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Letter from June O'Neill, Director Congressional Budget Office regarding Highway Trust Fund 1 (April 1998)

handle is hein.congrec/cbo10468 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE - _-. uNeill U.S. CONGRESS Director WASHINGTON, D.C. 20515 April 28, 1998 Honorable Pete V. Domenici Chairman Committee on the Budget United States Senate Washington, DC 20510 Dear Mr. Chairman: As you requested in your letter dated April 27, 1998, CBO has prepared answers to three questions regarding the Highway Trust Fund and the pending reauthorization of the Intermodal Surface Transportation Efficiency Act (ISTEA). The questions and our answers are as follows: 1. Why are gas tax receipts not an offset to ISTEA spending? The federal budget distinguishes between receipts and expenditures, and receipts are generally not treated as offsets to expenditures. Transportation excise taxes are recorded as governmental receipts (that is, on the revenue side of the ledger) because they stem from the government's sovereign power to tax, and spending for transportation programs is recorded as an expenditure (that is, on the outlay side). An equal increase in excise taxes and transportation spending would add to both receipts and expenditures but would have no effect on the surplus or deficit (which is the difference between the two). Revenues and outlays are subject to different control mechanisms under the Balanced Budget and Emergency Deficit Control Act of 1985. Most of the ISTEA outlays are discretionary-subject to annual obligation limitations in appropriation acts-and thus fall under the discretionary caps. The excise taxes, in contrast, are subject to the pay-as-you-go mechanism; changes in

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