The Office of Management and Budget (OMB) released its Mid-Session Estimates July 28 for various government accounts, including the Highway Trust Fund (HTF). OMB's report updates the estimates that were given in February that were included in the President's budget request. For the HTF, OMB estimates a shortfall of $3.1 billion for FY 2009, a slight improvement over the $3.2 billion shortfall projected in February. The new projection shows that highway account receipts in the HTF have declined $1.5 billion. However, the projection also indicates that outlays have declined by $1.6 billion, resulting in a $100 million improvement.
It is unclear why there is a drop in outlays from the program; however, the Congressional Budget Office (CBO) projected a decline in HTF outlays back in February due to the inability of states to provide matching funds for Congressionally earmarked projects. Many of the earmarked projects are funded at levels far below their actual cost and therefore states must provide a higher share of the cost of these projects. Earmarked funds not used cannot be transferred into a state's normal allocation. The OMB estimate also shows that the Mass transit Account of the HTF has a sufficient balance to fully fund the SAFETEA-LU authorized level for transit projects through the end of FY 2009 and is projected to have a balance of $4.2 billion at that time.
The report was unexpected and somewhat puzzling as reports from the Federal Highway Administration have shown a significant decline in driving over the past year, which will result in a further decline in HTF revenue from gas tax receipts. In fact, DOT Secretary Many Peters reported that FHWA data show that Americans drove 9.6 billion fewer vehicle-miles traveled (VMT) in May 2008 than in May 2007. This is the largest drop in VMT for any May, which typically reflects increased traffic due to Memorial Day vacations and the beginning of summer, and is the third-largest monthly drop in the 66 years such data have been recorded. Three of the largest single-month declines-each topping 9 billion miles-have occurred in 2008. This continues a seven-month trend that amounts to 40.5 billion fewer miles traveled between November 2007 and May 2008 than the same period a year before.
This new projection still leaves the highway program at risk for a cut of 34% in FY 2009 if additional revenue is not provided to the HTF (see following story).
Senate may consider Highway Trust Fund fix
Senate Finance Committee Chairman Max Baucus (D-Mont.) has included the HTF fix provision in the "tax extenders" bill, which extends a variety of tax provisions which expire this year and also includes a fix to the Alternative Minimum Tax to keep it from expanding its impact to a broad section of middle class taxpayers. In a meeting with Senate Environment and Publics Works Committee Chairman Barbara Boxer (D-Calif.) earlier in July, AGC CEO Stephen Sandherr suggested this strategy. If you have not yet done so please contact your senators at Prevent Highway Trust Fund Insolvency asking them to support the Highway Trust Fund fix. Grass roots contacts were very important in the effort to get the strong favorable vote on the fix in the House last week. There are few legislative days left before the end of the fiscal year and the Senate must act expeditiously to prevent a significant reduction in state highway lettings.
