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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1494 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                S. 1494

   To empower States with authority for most taxing and spending for 
  highway programs and mass transit programs, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            November 9, 1997

  Mr. Mack (for himself, Mr. Levin, Mr. Thurmond, Mr. Graham, and Mr. 
 Kyl) introduced the following bill; which was read twice and referred 
                      to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
   To empower States with authority for most taxing and spending for 
  highway programs and mass transit programs, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Surface Transportation and Transit 
Empowerment Act''.

SEC. 2. DEFINITIONS.

    In this Act, the following definitions apply:
            (1) Core highway programs.--The term ``core highway 
        programs'' means the following programs:
                    (A) The Interstate maintenance program under 
                section 119 of title 23, United States Code.
                    (B) Highway bridge replacement and rehabilitation 
                (excluding off-System bridges) under section 144 of 
                that title.
                    (C)(i) Indian reservation roads under section 204 
                of that title.
                    (ii) Public lands highways under section 204 of 
                that title.
                    (iii) Parkways and park roads under section 204 of 
                that title.
                    (D) Highway safety programs under section 402 of 
                that title.
                    (E) Highway safety research and development under 
                section 403 of that title.
                    (F) Motor carrier safety grants under section 31104 
                of title 49, United States Code.
                    (G) Metropolitan planning under section 104(f) of 
                title 23, United States Code.
                    (H) National defense highways under section 311 of 
                that title.
                    (I) Emergency relief under section 125 of that 
                title.
            (2) Core program state.--The term ``core program State'' 
        means a State which makes an election under section 3.
            (3) Election period.--The term ``election period'' means 
        the period beginning with the fiscal year determined under 
        section 3(b) and ending not later than with fiscal year 2003.
            (4) Future investment account.--The term ``Future 
        Investment Account'' means the Future Investment Account 
        established under section 9503(f) of the Internal Revenue Code 
        of 1986.
            (5) Highway account.--The term ``Highway Account'' means 
        the portion of the Highway Trust Fund established under section 
        9503 of the Internal Revenue Code of 1986 which is not the Mass 
        Transit Account or the Future Investment Account.
            (6) Mass transit account.--The term ``Mass Transit 
        Account'' means the Mass Transit Account established under 
        section 9503(e) of the Internal Revenue Code of 1986.
            (7) Surface transportation.--The term ``surface 
        transportation'' includes mass transit and rail.
            (8) Tier i core program state.--The term ``tier I core 
        program State'' means a core program State that is eligible for 
        a core highway programs payment and a non-core highway programs 
        block grant under section 3.
            (9) Tier ii core program state.--The term ``tier II core 
        program State'' means a core program State that is eligible for 
        a core highway programs payment under section 3 and that elects 
        under section 3(e) to reduce its Federal fuel tax rate with a 
        corresponding reduction in its non-core highway programs block 
        grant.
            (10) Tier i mass transit state.--The term ``tier I mass 
        transit State'' means a State that is eligible for a mass 
        transit block grant under section 4.
            (11) Tier ii mass transit state.--The term ``tier II mass 
        transit State'' means a State that elects under section 4(c) to 
        eliminate its mass transit fuel tax rate with a corresponding 
        elimination of its mass transit block grant.

SEC. 3. FUNDING OF HIGHWAY PROGRAMS IN CORE PROGRAM STATES.

