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No real harm can be done if we continue the highway construction program at or about the level provided in the 1956 act. The Bureau of Public Roads, State highway departments, and the construction industry have done an exceptionally creditable job to date in spite of some mistakes. The construction program has just reached high gear at tremendous cost and effort. To shift into low at this time and then later attempt to again accelerate it, will be extremely costly, particularly to the industries that have done so well in expanding themselves in order that they might do the job we ordered done under the 1956 act. To shift into low gear at this time would almost be disastrous to these industries and their labor forces.

Traffic congestion would become intolerable. The accident rate would continue to rise, and the adverse effect on the general economy would be almost beyond calculation. These losses and the adverse effect on the Nation's economy would be far greater than the amount of temporary funds needed to keep the construction program on or near the level or schedule provided by the 1956 act.

Let us, therefore, in the next few days, direct our attention to providing funds for the next 3 years. In providing these funds, let us not depart from the basic principles of our 1956 act. Let's keep it on a pay-as-you-go basis. Let us have the courage to pay for this program and not pass the cost on to future generations. No one needs to tell this Committee on Ways and Means about the precarious condition of the Federal Government Treasury. Let us not do this job by deficit spending and increase the national debt, thereby accelerating the inflationary spiral, a vicious spiral which in turn will increase the cost of the road program. We should be willing to put our feet to the political fire and raise the money, and not by some politically attractive or appealing scheme of deficit financing.

Some here and many throughout the country would applaud, I am sure, a transfer of all automobile excise taxes to the trust fund. This might be the easy and politically expedient way out, but all of us know that such action will solve nothing but will be extremely harmful. It will be deficit spending in disguise. It will unbalance the budget, increase the national debt, and cause a further erosion of the dollar, to say nothing of the inflationary effect.

In closing I want to say that in my opinion the Committee on Public Works a few weeks ago, by increasing the Interstate System authorization for fiscal year 1962, H.R. 5950, by $300 million, made a serious mistake, in view of the deficits we already face in the trust fund and the General Treasury. There is no excuse for giving the Committee on Ways and Means an additional headache at this time, especially if we do not furnish the aspirin.

While I favor the principle of reimbursement for toll roads, it is my feeling that the Committee on Public Works acted irresponsibly when it approved, at this critical time, the Buckley reimbursement bill, providing for payments to the States from the General Treasury totaling approximately $5 billion.

Furthermore, the Committee on Public Works, in suspending the Byrd amendment (sec. 209 (9) of the Highway Revenue Act of 1956) when it approved H.R. 5950, invaded the prerogatives of the Committee on Ways and Means.

The Byrd amendment deals primarily with the financing features of the highway program. In suspending the Byrd amendment, the Committee on Public Works certainly suggests, if it does not require, some form of deficit financing to meet the present crisis. The Committee on Ways and Means may desire to meet this problem by some method incompatible with the suspension of the Byrd amendment. Mr. IKARD. Mr. Chairman, at this point in the proceedings I request unanimous consent that there appear in the record of the hearings the statement of the Honorable Price Daniel, Governor of the great State of Texas, on the subject presently before the committee. It is of course unnecessary for me to point out to members of this committee the qualifications of the gentleman whose statement I am presenting, because he is known personally, I am sure, to every member of this committee and to the majority of the Members of the Congress. Price Daniel was, as we all know, a distinguished Member of the U.S. Senate from the State of Texas prior to his occupation of the chair of Governor of the Lone Star State.

Governor Daniel has been in close touch with the situation with which we here deal for quite some time and indeed he served as head of the informal committee organized by a number of State governors for the purpose of seeing to it that the interests of the States in the gasoline tax field are appropriately preserved and protected during the consideration of any Federal legislation relating to highway financing. I know of no one who is more qualified to speak on this subject than the Governor of my State, a former member of the U.S. Senate, and our good friend, the Honorable Price Daniel of Texas.

(The statement is as follows:)

STATEMENT OF GOV. PRICE DANIEL OF TEXAS

Because I am in the midst of a special session of the Texas Legislature, I find it impossible to appear before your committee for these important hearings on financing the Federal highway program, which I had hoped to attend. Therefore, I have requested Representative Frank Ikard of Texas to place this statement before the committee.

Earlier this year, 35 governors joined in opposition to the proposed increase of 12 cents per gallon in the Federal tax on gasoline recommended by President Eisenhower. Many of these governors have written their congressional delegations on the subject. Gov. G. Mennen Williams of Michigan, Gov. William G. Stratton of Illinois, Gov. James T. Blair of Missouri, Gov. J. Hugo Aronson of Montana and I are serving as an informal committee to continue working to prevent further Federal encroachment upon this urgently needed source of State revenue. Briefly stated, we believe that the problem confronting you can and should be solved by placing more of the Federal highway user taxes in the highway trust fund.

