It's still known as the "3:16 a.m. table."

It was the table showing the outcome of the final compromise funding formula hammered out in the early morning hours of Nov. 26, 1991, that paved the way for the passage the next day of the landmark legislation known as ISTEA (Intermodal Surface Transportation Efficiency Act of 1991).

"There was a real battle over state funding formulas. It was very intense. We often didn't go home on weekends," recalls a staffer for then-Senate Majority Leader George Mitchell, D-Maine. It was difficult to come up with a formula -- giving to one state here, taking from another state there -- that was acceptable to a majority of the House and Senate.

The difficulties in agreeing on which states got how much money from the omnibus transportation bill came even though "it was in everyone's interest to get a bill passed." As Thanksgiving approached, congressional leaders turned up the pressure to get a compromise bill through both houses. Mitchell threatened to keep the Senate in session through Christmas if that's what it took to pass ISTEA. Speaker Thomas Foley, D-Wash., kept similar pressure on the House of Representatives.

The More Things Change ...

Now, six years later, ISTEA will expire on Oct. 1, 1997, and the pressure is on Congress once again to pass a surface transportation authorization bill. And just as in 1991, the single most controversial issue is how to apportion the funds among the states so that ISTEA's successor can achieve a majority in the House and Senate.

There are, of course, some differences between the current situation and the situation in 1991. The issue of state equity arose earlier in the drafting process this time around. But the fact that the controversy has had a longer run does not seem to have made the issue any easier to resolve, and the prolonged debate may have served only to harden the various positions.

Another difference with 1991 is that now the Republicans control Congress. But once again, this doesn't seem likely to have a major effect on the outcome, since differences over the funding formula have followed regional rather than party lines. For example, the two most powerful Republicans on the Senate Environment and Public Works Committee have found themselves far apart on the formula issue. Sen. John Warner, R-Va., chairman of the Transportation and Infrastructure Subcommittee, is a leading sponsor of STEP 21 (Streamlined Transportation Efficiency Program for the 21st Century), which would direct more funds to the so-called "donor" states -- those mainly Southern, Midwestern and Western states that received less in transportation funding from the federal government under ISTEA than they remitted to the Highway Trust Fund. Warner, whose home state is one of the donors, termed the ISTEA formula a "gross inequity." But Sen. John Chafee, R-R.I., chairman of the full committee, whose home state is a "donee" that receives more in benefits than it contributes in taxes, is more comfortable with the ISTEA formula. He's a cosponsor of the "ISTEA Works" legislation introduced by Sen. Daniel Patrick Moynihan, D-N.Y., a bill that generally follows the ISTEA funding formula.

Also in the running is the Surface Transportation Authorization and Regulatory Streamlining Act (STARS 2000), introduced by Sen. Max Baucus, D-Mont., which tilts the formula somewhat more to the West than STEP 21.

"Many Western states are largely owned by the federal government," Baucus notes. "Yet, there are thousands of miles of highways that cross federal lands -- highways that the states must maintain and improve. And many states are rural, with low populations and vast land areas -- conditions that effectively prevent them from raising all of the revenue themselves to pay for their roads and bridges without inflicting a significant tax burden." Baucus argues that as in other federal funding programs, "there are legitimate reasons that some states receive more in highway funds than they contribute to the trust fund in gas taxes."

The Administration's formula approach lies somewhere between the donor proposal and the donee proposals -- although FHWA's first goal in proposing formula changes was to identify up-to-date, reliable factors that are clearly tied to each program's purpose. The second goal was to provide equity adjustment that recognized the valid views of both donor and donee states. DOT officials note that most donor states' funding shares would increase under ISTEA because Highway Trust Fund contributions would be a major factor in the formulas for National Highway System and Surface Transportation Program funds. In addition, NEXTEA includes a guarantee that all states would receive at least 90 percent of their percentage contributions to the Highway Account of the Highway Trust Fund.

