There has been considerable concern in the construction industry in recent weeks about the possibility of a major reduction of the federal highway program budget for fiscal year 2003. Those concerns are justified, according to the Associated Equipment Distributors (AED).

Earlier this month, U.S. Department of Transportation Secretary Norman Mineta informed Congress that the President’s budget for FY 2003 will include $9 billion less for highways than the $31.8 billion appropriated for this year. Under TEA-21, funding for the highway program is tied to gas tax receipts.

In 2000, 2001 and 2002, thanks to a strong economy, the road program received more than was originally authorized in the highway law. However, lower than expected gas tax revenues last year combined with a scaled-back projection for next year, mean that the core highway program could receive only $22.8 billion in FY 2003, $4.9 billion less than the $27.8 billion authorized in TEA-21.

The calculations used by Mineta to justify the administration’s position are highly complex and based upon criteria and formulas in the Budget Act and TEA-21. House Transportation & Infrastructure Committee Chairman Don Young (R-AR) has asked the General Accounting Office to conduct an investigations into the methodology used by the administration to calculate the cut in the highway program (known in Washington as "revenue aligned budget authority" or RABA).

The almost 30 percent cut in road funding proposed by the administration will have a serious impact on state road programs and may cause a loss of as many as 103,000 construction industry jobs in FY 2004. Talk of the reductions has left the construction industry in a state of turmoil during this time of recession, AED said.

A reduction of the amount suggested by the administration, AED stated, is uncalled for. It ignores the fact that there is nearly $20 billion in surplus and unobligated balances in the Highway Trust Fund (HTF). AED is urging Congress not to allow this cut to happen. Highway money must be used to construct highways and must not be diverted to other purposes (ie, helping to reduce the general budget deficit.)

AED members are urged to immediately contact their representatives and senators to ask them to use the HTF surplus to make up for the projected shortfall in the highway program during this period of economic uncertainty. Too many businesses will be closed and too many workers will lose their jobs unless action is taken to maintain current funding levels.

For more information, call 202/224-3121 or visit www.capwiz.com/aed.

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