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1 1 (September 13, 2021)

handle is hein.crs/goveems0001 and id is 1 raw text is: Congressional ____ Research Service informing the legist ive diebate since 1914____________________ Approaching Shortfall Could Limit Highway Payments to the States September 13, 2021 The impact of the Coronavirus Disease 2019 (COVID-19) pandemic on highway tax revenues is leading the Federal Highway Administration (FHWA) to alter procedures for reimbursing the states for highway construction expenditures. If the new procedures take effect, most states could experience both delays and reductions in the federal reimbursements they receive for highway work they have completed. Unless Congress acts to provide more money before then, FHWA could reduce payments to the states as early as October 12, 2021. Almost all the funding to support the Federal-Aid Highway Program comes from the highway account of the Highway Trust Fund (HTF). HTF revenue derives mainly from taxation of motor vehicle gasoline and diesel. Since the early 2000s, revenue from these sources has been less than outlays from the HTF. Consequently, Congress has periodically transferred money to the HTF, mostly from the Treasury general fund. Upon passage of the last authorization extension, the expectation was that such transfers would be sufficient to keep the HTF solvent into the summer of FY2022. However, in part because of the impact of the COVID-19 pandemic on motor fuel tax revenues, FHWA now anticipates the highway account will run out of money in November if new cash management procedures are not implemented first. On August 26, 2021, FHWA released a guidance memorandum outlining the procedures it intends to put in place. The procedures would apply only to the highway account, not to the separate mass transit account within the HTF, which does not face a near-term shortfall. Federal highway programs operate on a reimbursable basis: a state government expends the money as approved by federal officials, and then applies for the federal payment. Reimbursement normally occurs within 24 hours of the request via electronic funds transfer. However, the Anti-Deficiency Act prohibits the HTF from having a negative balance. To avoid this problem, when the balance in the highway account approaches $4 billion, which FHWA considers the minimum working balance, FHWA must implement some way of reducing or slowing payments. This means that states may have to wait for full reimbursement of funds they have already expended. Congressional Research Service https://crsreports.congress.gov IN11747 CRS INSIGHT Prepared for Members and Committees of Congress

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