Technical Writing Sample

The following is a sample write up of a Congressional committee meeting I covered for a client as part of my duties as an intern for Jefferson Government Relations.

As part of our ongoing effort to keep abreast of any new developments that might affect the Perini Corporation, Jefferson Government Relations attended the March 20^th hearing before the Subcommittee on Highways and Transit. Those testifying before the committee were; Ms. Jay Etta Hecker, Director of the Physical Infrastructure team in the U.S Accounting Office; Mr. Andrew Lyon, Deputy Assistant Secretary for Tax Amylases and the U.S. Department of Treasury; Ms. Donna McLean, Assistant Secretary for Budget and Programs at the U.S. Department of Transportation; and Mr. Kim Crawley, chief of the Natural and Physical Resources Cost Estimates Unit of the National Budget Office.

Congressman Petri, chairman of the Subcommittee on Highways and Transit presided over the hearing. Congressmen Oberstar and Borski also attended at various points, but for the majority of the hearing, Mr. Petri sat alone, flanked by several aides.

The main purpose of the hearing was ostensibly to examine the user fee policies and budgetary procedures used to determine the health of the Highway Trust Fund, and to discuss methods of ensuring stable growth of revenue and a reliable flow of Highway and transit funding to all 50 states in future years.

The Presidents” FY2003 budget includes a rather severe cut in Highway funding, which for our purposes, seems like a bad idea. Backlash is complicated by the fact that this years funding level was calculated using the same formula that has given Highways generous funding for the last few years. The March 20^th hearing was a testimony to confusing accounting. The RABA calculations seem to confuse just about everyone, including the members of the committee.

The Highway Trust Fund has received generous funding in the past several years under TEA-212. The Funding scheme guarantees specific funding levels annually for most Highway programs based on projected receipts to the Highway Trust Fund. This method of accounting is referred to as RABA. While RABAS has caused wild fluctuations in funding in the past, this is the first year in which the RABA adjustment is actually negative. As a result, The guaranteed Highway funding has been reduced in FY2003 by $4.369 Billion and the overall Highway funding level for 2003 is $8 billion dollars less than in 2002. This would affect large projects in many states, which are depending on a regular flow of funds to finance completion.

Mr. Petri opened the hearing with a plea to find a way to make the trust more reliable. He seemed rather fed up with RABA. At the time he was the only congressman present, as there was a vote on the floor at the time, but the hearing was already running late so he wanted to get started.

In her testimony, Ms. Jay Etta Hecker defended the reasonableness of RABA calculation process. She also detailed other problems that caused the increase, citing the $600 Million dollar error in the Administrations initial Adjustment release, and the impact of Gasohol usage on The Highway Trust Fund.

The first problem addressed, was the $600 million dollar error by the Administration. In January 2002 they had announced that the 2003 RABA adjustment would be negative $4.965 Billion. Although this error was to be corrected a few days later, by that time the Federal Highway administration had already made its initial calculations distributing the funds to the states. The result was increased confusion across the board.

Another problem impacting the trust is that cars are becomes more and more energy efficient. Receipts for RABA are based on gas taxes, and although the miles traveled by cars go consistently up, the number of gallons consumed is going steadily down. Also, these cars are beginning to use more energy efficient fuels, the most common of which being Gasohol, which refers to an ethanol-gas blend. (Biomass fuels are not a big enough percentage to really matter yet.) In order to encourage these environmentally sound practices, users receive a partial exception on the 18.4cents a gallon gas tax, paying 5.3 cents less per gallon. Although this encourages measures that reduce pollution, the plan has lost the Highway Trust Fund $6 billion over the last 4 years. That total loss is expected to rise to 13 billion over the next 11 years.

Mr. Andrew Lyon, from the Department of the Treasury, also testified to the ethanol related loss. All Highways related excise taxes over the last year and a half have experienced a downturn. Only ethanol tax revenues have increased. This shows a significant rise in the use of ethanol fuels, yet it also means a loss for gas taxes, which provide a greater percentage of revenue for the Highway Trust Fund. These cars, although cleaner, do not wear on the roads any less than regular gas-using vehicles, and Mr. Lyons opinion was that they should pay an equal share towards the upkeep of the roads.

Mr. Lyons also explained the effects of economic downturn on Trust Fund revenue, especially the impact on the operation of trucks. The retail tax on trucks was down 55.2%, which amounted to a decline of $1.8 billion. This, couples with losses in almost all other sources of revenue foe the Highway Trust Fund, make the 2003 Trust Fund weaker than ever.

