Trust-Fund Account Rescued, for Now
State transportation agencies and construction companies can exhale now that an $8-billion boost for the ailing Highway Trust Fund is law. The new money averts a deficit predicted to hit the fund’s highway account as early as Sept. 30, but the “fix” may only keep the account in the black for about another 12 months. Beyond that, observers agree, longer-lasting changes are needed, maybe in next year’s multiyear highway and transit bill. There’s no agreement yet, however, on what those changes should be.
| Time Line for Trust Fund ‘Fix’ |
July 17: Bill introduced in House to shift $8 billion from general fund to trust fund’s highway account. July 23: OMB issues veto warning over House bill. July 23: House approves bill with $8-billion shift, effective on Oct. 1. Vote is 387-37. July 28: OMB releases updated estimate for trust fund, shows $4.3-billion highway account surplus on Sept. 30. Late August: New trust-fund revenue and spending estimates show rapidly deteriorating picture for highway account. Sept. 5: DOT Secretary Peters say highway-account surplus will be gone as soon as Sept. 30. In a shift of position, she endorses House bill, with provision to release funds immediately. Sept. 10: By voice vote, Senate passes House bill, amended to release funds on enactment. Sept. 11: House passes amended bill, 376-29. Sept. 15: President Bush signs trust-fund fix into law. |
Steve Hall, American Council of Engineering Companies’ vice president for government affairs, says the new trust-fund measure is “late in coming, but it solves the problem.” But, Hall adds, “It’s important to remember this solves the short-term problem....We still have a shortfall in 2010 and beyond to deal with.”
The trust-fund rescue bill, which President Bush signed on Sept. 15, authorizes an $8-billion transfer from the Treasury’s general fund to the trust fund. Administrative steps need to occur before Treasury actually shifts the money, says Ian Grossman, a Federal Highway Administration spokesman. He said on Sept. 16 that he anticipates those actions will take place within days, and FHWA then can return to reimbursing states daily for their highway obligations.
When U.S. Transportation Secretary Mary Peters announced on Sept. 5 that the highway account’s situation was dire, she instructed FHWA to reimburse states only once a week and limit repayments to the trust fund’s available money. As it turned out, no cutback was necessary. Jack Basso, American Association of State Highway and Transportation Officials’ director of management and business development, said on Sept. 11, in FHWA’s first repayment after Peters’ announcement, it reimbursed 100% of states’ invoices.
“We hope that the [new law] will ensure the solvency of the trust fund for the next year,” says Pam Whitted, National Stone, Sand and Gravel Association vice president for government affairs.
But the fund’s health remains fragile. There’s no sign that highway travel and fuel-tax revenue are rebounding. Even if Congress freezes highway obligations at 2008’s $41.2 billion, actual outlays carried over from the previous year will put pressure on the fund’s bottom line. “It’s very possible that we’re going to be right up against the wall again sooner rather than later,” says Whitted.
