Congress approved a measure to transfer $8 billion from the general fund of the Treasury to the Highway Trust Fund after U.S. Department of Transportation Secretary Mary Peters revealed the trust fund would run out of mon-ey before the end of September.
The White House had previously threatened to veto the measure, calling it “both a gimmick and a dangerous precedent that shifts costs from users to taxpayers at large.”
But the administration shifted positions with Secretary Peters' projections, which revealed a much-accelerated timeline for the HTF's shortfall. The HTF is funded by an 18.3-cent federal tax on every gallon of gasoline sold and 24.3 cents for each gallon of diesel. The shortfall is due primarily to reductions in fuel consumption as the nation's drivers react to high gas prices.
“We're relieved that the Administration finally decided to join us in supporting this fix and that Congress was able to get it done quickly,” says Stephen E. Sandherr, chief executive officer of AGC. “Numerous state departments of transportation announced that if the full federal funds were not forthcoming they would be forced to cancel contract lettings, slow down work on ongoing projects and, in some cases, be forced to issue debt to make payments to contractors for work that is already underway.”
It has long been anticipated that the 52-year-old trust fund would move into the red next year, a result of Congressional reluctance to raise the gas tax, unchanged since 1993. But the fund, which had a $10 billion surplus just three years ago, has had a rapid change in fiscal fortune as drivers, responding to higher gas prices, curtailed their driving and switched to more fuel-efficient vehicles.
Secretary Peters commended the Senate for its swift action to address the immediate crisis but added in a statement that “Congress must eliminate the billions in wasted spending, thousands of unneeded earmarks, and hundreds of conflicting and contradictory special-interest programs in order to make sure states don't face thissituation again.”