Ms. Donna McLean, of the DOT, agreed with the points made by both Ms. Hecker and Mr. Lyons. But noted that change is very difficult, and might cause more problems that it would solve. The Trust covers a huge number of projects. From its inception, the Highway Trust Fund has been used not only to fund the construction of the Interstate system, but it has also supported other systems as well. That is why federal involvement is so important; the dedicated user fees in the trust play at least some role in almost all surface transportation systems.

Mr. Kim Crawley from The CBO emphasized that any change in the Trust must by law pass the Byrd Test. An account is said to pass the test if it’s unspent budget authority in any year exceeds it’s balance by no more that its projected receipts for the next two years. The reform alternatives, as he presented them, are as follows: 

1. Continue the 2002 obligation limitation for 2003

This alternative would provide an obligation limitation of $31.8 billion for the Federal-Aid Highways program for 2003- the same amount provided for 2003- and then inflate the limitation in congruence with the markets each year through 2012. The problem with this idea is that the Highway account balances would be depleted by 2006, and the account would then fail the Byrd Test, causing automatic cuts in contract authority.

2. Set the obligation limitation at 30.1 billion for 2003

This is pretty much the same scheme as above, but under this plan the account would fall below $1 billion but never reach zero. It would not fail the Byrd Test over the next ten years.

3. Use the TEA-21 level without a RABA adjustment

This would provide the Federal-Aid Highways program with an obligation limitation of $27.7 billion for 2003, then inflate it each year through 2012, according to the same plan as in solution 1. This obligation for 2003 would equal the amount authorized under TEA-21, but without the negative RABA adjustment of $4.4 billion that is required under the present law. Under this alternative, the balances of the Highway account would drop to about $1.1 Billion in 2005 but would gradually increase over subsequent years.

Yet however hard the change may be, it is absolutely necessary that the trust be reformed. As the Committee members pointed out repeatedly, states depend on a stable trust fund in order to carry out big projects that last several years before completion.

Mr. Borski asked why it was that a more reliable source of funding could not be found for the Highway trust fund. Everyone testifying agreed with him that it would be nice, and that they would research all possibilities.

Mr. Petri pointed out that some states index their fuel tax to the rate of inflation. He asked if that is something that should be considered on a larger basis. Mr. Crawly responded that a plan of that nature would make the Trust Dependent of the economy. Every time the economy took a bad turn, the Trust would be triply hit through the amounts paid out, the amounts in the current year, and the anticipated amounts. That plan would be impractical.

All the Committee members present seemed particularly interested in what to do about the Gasohol issue. It is a difficult question; although energy efficiency should be encouraged, is it fair that gasohol users are not paying their fair share towards the upkeep of the roads?

Mr. Petri showed some contempt for the whole idea of a Highway trust, but he suggested a general transfer of funds to make up for the gasohol loss. Of Course, that will not be enough to solve the problem, because the downturn in the fortunes of the trust is not entirely doe to gasohol.

The impact of user fees diverted from the Highway Trust is a long-term problem. When TEA-21 become law, Congress eliminated the practice of diverting conventional gasoline and diesel user fees to the general treasury fund for deficit reduction. However, 2.5 cents of the user fee on gasohol continues to be diverted into the general fund. The committee seemed open to reforming these funding practices, but did not have much idea about exactly how they would do it.

The only solid alternative to the cuts proposed in the Presidents budget so far is Mr. Crawleys’ option three, which is known as the Highway Funding Restoration Act, which will restore a minimum of $4.4 billion above the amount proposed in the Administration FY2003 Budget request for Highway programs, bringing the funding level to at least $27.75 billion- the minimum amount authorized in the landmark Transportation Equity Act for the 21^st century. It basically just eliminates the RABA adjustment.

As Highway funding goes to all states, this action will most likely receive broad bi-partisan support. Cutting Highway funding right now simply doesn’t make sense. Protecting funding for Highways would also protect family-wage jobs in Highway construction and related fields in all states. No one wants to be responsible for job cuts in today’s economy. In fact, spending money on Highways promotes economic recovery through an infusion of additional funds into a proven infrastructure.

The Committee members present seemed reluctant to agree with the Presidents cuts, and were very responsive to the testimony presented to them. They are honesty looking into all options, if only because they realize the potential political fallout if these cuts become and actuality.

The fact is that America needs roads and roads cost money. The Committee would be willing to try something new when it comes to managing the Highway trust. The days of RABA adjustments are numbered, because it does not make sense to have funding tied to receipts when the receipts no longer paint and accurate picture of how much the roads are used.