DALLAS -- The federal Highway Trust Fund will approach insolvency this summer soon after the current temporary extension expires at the end of May without new revenue to bolster the gasoline and diesel taxes dedicated to transportation, the Congressional Budget Office found in a revised analysis.
Meanwhile, Rep. Steve Stivers, R-Ohio, has introduced a bill that would fund transportation and water projects from the lease fees and royalty revenues generated by increased offshore oil and gas production in federal areas now off-limits to energy exploration.
The CBO's revised analysis, which was released on Thursday and extends through fiscal 2015, said that the cash balances in the HTF would drop below the level needed to sustain timely reimbursements to the states for projects soon after last year's general fund transfer of $11 billion into the HTF runs out on May 31.
"Under CBO's re-estimate of the President's proposals, as under current law, both the highway account and the transit account of the Highway Trust Fund would be unable to meet obligations sometime during the summer of fiscal 2015," the budget analysts said.
The Transportation Department will begin delaying and curtailing transportation project reimbursements once the balance in the highway portion of the HTF falls to $4 billion and the transit account balance dips to $1 billion.
The reimbursement policy, prepared during 2014's brush with insolvency, will be revived if the HTF gets near the low-balance thresholds again this year, Transportation Secretary Anthony Foxx told the House Transportation & Infrastructure Committee in February.
Before Congress approved the $11 billion bailout of the HTF in late July 2014, the Transportation Department notified states that reimbursements would be cut by 28% and invoices would be paid monthly instead of daily.
Arkansas and Tennessee, and Missouri have already reduced their 2015 road construction plans over the continued uncertainty about the level of federal funding this summer and other states are also expected to do so.
The HTF is the main source of federal funding to states and local governments for highway and transit infrastructure. Its main revenue stream is the federal fuel tax of 18.4 cents per gallon of gasoline and 24.4 cents of diesel. The federal fuels tax is set to drop to 4.3 cents per gallon at the end of fiscal 2016 unless Congress avoids the sunset provision in the law by renewing or increasing the tax.
President Obama has offered a six-year, $478 billion Grow America 2.0 plan that would be funded with $238 billion of fuel tax revenues and $240 billion from new taxes on corporate foreign earnings.
The federal fuels taxes would remain at the same levels they've been at since 1993 under the Obama plan, but a new one-time, mandatory transition tax of 14% would be levied on corporate accumulated offshore earnings and a 19% tax would be imposed on future such earnings.
The $40 billion a year expected from the proposed new corporate income taxes is listed as "intergovernmental transfers" in the CBO analysis.
Stivers' bill, HR 1330, would jump-start transportation and water projects with $150 billion of 20-year Treasury bonds, with tranches of $25 billion per year for six years, to generate funds for the HTF and state revolving loan programs.
The measure would require the Obama administration to revise its five-year Outer Continental Shelf plan to reopen canceled leases of tracts offshore California, South Carolina, and Virginia.
New lease sales would be mandated in other high-potential areas by Stivers' proposal, and the current 37.5% royalty revenue sharing agreement with Gulf of Mexico states would be extended to all coastal states with offshore energy production.