As a Member of the U.S. Senate in 1956, I recall that the Highway Act of that year specifically dedicated a portion of the road-use taxes to finance the then projected 13-year program. Those revenues were estimated to be adequate to pay for the program, although between 1960 and 1968 the annual income from them would not meet the annual highway costs. That was why the bill provided that the general fund would lend the highway program the difference which would be repaid in later years of the program through the excess of these revenues over the estimated highway costs. Subsequent higher cost estimates of the Interstate System will mean the program will take more than 13 years, but that does not void the fact that over a long period the revenue and cost would balance out.

The so-called Byrd amendment was added to the bill as an afterthought, providing that highway outlays may not in any year exceed income from the taxes

earmarked for the trust fund. The 1958 act suspended the Byrd amendment until 1960. Further suspension of this amendment in future years would have the same effect as following the plan first envisioned in 1956 of letting the general fund advance the difference between outlays and dedicated revenues, such advances to be returned to the general fund through surpluses from the dedicated revenues in the later years of the program. As long as the Byrd amendment can be suspended, President Eisenhower has no reason to ask for more Federal gasoline tax to keep the highway program moving as projected. According to the statistics compiled by the National Highway Users' Conference, the Federal Government is now diverting more than $1.3 billion Federal highway user taxes to purposes other than highway construction and maintenance. Congress can meet its obligations under the highway program by ending the current diversion of highway taxes and applying all of them to the Federal highway trust fund, thereby leaving additional motor vehicle taxes as a source of revenue for the States, which need more highway construction money to carry forward their own road programs and to match the Federal aid program.

A good argument can be made that road-user taxes should not have to pay for all of the highway costs, because the National System of Interstate Highways is essential to our national security and general welfare and should not be saddled solely on highway users. At the minimum, however, the Federal Government should follow the generally accepted principle that people who use the highways should pay for them and road-use taxes levied to build highways should be used for that purpose and not to pay the general costs of government.

For your information, I submit herewith copy of Senate Concurrent Resolution 9 adopted by the Texas Legislature and signed by me on February 7, 1959. I am also attaching a breakdown on Federal highway user taxes and how they are spent, as compiled by the National Highway Users' Conference.

SOURCES OF FEDERAL ROAD-USER TAXES AND PURPOSES FOR WHICH SPENT

For the year ending September 30, 1958, the Federal Government collected $3,477,837,000 in road-use taxes, using $2,082,340,000 for highways and $1,395,497,000 for general government. Following is a breakdown as compiled by the National Highway Users' Conference:

Road-use taxes which do go to highway trust fund

3 cents per gallon gasoline tax---.

3 cents per gallon tax on diesel fuel.

8 cents per pound tax on tires and 9 cents per pound on tubes___ $1.50 per 1,000 pounds use tax on trucks weighing over 26,000 pounds____.

Half of 10-percent excise tax on all new trucks and buses-

Total road use taxes going to trust fund_-

$1,649, 226, 000

Road-use taxes which do not go to highway trust fund

10-percent excise tax on automobiles__.

6 cents per gallon excise tax on lubricating oil---.
8-percent excise tax on auto parts and accessories-

Half of 10-percent excise tax on all new trucks and buses__

Total road-use taxes not going to trust fund_.

46, 354, 000 255, 388, 000

34, 085, 000 97, 287, 000

2,082, 340, 000

$1,063, 557, 000

70, 644, 000 165, 009, 000 97, 287, 000

1, 395, 497, 000

SENATE CONCURRENT RESOLUTION 9

Whereas the President has recommended that Congress increase the Federal tax on gasoline by 12 cents per gallon; and

Whereas the Federal Government is annually diverting more than $12 billion of Federal highway user taxes into nonhighway channels; and

Whereas it has been estimated that the addition of the 12 cents to the present 3-cent Federal tax on gasoline would result in Texans sending $137 million more in highway user taxes per year to Washington than would be returned to the State for highway purposes under the present aid formula: Now, therefore, be it

Resolved by the Senate of the State of Texas (the House of Representatives concurring), That the Congress be respectfully requested to oppose further Federal invasion of this gasoline tax which should be reserved for the use of the States, and that the use of such present highway user taxes be restricted to highway purposes only; and, be it further

Resolved, That a copy of this resolution be mailed to each Member of the Texas delegation in Congress.

