Highway Trust Fund

A $5.9 billion revenue shortfall by fiscal year 1997 is projected for the fund that provides most of the financing for highways and mass transit, but the deficiency could be avoided by extending a portion of the federal gas tax that expires in 1995. To finance more than $122 billion in federal aid for highway programs through fiscal year 1997, Congress extended federal highway excise taxes, such as those on gasoline and diesel fuel, through fiscal year 1999. Most of these taxes go to the Highway Trust Fund, the accounting mechanism used to record revenues and outlays. According to projections developed by the Federal Highway Administration, however, revenues through fiscal year 1999 will fall $5.9 billion short of money to be paid out of the account. This shortfall is expected to trigger the Byrd Amendment in fiscal year 1995--a financial safeguard mandating a reduction in outlays in the face of revenue shortfalls--and to grow substantially during the remaining 2 years of the authorization period. Most of the projected shortfall is attributable to an expected decline in collections of highway excise taxes. Congress could resort to several strategies--which include implementing, modifying, or suspending the Byrd Amendment--to address the anticipated revenue shortfall. All of these options have advantages and disadvantages that Congress will need to weigh carefully in deciding how to deal with the shortfall.

GAO found that the: (1) Federal Highway Administration (FHwA) projects that the highway account's revenues will not be sufficient to make the authorizations legislated for fiscal years 1992 through 1997; (2) anticipated $5.9-billion shortfall in actual and anticipated revenues will trigger the Byrd Amendment financial safeguard, which mandates a reduction in the apportionment of authorizations; (3) shortfall is attributable to revised revenue and cost estimates; (4) Department of the Treasury is not complying with mandates to quarterly estimate and report on the highway account's financial status; and (5) revenue shortfalls would also limit FHwA aid for state highway funding. GAO also found that, to deal with the expected shortfall in the highway account, Congress could: (1) allow the Byrd Amendment to take effect and repeal or incorporate the withheld authority during reauthorization; (2) increase revenues to the highway account; (3) limit annual obligation levels; (4) revise the Byrd amendment safeguard to consider future offsetting revenues for 3 years instead of 2 years; (5) alter the Byrd Amendment safeguard to apply to the full Highway Trust Fund; (6) modify the safeguard to weigh total outstanding obligations, not total outstanding authorizations, against available and anticipated revenues; and (7) completely suspend the Byrd Amendment.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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