AASHTO Journal, 30 January 2015
The Congressional Budget Office estimated Jan. 26 that the Highway Trust Fund faces a 10-year shortfall of $168 billion, as projected outlays under road and transit programs outpace its dedicated revenue stream.
In the CBO’s year-by-year projection, incoming revenue and interest earnings for the trust fund’s highway account would be $35 billion in most years. The CBO estimated HTF highway spending would rise from $46 billion this year to $50 billion in 2025, for a cumulative deficit of $125 billion. It estimated transit revenue plus interest at $5 billion for most years, while projected spending would rise from $8 billion in 2015 to $10 billion in 2025, leaving a total HTF transit account shortfall of $43 billion.
The new CBO baseline estimate is its first to extend through fiscal 2025. It compares with a 10-year estimate prepared last August, after Congress extend HTF funding through May, of a $157 billion shortfall through fiscal 2024.
Since August, the CBO numbers have improved for the intervening years, and the agency now projects a trust fund deficit through 2024 of $148 billion. However, the agency’s latest estimate also starts its counting as of 2016 and does not project a shortfall for the current year, fiscal 2015, while estimating end-year balances in both its highway and transit accounts will be under $500 million.
Congress will need to replenish the trust fund by May 31 to avoid a shortfall and interruption of payments. The CBO warns that starting this year “revenues credited to the highway and transit accounts of the Highway Trust Fund will be insufficient to meet the fund’s obligations,” since “under current law, the trust fund cannot incur negative balances, nor is it permitted to borrow to cover unmet obligations presented to the fund.”
The agency also notes that the Department of Transportation says it needs cash balances of at least $4 billion in the trust fund’s highway account, and at least $1 billion in its transit account, to meet spending obligations as they come due from states and transit agencies.
Last summer, the USDOT warned states it would have to begin making late payments in August to states for highway and bridge projects covered by the trust fund, as the highway account balance was on course to fall below that safe-cushion level. But Congress headed off such action at the end of July by topping off the trust fund and extending it through this May.