Statement of Administration Policy: H.R. 4794 - Transportation Appropriations Bill, FY 1989

(House)
(Sponsors: Whitten (D), Mississippi; Lehman (D), Florida)

The Secretary of Transportation and the Director of the Office of Management and Budget would recommend that the President veto the bill as reported by the House Appropriations Committee if it were presented to him. The bill exceeds the President's request for domestic discretionary programs by $2.0 billion in budget authority, $1.5 billion in obligation limitations, and $1.0 billion in total outlays.

The Administration opposes the self-executing rule to add the airline merger labor provisions to the Committee bill. This parliamentary maneuver abuses the appropriations process to force through legislation that could not succeed as an amendment to the bill under normal procedures. If the airline merger labor legislation becomes part of the bill, the President's senior advisers would recommend that he veto the bill. This is consistent with the Administration's previously expressed position on airline merger labor legislation.

The self-executing rule automatically inserts into the bill provisions that bring labor protectionism to the airline industry in airline mergers. The Administration opposes industry-specific labor protectionism, especially in fully mature, competitive industries such as air transportation. Existing statutory and administrative arrangements suffice to ensure appropriate protection for employee interests.

The Administration urges funding the Coast Guard in the Transportation bill at the President's request level and opposes the inclusion of $410 million in budget authority for the Coast Guard in the House-passed FY 1989 Defense Appropriations bill. Including these funds under the Bipartisan Budget Agreement (BBA) defense ceiling would appear to be inconsistent with the Agreement.

In addition, the Administration particularly objects to the following funding provisions:

—    an increase of $1.7 billion over the President's request for the Urban Mass Transportation Administration, excluding Washington Metro. This appropriation level would finance underutilized and costly local transit systems and would subsidize the projects of less than 20 cities with nationally collected motor fuel taxes.' In addition, Washington Metro funding of $180 million exceeds the President's request by $52 million. The President's request will complete construction of 89.5 miles, consistent with the Federal commitment made in the 1986 full funding agreement.

—    an increase of $1.4 billion above the deficit-neutral obligation level proposed by the President for highway programs, including $0.3 billion for programs exempt from the obligation limitation and $0.1 billion for 30 special, interest highway projects.

—    inclusion of $0.6 billion in budget authority for Amtrak, the Northeast Corridor Improvement Program, and Conrail Commuter Assistance. Amtrak accounts for less than one-half percent of intercity passenger travel, and its passengers continue to receive a subsidy averaging $30 per trip.

—    revisions to the President's budget for FAA, in particular the increase of $330 million for the Grants-in-aid for airports obligation limitation. This increase is not necessary for the Federal Aviation Administration to meet national capacity and safety needs. The Administration is also concerned about the Committee financing only $1.1 billion in FAA Operations from the Airport and Airway Trust Fund, versus $1.5 billion if the Administration's proposals were adopted.

—    inclusion of $29 million for the Payments to Air Carriers program, a program that is no longer necessary since airlines have adapted to a deregulated environment.

The Administration also objects to language provisions that infringe on Executive Branch management flexibility. Such provisions include: l) a prohibition on FAA funds for a pilot project to contract out maintenance, 2) prohibitions on the privatization of the Transportation Systems Center and the Turner-Fairbank Highway Research Center, 3) the appropriation of funds for the Office of the Secretary of Transportation by separate office with no provision for transfer between offices, 4) limitations on the number of political and presidential appointees in the Department of Transportation, and 5) a limitation on Panama Canal Commission non-administrative and capital obligations.

These and other objectionable provisions of the bill are discussed in more detail in the enclosure.

In addition, the Administration opposes any amendment that would have the effect of mandating a change in the Coast Guard's non-emergency search and rescue assistance policy. Legislation is neither needed nor appropriate as the Coast Guard has recently revised the existing policy resulting in a balanced program with step-by-step implementation procedures.