The most radical approach to the funding formula issue is taken by the Transportation Empowerment Act introduced by Sen. Connie Mack, R-Fla., and Rep. John Kasich, R-Ohio. This is a devolution bill that would reduce the federal gasoline tax by 12 cents over a four-year period. Except for a "core" federal program that would include mainly maintenance of the existing interstate system and roads on federal lands, the responsibility for funding transportation programs would be turned back to the states, which would be free to replace the federal gasoline tax with their own tax programs. Mack released a General Accounting Office report estimating that 39 states would benefit from his devolution proposal, but the analysis assumed that each state would enact a program that obligates funds in a manner consistent with the current federal program and that states would increase their fuel taxes by the amount of the federal tax decrease.

Comparison of Federal Highway Trust Fund Receipt Attributable to the States and Federal-Aid Appointments and Allocations from the Fund 1/Fiscal Years 1957-1995.

Donor States

Who are the donor states, and what kind of case do they have? Lists of donor states vary considerably, depending on how the funding statistics are calculated and what period of time is used. In fact, estimates of the number of donor states have ranged from 14 to 27. One approach is to consider payments into and apportionments and allocations from the Highway Account of the Highway Trust Fund for the ISTEA fiscal years of 1992 to 1996. Using this method, there are 18 donor states. These states (and their ratios of payments to apportionments and allocations) are Alabama (0.86), Arizona (0.92), Florida (0.85), Georgia (0.81), Indiana (0.85), Kentucky (0.84), Louisiana (0.90), Michigan (0.89), Mississippi (0.90), Missouri (0.88), North Carolina (0.89), Ohio (0.96), Oklahoma (0.89), South Carolina (0.77), Tennessee (0.85), Texas (0.84), Virginia (0.91), and Wisconsin (0.97).

On their face, the donor states' arguments seem compelling. Warner said on introducing his bill that it "recognizes that all regions of the nation have important transportation needs. We are committed to devising a program that -- for the first time -- responds to our transportation needs using current needs information. In doing so, we provide a program that acknowledges that sparsely populated states with large land areas or states with small populations cannot go it alone. We are committed to continuing a national transportation system -- to provide effective connections among the states. I believe the needs of these states must be addressed, and we do so in our legislation."

Debby K. Kilmer, director of the Washington, D.C., office for the state of Florida, argues that with the South and West growing faster than the Northeast, it is appropriate that "dollars should follow the people."

Backers of STEP 21 have formed the Reform ISTEA Now! coalition to generate grassroots support for the bill. The coalition is made up of 24 road-builder organizations representing asphalt pavers, general contractors, equipment dealers and consulting engineers in Southern and Midwestern states. Steve Fisher, the group's executive director, said in a June press conference, "In the coming months, our grassroots coalition will reach out to other like-minded interests who want greater equity applied to the distribution of highway funds. The citizens of donor states have been subsidizing the rest of the nation for far too long, while our own infrastructure needs are left unaddressed for lack of resources."

Donee States

But there are important arguments on the donee side as well. A study conducted by researchers at Harvard University's Kennedy School of Government and released by Moynihan indicates that when all programs, not just highways, are considered, many Northeastern and Midwestern states pay more in federal taxes than they receive in federal spending. By this calculation, the biggest donor states on a per capita basis are Connecticut, New Jersey, Illinois, and Delaware, while the primary donee states are New Mexico, Virginia, Mississippi, and West Virginia. New York is 10th on the per capita list of donor states, but, as Moynihan noted in a letter accompanying the report, its total balance of payments deficit was second only to that of Illinois. Moynihan also called it a "mixed blessing" that the one category in which New York did well was grants to state and local governments, which includes transportation, "in which New York does very well indeed." Preserving the ISTEA formula "will be the fight of our lives," Moynihan said.

