Today, the Bush administration released its mid-session budget review which updates the data included in the President's budget released in February. The budget estimate forecasted a $700 million Highway Trust Fund (HTF) shortfall in Fiscal Year (FY) 2009. Today's update increases the forecasted shortfall to more than $4 billion in FY 09.
Due to the spending rate in the HTF, Congress and the President will need to find additional revenues to plug the $4 billion hole or cut highway funding for FY 09 by an estimated $16 billion. The cuts in FY 2009 from the promised level of $43.4 billion to about $27 billion, would result in a 37% reduction in spending on U.S. infrastructure.
The dramatic reduction in funding would impact every state in the country because the highway program is financed by gas tax revenues that are deposited into the HTF. If the deficit is not patched, it is estimated that in 2009, California will lose $1.35 billion, Florida would lose nearly $673 million, New York would lose approximately $634 million and Texas will lose more than $1.1 billion.
The mid-session review also increased the forecast shortfall to $9 billion in 2010 and $15 billion in 2011. Those amounts will also require significant reductions in spending if Congress and the administration cannot agree on methods to fix the funding gap. Transit funding will also be impacted long term, because it is also funded primarily by the HTF.
The budget news comes at a critical juncture for the highway program, and federal, state and local governments will all feel the pinch. AGC has been working with its allies in the State DOTs on solutions to fix the problem and has presented a menu of ideas to both the Bush administration and Congress.