Administration Predicts HTF Will Need Additional Bailout Before End of IIJA

This afternoon, the Treasury Department released the quarterly Treasury Bulletin for March 2022, which contains the first Treasury-OMB forecast for Highway Trust Fund since the enactment of the funding increases in the bipartisan Infrastructure Investment and Jobs Act (IIJA) late last year. The Bulletin predicts that both accounts of the Highway Trust Fund will run out of money before the end of the IIJA in September 2026, necessitating another bailout from general revenues between now and then of around $12 billion.

Caveat: the Bulletin is using Treasury’s July 2021 tax revenue forecast. A new tax revenue forecast will be released by Treasury alongside the fiscal 2023 budget, supposedly sometime this month. Given how much economic volatility has been going on in the COVID era, the new tax forecast may show enough economic growth (and, therefore, motor fuel consumption and thus motor fuel excise tax receipts) to make up the difference.

Also, Administration spending (outlay) estimates often assume that programs will spend out their appropriations more quickly than they do in real life. The Congressional Budget Office is usually more pessimistic about the ability of the government, especially new programs, to spend money quickly. So even if the final OMB-Treasury forecast in the forthcoming budget does assume a new bailout will be needed, the Congressional Budget Office’s own forecast may not. (The eventual truth may lie between the two forecasts, or on either side of one.)

The IIJA transferred $118 billion from general revenues to the Highway Trust Fund ($90 billion to the Highway Account and $28 billion to the Mass Transit Account), which was thought, using the CBO forecast available in summer 2021, to be the bare minimum necessary to keep both accounts of the Trust Fund solvent through September 2026.

Instead, the Bulletin predicts that the Highway Account will need $8.7 billion to get through September 2023 (an oddly specific number in their table, given that every other number in their table is rounded to the billion dollars) and the Mass Transit Account will need $3 billion, as follows:

March 2022 Treasury Bulletin Forecast – Highway Account (Billion$)
FY23 FY24 FY25 FY26
Beginning-of-FY Balance 87 66 42 17
Net Excise Taxes & Interest 36 36 37 37
Flex Transfer to Transit -1 -1 -1 -1
Outlays -56 -59 -60 -61
End-of-FY Balance 66 42 17 -8.7
March 2022 Treasury Bulletin Forecast – Mass Transit Account (Billion$)
FY23 FY24 FY25 FY26
Beginning-of-FY Balance 31 24 17 8
Net Excise Taxes & Interest 5 5 5 5
Flex Transfer from Highways 1 1 1 1
Outlays -14 -13 -16 -16
End-of-FY Balance 24 17 8 -3


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