How the Financial Status of the Highway Trust Fund Impacts Surface Transportation Programs
Chairman Tom Petri (R-WI)
Subcommittee on Highways and Transit
Hearing on How the Financial Status of the Highway Trust Fund Impacts Surface Transportation Programs
July 22, 2013
(Remarks as Prepared)
Today’s hearing will focus on the financial status of the Highway Trust Fund and discuss the impact its pending insolvency will have on our surface transportation programs.
Federal highway, transit, and highway safety programs are administered by the U.S. Department of Transportation (U.S. DOT) in partnership with states, public transit agencies, and localities. While the U.S. DOT provides financial and technical assistance, the grantees are responsible for implementing the programs on a day-to-day basis.
The federal share of the programs is funded almost entirely from user fees collected and deposited into the Highway Trust Fund. When the Highway Trust Fund was established in 1956, the excise tax rates for fuels were 3 cents per gallon. Since then, the tax rate and structure have been revised several times. Currently, a tax rate of 18.4 cents per gallon is levied on gasoline, and 24.4 cents a gallon on diesel fuel. Fuel taxes represent approximately 90 percent of net revenues into the Trust Fund, but other sources include taxes on tires and heavy trucks. A separate Mass Transit Account within the Highway Trust Fund was created in 1982, which receives a portion of the fuel taxes collected.
In 2008, for the first time, the Highway Trust Fund had insufficient revenues and cash balances to meet its 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, a total of $54 billion will have been transferred from the General Fund into the Highway Trust Fund to maintain its solvency. This includes an $18.8 billion transfer authorized by Congress last year in MAP-21.
As the purchasing power of the Federal fuel taxes continues to decline year-to-year and vehicles become more fuel efficient, current spending levels will continue to outpace the money collected from fuel taxes. Over time, the gap will only worsen.
MAP-21 is set to expire on September 30, 2014 and current projections show that the Trust Fund will once again become insolvent and unable to meet its obligations starting in fiscal year 2015. Without changes in spending levels or additional revenue, the Trust Fund will continue to be unable to meet its obligations over the ten year budget window.
Today, the Committee will receive testimony from the Congressional Budget Office outlining the financial status of the Highway Trust Fund and its pending insolvency. In addition, we will hear how the U.S. Department of Transportation and its partners would be impacted if and when the Highway Trust Fund can no longer meet its commitments.
Many of our Members were not in Congress when previous funding shortfalls were addressed, and it is important that Members understand the fiscal reality we face and the measures the U.S. DOT would need to take.
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Honorable Polly Trottenberg, Under Secretary for Policy, U.S. Department of Transportation | Written Testimony
Mr. Kim P. Cawley, Unit Chief, Natural and Physical Resources Cost Estimates Unit, Congressional Budget Office | Written Testimony