Statement of the Transportation Departments of

Montana, Idaho, North Dakota, South Dakota, and Wyoming

Committee on Finance

Committee on Environment and Public Works

United States Senate

Financing Surface Transportation Programs

September 25, 2002

The transportation departments of Montana, Idaho, North Dakota, South Dakota, and Wyoming (“we” or “our”) submit this brief statement for the record of the joint hearing held on this date by the Committee on Finance and the Committee on Environment and Public Works.

We are extremely pleased that, today, there is a consensus in the country that a well funded highway program makes an important and positive contribution to our nation’s economic prosperity and quality of life. But we urge the Congress not to rest on that consensus, but to build upon it and increase today’s level of Federal investment. As the Congress receives testimony and prepares to shape legislation to reauthorize Federally assisted surface transportation programs, it is important to keep foremost in mind that increased transportation investments will truly advance the public interest and help all citizens and all States.

The two Committees are to be commended for holding this hearing. The nation’s ability to achieve increased transportation investment requires increased funding it requires an answer to the question of how the Federal Government will finance its contribution to such an increase.

A very important part of the answer is already before you. Earlier this year, Chairman Baucus, with the co-sponsorship of Senators Crapo, Daschle, Thomas, Craig, Enzi, Johnson, Warner, Reid, Graham, Bond, Harkin, and Carnahan, introduced bi-partisan legislation, S. 2678, that would increase receipts into the Highway Trust Fund without raising taxes.

We support every provision of that legislation.

That legislation would allow the Highway Account of the Highway Trust Fund, which has foregone very significant revenue due to increased gasohol consumption, to be properly credited. The bill would ensure that the 2.5 cents per gallon of tax on gasohol that currently is directed to the General Fund of the Treasury would be deposited in the Highway Account. In addition, the bill would credit the Highway Account with funds equal to the amount of fuel taxes not imposed on gasohol due to the gasohol tax preference (currently 5.3 cents per gallon). The bill would not raise the tax imposed on gasohol. This approach would make the Highway Account whole with respect to taxes either paid or foregone with respect to gasohol consumption. It would allow the Highway Account to finally receive treatment on this issue comparable to the treatment on this issue currently given to the Mass Transit Account which, unlike the Highway Account, already receives the same funding for a gallon of gasohol as it does for a gallon of regular gas.

S. 2678 also properly would reinstate the principle that the Highway and Mass Transit Accounts of the Highway Trust Fund should each be credited with interest on their respective balances. The bill also includes a thoughtful provision requiring a commission to look at long-term issues in financing the surface transportation program.

So, while witnesses today may be emphasizing various innovative ways of financing increased Federal surface transportation investment, we wanted to emphasize our support for the important and straightforward provisions included in S. 2678, the “Maximum Economic Growth for America Through the Highway Trust Fund Act.”

As to additional financing mechanisms, at this time we will limit ourselves to a brief positive comment on a concept that we understand to be under development by Senator Baucus. The approach would be for the Secretary of the Treasury to sell bonds with the proceeds being deposited in the Highway Trust Fund. The General Treasury would be responsible for the principal and interest. We welcome the development of this additional approach as a means of serving our national interest in increased investment in highways and transportation.

In closing, we commend Chairman Baucus and Ranking Member Grassley of the Finance Committee and Chairman Jeffords and Ranking Member Smith of the Environment and Public Works Committee for holding this hearing on the important issues of finding ways to finance increased Federal transportation investment. That investment is certainly essential to the economic future of our States and we appreciate this opportunity to offer views on how that might be achieved.