Highway Trust Fund Restoration Act
On September 11, 2008, the House passed the Highway Trust Fund Restoration Act, H.R. 6532, as amended by the Senate. This critical legislation is needed to address the projected shortfall in the Highway Trust Fund and save nearly 380,000 jobs nationwide.
On July 23, the House passed the bill by a vote of 387 to 37. The Democratic Leadership called for its quick enactment – due to the dire situation regarding the Highway Trust Fund and the potential loss of hundreds of thousands of job. Unfortunately, Senate Republicans blocked passage.
Although it had had a veto threat out on the House-passed bill in July, the Bush Administration has belatedly acknowledged the crisis with the Highway Trust Fund. On September 5, Secretary of Transportation Mary Peters stated that the trust fund would run out of money in the next few weeks and called on Congress to clear the House bill.
On September 10, the Senate passed the bill – with an amendment making the bill’s provisions effective upon enactment, rather than on September 30. On September 15, the President signed the bill into law.
The bill would help achieve the funding levels authorized by SAFETEA-LU. Unfortunately, Highway Trust Fund revenues have fallen behind what was anticipated when SAFETEA-LU was enacted in 2005. High gas prices have caused people to drive less and consume less fuel.
If this situation is not addressed, the American Association of State Highway and Transportation Officials (AASHTO) has estimated that the shortfall could lead to a devastating $14 billion, or 34 percent, reduction in federal highway investment.
A 34 percent cut in each state’s federal highway funds would lead to the loss of nearly 380,000 jobs at a time when we are attempting to revive the U.S. economy.
This bill restores $8.017 billion in highway-user taxes to the Highway Trust Fund that were transferred from the Highway Trust Fund to the General Fund in 1998 as part of an overall deficit reduction deal.
Key provisions of the bill:
The bill restores $8.017 billion to the Highway Trust Fund. The bill restores $8.017 billion in highway-user taxes to the Highway Trust Fund that were transferred from the Trust Fund in 1998. Specifically, in 1998, in response to concerns that the Highway Account’s $16.5 billion balance was too large, Congress transferred more than $8 billion from the Highway Trust Fund to the General Fund. Now that the Highway Trust Fund faces major shortfalls in 2009 and beyond, Congress should restore this $8 billion.
Without this bill, forecasts indicate a major shortfall in the Highway Trust Fund. Forecasts indicate a shortfall of several billion dollars to the Highway Trust Fund in FY 2009, the last year of the SAFETEA-LU authorization. In addition, the Federal Highway Administration recently reported that estimated miles traveled on U.S. public roads dropped 11 billion miles between March 2007 and March 2008, the first year-to-year reduction since 1979. As Americans drive less and purchase less fuel, the Highway Trust Fund’s shortfall will continue to worsen.
Failing to enact this bill could trigger funding cuts in federal highway funds to states of about 34 percent. According to the American Association of State Highway and Transportation Officials (AASHTO), failing to enact this bill could lead to a devastating $14 billion, or 34 percent, reduction in federal highway investment in FY 2009. A 34 percent cut in each state’s highway funds would lead to the loss of nearly 380,000 jobs at a time when we are attempting to revive the U.S. economy.
This bill fully complies with PAY-GO. Because the proposed $8 billion transfer is intergovernmental, the Congressional Budget Office has stated that this fix does not constitute a spending outlay, and thus would not violate PAY-GO. Likewise, the Joint Committee on Taxation confirms that this transfer will have no revenue effect.
The bill is effective upon enactment. Due to the dire situation with the Highway Trust Fund, the Senate adopted an amendment to the bill yesterday – which makes the bill’s provisions effective upon enactment, rather than on September 30.