Mr. BOSCH. Is it a fact that prior to this 1956 act all highway programs came under the general funds of the Treasury?

Mr. TALLAMY. Yes; that is correct.

Mr. BOSCH. That is all, Mr. Chairman.

Mr. BOGGS. Mr. Chairman, may I have a question in connection with that?

Mr. CHAIRMAN. Mr. Boggs.

Mr. BOGGS. That figure of almost $2 billion which, in a sense, was inherited, was something that we had to do and did not want to do. As a matter of fact, in my opinion and the opinion of most of us, it was most unfortunate that the trust fund had to take over these prior obligations and that $2 billion, in a sense, was a charge which should never have been assessed against the trust fund but Secretary Humphrey at that time insisted that we do it that way.

The CHAIRMAN. Mr. Harrison.

Mr. HARRISON. Mr. Tallamy, going back for just a moment to our discussion this morning about the actual contracts: Suppose that the Congress decided that this program should stop until the funds catch up except for the actual contracts hereofore made by the States and that the funds necessary to reimburse the States for such actual contracts shall be provided by the Treasury but the Treasury be fully repaid before any further allocations are made for highways; when would you anticipate the Treasury would be repaid?

Mr. TALLAMY. In 1961.

Mr. HARRISON. In 1961?

Mr. TALLAMY. Yes; fiscal 1961.

Mr. HARRISON. I am not talking about allocations now. talking about actual contracts. You mean fiscal 1961?

I am

Mr. TALLAMY. By the middle of fiscal 1961 the Treasury could be paid back. If we held back on contracts now against all authorizations, then we could pay the Treasury back by the middle of 1961. Mr. HARRISON. But did you not tell me this morning that at the end of fiscal 1960, that is, June 30, 1960, that you would be $150 million in arrears on that?

Mr. TALLAMY. Yes; I did.

Mr. HARRISON. How long into fiscal 1961 would it take you to pay back $150 million?

Mr. TALLAMY. About 2 months.
Mr. HARRISON. Two months?
Mr. TALLAMY. Wait a minute.

My 2 months' figure was wrong because I was predicating it upon the actual revenue into the trust fund and did not take into consideration the expenditures which would be going on during that period. It would actually take until December of 1961.

Mr. HARRISON. It would take about 4 months to get $150 million in excess?

Mr. TALLAMY. To net that amount.

Mr. HARRISON. In excess?

Mr. TALLAMY. Yes.

Mr. HARRISON. In excess of the ABC requirements and so forth. In other words, the suspension of the Byrd amendment for 4 months

into 1961 would give you enough money to pay for all contracts that the States have now made?

Mr. TALLAMY. I am not sure about the suspension of the Byrd amendment. I do not know that that is a part of it.

That would require an appropriation but I do not think it requires a suspension of the Byrd amendment.

Mr. HARRISON. In other words, within 4 months of the end of calendar 1960, you could repay it?

Mr. TALLAMY. That is right.

Mr. HARRISON. Thank you, sir.

The CHAIRMAN. Are there any further questions of the gentleman? Mr. J. J. ALLEN. Mr. Chairman, in June, the Highway Administrator submitted a report to the Secretary giving the view of the situation in each of the States. If you would care to have a copy of that report submitted for the record, I would be pleased to submit it. The CHAIRMAN. We would be glad to have that and, at this point, it will be included in the record.

(The report referred to follows:)

BUREAU OF PUBLIC ROADS

OFFICE MEMORANDUM, UNITED STATES GOVERNMENT

Date: June 23, 1959.

To: Secretary of Commerce.

From: Federal Highway Administrator.

We have now completed review of the individual State reports on future Interstate System progress under present financing provisions as previously discussed with you. Attached hereto are our findings dated June 23, 1959.

REPORT ON THE INTERSTATE SYSTEM PROGRAM

(By B. D. Tallamy, Federal Highway Administrator, June 23, 1959)

It is becoming increasingly urgent that we reach a sound and early solution to the problem of continuing the interstate highway program on schedule and without interruption.

Within a few weeks an apportionment of interstate funds should be made to the States for the fiscal year 1961. It is now past the middle of June, and, as matters stand, there will be no apportionment for fiscal 1961 and only a small one-not exceeding one-fifth of the authorized amount-for fiscal 1962.

Briefly, unless Congress acts quickly to provide additional financing, the fine construction pace we have established in building our National System of Interstate and Defense Highways will dwindle to a mere trickle of new contracts. The Federal-Aid Highway Acts of 1956 and 1958 provided authorizations totaling $25.625 billion for the fiscal years 1957 through 1969 for improving the Interstate System.

The 1956 legislation set in motion an accelerated program to be financed on a self-liquidating basis. It required the interstate and other Federal-aid highway programs to be financed entirely from trust fund revenues. On June 1 there was a balance of $476 million in the fund.

