Transportation Trust Funds: Budgetary Treatment

98-63 E

CRS Report for Congress

Received through the CRS Web

Transportation Trust Funds: Budgetary Treatment

Updated April 6, 1998

John W. Fischer

Specialist in Transportation

Economics Division

Congressional Research Service ˜ The Library of Congress

ABSTRACT

This report addresses issues associated with the purpose and use of transportation trust

funds. Understanding how the trust funds operate and how they relate to the federal unified

budget is, in reality, complex and difficult. As a result, there is considerable latitude for

differing views as to whether the trust funds are meeting their intended goals. This report

explores these differing views in the context of legislation that would change the budgetary

treatment of transportation trust funds.

This report will be updated as action on legislation is completed. The budget treatment

issue has now become part of the debate about reauthorization of federal surface

transportation programs. For the most current information on surface transportation

reauthorization see: U.S. Library of Congress. Congressional Research Service. ISTEA

Reauthorization: Highway and Transit Legislative Proposals in the 105th Congress, 2nd

Session. CRS Report 98-221. by John W. Fischer.

Transportation Trust Funds: Budgetary Treatment

Summary

Some Members of Congress believe that the transportation trust funds should

be viewed independently of other federal programs, and that federal transportation

program spending should closely track revenues collected for the funds. Other

Members of Congress believe that the transportation trust funds must be viewed as

components of the entire federal budget and not as a separate element of the budget.

Supporters of changing the budget treatment of trust funds, and especially those

in favor of moving the trust funds off-budget, state that such a change would create

the equivalent of a fire wall around federal transportation programs similar to, but not

the same as, the one that exists for the Social Security program. They believe that

this mechanism would provide an incentive for budget discipline and reserve the full

value of user-fee-funded programs for their mandated purposes. Most importantly,

this action would fulfill what they view as a “contract” between the taxpayer and the

federal government to spend what are essentially viewed by supporters as user fees.

The basic argument of those opposed to changing the treatment of trust funds

is the need to maintain the accountability and integrity of the unified federal budget.

They assert that the “surpluses” in the transportation trust funds do not exist because

the federal government underspends on transportation programs. Transportation

spending increased significantly until FY1995 - FY1996 and then increased slightly

in FY1997. In FY1998, transportation spending is again appropriated at an increased

level. To opponents of changing the treatment of trust funds, this situation

demonstrates that special budget treatment of trust funds is not needed to facilitate

necessary federal expenditures on transportation programs.

The 1st Session of the 105th Congress ended without floor action on legislation

that would change the budgetary treatment of transportation trust funds. Legislation

giving the transportation trust funds off-budget status was introduced in the House

early in the 105th Congress. The Truth in Budgeting Act, H.R. 4, attracted wide

support in the House and had 242 cosponsors listed as of September 4, 1997. In

addition, the provisions of H.R. 4 were incorporated in H.R. 2400, the Building

Efficient Surface Transportation and Equity Act of 1997, (BESTEA) as Title VII. In

committee markup on March 24, 1998, this title has been modified to take only the

highway trust fund off-budget. Floor action on this legislation occurred on April 1,

1998.

The Senate did not consider off-budget legislation in the 1st Session. Instead,

legislation that could be viewed as a counterproposal to the off-budget initiative has

been introduced. S. 404, the Highway Trust Fund Integrity Act of 1997, proposes the

creation of a “revenue constrained fund” within the federal budget that would have

some, but not all, of the same spending results as the off-budget bill. The Senate did

not consider the budgetary treatment of trust funds during its recently completed floor

action on S. 1173, the Intermodal Surface Transportation Efficiency Act of 1997

(ISTEA II), which provides for the long term reauthorization of surface

transportation programs. It is likely that the budgetary treatment of trust funds will

become an issue in conference on surface transportation legislation.

Contents

Trust Fund Origins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Genesis of the Off-Budget Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Understanding Trust Fund Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Highway Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Airport and Airway Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

The 4.3 Cents Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Budget Treatment of Transportation Trust Funds . . . . . . . . . . . . . . . . . . . . . . . 9

Comparisons with the Social Security Trust Fund . . . . . . . . . . . . . . . . . . 10

The Arguments For and Against Changing the Budget Treatment of Trust Funds (i.e.

Off-Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Arguments for Changing the Budget Treatment of Trust Funds (i.e. OffBudget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Arguments Against Changing the Budget Treatment of Trust Funds (i.e. OffBudget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The Off-Budget Debate in the 104th Congress . . . . . . . . . . . . . . . . . . . . . . . . . 13

Efforts to Change the Budget Treatment of Trust Funds in the 1st Session of the 105th

Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Revenue Constrained Fund (RCF) Option . . . . . . . . . . . . . . . . . . . . . 16

Efforts to Change the Budget Treatment of Trust Funds in the 2nd Session of the

105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

The FY1999 Budget Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Transportation Trust Funds: Budgetary

Treatment

The 1st Session of the 105th Congress ended without floor action on

legislation that would change the budgetary treatment of transportation trust funds.

Legislation giving the transportation trust funds off-budget status was introduced in

the House early in the 105th Congress.1 The Truth in Budgeting Act, H.R. 4,

attracted wide support in the House and had 242 cosponsors listed as of September

4, 1997. In addition, the provisions of H.R. 4 were incorporated in H.R. 2400, the

Building Efficient Surface Transportation and Equity Act of 1997 (BESTEA), as

Title VII. This legislation, which is designed to reauthorize federal surface

transportation programs was marked-up in the Committee on Transportation and

Infrastructure on September 24, 1997, but was not reported at that time. In committee

markup on March 24, 1998, this title has been modified to take only the highway

trust fund off-budget. Floor action occurred on April 1, 1998.

The Senate did not consider off-budget legislation in the 1st Session.

Instead, legislation that could be viewed as a counterproposal to the off-budget

initiative has been introduced. S. 404, the Highway Trust Fund Integrity Act of 1997,

proposes the creation of a “revenue constrained fund” within the federal budget that

would have some, but not all, of the same spending results as the off-budget bill. The

Senate did not consider the budgetary treatment of trust funds during its recently

completed floor action on S. 1173, the Intermodal Surface Transportation Efficiency

Act of 1997 (ISTEA II), which provides for the long term reauthorization of surface

transportation programs. It is likely that the budgetary treatment of trust funds will

become an issue in conference on surface transportation legislation.

The activity in the 105th Congress on this issue builds on the relative success

of off-budget legislation in the 104th Congress. The 104th Congress was something

of a milestone for supporters of the off-budget concept because it was the first time

that either body of Congress had voted in favor of giving the trust funds off-budget

status. The 104th Congress concluded without Senate action on off-budget

legislation.

