DALLAS — The Highway Trust Fund will not be able to meet obligations for highway and transit projects in fiscal 2015 under President Obama's proposed budget, the Congressional Budget Office is warning.
The CBO said last week that a new estimate of the president's budget proposal found the HTF will have a shortfall of $13 billion in FY-2015 and $16 billion in FY-2016.
"Under CBO's re-estimate of the president's proposals, the highway and transit accounts of the Highway Trust Fund will have insufficient revenues to meet obligations starting in fiscal year 2015," the budget agency said. "Under current law, the Highway Trust Fund cannot incur negative balances and has no authority to borrow additional funds."
President Obama's proposed four-year $302 billion transportation spending plan includes $92 billion of surface transportation infrastructure funding in fiscal 2015. Obama's proposed four-year reauthorization of the current two-year law would provide $63 billion from a revamped corporate tax code to bolster the HTF. The current law authorized a total of $105 billion of spending over its 27-month span, but that required a transfer of almost $21 billion from the general fund.
The HTF is shrinking because the federal gasoline tax of 18.4 cents per gallon is not keeping up with expenditures. The CBO estimates the tax will generate $39 billion in both FY-2015 and FY-2016, but expenditures will total more than $54 billion each year. The federal fuels tax will drop to 4.3 cents per gallon at the end of FY-2016 if Congress does not reauthorize it.
The Transportation Department has estimated the highway account of the HTF will run dry in August and the transit account will have a $1 billion cash balance at the end of fiscal 2014 on Sept. 30. DOT officials said reimbursements to states for transportation projects will be curtailed when the highway account falls below $4 billion.
Former DOT Secretary Ray LaHood and former Pennsylvania Gov. Ed Rendell said in an op-ed published April 17 in a Louisville, Ky., newspaper that immediate action is needed to sustain the HTF for a year until a more permanent solution can be found.
"The Highway Trust Fund is projected to run dry sometime in August," the two said in the Louisville Courier-Journal. "It sounds crazy that our Highway Trust Fund could go bankrupt and we won't be able to pay to repair our roads and bridges but unless Congress acts, this is exactly what will happen."
The most effective solution would be an immediate increase of 10 cents per gallon in the gas tax, they said.
"Such an increase would generate the $15 billion needed to sustain the trust fund for another year," LaHood and Rendell said. "During that time, Congress could move forward with reforming the corporate tax code."
The corporate tax reforms proposed by President Obama and Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, would keep the HTF solvent for the next 10 years, LaHood and Rendell said. "Congress should act immediately to keep the Highway Trust Fund from going bankrupt," they said. "Congress needs to make a real and sustainable long term fix for funding America's transportation system. The economic prosperity of our nation depends upon it."
While Congress seems unable to resolve the highway funding problems, Rendell and LaHood said, governors and state legislatures are taking action. Six states in 2013 raised their gasoline or sales taxes to fund transportation projects, they said, and another six are considering either increasing the gasoline tax or indexing it to inflation. Voters approved 91% of the highway funding proposals on the November 2013 ballot, Rendell and LaHood said.
"Our colleagues in state governments are making tough decisions, but Congress always seems to wait for a crisis to reach a boiling point before they act," Rendell and LaHood said. "Americans don't need more government gridlock, we need Congress to work together for the sake of our economy and the jobs that transportation funding provides."
