Senate GOP Budget Assumes Highway User Tax Increase

March 22, 2019

Earlier this afternoon, the chairman of the Senate Budget Committee, Mike Enzi (R-WY), released the text of a draft five-year budget blueprint for fiscal years 2020 through 2024 that his committee hopes to consider next week in a two-day markup on March 27-28. Notably, the blueprint assumes that Congress will enact somewhere around $85-90 billion in new highway user taxes over five years to keep the Highway Trust Fund solvent at baseline funding levels.

“Strengthening America’s future for our children and grandchildren begins by putting our nation on a more sustainable fiscal path and reducing our nation’s deficit spending, which is approaching $1 trillion per year,” said Enzi. “This budget is a responsible first step toward achieving that goal by reducing overspending and setting real, achievable deficit reduction targets. It supports reasonable reforms to mandatory spending programs and works to improve efficiency and accountability for how taxpayer dollars are spent, ensuring that government programs deliver results.”

(Here are links to the legislative text, section-by-section analysis, spending and revenue tables, and overview document.)

User tax increase. The tables that are to be inserted into the text of the resolution assume $176.5 billion in revenue increases over the five-year period, versus the Congressional Budget Office’s January 2019 revenue baseline, as follows:

Total Federal Revenues (Unified Budget, Includes Social Security and Postal Service)

Billions of dollars.
Actual Projected Projected Projected Projected Projected Projected
FY18 FY19 FY20 FY21 FY22 FY23 FY24 5-Year
Baseline Revenues (Unified) 3,328.7 3,514.9 3,685.8 3,840.5 4,012.3 4,208.2 4,448.1 20,195.0
Increase Under Enzi Budget +16.2 +29.1 +36.5 +43.8 +50.8 +176.5
Total Under Enzi Budget 3,328.7 3,514.9 3,702.0 3,869.6 4,048.8 4,252.0 4,499.0 20,371.4

The explanatory document then states:

FY 2020 Resolution Revenue

The resolution calls for $176 billion in increased revenue over the next five years. The resolution assumes about half of these receipts could be received as part of an effort to make the Highway Trust Fund solvent, though policy decisions would be left up to the Finance Committee. This assumption is based on an overarching user-pay principle to prevent the need for additional general fund transfers into the Fund. The resolution further assumes the remaining revenue changes could be generated by increasing federal employee retirement contributions and increases in receipts stemming from changes to other mandatory and regulatory programs.

The Trust Fund is currently spending down the $70 billion in bailouts provided in December 2015 by the FAST Act (and the $40-ish billion per year it receives in excise taxes), and the bailout money is expected to be exhausted right at the end of 2021. The cumulative revenue shortfall through the end of 2024 (the last year of Enzi’s plan) under the latest CBO baseline is $48.4 billion, plus about $5 billion in end-of-FY cash cushion balances, so say $54 billion. $54 billion is well under “about half” of $176.5 billion, so the highway user tax increase assumed by the Enzi resolution could provide for Trust Fund program growth above baseline.

About that baseline – the FY20 highway rescission. The budget does not restore the looming $7.6 billion highway contract authority rescission scheduled to take place on July 1, 2020. And since FY 2020 is the last year of the budget authority provided in the FAST Act, CBO is required by law to assume that the net final 2020 level will be the funding level every year for the highway program after that, forever. Indeed, the Enzi resolution assumes a further $8.179 billion in cuts to unspecified transportation programs over five years. (It doesn’t state how much of that assumed reduction is from discretionary programs vs. mandatory programs, and there are no reconciliation instructions given to the transportation committees to force them to make mandatory cuts, so the assumed $8.2 billion in reductions are not particularly serious.)

Budget Authority for Budget Function 400 (Transportation)

Billions of dollars.
FY19 FY20 FY21 FY22 FY23 FY24
CBO Baseline – BA
Federal-Aid Highways 44.968 38.536 38.536 38.536 38.536 38.536
Everything Else 58.674 59.946 61.03 62.145 63.268 64.436
Total, Baseline BA 103.642 98.482 99.566 100.681 101.804 102.972
Changes Assumed in Enzi Resolution 0 -0.681 -1.139 -1.618 -2.106 -2.635
Enzi Resolution – BA 103.642 97.801 98.427 99.063 99.698 100.337

However, the Enzi resolution does include a provision that would allow Congress to fix the highway rescission fairly easily in legislation:

Reserve fund. Section 3018 of the draft resolution allows the budget totals in the resolution to be adjusted to accommodate any legislation “relating to improving American transportation and infrastructure, which may include strengthening surface, air, or maritime transportation systems, water resources development, or broadband deployment” – but only if “such legislation would not increase the deficit over either the period of the total of fiscal years 2020 through 2024 or the period of the total of fiscal years 2020 through 2029.” This means that if the Environment and Public Works Committee were to report a bill that canceled the July 1, 2020 rescission, and that bill also contained a “pay-for” that covered the outlay cost of repealing the rescission (which would be measurable amount in 2020 but far, far less than $7.6 billion, and which might not have any outlay score in subsequent years), Enzi could just activate this “reserve fund” language and adjust the budget totals for function 400 upwards by $7.6 billion per year.

No general fund appropriations in a surface reauthorization bill. Section 4105 of the Enzi budget extends and makes permanent a provision in the fiscal 2010 budget resolution (sec. 405 of S. Con. Res. 13, 111th Congress) that expired on September 30, 2018. That section prohibits Senate consideration of any surface transportation reauthorization bill that appropriates budget authority from any source other than the Highway Trust Fund. That provision is enforced via a 60-vote point of order in the Senate. (However, surface transportation reauthorization bills usually can muster north of 60 votes to waive all budget rules – see the 63 to 30 vote to waive all budget discipline on the MAP-21 conference report or the 76 to 22 vote to waive all budget discipline on the Senate version of SAFETEA-LU.) And, since general fund bailouts of the Trust Fund aren’t considered budget authority, it is unclear what effect this point of order has.

Discretionary caps. The Enzi budget acknowledges reality and adheres to the current law caps on discretionary appropriations for 2020 and 2021 (the year the caps expire). However, it also contains a provision that allows Enzi to adjust the discretionary totals upwards if Congress enacts a law increasing the caps.

Reconciliation. Section 2001 of the resolution directs six Senate committees (Agriculture, Banking, Finance, HELP, and Homeland Security) to report reconciliation legislation to provide a total of $94 billion in deficit reduction over five years from some combination of cuts in mandatory outlays, or revenue increases.


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