Rep. Tom Petri (R-Wis.), the chairman of the House Subcommittee on Highways and Transit, is taking a proactive approach to rescue the Highway Trust Fund from insolvency in the future.
At a recent subcommittee hearing, Petri said 2008 marked the first time that the trust fund had insufficient financial resources to meet obligations. As a result, Congress authorized an $8 billion cash infusion from the General Fund of the Treasury into the Highway Trust Fund. By the end of 2014, $54 billion will have been transferred into the trust fund to maintain its solvency.
Fuel taxes represent approximately 90 percent of net revenues into the trust fund, with current tax rates of 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel fuel. As vehicles become more fuel efficient, however, current spending levels will continue to outpace the money collected from fuel taxes.
Unit Chief of the Natural and Physical Resources Cost Estimates Unit Kim Cawley, who testified for the Congressional Budget office, agreed with Petri’s conclusion that the trust fund’s current trajectory is unsustainable.
“Starting in fiscal year 2015, the trust fund will have insufficient resources to meet all of its obligations, resulting in steadily accumulating shortfalls,” Cawley said.
Cawley said that lawmakers would have to transfer an additional $15 billion in 2015 and increasing amounts in subsequent years to prevent future shortfalls, if spending – adjusted for inflation – is to continue at 2013 levels.
“Lawmakers could also address the projected annual shortfalls by substantially reducing spending for surface transportation programs, by boosting revenues, or by adopting some combination of the two approaches,” Cawley said. “Bringing the trust fund into balance in 2015 would require entirely eliminating the authority in that year to obligate funds (projected to be about $51 billion), raising the taxes on motor fuels by about 10 cents per gallon, or undertaking some combination of those approaches.”