Letter to the Honorable Jim Inhofe regarding estimates of the status of the Highway Trust Fund based on CBO’s August 2016 baseline
The Congressional Budget Office (CBO) has estimated the status of the Highway Trust Fund using the revenue and spending projections contained in CBO’s August 2016 baseline. These estimates are very similar to those reflected in CBO’s March 2016 baseline estimates. By 2021, CBO projects, revenues credited to the highway and transit accounts of the Highway Trust Fund will be insufficient to meet the fund’s obligations. The updated estimate is provided in the enclosed Table 1.
The Fixing America’s Surface Transportation (FAST Act) transferred about $71 billion, mostly from the general fund of the Treasury, to the Highway Trust Fund. Of those amounts, roughly $52 billion were credited to the Highway Account for the 2016-2018 period and roughly $18 billion were credited to the Transit Account for 2016. Under current law, the trust fund cannot incur negative balances, nor is it permitted to borrow to cover unmet obligations presented to the fund. CBO projects the highway account will end 2016 with a balance of $52 billion. However, by 2026, the cumulative shortfall will grow to $80 billion. CBO also projects that the transit account will have a balance of $18 billion in 2016, but a cumulative shortfall totaling $31 billion by 2026.
Actual spending from the Highway Trust Fund, revenues credited to the trust fund, and thus any future shortfalls could vary from CBO’s projections because of many factors, including weather-related construction delays, the responses of states and local governments to federal policies, changes in the price of motor fuels, and the price and demand for certain construction materials and labor.
The estimates of the status of the Highway Trust Fund in Table 1 reflect the assumption that the spending and revenue provisions in the FAST Act will be extended through the end of fiscal year 2026. Further, the estimates reflect an assumption that funding for programs financed by the Highway Trust Fund in subsequent years would continue at the level that the Congress provided in the Consolidated Appropriations Act, 2016—about $53 billion—adjusted for inflation. Those assumptions are consistent with Congressional rules governing how CBO prepares baseline projections for discretionary spending.