The Administration opposes any amendments that would result in reopening and maintaining Coast Guard facilities that have been closed or in preventing the closure of any other such facilities. The Coast Guard closed the facilities only after extensively analyzing the workload, productivity, impact on safety and mission, and cost advances in future years. The Administration objects to Congressional infringement on Executive Branch management flexibility in these matters.

Enclosure

TRANSPORTATION APPROPRIATIONS BILL, FY 1989
OBJECTIONABLE PROVISIONS

I. FUNDING LEVELS

Provisions in Defense and Military Construction Bills Providing Funds for the Coast Guard. The Administration is opposed to the House Appropriations Committee including $410 million in budget authority for the Coast Guard in the FY 1989 Defense Appropriations Bill. Including these funds under the Bipartisan Budget Agreement (BBA) defense ceiling would appear to be inconsistent with the Agreement. The Administration strongly urges funding the Coast Guard in the Transportation bill at the President's request level.

Urban Mass Transportation Administration (UMTA). UMTA funding (excluding Washington Metro) of $3.1 billion exceeds the President's deficit-neutral proposal of $1.4 billion by $1.7 billion. Funding at the House Appropriations Committee level would finance costly and underutilized local transit systems and would subsidize the projects of less than 20 cities with nationally collected motor fuel taxes. Washington Metro funding of $0.2 billion also exceeds the Administration's request by $52 million. The President's request will complete construction of 89.5 miles, consistent with the Federal commitment made in the 1986 full funding agreement.

Federal Highway Administration. The House Committee funds highway programs at $1.4 billion above the deficit-neutral obligation level proposed by the President. The Administration urges deletion of this increase to ensure that spending for highway programs does not exceed annual highway user fee receipts. The Committee's mark exceeds the President's Budget by $1.0 billion for programs included under the obligation ceiling, by $0.3 billion for programs exempt from the ceiling, and by $0.1 billion for 30 low priority, special interest projects. The earmarking of these projects is unnecessary because States could fund most of these projects with their Federal-aid highways allocation. The Federal cost to complete these unnecessary projects is estimated to be $2.4 billion.

Federal Railroad Administration. Amtrak, the Northeast Corridor Improvement Program, and Conrail Commuter Assistance are funded at $610 million. The President proposed no funding for these programs. Amtrak accounts for less than one-half percent of intercity passenger travel, and its passengers continue to receive a subsidy averaging $30 per trip. Appropriations for Conrail Commuter Assistance are unnecessary since alternate sources of funds are available for the same purpose.

Federal Aviation Administration. The obligation limitation for Grants-in-aid for airports is $330 million above the President's request. The additional funds are not needed in order for the FAA to meet capacity and safety needs of national priority.

Regarding FAA operations, the House Committee mark provides that only $1.1 billion will be financed from the Airport and Airway Trust Fund, versus $1.5 billion if the Administration's proposals were adopted. The Administration strongly believes that aviation users should pay not only for capital improvements but also a substantial portion of FAA operating costs.

Office of the Secretary. Proposed budget authority of $29 million for Payments to Air Carriers would subsidize air carriers participating in the Essential Air Service program, which was proposed for termination by the Administration. Originally set up as a ten year program in 1978 after airline deregulation, the program is no longer needed.

In addition, the House Committee eliminates funds for Regional Representatives, who support the Secretary's management initiatives. The Administration urges funding at the requested level of $0.8 million.

National Highway Traffic Safety Administration (NHTSA). The Committee includes $8 million for two unnecessary and inappropriate so-called highway safety projects: $3 million is included for a trauma research project that was supposed to end last year, and $5 million is proposed (in report language) as an earmark for the treatment of trauma injuries at a Philadelphia hospital. Both of these projects have little to do with the mission of NHTSA and should not be included in NHTSA's appropriation.

