NATIONAL HIGHWAY PROGRAM THURSDAY, APRIL 14, 1955 UNITED STATES SENATE, SUBCOMMITTEE ON ROADS, The subcommittee met at 10:17 a. m., in room 412, Senate Office Building, Senator Albert Gore (chairman of the subcommittee) presiding. Present: Senators Gore (presiding), McNamara, Martin, Case, and Bush. Also present: Senator Hruska. Senator GORE. The committee will come to order. The first witness is Mr. Francis V. du Pont, Special Consultant to the Secretary of Commerce. STATEMENT OF FRANCIS V. DU PONT, SPECIAL CONSULTANT TO THE SECRETARY OF COMMERCE Senator GORE. Do you have a prepared statement? Mr. DU PONT. I have a brief analysis of the bill, which is prepared. I will be glad to have 2 or 3 copies distributed. Mr. Chairman, gentlemen, I have been asked to evaluate and comment on S. 1573. This bill, as you know, was introduced by Senator Francis Case, a member of this committee, who will I hope correct any misinterpretation on my part. This bill has some provisions similar to those in the present legislation. There are also some new provisions which had not formerly existed which would bring the Department of Commerce into new fields of responsibility and financing. It would seem desirable to compare the grants proposed under S. 1573 to those that prevail under existing legislation and other bills which have been introduced. To this end there has been prepared a separate sheet setting forth this information, and which I tender herewith. I should like to point out at this point that S. 1573 becomes effective with the fiscal year that ends on June 30, 1957, and continues for a period of 10 years thereafter. The 1954 Federal Highway Act continues for a period of 2 years. I shall now endeavor to set forth the major points covered in S. 1573 as contrasted to the present highway act, as well as those provisions which are not included in the present act. Reference to the above-mentioned table of authorizations indicates an increase in all categories of Federal highway aid as compared to the present act. The greatest increases occur in the interstate and secondary systems. The total direct grants under S. 1573 would amount to $1,800 million per annum. The present act authorizes expenditures of $966 million or approximately the revenue produced by the tax on motor-vehicle fuels. Under S. 1573 it is quite obvious that the increased grants would encroach further on the general fund, as the receipts from motor vehicle fuel revenues would not equal the expenditures until about 1973. Senator CASE. Mr. Chairman? Senator CASE. I want to proceed in any way you desire. Senator CASE. On this particular point we might save time. First I would like to go back to the effective date of the proposal. We are presently in fiscal year 1956. Some of the legislatures have adjourned. My thought was that for them, since we are presently in 1956 and considering engineering problems and so forth, that if we were to start a new basis for apportionment, on any of the proposals, that it could well start with the first of the next fiscal year. Mr. DU PONT. That is well timed. Senator CASE. Rather than create reapportionment in the middle of this year. Senator GORE. That point was raised as an objection to S. 1048. Senator CASE. You could adjust that. With respect to any legislation it seems to me we could start out at the beginning of the next fiscal year, and that that would not require special sessions of the legislatures because under any proposals the funds or apportionments are available for 2 years, are they not? Mr. DU PONT. That is correct. Senator CASE. So they could pick up an increase, if there were an increase, in the second year, the legislatures generally meeting biennially. So that would be a practical date with regard to any legisla tion. With regard to the amount and whether or not it would encroach on the general fund, obviously if there is no provision for direct application some levy or some other funds, any authorization for appropriations comes from the general fund. The figure of $1,800 million suggested itself by thinking in terms of a 30-year return on the gasoline tax and oils. I think either in the Clay report, or some comment on it, I had noticed that the estimates had varied from 51.8 billion dollars to 54 or 55 billion dollars. I have seen various estimates. For convenience I took $54 billion as the prospective total receipts over a 30-year period. If you had a balanced completion of all systems, the secondary, primary, and interstate and urban, and take one-thirtieth of $54 billion would give you $1,800 million. That, in effect, is capitalizing the returns from a 30-year period, overlooking the interest factor, but capitalizing them on a 30-year period, the same principle that is followed in amortizing flood-control projects. In flood-control projects the Army engineers make a survey and measure the prospective benefits against the costs and establish what is called a BC ratio-benefit cost ratio. If the cost of a prospective flood-control project over a period of 25 years is equal to the benefits in prevention of damages or other benefits, the engineers report it as a feasible project; if it has a ratio of 1 to 1. Many flood-control projects of course have a better BC ratio than that. My thought is that if that is a sound principle for flood-control projects we might think of applying it to the highway problem of capitalizing the prospective revenues, or an amount equivalent to the prospective revenues, and applying it to annual appropriations for highways. That was the basis of the $1,800 million and why it was not thought of as an encroachment on the general fund. To be sure the money would come from the general funds of the Treasury. Senator GORE. Senator Case, do you not think that the sentence at