Highway Trust Fund: Improved Solvency Mechanisms and Communication Needed to Help Avoid Shortfalls in the Highway Account
Highlights
The Highway Account within the Highway Trust Fund is the primary mechanism for funding federal highway programs. The account-- administered by the Federal Highway Administration (FHWA) within the Department of Transportation (DOT)--channels about $33 billion in highway user excise taxes annually to states for highway projects. Although DOT and others projected that the account could run out of funds in fiscal year 2009, the balance fell more rapidly than expected and a shortfall became imminent in August 2008. In September, Congress passed legislation to provide $8 billion to replenish the account, but DOT officials anticipate the account could reach a critical stage again in fiscal year 2009. This report (1) describes the events that led to the decline in the account balance, including how DOT responded, and (2) identifies potential improvements in mechanisms to manage account solvency. This report also includes information on strategies GAO has reported on in the past that could be used to better align account outlays and revenues. To conduct this work, GAO analyzed information in legal and budget documents, reviewed account estimates, and interviewed agency officials and stakeholders.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Transportation | To improve DOT's communication with stakeholders on the status of the Highway Account and the mechanisms the agency uses to help maintain account solvency, the Secretary of Transportation should identify changes to existing solvency mechanisms designed to make annual adjustments to the Highway Account and communicate to Congress the potential benefits and limitations of these changes. |
Due to delay in surface transportation program reauthorization, this recommendation has not been implemented. The Department of Transportation will work with Congress to explore appropriate solvency mechanisms as part of the surface transportation program reauthorization process. Such measures can best be designed in light of the funding mechanisms and levels under consideration for the upcoming legislation.
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| Department of Transportation | To improve DOT's communication with stakeholders on the status of the Highway Account and the mechanisms the agency uses to help maintain account solvency, the Secretary of Transportation should monitor additional indicators that can impact the account balance throughout the year to better anticipate sudden changes in the balance. |
In August 2008, the balance of the Highway Account within the Highway Trust Fund--the primary mechanism for funding federal highway programs--dropped precipitously and a shortfall became imminent. We reported in February 2009 that the Department of Transportation (DOT) could improve how the agency monitors the account balance, and recommended that DOT monitor additional indicators that can impact the Highway Account balance throughout the year to better anticipate sudden changes in the balance. In response, DOT now more closely monitors the Highway Account balance, including tracking biweekly deposits and weekly cash withdrawals.
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| Department of Transportation | To improve DOT's communication with stakeholders on the status of the Highway Account and the mechanisms the agency uses to help maintain account solvency, the Secretary of Transportation should include in its proposed communication plan a periodic reporting schedule that includes information on the status of the Highway Account balance--based, in part, on information gained from monitoring additional indicators--and actions that may be needed to maintain account solvency. |
In August 2008, the balance of the Highway Account within the Highway Trust Fund--the primary mechanism for funding federal highway programs--dropped precipitously and a shortfall became imminent. We reported in February 2009 that the Department of Transportation (DOT) could improve how the agency communicates with stakeholders--Congress, state agencies, and others--and recommended that DOT communicate more regularly with stakeholders on the status of the account balance and actions that may be needed to maintain account solvency. In response, DOT officials have proactively communicated with stakeholders about an anticipated Highway Account shortfall for fiscal year 2009.
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