America's Highways

American Highway Users Alliance

The united voice of the transportation community on highway safety and mobility.

A nonprofit advocacy organization representing nearly 350 national trade associations, corporations, small businesses, and state and local nonprofit organizations that represent over 45 million highway users.

1776 Massachusetts Ave., NW, Suite 500
Washington, D.C. 20036
202.857.1200       fax 202.857.1220
www.highways.org
© Copyright 2002

RABA Rolls Forward: Funding Outlook Improves

On May 14th the House voted 410 to 5 to provide an additional $4.4 in budget authority and $1.118 billion in outlays for the FY 2003 highway appropriation. This restores the highway program to the $27.7 billion guaranteed under TEA21. The TEA21 funding mechanisms provided that if Highway Trust Fund Revenues grew beyond those garanteed in TEA21, the budget for the program would grow. This so-called Revenue Aligned Budget Authority or RABA allowed the highway program to expand from the $27.7 billion level contained in TEA21 to $31.8 billion last year based on increased deposits to the Trust Fund resulting from the economic expansion. However, with the slow-down in the economy and subsequent reduction in fuel tax revenues the RABA provision in TEA21 required that the Administration not only reduce current spending, but look back to the previous year's commitments and write down current spending to reflect those obligations in light of reduced current revenue trends.

Because there is a large - approximately $18 billion - surplus in the Highway Trust Fund, the House was willing to restore $4.4 billion to the FY 2003 program above the $23.3 billion the Administration requested thus keeping the $27.7 TEA21 guaranteed level. In looking at why the House took this step we can see the future motives behind a TEA21 reauthorization. Many members saw it as a jobs and economic stimulus bill, claiming the restoration of funding would protect 180,000 jobs. Other members such as Highway and Transit Subcommittee Chairman Tom Petri (R-WI) and Ranking Member Bob Borski (D-PA) said the state programs could not absorb such a cut and maintain their highway programs. Transportation and Infrastructure Committee Chairman Don Young (R-AK) said this restoration was vital to establishing future funding levels for reauthorization. But the Committee's Ranking Member Jim Oberstar (D-MN) noted that the compromises needed to move the measure included 49 new projects recommended by the House Appropriations Committee. The increasing use of this approach leaves DOT little discretion in managing the spending aspects of the program. Reauthorization will see a combination of projects and state programs as the driving forces behind the spending limits for the next highway bill.

The Senate left Washington for its Memorial Day Recess before completing action on its supplemental appropriations bill. Sen. Robert Byrd (D-WV) wishes to include RABA restoration as part of the supplemental. With 74 senators co-sponsoring a $4.4 billion restoration level, action is almost certain. Only differences between House and Senate budget calculation methods may cause a slight delay.

Congress has begun to recognize the financial problems with the Highway Trust Fund. The House included in its funding restoration measure a resolution calling for a new RABA formula that will smooth the peaks and valleys associated with the current funding methods.

In further recognition of Highway Trust Fund financial problems, Sen. Max Baucus (D-MT) held the first Senate Finance Committee hearing on revenue issues related to the Trust Fund. He used the hearing to gather information from the Treasury Department, the General Accounting Office (GAO) and the Congressional Budget Office (CBO) on tax administration, the revenue impact of alternative fuels' tax subsidies and revenue forecasting methods. The Senator is proposing to move the current 2.5 cents gasohol tax - which currently goes into the general fund to the Highway Trust Fund. In addition, he would compensate the Trust Fund for the 5.3 cents tax subsidy that ethanol receives by a transfer from the general fund equal to moneys ethanol would pay to the Trust Fund if it was taxed like other motor fuels. He noted that the continued diversion of highway taxes to non-highway purposes and the exemption of various fuels from paying their fair share of highway costs are endangering the user fee/Trust Fund concept. As we move into TEA21 reauthorization, the methods and amounts for funding future highway investments will be a major issue.