    (a) Election To Become a Core Program State.--Each State which 
makes an election described in subsection (b) shall be eligible with 
respect to each fiscal year during the State's election period for--
            (1) a core highway programs payment; and
            (2) a non-core highway programs block grant,
in lieu of any other payment from the Highway Account and the Future 
Highway Investment Sub Account of the Future Investment Account.
    (b) Requirements for Election.--An election is described in this 
subsection if--
            (1) such election is made by a State at least 180 days 
        before the first fiscal year with respect to which the election 
        applies;
            (2) such election is made by a State that certifies that 
        such State has a metropolitan planning organization established 
        under section 134 of title 23, United States Code, and that 
        such organization will maintain a system for processing funds 
        received by the State under this Act throughout the election 
        period; and
            (3) such election is submitted to the Secretary in such 
        form and manner as the Secretary prescribes.
    (c) Determination and Use of Core Highway Programs Payment.--
            (1) Determination of amount of payment.--
                    (A) In general.--Subject to subparagraph (B), the 
                Secretary shall determine for each fiscal year the 
                payment necessary to meet the commitments of core 
                highway programs for each core program State.
                    (B) Limitations.--
                            (i) General rule.--Any payment under 
                        subparagraph (A) for any fiscal year for any 
                        particular core highway program for a core 
                        program State shall be subject to--
                                    (I) except with respect to core 
                                highway programs described in 
                                subparagraphs (G), (H), and (I) of 
                                section 2(1), the funding level for 
                                such program for such year under clause 
                                (ii) in lieu of the funding level for 
                                such program for such year under any 
                                other provision of law, and
                                    (II) the annual obligation 
                                limitation for such program for such 
                                year imposed under any provision of 
                                law.
                            (ii) Special funding levels.--For purposes 
                        of clause (i), the funding levels for core 
                        highway programs are as follows:
                                    (I) For the Interstate maintenance 
                                program, $5,000,000,000 for fiscal year 
                                1998, $5,100,000,000 for fiscal year 
                                1999, $5,300,000,000 for fiscal year 
                                2000, $5,400,000,000 for fiscal year 
                                2001, $5,600,000,000 for fiscal year 
                                2002, and $5,800,000,000 for fiscal 
                                year 2003.
                                    (II) For highway bridge replacement 
                                and rehabilitation, $1,183,000,000 for 
                                fiscal year 1998, $1,217,000,000 for 
                                fiscal year 1999, $1,251,000,000 for 
                                fiscal year 2000, $1,286,000,000 for 
                                fiscal year 2001, $1,321,000,000 for 
                                fiscal year 2002, and $1,358,000,000 
                                for fiscal year 2003.
                                    (III)(aa) For Indian reservation 
                                roads, $197,000,000 for fiscal year 
                                1998, $202,000,000 for fiscal year 
                                1999, $208,000,000 for fiscal year 
                                2000, $214,000,000 for fiscal year 
                                2001, $220,000,000 for fiscal year 
                                2002, and $225,000,000 for fiscal year 
                                2003.
                                    (bb) For public lands highways, 
                                $177,000,000 for fiscal year 1998, 
                                $182,000,000 for fiscal year 1999, 
                                $187,000,000 for fiscal year 2000, 
                                $192,000,000 for fiscal year 2001, 
                                $197,000,000 for fiscal year 2002, and 
                                $202,000,000 for fiscal year 2002.
