

    This section amends current budget law by setting the 
fiscal year 2003 discretionary spending limit for the highway 
category at $29.282 billion. This change increases the highway 
category discretionary spending limit to accommodate the 
obligation limit authorized by this Act.

Section 4. Restoration of Highway Category Spending Guarantee

                                Summary

    Section 4 deems all fiscal year 2003 RABA adjustments made 
to the highway budget category and the obligation limit to be 
zero. Section 4 then applies this result retroactively to all 
reports issued pursuant to section 254 of the Balanced Budget 
and Emergency Deficit Control Act of 1985, including the 
discretionary sequestration preview report.

                               Discussion

    Section 4 deems the adjustments to the obligation limit and 
the outlay levels for the highway category to be zero and 
applies this change to the RABA adjustment to the President's 
February 2002 budget submission.

Section 5. Sense of the Congress Regarding Revenue Aligned Budget 
        Authority

    It is the sense of the Congress that future legislation 
should amend the TEA-21 RABA mechanism to more accurately align 
highway spending with highway revenues.

Section 6. Sense of the Senate Concerning Distribution of Funds

    It is the sense of the Senate that all funds authorized and 
appropriated for fiscal year 2003 for Federal-aid highway and 
highway construction programs be distributed in accordance with 
TEA-21.

                          Legislative History

    Senator Jeffords introduced S. 1917, the ``Highway Funding 
Restoration Act'', on February 7, 2002 with all 19 members of 
the Committee on Environment and Public Works as original 
cosponsors. When the committee reported S. 1917, it had 75 
cosponsors. The committee reported the bill, as amended, on 
June 4, 2002.

                                Hearings

    On February 11, 2002, the committee discussed S. 1917 
during a hearing on the Highway Trust, the RABA mechanism, and 
the President's fiscal year 2003 budget proposal.

                             Rollcall Votes

    The Committee on Environment and Public Works met to 
consider S. 1917 on June 4, 2002. By voice vote, the committee 
adopted an amendment in the nature of a substitute offered by 
Senators Jeffords and Smith. The committee also accepted an 
amendment to the Jeffords-Smith substitute offered by Senators 
Baucus and Warner. The committee agreed to S. 1917, as amended, 
by voice vote.

                      Regulatory Impact Statement

    In compliance with section 11(b) of rule XXVI of the 
Standing Rules of the Senate, the committee makes evaluation of 
the regulatory impact of the reported bill.
    The bill does not create any additional regulatory burdens, 
nor will it cause any adverse impact on the personal privacy of 
individuals.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the committee finds that S. 1917 would 
impose no unfunded mandates on local, State, or tribal 
governments.

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 11, 2002.

Hon. James M. Jeffords, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1917, the Highway 
Funding Restoration Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Rachel 
Milberg, who can be reached at 226-2860.
            Sincerely,
                                            Dan L. Crippen.
                              ----------                              


               Congressional Budget Office Cost Estimate


S. 1917, Highway Funding Restoration Act As ordered reported by the 
        Serrate Committee on Environment and Public Works on June 4, 
        2002.

Summary

    S. 1917 would amend the Transportation Equity Act for the 
21st Century (TEA-21) by authorizing an increase in the 
obligation limitation for the Federal-Aid Highway program of 
about $5.5 billion in 2003. TEA-21 provides budget authority 
for the Federal-Aid Highway program in the form of contract 
authority, the authority to incur obligations in advance of 
appropriations. Spending from the program, however, is largely 
controlled by limits on annual obligations set in 
appropriations acts. Although TEA-21 includes specific 
obligation limitations for the Federal-Aid Highway program, 
each year appropriation acts include a limitation that may or 
may not be the same as the amounts in TEA-21.
    Assuming the 2003 appropriations act includes an obligation 
limitation equal to the limitation in the bill, CBO estimates 
that implementing S. 1917 would cost about $5.3 billion over 
the 2003-2007 period, and an additional $0.2 billion after 
2007. S.1917 would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply.
    S. 1917 contains no intergovernmental or private-
sectormandates as defined in the Unfunded Mandates Reform Act 
CUIARA) and would benefit States.

