Highway Trust Fund Projected to Become Insolvent Earlier than Expected

As we've noted numerous times, the Highway Trust Fund will become insolvent around the end of the fiscal year - Sept. 30, just when MAP-21, the transportation authorization bill, expires. We were wrong. The new HTF "ticker" explains the bad news.

2 minute read

February 20, 2014, 9:00 AM PST

By Irvin Dawid


Adam Snider named his piece on the coming insolvency of the Highway Trust Fund [HTF], "HIGHWAY TO HELL" (scroll down to locate among the other Feb. 19 morning transportation news) and writes that it means Congress may "have to act around two months before MAP-21 expires at the end of September." Snider points to the DOT's new "Highway Trust Fund Ticker" that contains a graph showing when the fund will have a shortfall.  "In its latest update [Jan. 31], the agency still estimates a highway account shortfall in early August," he writes, which the graph shows as well.

The HTF's other account, the Mass Transit Account, isn't faring much better. It is projected to have a positive balance at the end of the fiscal year "of approximately $440 million". Highway advocates, in fact, had hoped to eliminate the transit account and shift the funds to road building, as AASHTO Journal indicated on February 10, 2012.

Note: "The HTF consists of two separate accounts—highway and mass transit. The highway account receives an allocation equivalent to 15.44 cents of the gasoline tax and the mass transit account receives the revenue generated by 2.86 cents of the tax." [pg. 3, of Congressional Research Services "Surface Transportation Funding and Programs Under MAP-21" (PDF)]

These projections have serious implications with the financial markets, as Reuters indicates in "Federal funding confusion leads Moody's to cut highway bonds" on Feb. 18.

Uncertainty about the future of federal transportation funding has cast a shadow over many U.S. states' highway and transit agencies, and Moody's Investors Service on Tuesday downgraded the ratings of 16 municipal bond issues tied to U.S. road money.

It would seem that the bond markets might also be looking at the HTF ticker and are concerned about the ability of Congress to take action before the fund becomes insolvent. The downgraded municipal bonds are those "that rely solely on federal monies and lack cash-funded debt reserves or other structural protections against possible interruption to the flow of federal money," according to Reuters. 

Wednesday, February 19, 2014 in Politico Morning Transportation

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