                                    (cc) For parkways and park roads, 
                                $86,000,000 for fiscal year 1998, 
                                $89,000,000 for fiscal year 1999, 
                                $91,000,000 for fiscal year 2000, 
                                $94,000,000 for fiscal year 2001, 
                                $97,000,000 for fiscal year 2002, and 
                                $101,000,000 for fiscal year 2003.
                                    (IV) For highway safety programs, 
                                $171,000,000 for each of fiscal years 
                                1998 through 2003.
                                    (V) For highway safety research and 
                                development, $44,000,000 for each of 
                                fiscal years 1998 through 2003.
                                    (VI) For motor carrier safety 
                                grants, not more than $90,000,000 for 
                                each of fiscal years 1998 through 2003.
            (2) Use of payment.--
                    (A) In general.--The core highway programs payment 
                for any core program State shall be available, as 
                provided by appropriation Acts, to the State for any 
                core highway program purpose in such State.
                    (B) Transferability of funds.--To the extent that a 
                core program State determines that funds made available 
                under this subsection to the State for a purpose are in 
                excess of the needs of the State for that purpose, the 
                State may transfer the excess funds to, and use the 
                excess funds for, any surface transportation purpose in 
                the State.
    (d) Determination and Use of Non-Core Highway Programs Block 
Grant.--
            (1) Determination of amount of block grant.--Subject to 
        subsection (e), the amount of the non-core highway programs 
        block grant for any tier I core program State for any fiscal 
        year is equal to the excess of--
                    (A) the amount of taxes transferred to the Highway 
                Account and the Future Highway Investment Sub Account 
                of the Future Investment Account for such fiscal year 
                which is attributable to highway users in that State as 
                determined by the Secretary of the Treasury (taking 
                into account proper reductions for uses of such taxes 
                for purposes other than the Federal-aid highway 
                program); over
                    (B) the core highway programs payment to such State 
                for such fiscal year, as determined under subsection 
                (c).
            (2) Use of block grant.--The non-core highway programs 
        block grant for any tier I core program State shall be 
        available, as provided by appropriation Acts, to the State for 
        any surface transportation purpose in such State. Any project 
        carrying out such a purpose shall be exempt from any Federal 
        regulation other than with respect to health and safety 
        standards and practices.
    (e) Election To Reduce Federal Fuel Tax Rate With Corresponding 
Reduction in Block Grant.--
            (1) In general.--With respect to fiscal years beginning 
        after the satisfaction year and ending with the termination of 
        the election period, a core program State may notify the 
        Secretary (in the same manner as the election described in 
        subsection (b)) of an election to become a tier II core program 
        State and to have imposed on highway users in the State the 
        State's core highway programs financing rate with respect to 
        the taxes transferred to the Highway Account and the Future 
        Highway Investment Sub Account of the Future Investment Account 
        which are attributable to such highway users in lieu of the tax 
        rates otherwise established in the Internal Revenue Code of 
        1986 for such fiscal years.
            (2) Determination of core highway programs financing 
        rate.--
                    (A) In general.--Upon notification by the Secretary 
                of an election by a State under paragraph (1), the 
                Secretary of the Treasury shall determine for each 
                subsequent fiscal year such State's core highway 
                programs financing rate, taking into account--
                            (i) the amount of taxes necessary to fund 
                        that State's core highway programs payment for 
                        such fiscal year;
                            (ii) the uses of the taxes described in 
                        paragraph (1) for purposes other than the 
