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64 T R A N S P O RTAT I O N F I N A N C E suggests that the federal share of the investment needed provide significant revenue benefits. The tax-writing just to maintain safety, structural, and traffic congestion committees are, however, famously hesitant to cede any conditions at the 2000 level would be $47.7 billion in of their revenue-raising authority to some kind of auto- FY 2004 and would rise to $53.6 billion in FY 2009. matic formula, such as a link to the Consumer Price According to current projections of the Congressional Index (CPI). Budget Office, the Highway Account of the Highway According to the General Accounting Office, the fed- Trust Fund, which took in $30.3 billion in FY 2000, will eral tax treatment of gasohol sales has lost the Highway only support a program that spends $35 billion to $36 Trust Fund $6 billion during TEA-21, a loss that will billion annually. Moreover, Administrator Peters states grow to $20 billion over the next 10 years unless cor- that if investment were to remain at anticipated levels rective action is taken. Gasohol (gasoline mixed with through 2003, recent trends observed in the condition ethanol) tax policy has two effects on the Highway and performance of the highway system would con- Trust Fund. First, the tax rate on gasohol is lower than tinue--physical conditions and safety performance the tax on gasoline or diesel (up to 5.1 cents per gallon would improve, but the operational performance of the lower, depending on how much ethanol is in the mix). highway system would deteriorate further. Average As the article points out, this encourages consumers to speeds would decline, the amount of delay experienced purchase gasohol and keeps corn growers happy. by drivers would increase, and the average length of con- Second, of the remaining gasohol tax, 2.5 cents per gal- gested periods on the nation's urban principal arteries lon goes to the general fund for deficit reduction (a would increase. holdover from the 1990 budget summit) rather than being put into the trust fund. Highway advocates have sought the transfer of the 2.5 cents from the general WHAT MEASURES CAN REASONABLY BE TAKEN fund to the Highway Trust Fund for some time, and TO ACHIEVE THE GOALS? implementing legislation (S. 1306/H.R. 2808), unop- posed by the corn growers, has been introduced in If we stick to the goals of covering the cost to maintain Congress. The issue of either eliminating the ethanol system condition and performance and improved safety, subsidy or requiring the general fund to reimburse the FHWA, AASHTO, and ARTBA would all agree that trust fund for the subsidized amount is slightly more performance will not be maintained without reautho- controversial. Recent legislation would mandate that at rization funding at levels greater than those of TEA-21. least 5 billion gallons of gasohol be sold in the United Where might this money come from? States each year, a number that would cause a signifi- While there is no single panacea, this paper addresses cant reduction in Highway Trust Fund receipts if the four categories of revenue sources: enhancements to the subsidy is not eliminated or reimbursed. fuel excise tax, tax credit bonds, alternative revenue So far as interest on the Highway Trust Fund is con- sources, and tolling. cerned, all federal trust fund accounts other than the Highway Trust Fund are credited with interest on their unexpended balances. The Highway Trust Fund, Enhancements to the Fuel Excise Tax Transportation Weekly recalls, gave up its interest in 1998 as part of the deal to ensure that all of the money Currently, fuel taxes provide approximately 90 percent is actually spent. The crediting of the Highway Trust of the revenues deposited in the Highway Trust Fund. Fund with interest would add revenue to the fund that, Any moves to increase the gas tax are certainly fraught if revenue-aligned budget authority (RABA) is reen- with political difficulty. Congress has raised the tax lev- acted, would then be spent. That would, however, also els on motor fuels on five occasions, but in only two of move the program away from the principle of 100 per- those instances (1959 and 1982) was the need for more cent user financing, since those interest payments, were infrastructure the reason for the increase. So where is they to be spent in the real world, would have to come the "low-hanging fruit"? In a recent article, from somewhere, probably the general fund, which Transportation Weekly summarized three sources that would create a sort of general fund subsidy for the high- have received significant attention in the run-up to way program. The crediting of interest (along with reauthorization: indexing the tax for inflation, captur- RABA) would, however, still bring in real money and ing interest on the Highway Trust Fund, and changing would be politically easier to accomplish than a gas tax the federal tax structure on gasohol sales.10 increase. Indexing the tax to compensate for inflation would Senate Finance Chairman Max Baucus has prepared reverse its eroding buying power and eventually would his Maximum Economic Growth for America Through the Highway Trust Fund (MEGA Trust Act) for reau- 10 Transportation Weekly, Vol. 3, No. 42, Aug. 19, 2002. thorizing the Highway Trust Fund next year. This legis-