Prior to the 104th Congress this issue was last addressed by the Senate in 1991

and by the Congress as a whole in the 1980s. All of the attempts to move the

transportation trust funds off-budget in the 1980s failed, in one case by a very narrow

margin. The issue pits those who believe that trust fund revenues should be reserved

1

This report discusses major issues relating to proposals to change the budget treatment of

transportation trust funds. It will be updated as issues develop and new legislation is

introduced. For the most current information about pending legislation, please consult the

Legislative Information System (LIS) at http://www.congress.gov.

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only for spending on specific programs, against those who believe that trust fund

revenues should remain an intrinsic part of the unified federal budget.

The philosophical issues surrounding the transportation trust fund debate are

often viewed as being straightforward and relatively easy to understand. Understanding how the trust funds operate and how they relate to the federal unified budget is,

in reality, complex and difficult. As a result, there is considerable latitude for

differing views as to whether the trust funds are meeting their intended goals. In

addition, there is also considerable room for debate about how much spending the

trust funds can support.

Trust Fund Origins

Two major transportation trust funds exist: the highway trust fund and the

airport and airway trust fund. The highway trust fund consists of two separate

accounts — highways and transit — which are sometimes mistakenly referred to as

separate trust funds. In practice, the highway account and the transit account are

discussed as though they were separate entities, with the highway trust fund being

synonymous with the highway account. There are other smaller transportation trust

funds, but they generally are not the focus of the budget treatment debate. These

include the inland waterways trust fund, the harbor maintenance trust fund, and the

national recreational trails trust fund. The national recreational trails trust fund is

actually a set-aside within the highway trust fund and would be affected by any

decision to change the budget treatment of the highway trust fund.

The oldest and largest of the trust funds is the highway trust fund. This fund

was created by a separate revenue title in the Federal-Aid Highway Act of 1956

(1956 Act) (P.L. 84-627). The 1956 Act provided funding for construction of the

now virtually complete Dwight D. Eisenhower Interstate Highway System. In

addition, the 1956 Act provided some funding for other federal highway programs.

The highway trust fund was established as a way to provide funding for capital

construction, and this remains its principal focus.

In light of the current budgetary climate, it is interesting to note that the

Eisenhower Administration did not originally propose the trust fund “pay-as-you-go”

financing system established in the 1956 Act. The Administration, concerned about

increasing federal spending, instead proposed the creation of a Federal Highway

Corporation with bonding authority; it was to receive a specific portion of the federal

gasoline tax to fund its activities. The Administration viewed this mechanism as

preferable to incurring an increase in general revenue spending.

Over the last 40 years, the highway trust fund and the federal program it

supports have been changed numerous times.2 In almost every instance, Congress

has chosen to expand the scope of the federal highway program. At various times

2

For a more detailed history of the trust fund see: U.S. Library of Congress. Congressional

Research Service. Federal Excise Taxes on Gasoline and the Highway Trust Fund: A Short

History. CRS Report 97-853E. by Louis Alan Talley.

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over the same period Congress has also chosen concomitantly to increase the

revenue stream into the trust fund by raising federal excise taxes on motor fuels. The

most recent change in the structure of the federal highway program occurred with

enactment of the Intermodal Surface Transportation Efficiency Act of 1991 (P.L.

102-240) (ISTEA). ISTEA also reauthorized the trust fund revenue title. The last

change in the levels of revenue dedicated to the trust fund occurred in 1990, as part

of the Omnibus Budget Reconciliation Act of 1990 (OBRA90) (P.L. 101-508).3

The second transportation trust fund to be established, the airport and airway

trust fund, was created by the revenue title of the Airport and Airway Development

Act of 1970 (P.L. 91-258). The “aviation trust fund,” as it is also known, was

established to provide funding for capital improvements to the Nation’s airport and

airway system. The scope of the aviation trust fund, like the highway trust fund, has

been expanded over time. The most recent reauthorization of aviation programs

occurred with passage of Federal Aviation Administration Authorization Act of 1996

(P.L. 104-264). The most recent change in the levels of revenue dedicated to the trust

fund occurred as part of the Taxpayers Relief Act of 1996 (P.L. 105-34 ).

The transit account, created by the Surface Transportation Assistance Act of

1982 (P.L. 97-424), represented the provisional culmination of a long-term

congressional debate about the position of transit as part of the national transportation

system. The transit account gave the transit industry a consistent federal funding

source for capital spending on new and rehabilitated infrastructure and for other

purposes.

Revenue sources differ for the various trust funds. The highway trust fund is

financed by sales taxes on tires, trucks, buses, and trailers as well as truck usage

taxes, but approximately 90% of trust fund revenue comes from excise taxes on

motor fuels.4 The majority of the motor fuel revenue dedicated to the trust fund is

derived from an 18.4 cents per gallon tax on gasoline. Of this, 18.3 cents is dedicated

directly to the highway trust fund. The transit account receives an allocation

equivalent to the revenue generated by 2.85 cents of the tax on motor fuels dedicated

to the highway trust fund. The remaining 0.1 cents goes into the leaking

underground storage tank (LUST) trust fund. In addition, the fund receives interest

on the balances of the fund held in the U.S. Treasury securities.

The aviation trust fund normally receives the vast majority of its funding from

a percentage tax on domestic airline tickets (9% in FY1998, dropping to 8.0% in

FY1999, and 7.5% in FY2000) and a flight segment tax ($1.00 per segment in

FY1998. This tax rises gradually to $3.00 in FY2003, and is thereafter subject to

indexation for inflation). Additional funding is obtained from taxes on aviation fuels,

3

Federal fuel taxes were raised 4.3 cents by the Omnibus Budget Reconciliation Act of 1993

(OBRA93)(P.L. 103-66). This permanent tax was originally levied for deficit reduction

purposes and was deposited in the Treasury’s general funds account. As will be discussed

later in this report, these revenues are now being deposited in the highway trust fund.

4

For a discussion of federal transportation fuel taxes see: U.S. Library of Congress.

Congressional Research Service. Transportation Fuel Taxes: What the Taxpayer Relief Act

Has Wrought. CRS Report 97-824E, by Bernard A. Gelb.

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cargo waybills, and international departures and arrivals. The aviation trust fund

also receives interest on the balances of the fund held in U.S. Treasury securities.

The Genesis of the Off-Budget Debate

Two philosophically different views about how trust funds relate to the budget

frame the current debate. According to off-budget proponents, the trust fund

mechanism represents a contract with the taxpayers to spend revenues on the specific

activities identified as the purpose of the trust fund. In the view of those who support

the unified budget approach, a dollar of federal revenue is a dollar of federal revenue.