Under section 209 (g) of the Highway Revenue Act of 1956, the full amounts authorized for the Interstate System cannot be apportioned if the estimated revenues in the highway trust fund will not be sufficient to meet obligations as they fall due. In 1958 Congress suspended the limitations of this section for the 1959 and 1960 fiscal year apportionments and at the same time provided increased authorizations for the fiscal years 1959, 1960, and 1961.

No additional revenues were made available, however, to cover the increased expenditures resulting from the 1958 act. As a consequence, under existing legislation there will be a deficit in the highway trust fund in the fiscal year 1960. Also, there can be no apportionment of interstate funds for the fiscal year 1961, 44357-59-7

and the maximum interstate apportionment for the fiscal year 1962 would be $500 million instead of the authorized $2.2 billion.

As a result, during the next 3 months 10 States will be unable to award further Federal-aid interstate contracts. These are California, Connecticut, Florida, Illinois, Michigan, New Hampshire, New York, Ohio, Oregon, and Vermont.

By about the end of this year, the interstate program will have reached a dead end, as far as any new work is concerned, in 16 more States. These are: Iowa, Kentucky, Louisiana, Maine, Massachusetts, Missouri, New Meximo, North Dakota, Rhode Island, South Carolina, Tennessee, Utah, Washington, West Virginia, Wyoming, and the District of Columbia.

Projecting a little further, our records show that 11 more States will have run out of interstate funds for new work by July 1960. These are Alabama, Georgia, Indiana, Kansas, Maryland, Mississippi, Nevada, New Jersey, Pennsylvania, South Dakota, and Wisconsin.

In brief, all new interstate work will have been cut off in 36 States and the District of Columbia in about a year unless additional financing is provided very soon. The problem is even graver than these facts would indicate. Actually, a 2-year interruption or sharp curtailment in apportionments would have the practical result of interrupting the advancement of the interstate program by about 3 years. During the period since the accelerated construction pace was made possible by the Federal-Aid Highway Act of 1956, the States have built up the necessary momentum required to complete the program on schedule. They have done this in the face of serious obstacles such as shortages of State funds, a scarcity of engineers, and the many other perplexing problems inherent in a program of such size.

We are now tooled up for a steady continuation of the authorized construction program. The States have built up their highway departments, made provision for matching Federal funds, and streamlined laws and procedures to expedite such necessary matters as acquisition of right-of-way. Public hearings have been held on proposed routes and commitments have been made to property owners along the right-of-way. Families have been moved and commercial and industrial establishments have been relocated in anticipation of early construction.

Substantial Federal and State funds are invested in right-of-way, engineering, and construction in various stages. Thousands of miles of highways will be partially completed, yet cannot be finished until further apportionments are made.

Appendix No. 1 indicates the rapid decline in contracts which will take place during fiscal years 1960-61.

Furthermore, based on current estimates of revenue and expenditures, the highway trust fund will incur a deficit this fall. Unless the trust fund is supplemented in fiscal year 1960 by additional revenue either from the motor fuel tax increase as the President has suggested or by an appropriation from the general fund-which the President has rejected—it will be necessary to withhold several hundred million dollars due the States late this calendar year until funds are available. Such action would cause grave financial situations in the States.

In keeping with the Executive budget recommendation, draft legislation has been submitted to the Congress providing for a temporary increase of 12 cents a gallon in the Federal motor fuel tax to be levied during the fiscal years 1960 through 1964. Enactment of this legislation would avoid a deficit in the highway trust fund, consequently eliminating the need for an appropriation from the general fund. It would likewise permit apportionments of interstate funds for 1961 and 1962 in accordance with the amounts already authorized by Congress.

The seriousness of this situation is further illustrated by appendix 1 which graphically illustrates the drastic cut in apportionments which would have to be made under existing law and the similar cut in contracts as compared to the result contemplated in the budget submission which included the 11⁄2 cent motor fuel tax increase.

Appendix 2 is a tabulation showing the effect upon individual States of not being able to make the apportionment this summer and of a maximum apportionment next year of $500 million.

Also attached are copies of telegrams which have been received from the various State highway departments which individually describe the situation which would be created in their States under those conditions.

APPENDIX 2.-Reduction in interstate apportionments for fiscal years 1961 and 1962 required under existing legislation

Bureau of Public Roads:

SACRAMENTO, CALIF., June 3, 1959.

Reurphone today last interstate project advertised May 15, bids June 10, 1959. We are now holding several Any further advertising discontinued as of May 15. large interstate projects totaling in excess of $50 million pending decision 1961 apportionment.

G. T. McCOY,

State Highway Engineer, California Division of Highways.