The U.S. Department of the Treasury has reduced its forecast of Highway Trust Fund revenues for FY 2004-09 by more than $3.3 billion below the January forecast used to prepare the Bush Administration's FY 2005 budget proposal for federal highway and mass transit investment. The new forecast was prepared as part of the annual Midsession Review of the budget, issued last week by the Office of Management and Budget.
The new figures project $3 billion less for the Highway Account--from a six-year total of $192.2 billion in January to $189.2 billion in the Midsession Review. Projected Mass Transit Account revenues were cut $300 million, from $30.9 billion to $30.6 billion.
The revenue estimates were cut due to assumptions regarding increased gasoline prices and growing sales of ethanol-based motor fuels. The Treasury assumes higher gasoline prices will cause consumers to purchase less gasoline, resulting in lower revenues into the Highway Trust Fund. The retail price of gasoline has recently hovered around $2 a gal, compared to just over $1.60 a gal in January. Under the current tax incentive for ethanol-based motor fuels, the Highway Trust Fund foregoes 5.2 cents on the sale of each gal of gasohol. As such, the Treasury's assumption that gasohol sales will increase would lead to a declining estimate of Highway Trust Fund revenues.
