WASHINGTON -- The White House is proposing to put the $30 billion of fuels tax revenues likely to be raised as part of the budget package into the highway and airport trust funds, where the money could be used after five years to finance highway, airport, and mass transit construction.
In remarks before the National Conference of State Legislatures late Tuesday, President Clinton said the issue of where to deposit the fuels tax revenues arising from a likely six-cents-a-gallon increase currently is being debated in the negotiations between House and Senate conferees over the $500 billion budget package.
The administration had asked that all of the $72 billion energy tax it originally proposed be deposited into a deficit reduction trust fund, which would have prevented the money from being used to construct highways, airport, and transit projects. However, nearly half of the revenues from the original proposal would have been raised from sources other than fuels taxes.
Since the original Clinton energy tax has been pared back during the budget negotiations into a likely small fuels tax increase, Clinton said the issue is being raised anew as to whether the fuels tax revenues should be dedicated to their traditional purpose of financing infrastructure projects.
"It was raised with me for the first time today, actually," Clinton told the state legislators. The issue must be resolved this week because "the Senate fuel tax proposal seems destined to, in some form or fashion, become a part of the conference bill," he said.
The Senate version of the budget contains a 4.3 cents-a-gallon tax increase covering all motor fuels except aviation fuels, and is estimated to raise $23 billion over five years. Under an amendment sponsored by Sen. Hank Brown, D-Colo., the Senate bill would have put all of the fuels tax revenues, without restrictions, into the transportation trust funds.
House negotiators late last week countered with a proposal, however, to increase the Senate's proposed tax to nine cents a gallon by October 1996, and put all of the revenues in the general fund to be used for deficit reduction. The House proposal, which would exempt only commercial jet fuels, is estimated to raise about $40 billion over five years.
The budget conferees have not adopted a final compromise on the fuels tax level or the trust fund issue, administration officials said.
Treasury Secretary Lloyd Bentsen has repeatedly suggested something like a six cents compromise level, which would raise about $30 billion. The administration wants a fuels tax somewhat higher than the Senate level to help pay for restoring tax incentives in the House bill that the Senate eschewed, such as Clinton's proposed urban empowerment zones.
Clinton and other administration officials said they are also proposing to maintain the current exemptions for state and local governments from the higher gas taxes.
On the trust fund issue, administration officials said they are proposing to deposit the revenues into the highway trust fund, as has traditionally been the case, but also to create a new "transportation infrastructure savings account" within the highway fund that would reserve the revenues for five years. During that period, the revenues would be used to reduce the deficit, as required under the fiscal 1994 budget resolution.
After five years, 80% of the revenues would be available to build highways and 20% would be available to build transit projects, if Congress has met its deficit reduction targets, the President said.
"It could be freed up for the original purpose for which it was intended if we had done what we ought to do by then, which is to control health-care costs and otherwise change the government so we are moving toward a zero deficit," Clinton said.
Administration officials said the White House is also proposing a two-year deferral on aviation fuels taxes raised under the bill. After two years, all the revenues from such taxes would be placed in the airport/airways trust fund and would be available for airport construction eventually, as under the highway fund proposal.
Clinton said in a separate interview with Georgia reporters late Tuesday that he will attempt to use his health-care reform legislation due out later this year to make further large reductions in the deficit after his budget plan is passed.
"I don't believe that this plan alone can restore America's health. It is just the critical first step," Clinton said. "If you get the budget out of the way, you start healthcare reform, which is the only way to get the deficit down to zero." he said.
Clinton said he recently assured Sen. Sam Nunn, D-Ga., that he intends to put further restraints on the burgeoning health-care programs -- Medicare and Medicaid -- through his health reform plan. He said the budget package does not curb the growing impact of those programs on the deficit, because it only cuts back the programs' growth from 12% a year to 9%.
"I'm not satisfied with going down to $200 billion a year and then going back up again in five years. We've got to do something about health care to move it to zero," Clinton said.