                        Federal-aid highway program for such fiscal 
                        year;
                            (iii) any adjustments necessary as a result 
                        of a determination under this paragraph for a 
                        preceding fiscal year; and
                            (iv) the rates with respect to such taxes 
                        otherwise imposed under the Internal Revenue 
                        Code of 1986 for such fiscal year.
                    (B) Report.--Not later than August 1, the Secretary 
                of the Treasury shall submit to the Committee on Ways 
                and Means of the House of Representatives and the 
                Committee on Finance of the Senate, a report that 
                describes the determination required under subparagraph 
                (A).
                    (C) Congressional approval required.--The Secretary 
                of the Treasury shall not implement the determination 
                required to be included in the report submitted under 
                subparagraph (B) unless a joint resolution is enacted, 
                in accordance with subparagraph (D), approving such 
                determination before the following October 1.
                    (D) Congressional consideration.--
                            (i) Terms of the resolution.--For purposes 
                        of subparagraph (C), the term ``joint 
                        resolution'' means only a joint resolution that 
is introduced before October 1 and--
                                    (I) that does not have a preamble;
                                    (II) the matter after the resolving 
                                clause of which is as follows: ``That 
                                Congress approves the determination of 
                                the Secretary of the Treasury regarding 
                                the imposition of the core highway 
                                programs rate for the State of ____ 
                                submitted on ____'', the blank spaces 
                                being filled in with the appropriate 
                                State and date, respectively; and
                                    (III) the title of which is as 
                                follows: ``Joint resolution approving 
                                the determination of the Secretary of 
                                the Treasury regarding the imposition 
                                of a core highway programs rate.''.
                            (ii) Referral.--A resolution described in 
                        clause (i) that is introduced--
                                    (I) in the House of 
                                Representatives, shall be referred to 
                                the Committee on Ways and Means; and
                                    (II) in the Senate, shall be 
                                referred to the Committee on Finance.
                            (iii) Discharge.--If a committee to which a 
                        resolution described in clause (i) is referred 
                        has not reported such resolution by the end of 
                        the 30-day period beginning on the date on 
                        which the Secretary of the Treasury submits the 
                        report required under subparagraph (B), such 
                        committee shall be, at the end of such period, 
                        discharged from further consideration of such 
                        resolution, and such resolution shall be placed 
                        on the appropriate calendar of the House 
                        involved.
                            (iv) Consideration.--Within 30 days after 
                        the date on which the committee to which a 
                        resolution described in clause (i) has 
                        reported, or has been discharged from further 
                        consideration of such resolution, such 
                        resolution shall be considered in the same 
                        manner as a resolution is considered under 
                        subsections (d), (e), and (f) of section 2908 
                        of the Defense Base Closure and Realignment Act 
                        of 1990 (10 U.S.C. 2687 note).
            (3) Satisfaction year.--For purposes of paragraph (1), the 
        term ``satisfaction year'' means the fiscal year during which 
        all Federal non-core highway program obligations of a core 
        program State payable from the Highway Account and the Future 
        Highway Investment Sub Account of the Future Investment Account 
        existing on the date of the election by such State described in 
        subsection (a) are paid.