Also cited by supporters of the current funding formula is a DOT "comparative level of effort" study showing that Southern and Midwestern states invest less of their own state resources in transportation than other states. An update to the ISTEA-required study, requested by Republican and Democratic staff members of the House Surface Transportation Subcommittee, ranks states by their efforts in four categories: highway spending as a percentage of total state and local government spending, state and local transportation spending compared to total transportation spending in a state, highway spending compared to total taxable resources income, and equivalent motor fuel tax rates for highway-user revenues distributed for highway.

Subcommittee ranking member Rep. Nick Rahall, D-W.Va., a supporter of the ISTEA formulas, said states backing STEP 21 and devolution "are not exactly stellar performers when it comes to dedicating their own state resources to their highway programs."

"While these states clamor for more federal funds, at the same time they are not willing to ante up their own resources. On the other hand, we find that many of the so-called donee states dedicate a greater percentage of their own resources to their highway programs," said Rahall.

The donor state response has been that the "level of effort" evaluation has no relation to a state's actual highway funding needs and rewards states with a high gasoline tax regardless of whether they use the tax proceeds wisely.

Finally, donee states contend that the argument over transportation funding shouldn't be waged on regional terms in any case because a sound highway system benefits everyone.

"The basic reason for federalism is for Washington to use money and distribute money based on the needs of the people," asserts New York Transportation Commissioner John B. Daly.

"We are a United States, not 50 separate ones," Baucus declares, adding that "transportation ties us together as a nation and as a people."

Prospects for Compromise

What are the prospects for a compromise on the funding formula? House Transportation and Infrastucture Committee Chairman Shuster has argued strongly that without more money for ISTEA's successor -- Shuster has called for as much as $32 billion a year in highway funding compared to ISTEA's $20 billion -- there just isn't enough flexibility to make the kinds of tradeoffs that will win votes for a particular plan. Many observers agree, pointing out that the ability to trade dollars for percentage points helped ensure success for ISTEA's formula.

"Resources are a problem," says Baucus aide Kathy Ruffalo. "If you have more resources, you have more options."

But Mary Lynn Tischer, director of policy analysis, evaluation and intergovernmental relations of the Virginia Department of Transportation says, "Regardless of the money, some states have had a windfall for too long." Nonetheless, Tischer believes that the final bill will include more money than is currently on the table in any of the proposals and that donor state concerns will be addressed -- at least to some extent.

One major interest group, the American Association of State Highway and Transportation Officials (AASHTO), with the same mix of state and regional constituencies as Congress, has not taken a position on the funding formula issue. Bill Higgins, AASHTO's director of congressional relations, is pessimistic about the prospects for a compromise by the time ISTEA expires Oct. 1. "They're not necessarily on the same wavelength," Higgins says about the various sides on the funding issue.

As for staff members on the House and Senate committees involved with the legislation, they're generally unwilling to make any predictions at all, either on or off the record, about the outcome of the funding formula controversy or the shape of a successor to ISTEA.

The bottom line is that while the elements are in place for a funding formula compromise, the expiration of ISTEA may not be enough of an incentive to make such a deal a reality. That's why no one will be surprised if ISTEA's successor ends up with its own version of the 3:16 a.m. table.

Cynthia Burbank is chief of the Legislation and Strategic Planning Division of the Federal Highway Administration. From 1991 to 1994, she headed FHWA's Environmental Analysis Division with responsibility for implementing transportation provisions of the 1990 Clean Air Act Amendments. In her 22-year career in the U.S. Department of Transportation, Ms. Burbank has worked for the Federal Transit Administration, Federal Aviation Administration, Office of the Secretary, and FHWA. She received a bachelor's degree in economics from Georgetown University.

S. Lawrence Paulson is a partner in Hoffman Paulson Associates, a writing/editing and public relations firm in Hyattsville, Md. He has written and edited numerous studies for the Federal Highway Administration, Federal Transit Administration, and National Highway Traffic Safety Administration. He also spent seven years covering Congress as the Washington bureau chief of a national daily newspaper, The Oil Daily.