The Federal Highway Administration (FHWA) has notified State departments of transportation that Highway Trust Fund (HTF) balances may dip below the threshold of $1 billion. If this occurs, FHWA will need to implement cash management procedures to limit timely reimbursements under the Federal-Aid Highway Program.
The Highway Account of the HTF is projected to run out of money around early November if FHWA does not implement cash management procedures outlined in the guidance.
The HTF has been going broke for years as this driver funded program is paid for through the gas tax. Current gas tax revenues on the Federal level have not been
FHWA
The steep drop in traffic volumes caused by the COVID-19 pandemic pushed the HTF closer to insolvency faster than projected
Cash Management Procedures in Place Unless IIJA Enacted
As a shortfall nears, FHWA will implement cash management procedures to ensure a positive balance is maintained in the Highway Account.
Cash management procedures would allocate HTF Highway Account funding reimbursements to states in proportion to their share of the total unexpended balances of all the states; however, reimbursement of the full requested amount may not be possible based on cash-on-hand.
Thus, under the cash management procedures, the American Association of State Highway & Transportation Officials (AASHTO) says that each state would only be able to bill against a state-specific cap, with “billing overages” being covered in the future payment cycle.
What is the Highway Trust Fund & Why is it Going Broke?
As was the case with prior HTF cash shortfalls in 2008 and 2014, reimbursement windows would be limited around the sixth and 17th business days each month, which is when the agency receives its twice-monthly deposits of tax receipts from the U.S. Department of the Treasury for the HTF.
If necessary, FHWA’s cash management process could begin as early as this October – not in November – in order to create and preserve a necessary “cash cushion” for the HTF.
“The Highway Trust Fund cash shortfall is an important scenario to be aware of – but also one of many possible scenarios between now and the end of September,” said Joung Lee, director of policy and government relations for AASHTO. “Of course, the infrastructure bill [the Infrastructure Investment and Jobs Act] will solve this issue immediately upon passage since it will transfer $118 billion from the Treasury’s general fund to the HTF – with $90 billion of this amount going to the HTF’s highway account,” he added.
The House is set to vote on the plan by September 27th.