Spending decisions, therefore, need to be in the context of national rather than

programmatic requirements.

In straightforward terms, the debate about the budget status of the transportation

trust funds is about the allocation and control of federal spending. The transportation

trust funds have enjoyed consistent congressional support as the principal funding

sources for highway, transit, and aviation activities. There are, however, two

longstanding issues — balance and appropriate use — that have periodically arisen

over whether this funding mechanism is succeeding in meeting its stated objective.

The balance issue is the most visible of the two and drives the budget treatment

debate to a large extent. By far the most contentious disagreement over trust fund

spending arises because actual federal spending for trust fund programs often does

not match program spending levels set in authorizing legislation. The disagreement

over spending levels usually reflects the differing priorities that congressional

committees face. For example, the authorizing committees with authority over

transportation programs often support full funding for these programs. Budget and

appropriations committees, by contrast, often view transportation spending as

competing with other federal needs within a broader context of fiscal policy.

Transportation programs have been subject to obligation limitations or ceilings

(usually in appropriations legislation) with a resultant decrease in transportation

program spending vis-a-vis authorized levels. The obligation limitation mechanism

allows Congress to control outlays for programs operating with contract authority.

The obligation limitation does not, however, represent a permanent cutback in

funding, as these funds are retained as unobligated balances for later use. Higher

obligation levels could, therefore, be required in future years to facilitate spending

down unobligated balances should Congress deem this desirable.

The appropriate use issue is rooted in an ideological debate over the intended

use of trust fund revenues. One school of thought advocates that trust funds should

only be expended for capital transportation projects. Another school believes trust

funds should pay, at least in part, for the administrative costs of providing transportation services. Use of trust funds to pay for transit operating expenses, for example,

is viewed by some as outside the intended scope of the trust fund mandate. Perhaps

the longest running dispute of this type involves the level of the trust fund

contribution to the operation and maintenance expenses of the Federal Aviation

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Administration (FAA). This dispute, apparently settled for the moment, dates back

to the Nixon Administration.

Understanding Trust Fund Balances

Unexpended balances exist in both the highway and aviation trust funds. The

significance of these balances and the reasons for them differ. A complete

understanding of these balances is difficult, in part because of the complexity of trust

fund accounting and because of the policy framework in which these funds have

existed.5

The Highway Trust Fund

The trust fund, and the programs operating out of the Federal Highway

Administration (FHWA) and the Federal Transit Administration (FTA) that it

supports, must be periodically reauthorized by Congress. The ISTEA provided this

authority through FY1997. At the beginning of FY1998 these programs are

continuing to operate as a result of a short term authorization approved near the end

of the 1st Session of the 105th Congress.

At the end of FY1996, as shown in appendix table 1, the highway account of the

highway trust fund had an unexpended balance of $12.1 billion. The transit account,

as shown in appendix table 2, had an unexpended balance of $9.5 billion for the same

period. It should be understood, however, that there are future commitments against

these balances. Hence, they do not represent cash balances available for immediate

use. A reason for this is that highway programs operate with contract authority rather

than budget authority.

Contract authority is tantamount to, but does not actually involve, entering into

a contract to pay for a project at some future date. Under this arrangement, specified

in Title 23 USC, authorized funds are automatically made available to the states at

the beginning of each fiscal year and may be obligated without appropriations

legislation. Appropriations are still required, however, to make outlays at some

future date to cover these obligations. States, therefore, may obligate more funds

than they actually could outlay at that time, although this does not appear to have

drawn down the trust fund balance. For budgetary reasons, Congress routinely limits

how much may be obligated in appropriations acts, which does not eliminate these

funds, but only delays the timing of their actual use.

Highway and transit grant programs work on a reimbursable basis: states pay for

projects up front and federal outlays are made to them only when work is completed

and vouchers are presented to the U.S. Department of Transportation (DOT), perhaps

months or even years after the project has begun. Work in progress is represented in

the trust fund as obligated funds and although they are considered “used” and remain

as commitments against the trust fund balances, they are not subtracted from

5

Detailed financial information about the trust funds is found in the appendix at the end of

this report.

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balances. Trust fund balances, therefore, appear high in part because funds sufficient

to cover actual and expected future commitments must remain available.

Both the highway and transit accounts have substantial short- and long-term

commitments. These include payments that will be made in the current fiscal year

as projects are completed and, to a much greater extent, outstanding obligations to

be made at some unspecified future date. Additionally, there are unobligated

amounts that are still dedicated to highway and transit projects, but have not been

committed to specific projects.

In FY1994, for example, the highway account showed future commitments of

$42.6 billion. If these commitments had been charged against the balance in the

highway account at that time, it actually would have shown a deficit. To guarantee

the ability to make good on these commitments, Congress, through the Byrd

amendment to the Federal-Aid Highway Act of 1956, as amended, restricted the

growth of these commitments to a level not to exceed the current year’s unexpended

balance plus projected income for the following two fiscal years. The Byrd

amendment is an automatic device that requires no additional congressional action

to implement.

To develop a more meaningful account balance, it is necessary to calculate what

would be available at the end of a fiscal year, including expected future revenues and

unpaid commitments. The resulting figure is often referred to as the “surplus.”

Obviously, this process is very sensitive to both expenditure and revenue estimates.

In addition, the figure adjusted for the Byrd amendment can be either higher or lower

than the unadjusted number, depending on the level of commitments against the

unexpended balance and whether the adjustment includes expected interest earnings

or changes in anticipated excise tax collections.

Whether this ending balance is a “true” surplus is subject to debate. Although

this figure represents uncommitted funds that theoretically could be used for highway

projects, the FHWA has argued that maintaining a safe “cushion” of between $1-3

billion is necessary for the highway account to ensure adequate liquidity against

changing revenue projections or unanticipated problems. Equally important, these

funds are not lost to the states (unless they lapse), but remain in each of their

accounts as unobligated balances. To date, no federal transportation funds have ever

lapsed because of a limitation placed on obligation levels. Based on projections by

the Congressional Budget Office, it would appear that the trust fund could support

additional spending on highway and transit programs over the next few years,

without creating conflict with the above-mentioned criteria.

A similar procedure can be used to calculate an available spending balance for

the transit account. A mechanism similar to the Byrd amendment, but requiring only

one additional year's revenue in the calculation, limits commitments from the transit

account. The idea of maintaining a safe “cushion” would be equally valid for the

transit account, reducing the amount of funds conceivably available for a one-time

increase in obligations.

