The Highway Trust Fund is projected to run a $164 billion shortfall over the next 10 years unless lawmakers take action, according to the Congressional Budget Office (CBO).
The trust fund consists of two accounts: one for highway work, which receives most of the funding, and another account that pays for mass transit projects.
Previously, when spending in the trust fund was projected to outpace its revenue, Congress simply filled the gap with money from the Treasury’s General Fund. This defeats the whole purpose of having a dedicated trust fund.
Lawmakers need to come up with a better solution — quickly.
In testimony to the Senate Finance Committee, CBO’s Assistant Director for Microeconomics Joseph Kile recently said the highway account would have to delay some payments beginning later this summer to maintain a positive balance. In Fiscal 2015, which begins in October, CBO warns that the entire trust fund would be unable to meet all of its obligations.
The trust fund faces declining revenue from the motor fuels tax, its dedicated funding source. The tax has not been increased since 1993, while stronger fuel economy standards and changing driving habits have cut into revenue.
Yesterday the Senate Environment and Public Works Committee unveiled legislation to re-authorize highway and transit programs for several years. Lawmakers, however, have yet to specify how they plan to fix the trust fund’s projected shortfalls.
External links:
Testimony on the Highway Trust Fund and Spending Options (CBO)
Background on Tax Provisions For Highway Financing (JCT)
