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Archive for Tuesday, February 26, 2002

Graves backs Bush on federal highway funds

February 26, 2002

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— Several of the nation's governors lobbed fiery criticism at President Bush's proposal to cut highway construction spending by $8.5 billion next year, but not Kansas Gov. Bill Graves.

Graves said Monday that Bush is only following the law, which ties transportation money to the amount raised by federal gasoline taxes. Those revenues, which go into the highway trust fund, are down because of the economic downturn and the increased use of ethanol, which has a lower tax rate, in gasoline.



"The thing that concerns me is sort of a lack of awareness of how we got into this situation," Graves said following the governors' private meeting with Bush at the White House.

Graves pointed out that besides the short-term problem of people buying less fuel because of the recession, new fuel efficiencies such as ethanol are here to stay, which means Congress needs a new, long-term funding formula, Graves said.

That is why Graves is hesitant to endorse a proposal from the governors that the government free up about $8 billion from the highway trust fund to ease, at least for one year, the revenue shortfall.

"I think we ought to be cautious," Graves said, in thinking "that a simple, one-time fix will shore up transportation funds going forward."

The Republican governor's attitude contrasted starkly with rhetoric from Democratic governors about Bush's budget proposal.

For example, Democratic Gov. Donald Siegelman of Alabama said: "It makes no sense to make cuts in transportation at a time the economy is showing signs of recovery. This would deal a staggering blow to a very fragile recovery."

Kansas and most other states are facing shortfalls that total an estimated $15 billion, according to the National Governors Assn. It's because of declining state tax revenues and the exploding cost of Medicare, the nation's health insurance program for the poor, which makes up one-fifth of state budgets.

Part of Graves' solution is increasing taxes. The Republican governor is seeking to generate $228 million by raising taxes on sales, motor fuels and cigarettes.

Graves said that while several other governors are open to boosting "sin" taxes such as those levied on cigarettes and gambling, they are not open to such general increases as Graves is proposing.

"We've all suffered through the slowdown in the economy," he said. "We're all just going to have to make some tough decisions and get through them."

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