In part because of its effect on the federal deficit, Presidents have often

discouraged increased program spending by requesting obligation limitations. If

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more trust fund money were used, the federal government would have to either

decrease spending on other programs, raise taxes, or increase borrowing to prevent

an increase in the deficit. This suggests that although surplus balances in the

highway trust fund do exist and at times may be either larger or smaller than

generally thought, they exist at least partially because of budgetary considerations.

The Airport and Airway Trust Fund

Balances in the aviation trust fund are more difficult to understand against the

backdrop of legislative provisions mandating certain spending priorities and recent

events that allowed the fund to lapse for extended periods of time. Nonetheless, it

is clear that the aviation trust fund maintained a sizable balance for much of its

existence. As shown in appendix table 3, the aviation trust fund had an unexpended

balance of $11.4 billion at the end of FY1995. After accounting for commitments

against the unexpended balance, the fund showed an uncommitted balance, or

“surplus,” of $5.1 billion. At the end of FY1996, the unexpended balance had

dropped to $2.5 billion and the uncommitted balance had dropped to $2.3 billion.

This dramatic one-year change was due to a confluence of events beginning in 1996

which severely affected fund revenues without a concomitant change in federal

program spending. This situation will be described in more detail subsequently, but

it is indicative of the peculiarities that have been associated with the history of this

trust fund. Another example, was the legal restriction placed on use of the fund to

pay FAA operational expenses in the 1980s, but since dropped, that had a significant

effect on the fund balances.

During the 1980s, restrictions on the use of the aviation trust fund monies were

legislated by the authorizing committees because of policy differences with the

executive branch and the appropriations and budget committees in Congress. These

restrictions included mechanisms that automatically limited the availability of trust

fund monies in certain instances under the guises of a “cap” and a “penalty clause.”

The major disagreements centered on how much of the trust fund should support

FAA operations vis-a-vis Treasury general funds.. The net result of these restrictions

was a several year increase in an already uneven relationship between fund revenues

and spending and a concomitant build up in the unexpended balance in the fund.

Another reason the aviation trust fund balance grew in the 1980s was related to

delays and problems in implementing the FAA’s National Airspace System (NAS)

Plan, now known as the Capital Investment Plan (CIP). It entails installation of a

complex advanced automation system (AAS) and other equipment related to air

traffic control. The AAS integrates considerable new capital investment in

computers, radar, and weather monitoring equipment required for managing the

explosive growth in air traffic that took place over the last decade. As the NAS

implementation plan continued to slip, primarily for technical and procurement

reasons, trust fund revenues accumulated faster than they were spent. This action

accelerated the surplus buildup, which increased even faster as interest accrued on

the balance. In recent years, supporters of the off-budget position have also argued

that airport improvement program spending, at below authorized levels, was

responsible for additional growth in the surplus

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All of the previous problems associated with the balances in the aviation trust

fund pale in importance in view of unexpected events affecting the trust fund that

occurred initially in 1996 and reoccurred in early 1997. On January 1, 1996, and

again on January 1, 1997, authority to collect taxes for the aviation trust fund expired.

The first expiration lasted almost 8 months and cost the trust fund approximately

$4.0 billion in revenues. The second expiration was much briefer, about two months,

costing the trust fund an additional $1 billion. To a significant extent the “surplus”

in the aviation trust fund was greatly diminished by these events. The taxes would

have expired again on September 30, 1997, without further reauthorization.

After a spring and summer of uncertainty, the aviation tax reauthorization

unexpectedly became part of the revenue debate about the balanced budget. The

result of this debate was the Taxpayer Relief Act of 1997 (P.L. 105-34) which

imposed a new system of aviation taxation effective October 1, 1997. The new

system is a compromise that tries to accommodate a demand by some parts of the

industry for a tax system related to aviation activity (in this case flight segments were

used), but at the same time maintain the strength of the old system by retaining a

somewhat reduced ticket tax.. The new taxes will raise an additional $3 billion during

the next 5 years, over what might have been expected if the old system had been

reauthorized without change

The 4.3 Cents Dilemma

The Taxpayer Relief Act of 1997 made another major change in the revenue

stream for the transportation trust funds. Prior to October 1, 1997, 4.3 cents of the

fuel tax had been deposited in the Treasury general fund for deficit reduction.

Transportation interest groups have long argued that it was inappropriate to use fuel

taxes for deficit reduction, arguing instead that all fuel taxes be reserved for

transportation purposes. Congress had not accepted this logic when the 4.3 cent

charge was enacted as part of OBRA93. During consideration of the Taxpayer Relief

Act of 1997, however, the Senate added a provision, later accepted in conference,

that redirected the 4.3 cent tax to the highway trust fund or the airport and airway

trust fund in most instances. For those funds designated for the highway trust fund

there was a further split that provides 3.45 cents to the highway account and reserves

the remaining 0.85 cents for the transit account.

This change provides the trust funds, and especially the highway trust fund, with

a dramatically increased revenue base. A 1.0 cent increase in the federal fuel tax is

generally viewed as providing something over $1.2 billion in new revenue for the

highway trust fund. As a result, the highway trust fund could receive over $5.0

billion in additional revenue during FY1998.6 Growth also occurs in the airport and

airway trust fund as a result of the redirection of the 4.3 cents associated with

6

There are several estimates that indicate that the actual increase in revenue could equate to

as much as $6.2 billion per year depending on increased fuel use associated with economic

growth and the increasing popularity of sport-utility vehicles.

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aviation fuel use, but the growth is not as dramatic, given the context of the new

overall aviation taxing structure discussed in the previous section of this report.

The redirection of the 4.3 cent tax was not accompanied by an increase in

transportation spending authority as part of the balanced budget agreement. Hence,

while these funds will be assigned to the trust funds, and will count toward the

balance in the fund for the purpose of determining interest payments, the funds are

not available for transportation activities. Instead, the balanced budget agreement

continues to assign spending of these revenues without regard to their changed

actuarial placement. The net result of this situation is the likelihood of significant

growth in the unexpended balance of all affected transportation trust funds. The

highway trust fund will be particularly affected by this situation.

This situation has incensed supporters of increased spending for federal

transportation who, as previously mentioned, believe that trust fund revenues and

transportation program spending should be linked. Supporters of this position, and

this includes some Members of Congress, have vowed to make increased

transportation spending, linked to the 4.3 cent revenue stream, a major component

of the FY1999 budget agreement debate.

It appears that the supporters of spending the 4.3 cent revenue stream have won

their case, at least for the moment. H.R. 2400 and S. 1173 both rely on the additional

funding provided by this revenue stream to pay for the large increases in

transportation spending found in each of these bills. What remains to be determined

is how this increases will be accommodated by offsets and other actions in the

FY1999 congressional budget agreement.

