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Directions in Highway Safety, Summer 2008 Cover Page Download Newsletter pdf
[572 KB, 12 pgs.]

Late Winter 2008 | Vol. 10 | No. 4

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Making Sense of the Highway Trust Fund Crisis

Current projections show the Highway Trust Fund-the Fund that supports highway safety programs-going into deficit by the end of FY 2009.

Last August, both the Administration and the Congressional Budget Office (CBO) projected a Highway Trust Fund budget shortfall of $4.3 billion for FY 2009. In January, these projections were revised, but the two no longer agree.

In February, AASHTO held a briefing on the future of the Highway Trust Fund. Jack Basso, AASHTO Director of Administration and Management and former Assistant Secretary for Budget and Programs for the U.S. Department of Transportation, shared current budget projections and explained potential solutions.

Man Scratching His Head

Basso favors the Administration's numbers over CBO's revised estimate, as CBO failed to take into account advance construction financing whereby states use nonfederal funds to advance a Federal-aid project, later converting the advance-constructed project to a Federal-aid project by obligating the permissible share of its Federalaid funds and receiving subsequent reimbursements. These conversions tend to accelerate toward the end of an authorization bill.

Possible solutions to cover the FY 2009 shortfall include a proposal from Senators Baucus (D-MT) and Grassley (R-IA) that rearranges funding within the DOT budget, increases enforcement of tax evasion and reimburses the Trust Fund with some money from the general fund. Basso expects the Baucus/Grassley fix will move through Congress this year.

On the revenue side, Basso thinks the only three options for increasing revenue for FY 2010 are: increasing the gas tax, moving money from the general fund (which is not likely) or doing nothing, which would result in a projected decrease in funding by 53% for highway and 55% for transit, respectively.

CBO is expected to re-estimate its baseline numbers in March, and new revenue estimates will be out in July.