SEC. 4. FUNDING OF TRANSIT PROGRAMS IN MASS TRANSIT BLOCK GRANT STATES.

    (a) Election To Become a Mass Transit Block Grant State.--A core 
program State or any other State may notify the Secretary (in the same 
manner as the election described in section 3(b)) of an election to 
receive with respect to each fiscal year during the State's election 
period a mass transit block grant, in lieu of any other payment from 
the Mass Transit Account and the Future Transit Investment Sub Account 
of the Future Investment Account. An election under this subsection 
shall not affect a State's continued eligibility for revenues provided 
through the general fund of the Treasury for transit programs.
    (b) Determination and Use of Mass Transit Block Grant.--
            (1) Determination of amount of block grant.--Subject to 
        subsection (c), the amount of the mass transit block grant for 
        any tier I mass transit State for any fiscal year is equal to 
        the amount of taxes transferred to the Mass Transit Account and 
        the Future Transit Investment Sub Account of the Future 
        Investment Account for such fiscal year which is attributable 
        to highway users in that State as determined by the Secretary 
        of the Treasury.
            (2) Use of block grant.--The mass transit block grant for 
        any tier I mass transit State shall be available, as provided 
        by appropriation Acts, to the State for any surface 
        transportation purpose in such State. Any project carrying out 
        such a purpose shall be exempt from any Federal regulation 
        other than with respect to health and safety standards and 
        practices.
    (c) Election To Eliminate Mass Transit Fuel Tax Rate With 
Corresponding Elimination of Block Grant.--
            (1) In general.--With respect to fiscal years beginning 
        after the satisfaction year and ending with the termination of 
        the election period, a State which has made an election under 
        subsection (a) may notify the Secretary (in the same manner as 
        such an election) of an election to become a tier II mass 
        transit State and to eliminate the financing rate with respect 
        to the taxes transferred to the Mass Transit Account and the 
        Future Transit Investment Sub Account of the Future Investment 
        Account which are attributable to the highway users of the 
        State in lieu of the mass transit block grant for such fiscal 
        years.
            (2) Elimination of mass transit fuel tax rate.--
                    (A) In general.--Upon notification by the Secretary 
                of an election by a State under paragraph (1), the 
                Secretary of the Treasury shall, not later than August 
                1, submit to the Committee on Ways and Means of the 
                House of Representatives and the Committee on Finance 
                of the Senate, a report that notifies the committees of 
                such an election.
                    (B) Congressional approval required.--The Secretary 
                of the Treasury shall not implement the election 
                included in the report submitted under paragraph (1) 
                unless a joint resolution is enacted, in accordance 
                with paragraph (3), approving such election before the 
following October 1.
            (3) Congressional consideration.--
                    (A) Terms of the resolution.--For purposes of 
                paragraph (2), the term ``joint resolution'' means only 
                a joint resolution that is introduced before October 1 
                and--
                            (i) that does not have a preamble;
                            (ii) the matter after the resolving clause 
                        of which is as follows: ``That Congress 
                        approves the elimination of the mass transit 
                        fuel tax rate for the State of ____ submitted 
                        on ____'', the blank spaces being filled in 
                        with the appropriate State and date, 
                        respectively; and
                            (iii) the title of which is as follows: 
                        ``Joint resolution approving the elimination of 
                        the mass transit fuel tax rate.''.
                    (B) Consideration.--A resolution described in 
                subparagraph (A) shall be considered in the same manner 
                as a resolution is considered under clauses (ii), 
                (iii), and (iv) of section 3(e)(2)(D).
            (4) Satisfaction year.--For purposes of this section, the 
        term ``satisfaction year'' means the fiscal year during which 
        all Federal transit program obligations of a State payable from 
        the Mass Transit Account and the Future Transit Investment Sub 
        Account of the Future Investment Account existing on the date 
        of the election by such State described in subsection (a) are 
        paid.