Budget Treatment of Transportation Trust Funds

Only the highway trust fund predates the adaptation of the unified budget

concept that began in FY1969. Prior to the unified budget, the federal government

operated with essentially three budgets: administrative, consolidated cash, and

national income accounts. All federal trust fund activities were accounted for in the

consolidated cash budget and the national income accounts budget.

The adoption of the unified budget made all trust fund receipts and expenditures

part of the annual budget process on an actuarial basis. In making its decision to

include trust funds in the unified budget, Congress apparently relied on the

recommendations of President Johnson’s Commission on Budget Concepts. The

Commission identified several major justifications for the inclusion of all trust funds

in the budget including: Congress’ ongoing responsibility to establish taxes for and

benefits to be derived from trust funds; the possible “incentive to finagle budget

totals by inventing new trust fund expenditures, ... outside the budget;” and the

possibility that trust funds outside the budget “distort priorities of social choice and

CRS-10

lead to bad program decisions.”7 The Commission recognized that arguments could

be made to support the exclusion of trust funds from the budget. However, it argued

successfully that better budget accountability necessitated that trust funds be

examined as part of the overall budget.

Comparisons with the Social Security Trust Fund

Those who seek to move the transportation trust funds off-budget frequently

refer to the off-budget status of the social security trust fund as a potential model. As

a result of OBRA90, the social security trust fund was specifically excluded from

budget calculations for the unified federal budget. The legislation did not, however,

remove the costs of administering the social security program from the budget. This

is worth noting because all of the administrative expenses of the FHWA and a large

portion of the FAA’s operating and maintenance expenses are derived from the trust

funds.

A further, and very important, difference from the transportation trust funds is

the social security system’s permanent appropriation. This allows the Social Security

Administration to distribute funds on a formula basis without any congressional

action. Although Congress can, and does, revisit the issue of social security spending

from time to time, there is no annual appropriations process or periodic authorization

process as there is for transportation programs.

Finally, the total federal deficit is the difference between all federal revenues

and outlays including both on-budget and off-budget accounts. The outlays and

revenues of the social security system are part of this computation.

The Arguments For and Against Changing the Budget

Treatment of Trust Funds (i.e. Off-Budget)

The budget status of the transportation trust funds is at its root a discussion

about money and who should have the authority to spend it. What follows is a

synopsis of the major arguments that have been put forward to support and oppose

taking the trust funds off-budget.8

7

Tax Institute. Federal Trust Funds: Budgetary and Other Implications. New York, 1970.

p. 20

8

For a discussion of the proponents positions on the off-budget debate see: Shuster, Bud.

Money to Get America Moving. Washington Post. September 15, 1997 (also available at

www.house.gov/transportation/bestea/shuster.htm) and Young, J.T. Phantom Highway

Surplus. Journal of Commerce. November 5, 1997. p. 7A

CRS-11

Arguments for Changing the Budget Treatment of Trust Funds (i.e.

Off-Budget)

! The transportation trust funds represent a contract with the Nation’s taxpayers.

Motorists, airline passengers, and others are paying user fees with the

expectation that these fees will be utilized for the programs with which they

are associated. If the trust funds are not going to be used for their stated

purposes, the excise taxes that fund them should be eliminated.

! According to the Federal Highway Administration and others, there are

significant infrastructure needs nationwide that are not being met. If the trust

funds were made available by changing the budget treatment of trust funds,

they could support needed additional federal transportation spending. Prior

to the increase in revenues to the highway fund discussed earlier, proponents

have sometimes identified the possible additional spending as being up to $2

billion annually on highways and transit, and $1 billion annually on aviation.

Given the new revenues to the fund these estimates are now likely to be much

higher.

! Inclusion of the trust funds in the unified budget subjects their outlays to the

budget process, thereby making them liable to legislated spending limitations,

which are not based on an analysis of national transportation spending needs.

! Using the trust fund balances to help mask the size of the overall federal

deficit perverts the unified budget process by giving a false impression of the

magnitude of the deficit and thereby distorts the overall budget process.

! Taking the transportation trust funds off-budget, or otherwise changing their

budget treatment, would not encourage others to seek changes to additional

trust funds. This is because transportation trust funds differ from other trust

funds by being user-fee financed, having a self-regulating deficit precluding

mechanism in the form of the Byrd amendment, and by funding long-term

programs.

! Proponents of the off-budget position reject the argument that trust fund

surpluses are the result of intergovernmental transfers resultant from the

payment of interest on balances in the fund. They argue that interest payments

are a fair mechanism for compensating the funds for their temporary use to

fund other federal activities. In addition, the regulations requiring interest

payments predate the transportation trust funds and are applied to all trust

funds.

! Taking the trust funds off-budget would eliminate the temptation they present

to those seeking funding sources for other projects.

CRS-12

Arguments Against Changing the Budget Treatment of

Funds (i.e. Off-Budget)

Trust

! The unified budget is an essential tool for understanding how the federal

government collects and spends all of its funds. Any federal activity affects

the economy as a whole. Attempts to isolate specific activities, such as

transportation, from view could distort overall federal economic policy

formulation.

! Many of the “surpluses” in the transportation trust funds are derived, at least

in part, from intergovernmental transfers, in large part as a result of interest

paid by the treasury on trust fund balances. These payments could be viewed

as subsidies to transportation at the expense of other federal programs. As a

result, the surpluses have often distorted the trust fund balances in the same

way that off-budget advocates claim that the surpluses distort the federal

deficit.

! When viewed from a historical perspective, outlays from the trust funds have

exceeded revenues into the funds in many years, particularly in the 1980s and

well into the 1990s. This is only possible because of the aforementioned

intergovernmental transfers and the compounding of the interest payments.

This is particularly true for the highway trust fund. This situation shows that

the federal government’s transportation program spending in recent times is

in line with, or exceeds, what the trust funds should provide by way of outlays.

! Changing the budget treatment of transportation trust funds could encourage

the advocates of other federal spending programs to seek similar status. If a

significant number of these requests were granted the unified budget process

would cease to afford Congress the ability to determine national priorities on

a recurring basis.

! Off-budget programs with automatic spending authority dilute the control of

Congress over policy decisions. Such a situation is at odds with the constitutional mandate for Congress to approve all federal spending.

! Off-budget status for specific transportation activities, such as highways,

could decimate funding for non-trust fund federal transportation programs that

would have to take the brunt of any deficit reduction efforts because they are

all part of the same budget function area (function 400).

