Balanced Budget Plan Linked to Gas Tax

Support for the landmark balanced budget deal between the White House and Congress could be sapped by a brewing rebellion over plans to use gas tax funds to reduce the deficit--an idea lawmakers say would cripple highway and transit projects throughout California and the nation.

White House and congressional negotiators are hammering out details of the historic plan to balance the budget by 2002. One proposal is to mask the size of the deficit by setting aside more than $40 billion in gasoline tax revenue, a tenth of it paid by California motorists every time they go to the pump.

Under that proposal, California could lose as much as $4 billion in transportation money over the next five years, enough to jeopardize projects from the Metro Rail to the Alameda Corridor, congressional aides said.

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“The gas tax is a user fee. Those people at the pump pay this huge gas tax and they trust it will go to fix the roads,” said Rep. Jay C. Kim (R-Diamond Bar), a member of the House transportation committee. “I don’t see how I can support this balanced budget proposal the way it is.”

In a letter this week to House Speaker Newt Gingrich (R-Ga.), all but two of the 73 members of the House Transportation and Infrastructure Committee protested the use of gasoline taxes for anything other than highway and transit projects, calling the diversion of funds a “dishonest practice” that continues the “politics of illusion.”

In addition, all 52 of California’s House members have joined a transportation task force formed by Kim, only the second time in congressional history that the notoriously fractious delegation has united behind an issue. (The first was over military base closures.)

Support for the budget deal cannot be measured until details are firmed up, but opposition from the transportation committee and Kim’s task force could influence more than 120 votes, more than a quarter of the House membership.

“I can’t argue against a balanced budget--the benefits to our nation and to our families are unquestionable,” said Kim, who has supported a balanced budget amendment since 1991. “But we can’t afford to have billions in transportation dollars diverted to something else. We have freeways that need to be renovated, potholes that need to be fixed.”

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The highway money comes from the 18.3-cents-a-gallon federal fuel tax motorists pay at the pump. With its huge population and volume of cars, California contributes about 10% of the pot, a vast sum that lawmakers believe should go back to the state in improved freeways, other roads and mass transit.

The idea of raiding the lucrative highway fund is not new. President Lyndon B. Johnson started it in 1969 to mask the cost of the Vietnam War. Ever since, Congress has allowed a surplus of money to build up in the fund and then used it to offset the deficit. The money isn’t actually spent to pay off the deficit, but it is not spent on transportation projects either. It sits there in reserve.

“Tell somebody sitting on the I-5 at 8 a.m. that there is $40 billion in funds that isn’t being spent on transportation, and they would leap out of their car and start screaming,” said Jeff Nelligan, transportation committee spokesman.

In 1993, President Clinton added a new twist to the use of highway money, authorizing a 4.3-cents-a-gallon gas tax increase to be spent on social programs. There is another movement afoot in the House and Senate to funnel that money back to the highway fund, which could mean an additional $3 billion for California transportation projects through 2002.

House transportation committee Chairman Bud Shuster (R-Pa.) met late Thursday with Gingrich and other House leaders about the frozen transportation funds. Aides said he emerged optimistic that negotiations were “proceeding in good faith.”

It took weeks of talks to reach the preliminary balanced budget agreement announced last week, and negotiators will doubtlessly be hard-pressed to find another source of revenue if the $40 billion in highway funds is taken off the table.

The money is critical for the California economy, which was pulled from the recession in part by transportation projects, Kim said. And with traffic levels expected to explode in the next century and 43% of the state’s bridges considered unsafe, California cannot spare a dime, state transportation advocates argue.

“The roads in the country are going to hell in a handbasket really fast,” said William D. Hickman, a spokesman for the Washington-based American Highway Users Alliance, which represents oil companies, the trucking industry and auto makers. According to Hickman, about 30% of highway deaths--or 40,000 a year--are related to bad road design and conditions.

Staff writers Richard Simon in Los Angeles and Janet Hook in Washington contributed to this story.