Congressional Budget Office January 14, 2020 Federal Highway - PowerPoint PPT Presentation

Congressional Budget Office January 14, 2020 Federal Highway Spending and Revenues Transportation Research Board, 99th Annual Meeting Standing Committee on Revenue and Finance Sheila Campbell Microeconomic Studies Division

CBO Federal Spending for Highways 1

CBO Public Spending for Highways as a Share of GDP Percent 1.6 1.4 1.2 State and Local 1.0 Spending 0.8 0.6 0.4 Federal Spending 0.2 0.0 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 GDP = gross domestic product. 2

CBO Federal Spending for Highways, Adjusted for Inflation Billions of 2017 Dollars 70 Adjusted With 60 Government- Specific Capital and Consumption 50 Price Indexes 40 30 20 Adjusted With GDP Deflator 10 0 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 3

CBO Federal Spending for Highways in the Future Policymakers could use a number of different criteria to guide decisions about how much the federal government should spend for highways.  In the Federal Highway Administration’s (FHWA’s) Improve Conditions and Performance Scenario, projects would be funded if their benefits met or exceeded their costs.  In the FHWA’s Maintain Conditions and Performance Scenario, projects would be funded to keep overall conditions and performance unchanged by the end of 20 years.  Alternatively, policymakers could set spending equal to expected revenues in the Highway Trust Fund. 4

CBO Shares of Total Federal-Aid Highway Spending Devoted to Various Purposes 5

CBO Highway Trust Fund Revenues 6

CBO Sources of Revenues Credited to the Highway Trust Fund, 2018 Gasoline and Other Fuels Taxes on Tax Fuels ($36.2 billion) Diesel Tax Truck and Trailer Tax Taxes Specific to Heavy Use Tax on Certain Vehicles Vehicles ($6.3 billion) Tires and Tread Rubber Tax Other Taxes and Fines 0 5 10 15 20 25 30 Billions of Dollars 7

CBO Receipts, Outlays, and End-of-Year Balance or Shortfall in the Highway Account of the Highway Trust Fund Billions of Dollars 100 Projected Actual 75 Outlays 50 25 Receipts 0 -25 -50 -75 End-of-Year Balance or Shortfall -100 -125 -150 2012 2014 2016 2018 2020 2022 2024 2026 2028 These are the values in CBO’s May 2019 baseline budget projections. For surface transportation programs funded from the Highway Trust Fund, CBO’s baseline projections of outlays do not consider whether projected balances in the trust fund are sufficient to support any particular amount of spending. Rather , CBO’s projections of the balances or shortfalls in the trust fund reflect the cash flows that would stem from the spending and revenues as projected separately in CBO’s baseline. F or more information, see Congressional Budget Office, The Highway Trust Fund and the Treatment of Surface Transportation Programs in the Federal Budget (June 2014), www.cbo.gov/publication/45416. 8

CBO Estimated Spending From the Highway Account of the Highway Trust Fund Under S. 2302 Millions of Dollars 2020 – 2025 2020 2021 2022 2023 2024 2025 Start-of-Year Balance 23,542 13,518 303 (a) (a) (a) (a) Revenues and Interest b 37,739 37,282 36,955 36,762 36,650 36,560 221,949 Outlays 46,763 49,498 53,357 55,391 56,560 57,941 319,510 End-of-Year Balance c 13,518 303 (a) (a) (a) (a) n.a. ——— a ——— ——— ——— ——— ——— ———— Memorandum: Shortfall n.a. a n.a. -17,099 -19,629 -20,910 -22,381 -80,019 All years shown are federal fiscal years. Components may not add up to totals because of rounding. Outlays, revenues, and interest projections are relative to CBO’s May 2019 baseline . n.a. = not applicable. a. Under current law, the Highway Trust Fund cannot incur negative balances. However, following the rules in the Balanced Budget and Emergency Deficit Control Act of 1985 for constructing the baseline, this estimate for surface transportation spending incorporates the assumption that obligations presented to the Highway Trust Fund will be paid in full. The memorandum to this table shows the shortfall of fund balances, assuming spending amounts consistent with CBO’s estimate for S. 2302 for the Federal -Aid Highway Pro gram and CBO’s May 2019 baseline for the National Highway Traffic Safety Administration and Federal Motor Carrier Safety Administration programs, which are part of the Highway Account of the Highway Trust Fund. b. Some of the taxes that are credited to the Highway Trust Fund are scheduled to expire on September 30, 2022, including the taxes on tires and all but 4.3 cents of the federal tax on motor fuels. However, under the rules in the Deficit Control Act for constructing the baseline, this estimate incorporates the assumption that all of the expiring taxes credited to the fund will continue to be collected after fiscal year 2022. c. End-of- year balances reflect amounts transferred from the trust fund’s highway account to its transit account— in 2018, $1.6 billion. CBO estimates that those transfers will equal $1 billion annually over the 2020 – 2025 period. 9

CBO Receipts, Outlays, and End-of-Year Balance or Shortfall in the Transit Account of the Highway Trust Fund Billions of Dollars 50 Projected Actual Receipts 25 Outlays 0 -25 End-of-Year Balance or Shortfall -50 -75 2012 2014 2016 2018 2020 2022 2024 2026 2028 These are the values in CBO’s May 2019 baseline budget projections. For surface transportation programs funded from the Highway Trust Fund, CBO’s baseline projections of outlays do not consider whether projected balances in the trust fund are sufficient to support any particular amount of spending. Rather , CBO’s projections of the balances or shortfalls in the trust fund reflect the cash flows that would stem from the spending and revenues as projected separately in CBO’s baseline. F or more information, see Congressional Budget Office, The Highway Trust Fund and the Treatment of Surface Transportation Programs in the Federal Budget (June 2014), www.cbo.gov/publication/45416. 10

CBO Option to Increase Taxes on Motor Fuels and Index for Inflation In 2018, CBO published an estimate prepared by the staff of the Joint Committee on Taxation of the effects on revenues of increasing excise taxes on motor fuels, beginning in January 2019. Changes in Revenues Billions of Dollars 2019 – 2023 2019 – 2028 2019 2020 2021 2022 2023 Increase the Tax Rates by 15 Cents 15.2 21.9 22.7 23.5 24.2 107.5 237.1 Increase the Tax Rates by 35 Cents 35.1 50.2 51.3 52.2 53.1 241.9 514.9 11

CBO CBO’s Analysis of Revenues From a Tax on Vehicle Miles Traveled (VMT) by Commercial Trucks 12

CBO Estimated Annual Gross Revenues From Uniform VMT Taxes on All Roads 13

CBO Estimated Annual Revenues From a VMT Tax of 5 Cents per Mile, by the Road Network Included in the Tax Base Billions of 2017 Dollars 14 All Roads 12 Interstates and Arterial Roads 10 Interstates Limiting the roads covered by a VMT tax would have 8 less effect on revenues if 6 the tax applied only to combination trucks. 4 2 0 All Trucks Combination Trucks 14

CBO Recent Publications From CBO About Federal Highway Spending Cost estimate for S. 2302, America’s Transportation Infrastructure Act of 2019 (November 12, 2019), www.cbo.gov/publication/55845. Issues and Options for a Tax on Vehicle Miles Traveled by Commercial Trucks (October 2019), www.cbo.gov/publication/55688. Federal Investment, 1962 to 2018 (June 2019), www.cbo.gov/publication/55375. Federal Support for Financing State and Local Transportation and Water Infrastructure (October 2018), www.cbo.gov/publication/54549. Public Spending on Transportation and Water Infrastructure, 1956 to 2017 (October 2018), www.cbo.gov/publication/54539. 15