                Estimated Cost to the Federal Government

    The estimated budgetary impact of S. 1917 is shown in the 
following table. The costs of this legislation fall within 
budget function 400 (transportation).


                  By Fiscal Year in Millions of Dollars
------------------------------------------------------------------------
                                   2003    2004    2005    2006    2007
------------------------------------------------------------------------
Authorization Level\1\..........       0       0       0       0       0
Estimated Outlays...............   1,491   2,320     939     331     221
------------------------------------------------------------------------
\1\Budget authority for the Federal-Aid Highway program is provided as
  mandatory contract authority in authorization legislation such as TEA-
  21. Changing the obligation limitation, as S. 1917 would do, does not
  affect such budget authority.

                           Basis of Estimate

    For thus estimate, CBO assumes that S. 1917 will be enacted 
in fiscal year 2002, that the appropriation action for 2003 
will adopt the new obligation limitation, and that spending 
from the Federal-Aid Highway program will follow historical 
patterns. Assuming the 2003 appropriations act sets a 
limitation equal. to the level that would be authorized by S. 
1917, implementing the bill would cost $5.5 billion over the 
next seven years.
    S. 1917 would increase both the obligation limitation and 
the outlay cap association with the highway category for 2003. 
Amending the outlay cap for the highway category would affect 
the enforcement of limitations for discretionary spending, but 
any effect on the budget would be subject to future 
appropriation action. That is, the increase in the cap would 
not-by itself-cause an increase in spending. The highway 
category includes the Federal-Aid Highway program, programs for 
motor carrier safety, and programs for highway traffic safety.

Pay-As-You-Go Considerations: None.

Intergovernmental and Private-Sector Impact

    S. 1917 contains no intergoverrmuental or private-sector 
mandates as defined in UMRA. Enacting this bill would benefit 
States by substantially increasing the level of Federal-Aid 
Highway grants available in 2003. Because States voluntarily 
participate in this program, any costs they would incur as a 
result of the bill's enactment would be voluntary as well.

Previous CBO Estimate

    On May 6, 2002, CBO transmitted a cost estimate for H.R. 
3694, the Highway Funding Restoration Act, as ordered reported 
by the House Committee on Transportation and Infrastructure on 
May 1, 2002. The House bill would amend TEA-21 by authorizing 
an increase in the obligation limitation for the Federal-Aid 
Highway program of almost $4.4 billion. S. 1917 would authorize 
an increase of about $5.5 billion, and the estimated costs of 
the two pieces of legislation reflect this difference.
Estimate Prepared By: Federal Costs: Rachel Milberg (226-2860); 
Impact on State, Local, and Tribal Governrnents: Marjorie 
Miller (225-3220); Impact on the Private Sector: Jean Talarico 
(226-2940).

Estimate Approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                        Changes in Existing Law

    In compliance with section 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill 
as reported are shown as follows: Existing law proposed to be 
omitted is enclosed in [black brackets], new matter is printed 
in italic, existing law in which no change is proposed is shown 
in roman:
                              ----------                              


         TRANSPORTATION EQUITY ACT FOR THE TWENTY-FIRST CENTURY

                     TITLE I--FEDERAL-AID HIGHWAYS

                Subtitle A--Authorizations and Programs

SEC. 1101. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--The following sums are authorized to be 
appropriated out of the Highway Trust Fund (other than the Mass 
Transit Account):

           *       *       *       *       *       *       *


SEC. 1102. OBLIGATION CEILING.

    (a) General Limitation.--Notwithstanding any other 
provision of law but subject to subsections (g) and (h), the 
obligations for Federal-aid highway and highway safety 
construction programs shall not exceed--

           *       *       *       *       *       *       *

    (k) Restoration of Obligation Limitation for Fiscal Year 
2003._Notwithstanding any other provision of law, the 
obligations for Federal-aid highway and highway safety 
construction programs for fiscal year 2003--
            (1) shall be $28,900,000,000; and
            (2) shall be distributed in accordance with this 
        section.