SEC. 5. ENFORCEMENT.

    If the Secretary determines that a core program State (or any other 
State under section 4(b)(2)) has used funds under this Act for a 
purpose that is not a surface transportation purpose, the amount of the 
improperly used funds shall be deducted from any amount the State would 
otherwise receive from the Highway Account for the fiscal year that 
begins after the date of the determination.

SEC. 6. REPORTS.

    (a) Annual State Assessment.--A core program State shall--
            (1) assess the operation of the State surface 
        transportation program funded under this Act in each fiscal 
        year, including the status of the core highway programs in the 
        State; and
            (2) report to the Secretary, by January 1 following the end 
        of the fiscal year, on the result of the assessment.
    (b) Report of the Secretary.--The Secretary shall submit to the 
appropriate committees of Congress an annual report and evaluation of 
the State surface transportation programs funded under this Act based 
on the State assessments and reports submitted under subsection (a). 
Such report shall include any conclusions and recommendations that the 
Secretary considers appropriate.

SEC. 7. INTERSTATE SURFACE TRANSPORTATION COMPACTS.

    (a) Definitions.--In this section, the following definitions apply:
            (1) Infrastructure bank.--The term ``infrastructure bank'' 
        means a surface transportation infrastructure bank established 
        under an interstate compact under subsection (b)(5) and 
        described in subsection (d).
            (2) Participating states.--The term ``participating 
        States'' means the States that are parties to an interstate 
        compact entered into under subsection (b).
            (3) Surface transportation project.--The term ``surface 
        transportation project'' means a surface transportation 
        project, program, or activity described in subsection (b).
    (b) Consent of Congress.--In order to increase public investment, 
attract needed private investment, and promote an intermodal 
transportation network, Congress grants consent to States to enter into 
interstate compacts to--
            (1) promote the continuity, quality, and safety of the 
        Interstate System (as defined in section 101 of title 23, 
        United States Code);
            (2) develop programs to promote and fund surface 
        transportation safety initiatives and establish surface 
        transportation safety standards for the participating States;
            (3) conduct long-term planning for surface transportation 
        infrastructure in the participating States;
            (4) develop design and construction standards for 
        infrastructure described in paragraph (3) to be used by the 
        participating States; and
            (5) establish surface transportation infrastructure banks 
        to promote regional or other multistate investment in 
        infrastructure described in paragraph (3).
    (c) Financing.--An interstate compact established by participating 
States under subsection (b) to carry out a surface transportation 
project may provide that, in order to carry out the compact, the 
participating States may--
            (1) accept contributions from a unit of State or local 
        government or a person;
            (2) use any Federal or State funds made available for that 
        type of surface transportation project;
            (3) on such terms and conditions as the participating 
        States consider advisable--
                    (A) borrow money on a short-term basis and issue 
                notes for the borrowing; and
                    (B) issue bonds; and
            (4) obtain financing by other means permitted under Federal 
        or State law, including surface transportation infrastructure 
        banks under subsection (d).
    (d) Infrastructure Banks.--
            (1) In general.--An infrastructure bank may--
                    (A) make loans;
                    (B) under the joint or separate authority of the 
                participating States with respect to the infrastructure 
                bank, issue such debt as the infrastructure bank and 
                the participating States determine appropriate; and
                    (C) provide other assistance to public or private 
                entities constructing, or proposing to construct or 
                initiate, surface transportation projects.
            (2) Forms of assistance.--
                    (A) In general.--An infrastructure bank may make a 
                loan or provide other assistance described in 
                subparagraph (C) to a public or private entity in an 
                amount equal to all or part of the construction cost, 
                capital cost, or initiation cost of a surface 
                transportation project.
                    (B) Subordination of assistance.--The amount of any 
                loan or other assistance described in subparagraph (C) 
                that is received for a surface transportation project 
                under this section may be subordinated to any other 
                debt financing for the surface transportation project.
                    (C) Other assistance.--Other assistance referred to 
                in subparagraphs (A) and (B) includes any use of funds 
                for the purpose of--
                            (i) credit enhancement;
                            (ii) a capital reserve for bond or debt 
                        instrument financing;
                            (iii) bond or debt instrument financing 
                        issuance costs;
                            (iv) bond or debt issuance financing 
                        insurance;
                            (v) subsidization of interest rates;
                            (vi) letters of credit;
                            (vii) any credit instrument;
                            (viii) bond or debt financing instrument 
                        security; and
                            (ix) any other form of debt financing that 
                        relates to the qualifying surface 
                        transportation project.
            (3) No obligation of united states.--
                    (A) In general.--The establishment under this 
                section of an infrastructure bank does not constitute a 
                commitment, guarantee, or obligation on the part of the 
                United States to any third party with respect to any 
                security or debt financing instrument issued by the 
                bank. No third party shall have any right against the 
                United States for payment solely by reason of the 
                establishment.
                    (B) Statement on instrument.--Any security or debt 
                financing instrument issued by an infrastructure bank 
                shall expressly state that the security or instrument 
                does not constitute a commitment, guarantee, or 
                obligation of the United States.

SEC. 8. FEDERAL-AID FACILITY PRIVATIZATION.

