Statement by the President on the Financing of the Interstate Highway System.

I HAVE consistently requested the Congress to maintain the pay-as-you-go principle which was embodied in the Highway Act of 1956. With this in mind in January I recommended a temporary increase of 1 ½ cents in the gas tax to provide revenues to meet anticipated deficits beginning in fiscal year 1960.

I am deeply concerned that no action has yet been taken on this proposal. As matters now stand, no apportionment of Interstate funds can be made to the states in July or August of this year for fiscal year 1961, and only a small apportionment next year for fiscal 1962. The only serious alternatives now being considered by the Congress--waiving the Byrd "pay-as-you-go" Amendment or diversion of other taxes--would solve nothing. They would either increase the size of the Highway Fund deficit by further postponing the pay-as-you-go principle, or reduce the general revenues available for other essential programs. Either of these alternatives would be unacceptable to me.

There is attached hereto a. report from the several State Highway Commissioners. They have been queried as to the effect of no new apportionments of money in July or August of 1959, which is the present likelihood. As this report indicates, the Federal Highway Administrator has been informed by the several State Highway Departments that 10 states will have to cease issuing any new contracts for the Interstate System this summer, and that 15 additional states plus the District of Columbia will be forced to suspend contract-letting by about the end of this year. An additional eleven states will have run out of Interstate funds for new work by July 1960.

This is a critical situation in our national road-building program, and one which should give great concern to every motorist. We are on the verge of a stalemate in the orderly development of our vital Interstate road network.