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1 1 (March 6, 2019)

handle is hein.crs/govyez0001 and id is 1 raw text is: Congressional Research Service Informing the legislative debate since 1914 0 March 6, 2019 Reauthorizing Highway and Transit Funding Programs Surface transportation reauthorization acts fund federal highway and public transportation programs, along with transportation research, intercity passenger rail, and other programs. The Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), authorized federal spending on highways and public transportation for FY2016- FY2020. The funding expires on September 30, 2020. The Federal-Aid Highway Program The FAST Act provides on average $45 billion annually for the 1,027,849-mile system of Federal-Aid highways. Of these funds, 92.5% are distributed to the states via formula. The states have nearly complete control over the use of these funds, within the limits of federal planning, eligibility, and oversight rules. Money is not provided up front. A state is reimbursed after work is started, costs are incurred, and the state submits a voucher to the Federal Highway Administration (FHWA). The highway program focuses on highway construction and planning, and does not support operations or routine maintenance. The federal share of project costs is generally 80%, but 90% for Interstate System projects. In general, projects are limited to a designated system that includes roughly 25% of all U.S. public road mileage. The Federal Public Transportation Program The FAST Act authorized an average of $12.2 billion annually for the federal public transportation program. Most of this funding is distributed by formula to local transit agencies. The largest discretionary program is the New Starts Program, which supports construction of new local rail, bus rapid transit, and ferry systems, and the expansion of existing systems. Funding Issues Highway Trust Fund. Historically, all of the federal highway program and 80% of the public transportation program have been funded with revenues from the Highway Trust Fund (HTF). Revenues supporting the HTF come from a combination of fuel, truck, and tire taxes, but the fuel taxes provide about 85%-90% of the money. The excise taxes on gasoline and diesel are fixed in terms of cents per gallon (18.3 cents for gasoline and 24.3 cents for diesel), and do not adjust for inflation or change with fuel prices. The rates were last raised in 1993. Increases in fuel consumption kept revenues growing until the recession that began in 2007. Since that time, improving fuel efficiency and slower growth in vehicle mileage have led revenue to level off, and spending from the HTF has consistently outrun highway user revenues. Unable to agree on revenue increases or program reductions, Congress began providing transfers to the HTF to prevent its insolvency. Since September 2008, Congress has provided $144 billion to the HTF, mainly from the Treasury general fund. This includes $70 billion of transfers authorized in the FAST Act. Short-term issues. The Congressional Budget Office (CBO) estimates that the HTF has sufficient balances to cover expected outlays through September 2021. However, unless Congress authorizes additional funds by then, the balance in the HTF could fall so low that the Department of Transportation may have to delay reimbursement to states and transit agencies for completed projects. Long-term issues. More money will likely be needed if Congress wishes to continue the highway and public transportation programs at or above their current levels, adjusted for inflation, in a future multiyear reauthorization. CBO projects the annual difference between revenues and outlays to rise from $16 billion in FY2021 to $22 billion in FY2026 (see Figure 1). Figure I. HTF Revenue and Outlays ($ Billions) -0 Actual (FY16-FY18) Projected (FY19-FY26) $70B $60B Outlays - - - $508B Revenues and Interest* $40B $30B iI I I I I I I I FY16 FY18 FY20 FY22 FY24 FY26 *Does not include transfers Source: CBO, Highway Trust Fund Accounts-January 2019 Baseline. Based on current law, a future five-year reauthorization bill would need to cover a projected $68 billion shortfall, and a six-year bill would need to cover $89 billion. What Are Some Options? Continue reliance on general funds. Congress could choose to transfer money from the general fund to the HTF to accommodate as large a surface transportation program as desired. When the FAST Act expires at the end of FY2020, general fund transfers will have occurred for 12 years. Alternatively, Congress could eliminate the HTF altogether and pay for highways and transit through annual appropriations from the general fund. Cut spending. Congress could reduce federal highway and public transportation spending to match the currently projected revenues. This would require spending cuts of roughly 25%. ittps://crsreports.congress.gov

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