Federal Highway Trust Fund Continues to Face Insolvency

Efforts to keep the federal Highway Trust Fund solvent were again defeated in the U.S. Senate recently. Absent the fix the trust fund is projected to have a $3.1 billion shortfall in FY 2009. If that huge deficit were offset by obligation limitation reductions it would require reducing the distribution of federal funding to the states by as much as $16.5 billion in FY 2009.

Sens. Max Baucus (D-MT) and Charles Grassley (R-IA) of the Senate Finance Committee and Patty Murray (D-WA) who chairs the Transportation Appropriations Subcommittee have championed efforts to restore monies to the trust fund. A stand-alone measure to do so was passed in the House earlier this year with unanimous support from the states U.S. House delegation.

Since then the Senators have attempted to attach the trust fund fix to other pieces of legislation. Most recently supporters attached the trust fund fix to a bill extending certain expiring or expired tax provisions. (Not so incidentally one of those expired tax provisions allowed Washington State residents to take an itemized deduction on their federal tax returns for state and local sales taxes.) The bill was prevented from moving forward when the 51-43 vote on a procedural motion failed to meet the required 60-vote support level. The defeat was not due to much opposition to the trust fund fix but to other aspects of the bill.

The Baucus/Grassley/Murray proposal would have credited the Highway Account for $8 billion that was transferred out of the account to the federal General Fund by the 1998 surface transportation reauthorization law known as TEA-21. In 1998 the $8-billion transfer was an attempt to appease certain members of Congress concerned about TEA-21s increased highway and transit investment levels and new budgetary protections for the Highway Trust Fund. Although this legislation was enacted 10 years ago the fact remains the transferred funds were highway user fee revenues and the trust fund would not be facing a shortfall if these revenues had not been diverted to non-transportation purposes.

Sen. Baucus expressed little hope of a bipartisan deal in the short term. Congress is adjourning for its summer recess and the lack of support for this bill is likely to put off solving the trust fund crisis until September at best. AGC of America continues to press the Senate to pass the fix using any other viable vehicle.