! The unified budget does not prevent Congress from spending more on

transportation if it so chooses. In fact, transportation spending has risen

significantly over the last four decades.

CRS-13

The Off-Budget Debate in the 104th Congress

On February 7, 1995, Representative Shuster, Chairman of the House

Committee on Transportation and Infrastructure, with cosponsorship from committee

majority and minority leadership, introduced H.R. 842, the “Truth in Budgeting Act.”

The bill as introduced would have afforded the highway, aviation, inland waterways,

and harbor maintenance trust funds off-budget status.

The proposed legislation enforced the off-budget status of the trust funds by

prohibiting their inclusion in the budget of the United States and the congressional

budget, and by exempting the trust funds from any general budget limitations. The

bill detailed specific safeguards against deficit spending from the various trust funds

and a process for determining the availability of funds for additional spending from

the trust funds. The legislation did not call for a permanent appropriation, leaving the

role of appropriation committees unchanged. On May 3, 1995, the House Committee

on Transportation and Infrastructure reported H.R. 842 to the House. The legislation

passed in committee on a unanimous voice vote without amendment.

The principal supporters of this legislation in the House were the

aforementioned Chairman and leadership of the Committee on Transportation and

Infrastructure. In addition, the legislation had the strong support of Representative

Clinger, then Chairman of the House Committee on Government Reform and

Oversight. The off-budget argument also had the ardent and active support of most

transportation and construction trade interest groups. It also had the support of many

business groups, such as the U.S. Chamber of Commerce. These organizations

banded together in “The Alliance for Truth in Transportation Budgeting.” This

organization conducted a very visible effort in support of H.R. 842.

Opposition to the legislation in the House came largely from Members of the

Budget and Appropriations Committees. The Chairman of the Subcommittee on

Transportation of the House Committee on Appropriations, Representative Wolf,

opposed taking the trust funds off-budget. Budget Committee Chairman Kasich also

opposed to the legislation.

The Clinton Administration similarly took a strong stand against H.R. 842. In

a March 27, 1995 letter to the Chairman and Ranking Members of the principal

committees considering this legislation, the then Director of the Office of

Management and Budget, Alice Rivlin, took a strong stand against efforts to move

the trust funds off-budget. The letter detailed the Administration’s objections to the

legislation and discussed what it viewed as serious budgetary problems with the offbudget initiative. Opposition to this legislation outside of Congress and the

Administration also exists.

The budget resolutions passed by Congress for FY1996 and FY1997 continued

to treat the transportation trust funds as part of the unified budget. Both proposals

required significant decreases in transportation program spending over the next 7

years as part of an overall federal deficit reduction program. As a result of these

recommendations it is likely that all federal transportation programs supported either

by the trust funds or by general funds would be subject to reduced funding.

CRS-14

Representative Shuster attempted to bring up the off-budget issue as part of the

floor debate on the FY1996 House budget resolution. The Rules Committee,

however, did not allow this issue to be brought to the floor at that time. Instead,

Speaker Gingrich announced the formation of a Speaker’s Task Force on

Transportation in mid-1995 to address this issue and make a recommendation to the

House on how transportation funding issues, including the off-budget issue should

be addressed. The task force was to be chaired by the Speaker and included

Representatives Shuster, Livingston, Wolf, Kasich, Molinari, Franks (NJ) and

Hobson. No deadline for a task force recommendation was established. During the

remainder of the 104th Congress, the task force met intermittently and has disbanded

without putting forth any specific recommendations.

Pending the task force’s recommendations there was little congressional

attention to the off-budget issue during the summer of 1995. This situation changed

briefly in September 1995, however. The House Committee on Transportation and

Infrastructure reported H.R. 2274, the National Highway System Designation Act of

1995, which incorporated the provisions of H.R. 842. By agreement with the House

leadership, the bill was stripped of its off-budget provisions during consideration by

the Rules Committee. In return for dropping these provisions, proponents of H.R.

842 apparently were promised a floor debate and vote on the issue before the end of

the first session of the 104th Congress. The crowded legislative calendar at the end

of the first session precluded this debate.

House Floor consideration of H.R. 842 occurred on April 17, 1996. Several

amendments were considered and all but two were defeated. The two amendments

that were approved were both introduced by the sponsors of H.R. 842 and could be

viewed as perfecting amendments.

The amendments insured that future

transportation program spending would be subject to the presidential line-item veto

and required that the annual interest level accruing to the transportation trust funds

not exceed the level accruing to other federal trust funds.

Final passage of H.R. 842 came on a vote of 284 to 143, with 5 Members not

voting. This represented a much larger margin of success than many observers had

forecast prior to the vote. Supporters of the legislation hoped that this high level of

support would provide the bill with the momentum needed to bring about Senate

action.

Interest in the off-budget debate in the Senate, however, could be viewed as

tepid. Senators Lott and Baucus introduced legislation, S. 729, that would have the

same effect as the H.R. 842. Lobbying efforts supporting the Senate legislation

intensified following House passage of the legislation. Several Senators, including

Environment and Public Works Committee Chairman Chafee and Budget Committee

Chairman Domenici, are on record as opposing any change in the budgetary

treatment of trust funds and circulated a “Dear Colleague” letter confirming this

position. The 104th Congress ended without any Senate action on the off-budget

proposal.

CRS-15

Efforts to Change the Budget Treatment of Trust Funds

in the 1st Session of the 105th Congress

Chairman Shuster and other supporters of the off-budget concept frequently

stated their intention to make an off-budget bill one of the first pieces of legislation

introduced in the 105th Congress. They followed through on this promise by

introducing H.R. 4, The Truth in Budgeting Act, on January 7, 1997. The bill also

received expedited attention in the House Committee on Transportation and

Infrastructure and was reported to the House on March 5, 1997. The legislation has

attracted wide support in the House with 242 cosponsors listed as of September 24,

1997.

The off-budget debate has always been a major component of the argument

about federal transportation program spending. The authority to operate these

programs, contained in the Intermodal Surface Transportation Efficiency Act of 1991

(P.L. 102-240)(ISTEA), expired at the end of FY1997.9 These programs are

currently operating on an interim funding basis, but this interim funding will expire

by the summer of 1998.

As part of the reauthorization debate there are a number of Members seeking

major changes in the ISTEA structure. The seemingly most contentious change is a

possible reallocation of assistance among states, combined with a significant increase

in federal surface transportation program spending. The additional spending,

required by these proposals, could come from off-budget legislation, creation of a

"revenue constrained fund" (RCF)(discussed in the next section), and/or from tapping

all, or part, of the 4.3 cent fuel tax that has been redirected to the highway trust fund.