    (a) Definitions.--In this section, the following definitions apply:
            (1) Executive agency.--The term ``Executive agency'' has 
        the meaning provided in section 105 of title 5, United States 
        Code.
            (2) Privatization.--The term ``privatization'' means the 
        disposition or transfer of a transportation infrastructure 
        asset, whether by sale, lease, or similar arrangement, from a 
        State or local government to a private party.
            (3) State or local government.--The term ``State or local 
        government'' means the government of--
                    (A) any State;
                    (B) the District of Columbia;
                    (C) any commonwealth, territory, or possession of 
                the United States;
                    (D) any county, municipality, city, town, township, 
                local public authority, school district, special 
                district, intrastate district, regional or interstate 
                government entity, council of governments, or agency or 
                instrumentality of a local government; or
                    (E) any federally recognized Indian tribe.
            (4) Transportation infrastructure asset.--
                    (A) In general.--The term ``transportation 
                infrastructure asset'' means any surface-
                transportation-related asset financed in whole or in 
                part by the Federal Government, including a road, 
                tunnel, bridge, or mass-transit-related or rail-related 
                asset.
                    (B) Exclusion.--The term does not include any 
                transportation-related asset on the Interstate System 
                (as defined in section 101 of title 23, United States 
                Code).
    (b) Privatization Initiatives by State and Local Governments.--The 
head of each Executive agency shall--
            (1) assist State and local governments in efforts to 
        privatize the transportation infrastructure assets of the State 
        and local governments; and
            (2) subject to subsection (c), approve requests from State 
        and local governments to privatize transportation 
        infrastructure assets and waive or modify any condition 
        relating to the original Federal program that funded the asset.
    (c) Criteria.--The head of an Executive agency shall approve a 
request described in subsection (b)(2) if--
            (1) the State or local government demonstrates that a 
        market mechanism, legally enforceable agreement, or regulatory 
        mechanism will ensure that the transportation infrastructure 
        asset will continue to be used for the general objectives of 
        the original Federal program that funded the asset (which shall 
        not be considered to include every condition required for the 
        recipient of Federal funds to have obtained the original 
        Federal funds), so long as needed for those objectives; and
            (2) the private party purchasing or leasing the 
        transportation infrastructure asset agrees to comply with all 
        applicable conditions of the original Federal program.
    (d) Lack of Obligation To Repay Federal Funds.--A State or local 
government shall have no obligation to repay to any agency of the 
Federal Government any Federal funds received by the State or local 
government in connection with a transportation infrastructure asset 
that is privatized under this section.
    (e) Use of Proceeds.--
            (1) In general.--Subject to paragraph (2), a State or local 
        government may use proceeds from the privatization of a 
        transportation infrastructure asset to the extent permitted 
        under applicable conditions of the original Federal program.
            (2) Recovery of certain costs.--Notwithstanding any other 
        provision of law, the State or local government shall be 
        permitted to recover from the privatization of a transportation 
        infrastructure asset--
                    (A) the capital investment in the transportation 
                infrastructure asset made by the State or local 
                government;
                    (B) an amount equal to the unreimbursed operating 
                expenses in the transportation infrastructure asset 
                paid by the State or local government; and
                    (C) a reasonable rate of return on the investment 
                made under subparagraph (A) and expenses paid under 
                subparagraph (B).

SEC. 9. ESTABLISHMENT OF FUTURE INVESTMENT ACCOUNT.

    Section 9503 of the Internal Revenue Code of 1986 (relating to 
Highway Trust Fund), as amended by section 901(d) of the Taxpayer 
Relief Act of 1997, is amended by adding at the end the following:
    ``(f) Establishment of Future Investment Account.--
            ``(1) Creation of account.--There is established in the 
        Highway Trust Fund a separate account to be known as the 
        `Future Investment Account', consisting of such amounts as may 
        be transferred or credited to the Future Highway Investment Sub 
        Account and the Future Transit Investment Sub Account of the 
        Future Investment Account as provided in this subsection or 
        section 9602(b).
            ``(2) Transfers to future investment account.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall transfer to the Future Highway Investment Sub 
                Account the future highway investment portion and to 
                the Future Transit Investment Sub Account the future 
                transit investment portion of the amounts appropriated 
                to the Highway Trust Fund under subsection (b) which 
                are attributable to taxes under sections 4041 and 4081 
                imposed after September 30, 1997.
                    ``(B) Future investment portions.--For purposes of 
                subparagraph (A)--
                            ``(i) the term `future highway investment 
                        portion' means an amount determined at the rate 
                        of 3.44 cents for each gallon with respect to 
                        which tax was imposed under section 4041 or 
                        4081, and
                            ``(ii) the term `future transit investment 
                        portion' means an amount determined at the rate 
                        of .86 cent for each gallon with respect to 
                        which tax was so imposed.
            ``(3) Expenditures from account.--Amounts in the Future 
        Investment Account shall be available, as provided by 
        appropriation Acts, in a Federal budget neutral manner, for 
        making expenditures after October 1, 1997--
                    ``(A) in the case of the Future Highway Investment 
                Sub Account, in accordance with elections made under 
                section 3(a) of the Surface Transportation and Transit 
                Empowerment Act, and
                    ``(B) in the case of the Future Transit Investment 
                Sub Account, in accordance with elections made under 
                section 4(a) of the Surface Transportation and Transit 
                Empowerment Act.''.

