House Transportation Subcommittee reviews Highway Trust Fund solvency

News AGC February 17, 2006
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The House Highways, Transit and Pipelines Subcommittee recently held a hearing to question Administration officials about the long-term solvency of the Highway Trust Fund (HTF). The concern was raised in the Administration's budget proposal, sent to Capitol Hill last week, which projects that the current revenue into the HTF will not support SAFETEA-LU funding levels through FY 2009, the end of the authorization period covered in the legislation.

The Administration's budget projects a $2.3 billion short fall in FY 2009 if there are no changes in funding or revenue. Subcommittee Chairman Tom Petri (R-Wis.) asked why there was such a drastic change in revenue projections made by the Treasury Department last summer when SAFETEA-LU was being debated.

Chairman Petri also said that if a funding cut is going to be proposed in the future because of this shortfall than it is better to know that now so that all options can be considered. Other members of the subcommittee also expressed concern about the dramatically different revenue projections.

?Administration representatives, including DOT's Chief Financial Officer Phyllis Scheinberg and FHWA Acting Administrator Rick Capka, attempted to ease concerns pointing out that projections are based on a number of assumptions and that it is not fully clear what the true revenue will be. They pointed out that the Congressional Budget Office (CBO) makes its own independent projections and CBO does not foresee a short fall at this time.

Scheinberg and Capka suggested that it is not necessary to formulate a solution now to a problem that may not materialize. They pointed out that SAFETEA-LU established two commissions to look at future needs and funding sources and that this is where the solution should be considered. Several members of the subcommittee suggested that a solution to the problem that should be seriously considered is to increase revenue, including raising the user fee.

   ?The Administration representatives also pointed out that budget proposal includes a recommendation to create a new $100 million "Open Roads Financing Pilot Program" to explore the expanded use of tolls and other direct user charges to meet growing transportation needs. They pointed out that traditional funding sources for highway programs are producing insufficient revenue at all levels of government. Under the program, funds would be provided to up to five states to identify new ways of expanding highway investment levels through innovative mechanisms that can augment existing funding sources.

 ?Also of concern in the budget is a proposal to fund the National Highway Safety Administration (NHTSA) out of the HTF. NHTSA is traditionally funded out of general fund revenue. The Administration views SAFETEA-LU as directing this budgetary treatment of NHTSA.

?All of these budget proposals will be deliberated as part of the annual appropriations process.

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