Reauthorization legislation typically requires a revenue title, which means that

the overall operation and funding of the highway trust fund will be part of the

reauthorization debate. In fact, the off-budget issue has now become part of

reauthorization legislation under consideration in the House. The provisions of H.R.

4 were incorporated in H.R. 2400, the Building Efficient Surface Transportation and

Equity Act of 1997 (BESTEA), as Title VII (introduced September 4, 1997). This

legislation was marked-up by the Committee on Transportation and Infrastructure on

September 24, 1997, but was not reported at that time.

Proponents of the off-budget initiative have retained the same support base that

promoted the effort in 104th Congress. The field of opponents is also essentially the

same, with the leadership of the House Budget and Appropriations Committees

actively opposing the off-budget bill.

9

For a discussion of ISTEA issues and legislation see: U.S. Library of Congress.

Congressional Research Service. Highway and Transit Program Reauthorization: ISTEA

Revisited? CRS Report 97-194E. by John W. Fischer and William A. Lipford; and ISTEA

Reauthorization: Highway Related Legislative Proposals in the 105th Congress 2nd Session.

CRS Report 98-221E. by John W. Fischer.

CRS-16

The Revenue Constrained Fund (RCF) Option

Senators Chafee and Bond introduced legislation near the beginning of the 105th

Congress that can be viewed as an alternative to the off-budget initiative. The

Highway Trust Fund Integrity Act of 1997, S. 404, deals only with the highway

account of the highway trust fund. The legislation would create a new budget

category called a revenue constrained fund (RCF). The RCF would remain on

budget, subject to special budget rules.

The RCF is straightforward in concept. The RCF links revenues to the fund and

spending from the fund. Under the RCF spending for highways would equal last

year’s revenues. If revenues go down, spending goes down. Hence the description

of this concept as “constrained”.

Supporters of the RCF see it as a way to allow increased spending for highways

based on actual trust fund revenues. This position is supported by historical growth

in the trust fund revenue stream which has been gradual and sustained. From the

perspective of the federal budget, supporters of the RCF view it as being essentially

revenue neutral.

The RCF proposal is silent on how to treat existing unexpended balances in the

highway trust fund. Supporters of the legislation view the RCF as a clean starting

point for the future.

Supporters of the off-budget position have generally welcomed the RCF as a

step in what they see as the right direction. They do not, however, view it as going

far enough towards freeing the trust funds from the budget process.

The off-budget idea has known proponents in the Senate, but has not attracted

the level of support seen in the House. It is also likely that the RCF proposal will

compete with the off-budget initiative in the Senate. As a result, it is not possible to

predict whether trust fund budget legislation will ultimately fare better in the Senate

in the 105th Congress than it did in the 104th.

Efforts to Change the Budget Treatment of Trust Funds

in the 2nd Session of the 105th Congress

In early February the Speaker of the House formed a task force charged with

working out the Leadership’s plan for the FY1999 budget cycle. Reauthorization of

surface transportation programs was an important component in this discussion.

Chairman Shuster apparently convinced the Leadership of the need to press forward

on H.R. 2400 at the funding levels proposed in the 1st Session. As part of the

agreement reached by the task force, the Transportation and Infrastructure Committee

could move its reauthorization bill to the floor with off-budget provisions. These

provisions, however, could only affect the highway trust fund and would affect the

future operation of the fund.

CRS-17

On March 24, 1998, the House Committee on Transportation and Infrastructure

marked-up H.R. 2400 and reported it. By prior agreement with the House leadership

the manager’s amendment to the bill modifies the off-budget provision so that it

refers to only the highway trust fund. This provision takes the highway trust fund

off-budget beginning in FY1999.

On March 26, 1998, the House Committee on Ways and Means reported the

revenue title of H.R. 2400. As part of the same Leadership agreement this provision

reduces the beginning of year unexpended balances for FY1999 in the highway

account and mass transit account to $8.0 million and $5.5 million respectively. In

addition, the title provides that interest paid on balances in the trust fund in future

years will not accrue to the trust fund.

There are still a number of Members of the House known to be opposed to the

off-budget provisions of H.R. 2400. Amendments to undue the leadership agreement

were offered when H.R. 2400 was considered on the floor on April 1, 1998. All of

these efforts were unsuccessful by wide margins.

The Senate in its consideration of reauthorization of surface transportation

programs, S. 1173, did not address the budget treatment issue. This means that offbudget treatment may become an issue during conference on the respective House

and Senate surface transportation reauthorization bills.

The FY1999 Budget Agreement

The budget status of the transportation trust funds is likely to become entangled

in the debate about the FY1999 congressional budget resolution. The balanced

budget agreement reached by the Clinton Administration and congressional

leadership in FY1998 provided transportation programs in general, and surface

transportation programs in particular, with only modest increases in funding during

the life of the agreement. These levels are well below those in H.R. 2400 and S.

1173.

Under existing budget rules additional transportation spending must be offset

by decreased spending on other governmental activities in the discretionary part of

the budget. The Senate Budget Committee in its FY1999 budget proposal has

accommodated the increased spending levels in S.1173, by using offsets proposed in

the Clinton Administration budget. The Administration, however, had a different set

of spending priorities in mind when it proposed these offsets and is expected to

object to the Senate plan in its current form.

The House Budget Committee has not yet proposed an FY1999 budget plan.

It is not expected to act until after the Easter district work period. H.R. 2400

accommodates this timetable by including a provision in Title 11 that requires that

offsets be found in conference. It is not clear that the Senate will agree to this

arrangement.

CRS-18

Conclusions

Regardless of where trust funds reside in terms of the unified budget, they

remain federal accounts with a dedicated revenue stream. As such, they must still be

accounted for from an actuarial standpoint. The observation that the “devil is in the

details” would seem to be applicable in this context.

Congress, of course, can revisit any issue as changing situations may dictate.

The current “security” of the social security trust fund occurred only after a decade

of consideration and there are still those within Congress who would like to see the

budget status of this trust fund revisited. The transportation trust fund’s budget status

has now been revisited over the course of a decade as well. It remains to be seen

whether Congress will decide to move the transportation trust funds out of the unified

budget or leave their budget status unchanged.

CRS-19

For Additional Reading

U.S. Congress. House. Committee on Transportation and Infrastructure. Truth in

Budgeting Act. Report to accompany H.R. 842. Report 104-499, Part I. 104th

Congress, 2nd Session. Washington, U.S. Govt. Print. Off., March 27, 1996.

19 p.

U.S. Congress. House. Committee on the Budget. Truth in Budgeting Act. Adverse

Report with Dissenting Views to accompany H.R. 842. Report 104-499, Part II.

