Letting Highway Trust Fund Earn Interest: How Much Would it Help?
The Senate released a proposed $26.8 billion patch to the nation’s highway trust fund two weeks ago that included a long-sought priority of transportation policy-makers: restoring the fund’s ability to keep the interest it accrues on unspent balances.
But the deal left open the question of how much that fix would benefit lawmakers as they seek to plug a serious funding gap in the nation’s infrastructure spending. Enter the non-partisan Congressional Budget Office (CBO), which released some hard numbers on Tuesday.
The CBO found that if the current transport spending levels were continued — which the Obama administration hopes to do for the next 18 months — the trust fund would receive slightly less than $400 billion over the next 10 years, with $50 billion of that dedicated to transit.
Yet the fund would be obligated to pay $610 billion to state DOTs over the same period to keep transport projects going. Transit spending would total about $90 billion, leaving a 10-year estimated deficit of $170 billion for roads and bridges, and a $40 billion shortfall for transit.
And that deficit is assuming no added long-term investment in infrastructure from the federal government, which is almost certain to occur sometime between now and 2012 — as long as a steady source of funding is found. So the budget challenge is, in a word, staggering.
How much would letting the trust fund keep its interest help with that problem? The CBO estimated that $3 billion or so in extra annual revenue would be freed up for new spending. Taken over 10 years, that amounts to one-seventh of the projected yearly shortfall in transportation programs.