SEC. 10. EFFECTIVE DATE CONTINGENT UPON CERTIFICATION OF DEFICIT 
              NEUTRALITY.

    (a) Purpose.--The purpose of this section is to ensure that--
            (1) this Act will become effective only if the Director of 
        the Office of Management and Budget (referred to in this 
        section as the ``Director'') certifies that this Act is deficit 
        neutral;
            (2) discretionary spending limits are reduced to capture 
        the savings realized in devolving transportation functions to 
        the State level pursuant to this Act; and
            (3) the tax reduction made by this Act is not scored under 
        pay-as-you-go and does not inadvertently trigger a 
        sequestration.
    (b) Effective Date Contingency.--Notwithstanding any other 
provision of this Act, this Act shall take effect only if--
            (1) the Director submits the report as required in 
        subsection (c); and
            (2) the report contains a certification by the Director 
        that, based on the required estimates, the reduction in 
        discretionary outlays resulting from the reduction in contract 
        authority is at least as great as the reduction in revenues for 
        each fiscal year through fiscal year 2003.
    (c) OMB Estimates and Report.--
            (1) Requirements.--Not later than 5 calendar days after the 
        date of notification by the Secretary of any election described 
        in section 3(b), the Director shall--
                    (A) estimate the net change in revenues resulting 
                from this Act for each fiscal year through fiscal year 
                2003;
                    (B) estimate the net change in discretionary 
                outlays resulting from the reduction in contract 
                authority under this Act for each fiscal year through 
                fiscal year 2003;
                    (C) determine, based on those estimates, whether 
                the reduction in discretionary outlays is at least as 
                great as the reduction in revenues for each fiscal year 
                through fiscal year 2003; and
                    (D) submit to the Congress a report setting forth 
                the estimates and determination.
            (2) Applicable assumptions and guidelines.--
                    (A) Revenue estimates.--The revenue estimates 
                required under paragraph (1)(B) shall be predicated on 
                the same economic and technical assumptions and 
                scorekeeping guidelines that would be used for 
                estimates made pursuant to section 252(d) of the 
                Balanced Budget and Emergency Deficit Control Act of 
                1985 (2 U.S.C. 902(d)).
                    (B) Outlay estimates.--The outlay estimates 
                required under paragraph (1)(B) shall be determined by 
                comparing the level of discretionary outlays resulting 
                from this Act with the corresponding level of 
                discretionary outlays projected in the baseline under 
                section 257 of the Balanced Budget and Emergency 
                Deficit Control Act of 1985 (2 U.S.C. 907).
    (d) Conforming Adjustment to Discretionary Spending Limits.--Upon 
compliance with the requirements specified in subsection (b), the 
Director shall adjust the adjusted discretionary spending limits for 
each fiscal year through fiscal year 2003 under section 601(a)(2) of 
the Congressional Budget Act of 1974 (2 U.S.C. 665(a)(2)) by the 
estimated reductions in discretionary outlays under subsection (a)(2).
    (e) Paygo Interaction.--Upon compliance with the requirements 
specified in subsection (b), no changes in revenues estimated to result 
from the enactment of this Act shall be counted for the purposes of 
section 252(d) of the Balanced Budget and Emergency Deficit Control Act 
of 1985 (2 U.S.C. 902(d)).
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