The CHAIRMAN. We will now hear from our colleague, the Honorable Elizabeth Kee from the State of West Virginia. We are happy to welcome you, Mrs. Kee.

STATEMENT OF REPRESENTATIVE ELIZABETH KEE, OF

WEST VIRGINIA

Mrs. KEE. Thank you, Mr. Chairman.

Mr. Chairman and other distinguished members of the Ways and Means Committee of the House of Representatives. I deeply appreciate this opportunity, which you have so graciously extended, to present this brief statement in opposition to this proposed tax increase. There is serious question in my mind as to the wisdom of any increase in the Federal excise tax on gasoline, a matter now before the Committee on Ways and Means.

In my mind new gasoline taxes must be balanced against certain hard realities. In my State we have just reluctantly increased the State tax on motor fuel. To ask the people of West Virginia to face a second increase within a year is a step which I cannot support.

I must join with the Governors of more than 30 States in opposing such a move. May I add that I take this position with more in mind than the best interests of the people in my own State and district.

It is my conviction that the vast revenues already accruing to the Government through Federal automotive taxes are sufficient to underwrite the road program quite amply.

West Virginia is one of the many States that subscribe to the principle that automotive tax revenues should be used for highway purposes, and in 1942 such a provision was adopted as part of our State constitution. Observance of this same principle at the Federal level would erase any need for new motorist taxes.

Therefore, Mr. Chairman, it is my heartful hope that you and the members of your committee will not approve this proposed legislation. The CHAIRMAN. Thank you, Mrs. Kee, for coming to us and giving us your views on this subject.

Mrs. KEE. Thank you, Mr. Chairman.

The CHAIRMAN. We will now hear from our colleague, the Honorable Harold C. Ostertag, from the State of New York. We are happy to welcome you, Mr. Ostertag.

STATEMENT OF REPRESENTATIVE HAROLD C. OSTERTAG, OF NEW YORK

Mr. OSTERTAG. Thank you, Mr. Chairman.

Mr. Chairman and distinguished members of this committee, it is a privilege to appear here, today.

The subject matter of these hearings is the highway trust fund and the problems incident to the financing of the Federal highway program. This is a subject that is of vital interest and importance to every citizen in the United States. A safe and efficient highway network is essential to America's military and civil defense and to the economy. I cannot emphasize too strongly the necessity for our highway system to grow if we are to maintain and increase our standard of living. The Federal Highway Act of 1956 was designed to give our Nation a properly articulated highway sytsem that would solve the

problems of speedy, safe interstate travel paying off in economic growth and making a good start on the highways the country will need for a population of 200 million people. The highway trust fund was created to provide for the financing of the 41,000 mile Interstate Highway System and certain highway user taxes were earmarked for the fund. Now the highway trust fund is nearly depleted and will not have enough funds to meet the schedule of apportionments to the States for the fiscal year 1961. Unless additional funds are obtained, the interstate highway program will not proceed as scheduled.

Mr. Chairman, though a number of proposals have been advanced for providing the additional revenues needed to meet the deficit that will appear in the highway fund, it is my belief that the bill I have introduced, H.R. 7780, is the most practical approach to the problem. It would permit the issuance of highway revenue bonds to provide for the funds needed to keep the Federal highway program on schedule. These bonds would be issued by the Federal Aid Highway Corporation which is created by this legislation.

It should be pointed out that the proposal I have introduced, providing for revenue bond financing, is in line with the original highway financing program recommended in 1955 by the President's Advisory Committee on a National Highway Program.

According to the Bureau of Public Roads, the estimated revenues that would be required by the Federal Government to complete the Interstate system would be $36 billion. The amount that will be received from present trust fund revenues available for the Interstate System would be $22.639 billion. Therefore, the additional revenues that will be required to complete the Interstate System above and beyond those amounts received from the trust fund revenues would be $13.361 billion.