the top of the page, in which he assumes that any expenditure of nonrevenue from the fuel-oil tax is an enroachment on the general fund, is erroneously based upon the presumption that there is a linkage between funds available for highway construction and the revenue from the fuel-oil tax, because the Congress specifically rejected such a linkage? Senator CASE. In that sense it is true that there is no enroachment on the general fund if you just accept the idea that highway appropriations come from the general fund. Senator GORE. All the revenue from that source does go into the general fund. Mr. DU POINT. There is no question about that, sir. Senator CASE. It is simply using that as a measurement or yardstick. Mr. DU PONT. The reason I bring it out as a yardstick, last year was the first year that the appropriations approximated the gasoline revenue. That is the first time that has been true. Senator GORE. Obviously the appropriations must exceed the revenue from that source in the next several years if we are to modernize our highway system. There was a time when the advocates of better highways thought they saw an advantage in linkage. The time has now come when the advantage has disappeared and becomes a disadvantage. Mr. DU PONT. I think that is self-evident in view of the deficiencies. Senator CASE. Just one further observation, if the chairman will permit me. My thought is that the interest factor might be regarded as a contribution even if you want to think in terms of measurementthe interest factor might be regarded as an appropriate contribution from the general funds because of the contribution to general welfare. The country as a whole could well afford to advance funds, so to speak, for highway construction in view of the construction to safety, the general well-being, promotion of commerce, and promotion of industry. Mr. DU PONT. The apportionment formula of the several funds to the States and Territories remains the same in the bill under discussion as in the 1954 act except in the case of the interstate funds. In the case of the interstate funds there, is no change in the existing formula for a period of 5 years, after which the interstate funds would be apportioned among the several States in accordance with the ratio which the cost of completing the uncompleted portion of the National System of Interstate Highways in such States bears to the 61030-55-55 cost of completing the uncompleted portion of the entire National System of Interstate Highways. That is taken right out of the act. I should like to suggest the desirability of reducing the period under which the present formula prevails to a period of 2 or 3 years instead of the specified 5 years. The matching basis for all funds remains the same as now prevails with the exception of interstate funds which currently are matched on a 60-40 basis. Under the act under consideration the matching basis is increased to 90-10. Furthermore, the latitude for the transfer of funds from one system to another has been increased from 10 to 20 percent. This transfer of funds does not apply to interstate funds. Í should like to suggest that consideration be given to a further increase in the transferability of funds. The American Association of State Highway Officials has recommended that 25 percent of the funds in any one category, exclusive of interstate funds, be transferable. It is believed that this greater latitude is particularly desirable in view of the substantial increase in the secondary fund allocation and also because of the great variation in the needs as between one category of highways and another category of highways in a given State. It might be desirable to limit this transfer authority from a lower category to a higher category. This would preclude the transfer of primary allocations to the secondary category. Provision is included in the bill whereunder the Secretary of Commerce is directed to designate as promptly as possible in cooperation with the States the unallocated mileage of the Interstate System of 40,000 miles as provided in the 1944 Highway Act. Provision is also made for the inclusion in the Interstate System of existing toll facilities. The prompt allocation of this mileage as feeders and distributing routes is highly desirable. The bill provides for the development and adoption of standards to be employed in the construction of interstate highways. These standards are to be developed in conference with the Department of Defense and the Federal Civil Defense Administration. It might be desirable at the outset to divide the primary system into two categories. Those segments of the Interstate System that were allocated to the first category would be the sections to be completed first and given the highest priority. The improvement of those highways in the second category would be undertaken after those in the first category were completed. I am thinking there particularly of the civil defense angle. The establishment by Congress of specific standards is highly desirable; in fact, mandatory if we are to have an Interstate System of highways. It is not believed possible to build such a system without these guidelines and requirements. I venture the opinion that it would be preferable to eliminate the Interstate System of highways in the absence of such standards and merely increase the grants to the primary system. Senator CASE. Does S. 1160'set forth the specific guidelines and requirements that you have in mind? Mr. DU PONT. It does in that it refers to the conference with the Defense Department and the Association of State Highway Officials. Senator GORE. How does that delineate standards? Mr. DU PONT. That determines the standards to be used on the interstate system, the geometrics and that sort of thing. |