September 24, 2002

The Honorable Max Baucus

Chairman, Committee on Finance

The Honorable James Jeffords

Chairman, Committee on Environment and Public Works

United States Senate

Washington, D.C. 20510

Re: Joint Hearing of September 25, 2002

Dear Chairmen Baucus and Jeffords:

The American Highway Users Alliance (AHUA) takes this opportunity to briefly address issues regarding the financing of the Federal highway program and asks that this letter be included in the record of the September 25 joint hearing of the Finance and Environment and Public Works Committees on this subject.

Your Committees are to be commended for holding this hearing on how the Federal government can finance an increased level of Federal investment in highways — an investment that will provide important benefits throughout the country.

As the nation’s broadest-based highway advocacy organization and the organization that represents the motorists, truckers, and businesses that pay the taxes that fully fund and rely on our nation’s highway and bridge investments, The Highway Users is particularly interested in your joint efforts to improve revenue collection and increase investments.

America’s roads have serious and documented ftinding needs — too many Americans are dying or being injured on roads suffering from outmoded design — traffic congestion is worsening, threatening safety, slowing air quality progress, increasing tailpipe greenhouse gas emissions, wasting fuel, slowing product deliveries, and taking commuters away from their families and other productive exercises.

Some have called for increasing federal fuel taxes. If there are demonstrated needs and current funding is being invested appropriately, highway users will seriously consider that option. But we believe that your committees must first improve where today’s taxes are going, prevent further erosion of available resources, and examine all means available to boost highway revenues without raising taxes.

Thus, we take this opportunity to support S. 2678, the “Maximum Economic Growth for America Through the Highway Trust Fund Act,” bi-partisan legislation introduced earlier this year by Chairman Baucus. The twelve co-sponsors of that bill include the ‘following members of the Finance or Environment and Public Works Committees: Senators Daschle, Reid, Graham, Warner, Bond, Thomas, and Crapo. We thank all the supporters of that legislation for their leadership in advancing the provisions of that bill.

Among other provisions, S. 2678 would provide 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, S. 2678 would deposit into the Highway Account an amount equal to the fuel taxes not imposed on gasohol due to the gasohol tax preference. This is in keeping with historical precedence of funding agricultural programs, like ethanol, from the general fund. The bill would not raise the tax imposed on gasohol. This means that the Highway Account would receive treatment on gasohol comparable to the treatment currently given to the Mass Transit Account. That account, unlike the Highway Account, already receives the same amount of funding for a gallon of gasohol as it does for a gallon of regular gas.

S. 2678 would also resume the practice of crediting the Highway and Mass Transit Accounts of the Highway Trust Fund with interest on their respective balances. While we would prefer that Congress invest those surpluses, the trust fund should receive interest on highway use taxes collected, but not invested.

Increased revenues for the highway program can also come from improved collections. We ask that the two committees work to achieve greater compliance with our tax laws that support the Highway Trust Fund. We have heard, for example, that changing the point of collection of aviation fuel taxes could add billions to the Trust Fund over the life of a reauthorization. Other enforcement steps could be beneficial as well. We urge the Congress to take appropriate steps to achieve the highest possible rate of collection of the taxes due to the Highway Trust Fund.

In addition, we understand that Senator Baucus is exploring additional legislation that would allow the Secretary of the Treasury to sell tax credit bonds. The proceeds would go into the Highway Trust Fund and the General Treasury would be responsible for the principal and interest. We are eager to see this approach advance as an additional means of increasing highway investment.

Mssrs. Chairmen, the American Highway Users Alliance commends the Committees for holding this hearing and urges enactment of legislation, in accord with the points outlined above, to finance increased Federal highway investment. Thank you for your consideration of our views on this important matter.

Respectfully submitted,

William D. Fay

President and CEO