104th Congress, 2nd Session. Washington, U.S. Govt. Print. Off., March 29,

1996. 18 p.

U.S. Congress. House. Committee on the Budget. The Implications of Taking the

Transportation Trust Funds Off-Budget. Hearings. Serial No. 104-25. 104th

Congress, 2nd Session. Washington. U.S. Govt. Print. Off., March 28, 1996.

65 p.

U.S. Congress. House. Joint Committee on Taxation. Present Law and Background

Information on Federal Transportation Excise Taxes and Trust Fund

Expenditure Programs. Report (unnumbered). Prepared for the use of the

Committee on Ways and Means. Washington, U.S. Govt. Print. Off. November

14, 1996. 109 p.

U.S. Congress. Senate. Committee on Appropriations. Transportation Trust Funds,

Fiscal Year 1990. Hearings, 101st Congress, 1st Session. Washington, U.S.

Govt. Print. Off., May 11, 1989.

U.S. Congressional Budget Office. Paying for Highways, Airways, and Waterways:

How Can Users Be Charged? CBO Study. May 1992. 75 p.

U.S. General Accounting Office. Airport and Airway Trust Fund: Effects of the

Trust Fund Taxes’ Lapsing on FAA’s Budget. GAO/RCED-96-130.

Washington, U.S. Govt. Print. Off., April 1996. 10 p.

U.S. Department of Transportation. Federal Highway Administration. Financing

Federal-Aid Highways. FHWA-PL-92-016, May 1992.

CRS-20

Appendix

Table 1. Balances of the Highway Account

of the Highway Trust Fund,

FY1988-FY1996 (in millions of dollars)

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

14,660*

20,420

22,034

20,689

Tax Revenue During the Period

Total Tax Revenue

12,836

14,359

12,472

14,494

15,664

16,046

Cash Outlays During the Period

Total Annual Outlays

14,038

13,603

14,375

14,687

15,518

16,641

19,011

19,472

20,018

20,871

Net Income Before

Interest

-1,201

756

-1,903

-193

146

-595

-4,351*

948

2,016

-182

Interest on

Investments

809

776

981

810

909

818

754

547

658

802

Change in Cash

-392

1,532

-922

617

1,055

223

-3,597*

1,495

2,674

620

Trust Fund Balances

Unexpended

Balance, Start of

Year

9,412

9,019

10,551

9,629

10,246

11,301

11,524

7,927

9,421

11,658

Change in Cash

-392

1,532

-922

617

1,055

223

-3,598*

1,495

2,674

620

Unexpended

Balance, End of

Year

9,019

10,551

9,629

10,246

11,301

11,524

7,926*

9,421

12,095

12,278

* The U.S. Treasury failed to credit the trust fund with $1.6 billion in tax revenues collected in FY1994. These revenues have been credited to

the FY1995 beginning balance. This accounting situation distorts the FY1994 numbers.

Source: U.S. Government. Office of Management and Budget. Budget of the United States Government, various years.

CRS-21

Table 2. Balances of the Transit Account of the Highway Trust Fund,

FY1988-FY1996 (in millions of dollars)

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1,949

2,008

2,192

2,617

3,198

Tax Revenue During the Period

Total Tax Revenue

1,277

1,269

1,395

2,485*

1,070*

Cash Outlays During the Period

Total Outlays

696

849

879

1,054

1,268

1,916

3,364

3,179

3,336

3,663

Net Income Before

Interest

582

420

516

1,431

-198

33

-1,355

-987

-719

-465

Interest on Investments

384

469

581

664

746

710

684

621

665

638

Change in Cash

966

889

1,097

2,095

548

743

-672

-366

-54

173

Trust Fund Balances

Unexpended Balance,

Start of Year

Change in Cash

Unexpended Balance,

End of Year

4,202

5,168

6,057

7,154

9,249

9,797

10,617

9,945

9,579

9,525

966

889

1,097

2,095

548

743

-672

-366

-54

173

5,168

6,057

7,154

9,249

9,797

10,474

9,945

9,579

9,525

9,698

* The U.S.Treasury over credited FY1991 tax receipts and applied corrections in FY1992.

Source: U.S. Government. Office of Management and Budget. Budget of the United States Government, various years.

CRS-22

Table 3. Balances of the Airport and Airway Trust Fund,

FY1988-FY1996 (in millions of dollars)

1988

1989

1990

1991

1992

1993

1994

1995

1996c

1997

Tax Revenue During the Period

Passenger Ticket Tax

2,815

3,201

3,219

4,341

4,012

2,677

4,528

4,768

2,123

3,389

Waybill Tax

168

181

178

222

249

255

284

361

151

331

Fuel Tax

117

629

141

140

167

121

187

211

3

128

International Departure Tax

95

106

180

217

231

223

218

233

128

194

3,189

3,665

3,700

4,910

4,644

3,261

5,217

6,363

2,369

4,027

Total Tax Revenuea

Cash Outlays During the Period

Federal Aviation

Administration:

Airport Grants-in-aid

825

1,135

1,220

1,541

1,672

1,931

1.620

1,826

1,450

1,489

Facilities & Equipment

1,043

1,088

1,317

1,512

1,885

2,166

2,434

2,639

1,866

2,310

Research, Engineering, &

Development

170

128

154

179

214

212

226

232

186

218

830

478

807

2,032

2,110

2,279

2,199

2,546

2,223

1661

Total Annual Outlays

2,896

2,858

3,528

5,299

5,978

6,654

6,547

7,384

5,806

5,758

Net Income Before

Interest

293

807

172

-389

-1,334

-3,393

-1,330

-1,021

-3,437

-1,731

Interest on Investments

893

1,009

1,245

1,297

1,273

1,040

837

757

759

481

1,185

1,816

1,417

908

-61

-2,353

-493

-264

-2,678

-1,250

FAA Operations

b

Change in Cash

Trust Fund Balances

Unexpended Balance, Start of

Year

9,935

11,120

12,936

14,353

15,261

15,200

12,851

12,386

5,167

4,355

Change in Cash

1,185

1,816

1,417

908

-61

-2,353

-465

-264

-2,678

-872

Unexpended Balance, End of

Year

11,120

12,936

14,353

15,261

15,200

12,847

12,386

11,365

2,516

3,483

a

Includes refunds of taxes and offsetting collections.

Includes offsetting collections and additional payments.

c

All trust fund activities for FY1996 are affected by the lapse in revenue collection authority during the January - August 1996 period.

Source: U.S. Government. Office of Management and Budget. Budget of the United States Government, various years.

b

CRS-23