Federal Highway Trust Fund (United States)
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The Highway Trust Fund is a transportation fund in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
which receives money from a federal fuel tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon of diesel fuel and related excise taxes. It currently has two accounts, the Highway Account funding road construction and other surface transportation projects, and a smaller Mass Transit Account supporting
mass transit Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typical ...
. Separate from the Highway Trust Fund is the Leaking Underground Storage Tank Trust Fund, which receives an additional 0.1 cents per gallon on gasoline and diesel, making the total amount of tax collected 18.5 cents per gallon on gasoline and 24.5 cents per gallon on diesel fuel. The Highway Trust Fund was established in 1956 to finance the United States
Interstate Highway System The Dwight D. Eisenhower National System of Interstate and Defense Highways, commonly known as the Interstate Highway System, is a network of controlled-access highways that forms part of the National Highway System in the United States. Th ...
and certain other roads. The Mass Transit Account was created in 1982. The federal tax on motor fuels yielded $28.2 billion in 2006.


History

Prior to the
Federal Aid Highway Act of 1956 The Federal-Aid Highway Act of 1956, also known as the National Interstate and Defense Highways Act, was enacted on June 29, 1956, when President Dwight D. Eisenhower signed the bill into law. With an original authorization of $25 billion for t ...
and the establishment of the Highway Trust Fund, roads were financed directly from the General Fund of the
United States Department of the Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and t ...
. The 1956 Act directed federal fuel tax to the Treasury’s General Fund to be used exclusively for highway construction and maintenance. The Highway Revenue Act, pre-dating the Fund, mandated a tax of three cents per gallon. This original Act, also known as Highway Revenue Act, was set to expire at the end of fiscal year 1972. In the late 1950s, the gas tax was increased to four cents. The 1982
Surface Transportation Assistance Act The Surface Transportation Assistance Act of 1982 was a comprehensive transportation funding and policy act of the United States Federal Government, . The legislation was championed by the Reagan administration to address concerns about the surface ...
, approved by President
Ronald Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
in January 1983, increased the tax to nine cents with one cent going into a new Mass Transit Account to support
public transport Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typical ...
. In 1990, the gas tax was increased by President George H. W. Bush with the
Omnibus Budget Reconciliation Act of 1990 The Omnibus Budget Reconciliation Act of 1990 (OBRA-90; ) is a United States statute enacted pursuant to the budget reconciliation process to reduce the United States federal budget deficit. The Act included the Budget Enforcement Act of 1990 whic ...
to 14 cents, with 2.5 cents of the increase going to the Highway Fund. The other 2.5 cents of the Omnibus Act was directed towards deficit reduction. In 1993, President Clinton increased the gas tax to 18.4 cents with the
Omnibus Budget Reconciliation Act of 1993 The Omnibus Budget Reconciliation Act of 1993 (or OBRA-93) was a federal law that was enacted by the 103rd United States Congress and signed into law by President Bill Clinton on August 10, 1993. It has also been unofficially referred to as the De ...
with all of the increase going towards deficit reduction. The
Taxpayer Relief Act of 1997 The Taxpayer Relief Act of 1997 () reduced several federal taxes in the United States. Starting in 1998, a $400 tax credit for each child under age 17 was introduced, which was later increased to $500 in 1999. This credit was phased out for h ...
redirected the 1993 increase to the newer Fund. During 2008, the Fund required an additional $8 billion, which was provided by the Treasury’s general revenue funds to cover a shortage in the Fund. This shortage was due to lower gas consumption as a result of the recession and higher gas prices, together meaning an overall decrease in revenues that would otherwise have been directed to the Fund. Further transfers of $7 billion and an additional $19.5 billion were made in 2009 and 2010, respectively. During the 2008 presidential campaign, Senator
John McCain John Sidney McCain III (August 29, 1936 – August 25, 2018) was an American politician and United States Navy officer who served as a United States senator from Arizona from 1987 until his death in 2018. He previously served two terms ...
proposed a 'gas holiday', suspending the tax during the peak summer driving season. Senator
Hillary Clinton Hillary Diane Rodham Clinton ( Rodham; born October 26, 1947) is an American politician, diplomat, and former lawyer who served as the 67th United States Secretary of State for President Barack Obama from 2009 to 2013, as a United States sen ...
endorsed this idea soon afterwards, while Senator
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
opposed the holiday. As an alternative, Senator Clinton proposed a ' windfall tax' on oil companies, which would make up for the lost revenue from the federal tax on gasoline and diesel fuel without affecting any existing or planned projects. Since 2000, there have been at least half a dozen attempts by individual members of Congress to suspend the federal gas tax, without which (and without a replacement) would have halted repair and expand the Federal highway system. All such attempts have failed.


Fund balance

Account balance for fiscal year 2016 (October 1, 2015 – September 30, 2016).


Solvency issues

From 2008 to 2010, Congress authorized the transfer of $35 billion from the General Fund of the U.S. Treasury to keep the Trust Fund solvent. The
Congressional Budget Office The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. Inspired by California's Legislative Analyst's Office that manages ...
(CBO) projected in 2012 that the Fund's Highway Account and Mass Transit Account would become insolvent by 2014. CBO said that although vehicles would travel more miles in the future (therefore consuming more taxable fuel), congressional refusal to increase the fuel tax would have caused the Fund to receive less money. Further, CBO assumed that Congress would not increase transportation spending beyond inflation (adjusted from 2012). As of June 2015, the CBO projected that payments from the Highway Trust Fund to the many states would need to be delayed at some point before the end of federal fiscal year 2015 (i.e., before the end of September 2015) to keep the balance above zero, without either some increase in the federal motor fuel excise tax (or allocation of other revenues to the Trust Fund). Alternatively, Congress would have had to reduce Trust Fund spending commitments. In 2013, the
U.S. Chamber of Commerce The United States Chamber of Commerce (USCC) is the largest lobbying group in the United States, representing over three million businesses and organizations. The group was founded in April 1912 out of local chambers of commerce at the urgin ...
supported raising the federal gasoline tax to keep the Fund solvent. The
United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...
passed a stopgap plan on July 31, 2014 to prevent a funding lapse. As of 2015, despite a considerable drop in gas prices, there was still little support among the US public and Congress for any increase(s) of the gasoline excise tax.


See also

*
Fuel taxes in the United States The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel.http://www.fhwa.dot.gov/infrastructure/gastax.cfm US Department of Transportation, Federal Highway Administration: When did the Fed ...


References


External links


Financing the Federal Highway Trust, by the Federal Highway AdministrationFederal Highway Administration "Primer" on the FHT (pdf)How Would Proposed Fuel Economy Standards Affect the Highway Trust Fund?
Congressional Budget Office The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. Inspired by California's Legislative Analyst's Office that manages ...

State of the Highway Trust Fund: Long-term Solutions for Solvency: Hearing before the Committee on the Budget, House of Representatives, One Hundred Thirteenth Congress, First Session, April 24, 2013When did the Federal Government begin collecting the gas tax?
{{US highway acts United States federal transportation legislation Law articles needing an infobox 1956 in American law