ARTBA outlines plan for Highway Trust Fund solvency

Restructuring federal motor fuel tax exemptions would yield an additional $1 billion annually for highway account

News ARTBA March 29, 2007
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The repeal or restructure of four federal motor fuel tax exemptions would generate an additional $1 billion in Highway Trust Fund (HTF) revenues annually and ensure there is sufficient funding to meet the investment levels called for in 2005's SAFETEA-LU highway/transit law, the American Road & Transportation Builders Association (ARTBA) told a congressional panel on March 27.

Under the current law, the Federal Highway Administration projects a $700 million negative balance in the HTF highway account by the end of fiscal year 2009.

ARTBA Vice President of Economics & Research Dr. Bill Buechner, a Harvard-trained economist, testified at a House Highways & Transit Subcommittee hearing called to review the viability of the current fuel tax and highway funding program.

Buechner cited the exemptions identified by the congressional Joint Committee on Taxation for certain vehicles and buses used by state and local governments and nonprofit organizations. The exemptions for these vehicles, which cause the same wear and tear on highways as automobiles, cost the highway account of the HTF $1 billion a year, Buechner told the subcommittee.

Buechner rejected calls from some groups that the highway program funding guarantees in SAFETEA-LU be suspended or the federal highway program cut.

"Eliminating these highway account exemptions, which was previously endorsed by the Bush administration and the U.S. Senate, would ensure the Highway Trust Fund has enough revenue to meet the commitments in SAFETEA-LU and prevent the next surface transportation reauthorization cycle from starting in a deficit situation in 2010," Buechner said.

During the hearing, the ARTBA economist also reiterated the association's long-held policy position that the federal motor fuels excise tax continue to serve as the foundation for financing the highway/transit programs for the reauthorization of SAFETEA-LU and beyond.

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