U.S. Dept. of Transportation Peters says DOT looking at why outlays are lower than estimated earlier

Despite a continued decline in highway travel, a new Bush administration forecast of the Highway Trust Fund's financial health surprisingly projects a slightly lower 2009 deficit, compared with an estimate issued early this year.

Transportation Secretary Mary Peters said that the updated forecast, issued July 28, shows that the trust fund's highway-account deficit will be about $3.1 billion in fiscal 2009, compared with a $3.2-billion shortfall forecast as part of President Bush's 2009 budget, proposed in February.

Peters told reporters that trust-fund receipts now are estimated to be $1.5 billion less than forecast six months ago, but that was more than offset by a $1.6-billion decline in outlays. She said that DOT officials were trying to determine the reasons why outlays were down from the previous estimate.

State transportation and construction industry officials have been anxiously awaiting the new trust-fund figures, which were widely expected to show a trust fund deficit that was much higher than $3 billion. The House on July 23 passed a bill that would transfer $8 billion from the general fund to the trust fund to rectify the problem. In the Senate, Finance Committee Chairman Max Baucus (D-Mont.) included a similar trust-fund "fix" in tax bill he introduced July 24.

The new trust fund figures were released just hours after Peters' department reported that travel on the nation's highways in May dipped 3.7% from the same month last year. That's the seventh-straight monthly drop in vehicle miles traveled. "The decline in American driving is deepening," Peters says.

She said the trend in travel emphasizes that the gasoline tax is "an antiquated mechanism" and reiterated her call for a significant shift in how the surface transportation program is financed and organized. She said DOT would be announcing a "policy proposal" July 29, recommending major changes, including "weaning ourselves from the gas tax" over time. She said the recommendations are aimed at the next surface transportation bill, due next fall.