These estimates broken down on a yearly basis would be as follows: Additional highway trust fund amounts required to complete Interstate System

According to the table I have included, the fund will go into the red in fiscal 1960 in the amount of $300 million. These deficits will gradually increase and by 1972, it is estimated the deficit will total more than $13 billion. Under the provisions of my bill, bonds will be issued annually only to make up those funds necessary to keep the Interstate System on schedule. These bonds would be secured against the guaranteed revenue of the highway trust fund. The special levies which go into the trust fund are scheduled to end in 1972; my proposal would merely extend the existing special highway taxes long enough to retire the revenue bonds. The Corporation created by my proposal would be headed by a board of directors composed of the Secretary of Commerce, the Secretary of the Treasury, and a person designated by the Secretary of the Treasury. The Corporation will be subject to all the provisions of the Government Corporation Con

trol Act.

Mr. Chairman, the creation of a Federal Highway Aid Corporation to issue highway revenue bonds would make the necessary funds available without placing a heavier burden on either the Federal budget, existing revenues or the Treasury. Several proposals that have been advanced would make up the deficit by taking the needed additional revenues from the General Treasury of the United States. No matter how these proposals are viewed they still amount to another burden of deficit financing for our General Treasury to bear. At a time when it is essential to maintain a balanced budget and check the rising debt, another raid on the General Treasury must be avoided.

The so-called Byrd amendment which was made part of the Highway Revenue Act of 1956 was enacted to insure that the highway program would be financed without resort to budgetary deficits. This amendment eliminated the provision which permitted the trust fund to obtain advances from the general funds of the Treasury to meet temporary deficits in the trust fund. Congress felt at that time that to permit such a provision to remain in the act could lead to vast deficit spending and budgetary imbalance. This would present a dangerous possibility and thus Congress passed the Byrd amendment eliminating this provision. To raid the Treasury at this time in order to make up the deficit in the trust fund would be resorting to exactly the same thing that Congress strived to avoid in 1956.

Another proposal would increase the Federal gasoline tax by 11⁄2 cents per gallon. This proposal has found little support. In view of the fact that the Federal Government's highway expenditures are being paid virtually in their entirety through special taxes on highway users, it is believed that it would be inequitable to impose a substantial tax increase at this time.

Mr. Chairman, this is a matter which demands prompt action. Mr. Bertram D. Tallamy, Federal Highway Administrator, stated recently that unless action is taken the Federal Government will not be able to enter into any new contracts for quite a few months, even though the States now have the authorization. As I understand it, the Government will not be able to make any apportionment at all for the Interstate System next year, and only about $500 million as a maximum in the following year. For example, this development would affect my own State of New York by some $200 million.

Under the terms of my bill (H.R. 7780), the users of our highways would continue to bear the cost for the construction of the Interstate

Highway System. This was the original intent of Congress in authorizing this program. My proposal also makes possible the adoption of a sound method by which to finance any reimbursement plan for States which built part of the Interstate System before Federal funds were appropriated. Under reimbursement plans which have been proposed, for example, my State of New York would be reimbursed $799 million. Mr. Chairman, I believe the proposal I have introduced is the best solution to the problem that has developed in connection with this national interstate and defense highway program and I hope that the members of this committee will give it their most careful and sober consideration.

The CHAIRMAN. Thank you, Mr. Ostertag for coming to us and giving us your views on this subject.

Mr. OSTERTAG. Thank you, Mr. Chairman.

Our next witness is our colleague from Iowa, the Honorable Fred Schwengel.

We are pleased to have you with us this morning, Mr. Schwengel. You are recognized to proceed.

STATEMENT OF REPRESENTATIVE FRED SCHWENGEL, OF IOWA

Mr. SCHWENGEL. Mr. Chairman and members of the committee, I am Fred Schwengel, from the First District in Iowa, and a member of the Public Works Committee, a member of the Subcommittee on Roads.

