U.S. highway fund crushed by cutback in driving
As drivers cut back on gas, The Department of Transportation says its Highway Trust Fund will be depleted and needs an $8 billion emergency infusion.
By Tami Luhby, CNNMoney.com senior writer
September 5, 2008: 1:50 PM EDT
NEW YORK (CNNMoney.com) An unprecedented decline in driving will have depleted the federal Highway Trust Fund by the end of September prompting the government to ask Congress for an $8 billion emergency infusion Friday. Gasoline sales are crucial to maintaining the nation's highway infrastructure. About 90% of the fund's total revenues comes from taxes on motor fuels, according to a July report from the Congressional Budget Office.
Without the additional money, the Department of Transportation will not be able to fully reimburse states for their highway investments. Already in September, department officials are projecting getting $4.4 billion in state requests but collecting only $2.7 billion in revenues. If it doesn't receive the funds, it will start reimbursing states on a pro-rated basis as soon as the end of next week, U.S. Transportation Secretary Mary Peters said in a conference call.
Peters said the Administration favors a bill put forth by Rep. Charles Rangel, D-N.Y., which would transfer $8 billion from the General Fund to the Highway Trust Fund. The bill passed the House before it recessed for summer break.
The crunch comes as Americans have drastically cut back on their driving amidst record high gas prices. The number of miles driven has dropped by 53.2 billion miles since last November, the first time it has topped 50 billion, officials said.
The 18.4-cent tax per gallon on gas and gas-ethanol blends accounts for two-thirds of the trust fund's revenues. Another quarter comes from the 24.3-cent tax on diesel fuels.
In 2007, the Highway Trust Fund took in about $38.8 billion in revenue.
The fund has become an election issue since Republican nominee John McCain favored eliminating the 18.4-cent gas tax to this summer to alleviate some of the pressure Americans are feeling from the higher gas prices.
Barack Obama, the Democratic nominee, recently proposed an emergency plan that would inject $25 billion into a Jobs and Growth Fund that would be used, in part, to replenish the Highway Trust Fund.