As part of a growing congressional response to state demands for a balanced federal budget, Sen. Gary Hart (D-Colo.) yesterday introduced a Senate resolution calling for establishment of a new "capital" budget.
While Hart said his resolution "does not directly relate to the current debate over the nature and size of budget deficits," it would have the effect of balancing the 1980 budget instead of leaving it $29 billion in the red, using current accounting definitions.
Meanwhile, Sen. Lloyd Bentsen (D-Tex.) urged both the House and Senate Budget committees to support his bill to eliminate federal revenue sharing with state governments. The 1980 budget includes $2.28 billion for such payments.
Resentment has been growing in Congress over state efforts to require a balanced federal budget. Twentynine legislatures, out of 34 needed, have passed resolutions asking Congress to call a constitutional convention to adopt an amendment requiring the budget to balance.
Some of the recent state resolutions have suggested wording for such an amendment to prevent Congress from reducing aid to state and local governments.
"Most people do not understand that one of every five dollars in the federal budget goes to long-term capital investments the government makes," Hart said. "Although most businesses would account for those expenditures separately from current outlays, the federal government makes no such distinction."
All but two states have constitutional mandates that their budgets be balanced. Most of the states make the sort of distinction Hart wants in the federal budget, and they routinely balance only their operating budgets.
"Investment-type outlays account for $115 billion of the total estimated outlays" of $531.6 billion in the 1980 budget, Hart said. "Of this, $44 billion is for defense purposes, primarily for the acquisition of major equipment.
The remaining $71 billion includes $24 billion for construction of highways, mass transit, pollution control facilities and similar physical assets, he said.
Various study commissions in the past have recommended against using a capital budget, most recently in 1967 when the present "unified" budget concepts were adopted. The major objection has been the difficulty of identifying purely capital expenditures. There has also been concern that such an approach would bias spending in favor of physical assets because their current cost would appear to be less.
Bentsen, in letters to the two committee chairmen and to President Carter, wrote, "In my opinion it simply makes no sense for the federal government to continue to send general revenue sharing funds to state governments when they are in far better financial condition than the federal government."