AASHTO Journal, 5 February 2016
The Congressional Budget Office, in a new 10-year estimate of Highway Trust Fund spending and revenue, projects the country’s principal infrastructure investment stream will run dry in 2021 and unless Congress provides more funding it could rack up a $108 billion cumulative deficit through 2026.
The illustration won’t surprise transportation investment advocates who have long urged Congress to lock in a sustainable source of revenue for the trust fund that could grow as needed to cover its authorized spending levels.
The new five-year FAST Act, which runs through 2020, relies on $70 billion in intergovernmental transfers to cover annual shortfalls between what the HTF receives in dedicated excise tax receipts and what it is projected to spend from its highway and transit accounts.
Congress generated those additional FAST Act funds by tapping Federal Reserve capital surpluses and reducing dividends the Fed pays to large member banks, plus various other money-raising provisions unrelated to surface transportation programs.
That law’s new funding infusion only lasts through 2020, however, so the CBO projects that in 2021 the highway account would end the year with less than $500 million on hand, while the transit account would be $2 billion in the red.
Then the funding gap would grow each year without new revenue, the CBO illustration shows, so that by the end of 2026 the highway account would have built a $76 billion cumulative deficit while the transit account would have accrued a $32 billion shortfall.
Put another way, even as states are starting to tap the FAST Act’s initial funding levels, the CBO is saying that after this law expires in 2020 the trust fund will need another $108 billion to meet its obligations for the following six years.
That is a theoretical budget projection exercise, because by law the trust fund cannot run a deficit. But what the CBO forecast also means is that unless Congress has already replenished the HTF before the accounts shrivel in fiscal 2021, the federal government would impose spending restrictions on states and transit agencies to prevent the HTF balances from falling below safe cash management levels.
And to avoid that potential disruption, states, transportation groups and lawmakers would need to build momentum well beforehand for Congress to find more money for highway and transit programs.
Bud Wright, executive director of the American Association of State Highway and Transportation Officials, said the CBO analysis confirms what he and officials from other infrastructure investment groups have been saying ever since Congress showed how it would pay for the FAST Act.
“Perhaps the Fast Act’s major weakness is that it did not lock in sufficient revenues for the Highway Trust Fund beyond a few years,” Wright said. “It kicks the funding question farther down the road, but as the CBO shows it is no lasting solution to our investment needs.”
He added: “There are many good things about the new law, especially the program certainty it provides over five years so that state departments of transportation and other agencies can implement long-term plans. But its funding constraints will in a few short years push the nation right back to where we were last year – grappling with how to pay our transportation system’s bills.”