As a Member of Congress and as a member of the Public Works Committee I want to say to you that I am very much aware of the importance of your committee and of the great responsibility that is yours to find ways and means to finance the cost of Government projects.

I am aware, too, of the fact that there are committees who sometimes try to usurp the jurisdiction of finding ways and means that rightly belong to your committee and I am one to admit that this may have been at least partially true with respect to the Public Works Committee when they were writing the 1956 Interstate Highway Act. However, I feel that there may have been more reason than usual for this committee in this instance to try to have an influence in this regard.

I should like to commend the committee for the very diligent efforts it is putting forth in trying to resolve the very difficult problem and challenge that has been presented to you to solve this problem under very difficult circumstances. I want to thank you for giving me this opportunity to appear and to assure you that it is a distinct privilege to have this opportunity to come before you this morning to testify on this very serious problem that has been and is confronting you, the Congress, and the Nation today. That is to discuss ways and means to resolve the financial problem that has developed in our plans for building of the greatest national system of interstate highways that any nation has ever attempted, much of which I believe can be done now.

First I should like to call to your attention, very briefly, the history of the development of this system. Those of you who have been in Congress since 1938 and those who have been interested in the advancement and improvement of our road system since that time will

know that several studies were made during the period from 1938 to 1948 dealing with this whole subject of national highways.

The system was first called the interregional system or the backbone for a system of interstate highways. These studies, the record shows, finally resulted in the inclusion of section VII in the Federal Highway Act of 1944 which officially created a National System of Interstate and Defense Highways limited by statute to 40,000 miles.

Little was done toward the construction of this system until 1955. It was then that the first real impetus was given to the construction of the system. The Subcommittee on Roads of the House Committee on Public Works held very extensive hearings in 1955. You will recall that several members of this great committee sat with and participated in those hearings. This legislation failed then because of disagreement on methods of financing.

Then in 1956 came additional hearings in both the Roads Subcommittee and this great Committee on Ways and Means. These hearings, together with hearings held in the Senate, resulted in the enactment of the Federal-Aid Highway Act of 1956 and a National System of Interstate and Defense Highways as we know it now.

Purpose of the National System of Interstate and Defense Highways: Congressional intent as to the purpose of the Interstate System we clearly set forth in section 108(a) of the act of 1956 and it reads as follows:

(a) INTERSTATE SYSTEM.-It is hereby declared to be essential to the national interest to provide for the early completion of the National System of Interstate Highways, as authorized and designated in accordance with section 7 of the Federal-Aid Highway Act of 1944 (58 Stat. 838). It is the intent of the Congress that the Interstate System be completed as nearly as practicable over a 13-year period and that the entire system in all the States be brought to simultaneous completion. Because of its primary importance to the national defense, the name of such system is hereby changed to the National System of Interstate and Defense Highways. Such National System of Interstate and Defense Highways is hereinafter in this act referred to as the Interstate System.

The first portion of section 108 (b) of the 1956 act is also significant, and I quote:

(b) AUTHORIZATION OF APPROPRIATIONS.-For the purpose of expediting the construction, reconstruction, or improvement, inclusive of necessary bridges and tunnels, of the Interstate System, including extension thereof through urban areas, designated in accordance with the provisions of section 7 of the FederalAid Highway Act of 1944 (58 Stat. 838), *

BRIEF REPORT ON THE PROGRESS

Mr. Chairman, noting first of all that this Government, with the enactment of the Federal-aid highway program in 1956, began one of the greatest public works internal projects ever attempted by any nation, and even though its planning and building has been underway for almost 3 years, the House Roads Subcommittee has not held any comprehensive hearings on the progress of the Federal-aid highway program since 1956.

Therefore the House of Representatives has had no opportunity to study in detail all of the important aspects of the progress of the building of the Interstate System such as standards, work in the urban areas, estimates of needs filed by the States in accordance with provisions of title I of the act of 1956.