           *       *       *       *       *       *       *


 TITLE VII--TRANSPORTATION DISCRETIONARY SPENDING GUARANTEE AND BUDGET 
                                OFFSETS

      Subtitle A--Transportation Discretionary Spending Guarantee

SEC. 8101. DISCRETIONARY SPENDING CATEGORIES.

           *       *       *       *       *       *       *


SEC. 8103. LEVEL OF OBLIGATION LIMITATIONS.

    (a) Highway Category.--* * *

           *       *       *       *       *       *       *

            (5) for fiscal year 2003, [$28,233,000,000] 
        $29,387,000,000.

           *       *       *       *       *       *       *

                              ----------                              


       BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985

Public Law 99-177, December 12, 1985, 99 Stat. 1037

           *       *       *       *       *       *       *


SEC. 251. ENFORCING DISCRETIONARY SPENDING 
                    LIMITS.

    (a) Enforcement.--

           *       *       *       *       *       *       *

    (c) Discretionary Spending Limit.--As used in this part, 
the term ``discretionary spending limit'' means--
            (1) with respect to fiscal year 1997, for the 
        discretionary category, the current adjusted limits of 
        new budget authority and outlays;
            (2) with respect to fiscal year 1998--
                    (A) for the defense category: 
                $269,000,000,000 in new budget authority and 
                $266,823,000,000 in outlays;
                    (B) for the nondefense category: 
                $252,357,000,000 in new budget authority and 
                $282,853,000,000 in outlays; and
                    (C) for the violent crime reduction 
                category: $5,500,000,000 in new budget 
                authority and $3,592,000,000 in outlays;
            (3) with respect to fiscal year 1999--
                    (A) for the defense category: 
                $271,500,000,000 in new budget authority and 
                $266,518,000,000 in outlays;
                    (B) for the nondefense category: 
                $255,699,000,000 in new budget authority and 
                $287,850,000,000 in outlays;
                    (C) for the violent crime reduction 
                category: $5,800,000,000 in new budget 
                authority and $4,953,000,000 in outlays;
                    (D) for the highway category: 
                $21,885,000,000 in outlays; and
                    (E) for the mass transit category: 
                $4,401,000,000 in outlays;
            (4) with respect to fiscal year 2000--
                    (A) for the discretionary category: 
                $532,693,000,000 in new budget authority and 
                $558,711,000,000 in outlays;
                    (B) for the violent crime reduction 
                category: $4,500,000,000 in new budget 
                authority and $5,554,000,000 in outlays;
                    (C) for the highway category: 
                $24,436,000,000 in outlays; and
                    (D) for the mass transit category: 
                $4,761,000,000 in outlays;.
            (5) with respect to fiscal year 2001--
            (A) \1\ for the discretionary category: 
        $637,000,000,000 in new budget authority and 
        $612,695,000,000 in outlays;
---------------------------------------------------------------------------
    \1\ Margin so in law.
---------------------------------------------------------------------------
                    (B) for the highway category: 
                $26,204,000,000 in outlays; and
                    (C) for the mass transit category: 
                $5,190,000,000 in outlays;
            (6) with respect to fiscal year 2002--
                    (A) for the discretionary category: 
                $681,441,000,000 in new budget authority and 
                $670,206,000,000 in outlays;
                    (B) for the highway category: 
                $26,977,000,000 in outlays;
                    (C) for the mass transit category: 
                $5,709,000,000 in outlays; and
                    (D) for the conservation spending category: 
                $1,760,000,000, in new budget authority and 
                $1,473,000,000 in outlays;
            (7) with respect to fiscal year 2003--
                    (A) for the highway category: 
                [$27,728,000,000] $29,234,000,000 in outlays;
                    (B) for the mass transit category: 
                $6,256,000,000 in outlays; and
                    (C) for the conservation spending category: 
                $1,920,000,000, in new budget authority and 
                $1,872,000,000 in outlays;

           *       *       *       *       *       *       *