II. LANGUAGE PROVISIONS

Urban Mass Transportation Administration. Through report language, the House Appropriations Committee proposes earmarking new start projects and other discretionary grants. Earmarking projects without regard to their merits will lead to Federal investment in inefficient systems with higher costs and lower revenues and ridership than predicted. Reports, including one from the Congressional Budget Office, have consistently shown that Federal investments in new transit facilities are highly questionable. These proposed earmarks conflict with UMTA's statutory role, to which Congress agreed in the Surface Transportation and Uniform Relocation Assistance Act, of identifying the most cost-effective projects.

The Administration also objects to bill language that would allow UMTA-funded transit operators to provide charter service by exempting them from the charter bus requirements of the Urban Mass Transportation Act'of 1964, as amended. Adoption of this provision would prejudice the charter bus rulemaking process now underway and would contradict several provisions of the Act.

Federal Aviation Administration. The Administration objects to the provisions that infringe on FAA executive management by prohibiting funds for a pilot project to contract out maintenance functions. This is an unwarranted interference with the Executive Branch's management responsibilities. The project is an essential factor in determining whether maintenance of selected National Airspace System facilities can be effectively contracted out.

The Administration also opposes bill language that prohibits airport grants to the Massachusetts Port Authority (Massport) until the U.S. District Court and DOT have determined that the landing fee structure adopted by Massport for the Logan International Airport does not violate the Federal Aviation Act of 1958. Although the Secretary of Transportation requested that Massport delay fee implementation until the DOT review is completed, this statutory cut off of funds is an unwarranted intrusion into the local decision-making process. Further, the report language on this provision is particularly egregious in that it prejudges the outcome of both the pending litigation and the DOT investigation.

Privatization. The Committee continues the prohibition on privatizing the Transportation Systems Center and the Turner-Fairbank Highway Research Center. This provision is contrary to good management practices. The Department should have the flexibility to pursue privatization initiatives that will increase efficiency and lower costs.

Manassas, Virginia Interchange. The House Appropriations Committee includes a provision prohibiting funds for an interchange in Manassas, Virginia. This provision is objectionable because it represents unwarranted Federal interference in the decisions of state and local officials.

Office of the Secretary. For the Office of the Secretary of Transportation, funds are appropriated by separate office with no provision for transfer between offices. This severely limits the management flexibility of the Secretary, particularly in this environment of stringent budget constraints and in light of the anticipated need to accommodate unbudgeted pay increases.

Limitations on the Number of Political and Presidential Appointees. The bill proposes to limit the number of political and Presidential appointees in DOT to 120. This provision represents undue interference with Executive Branch discretion on departmental personnel policies and limits the Department's ability to effectively implement key programs.

GSA Rental Payments. A general provision limits Rent payments to the General Services Administration (GSA) to 102 percent of the rates paid during FY 1988. This is inconsistent with the Administration's attempt to charge market rates to encourage the efficient utilization of space and with the Federal Property and Administrative Services Act of 1949. The provision would result in an increase of $19 million in outlays. After informal consultation with the Congressional Budget Office, OMB has determined that this increase will be charged to the Transportation Appropriations Bill.

In addition, the Administration is concerned about an amendment added in the House Appropriations Committee stating that the obligations and outlays of "General Services Administration, Federal Building Fund" are to be reduced by an amount equal to the revenue reduction associated with the 102 percent cap. The proposed language is not specific as to how such reductions would be implemented and is not, therefore, reflected in the scoring of the Treasury, Postal Service, and Governmental Operations Appropriations Bill.

Panama Canal Commission Limitation. While the funding levels in the Committee bill for the Panama Canal Commission (PCC) are consistent with the President's request, the Administration objects, in principle, to the bill language placing a limitation on non-administrative and capital obligations — a limitation not requested in the President's Budget. This limitation will constrain the PCC's flexibility in meeting changing business conditions, and thereby conflict with the purpose of converting the PCC to a revolving fund. In particular, it could result in a profit payment to the Republic of Panama by limiting the PCC's ability to offset unanticipated revenue surges with commensurate increases in expenses.