BEN RAMSEY,

President of the Senate.

WAGGONER CARR,
Speaker of the House.

I hereby certify that Senate Concurrent Resolution 9 was adopted by the senate on January 27, 1959.

CHARLES SCHNABEL,
Secretary of the Senate.

I hereby certify that Senate Concurrent Resolution 9 was adopted by the house on January 28, 1959.

Approved February 7, 1959.

DOROTHY HALLMAN, Chief Clerk of the House.

PRICE DANIEL, Governor.

The CHAIRMAN. Our next witness is Mr. Kiley. Please identify yourself for the record, by giving us your name, address, and the capacity in which you appear.

STATEMENT OF EDWARD V. KILEY, DIRECTOR, DEPARTMENT OF RESEARCH, AMERICAN TRUCKING ASSOCIATIONS, INC.

Mr. KILEY. My name is Edward V. Kiley, and I am director of the Department of Research of the American Trucking Associations, Inc., with headquarters at 1424 16th Street, NW., Washington, D.C. The American Trucking Associations, Inc., is a federation that was established in 1933 as the national trade association of the trucking industry, representing all types of motor carriers of property, for-hire and private. We have affiliated associations in 48 States and the District of Columbia. In addition, we speak for 12 affiliated motor carrier conferences.

We appreciate this opportunity to appear before your committee to present the trucking industry's position on the problems faced in connection with the financing of the Federal highway program. It is the belief of the industry that the highway program, so essential to the national welfare and the general economy of our country, should be kept on schedule. We believe this can be accomplished without placing additional taxes on the Nation's highway users at this time.

The trucking industry was among the first to pledge its support of an expanded national highway program and currently is paying a substantial portion of the special highway user taxes that are going into the trust fund from which the Federal highway expenditures are being made.

At present virtually all of the moneys going into the highway trust fund are from special taxes on highway users. There are no appreciable tax revenues from any other source being used to pay the Federal Government's portion of the highway program. We feel this fact is extremely important in the consideration of whether or not additional taxes should be placed on highway users at this time. In his message accompanying the Federal budget for 1959 the

President, in supporting his recommendation of an increase of 112 cents in the Federal gasoline tax to provide revenues for the highway trust fund, stated:

The comprehensive highway program enacted in 1956 established the principle that highway users, rather than the general taxpayers, should pay the cost of Federal-aid highways.

We cannot agree with the President's statement. The legislative history of the Federal-Aid Highway Act of 1956, and the act itself, do not support such a conclusion. In fact, the record clearly shows that although the Congress did not initially provide for highway trust fund revenues from sources other than highway user taxes, it did not contemplate that this would always be the case.

The report of the Ways and Means Committee accompanying the Highway Revenue Act of 1956, had the following significant statement to make regarding the benefits of an expanded highway program other than those accruing directly to use of the improved facilities:

It should also be recognized that substantial benefits from the proposed highway program will accrue to the economy as a whole and that the proposed highway program has been advocated in part because it is essential to the country's national defense.

This thought was clearly outlined in section 210 of the Highway Revenue Act of 1956 which directed the Secretary of Commerce to develop for the Congress information on which it could determine what adjustments should ultimately be made in the financing provisions of the highway program. What Congress had in mind is stated in the following language of section 210:

The purpose of this section (210) is to make available to the Congress information on the basis of which it may determine what taxes should be imposed by the United States, and in what amounts, in order to assure, insofar as practicable, an equitable distribution of the tax burden among the various classes of persons using the Federal-aid highways or otherwise deriving benefits from such highways.

Section 210(b)3 further states that the Secretary of Commerce is— to make a study and investigation of any direct and indirect benefits accruing to any class which derives benefits from actual use of such highways. The foregoing provisions of the act make it clear that Congress had not closed its mind to the possibility that a portion of the cost of the Federal highway program should be supported by funds other than those derived from special taxes on highway users. The Secretary of Commerce is scheduled to submit his final report on this important aspect of the highway financing program in January 1961. When the Congress has this report it will be in a position to evaluate fully the overall equity of the highway financing program and to determine the extent to which beneficiaries other than highway users should share in the tax burden.

An indication of the importance of nonhighway user benefits is contained in the third progress report of the highway cost allocation study of the Secretary of Commerce, House Document No. 91, 86th Congress. This progress report is called for under the provisions of section 210 of the Highway Revenue Act of 1956 and was submitted to the Congress in March of this year. The opening paragraph of

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