Summary: A $5.9 billion revenue shortfall by fiscal year 1997 is projected for the fund that provides most of the financing for highways and mass transit, but the deficiency could be avoided by extending a portion of the federal gas tax that expires in 1995. To finance more than $122 billion in federal aid for highway programs through fiscal year 1997, Congress extended federal highway excise taxes, such as those on gasoline and diesel fuel, through fiscal year 1999. Most of these taxes go to the Highway Trust Fund, the accounting mechanism used to record revenues and outlays. According to projections developed by the Federal Highway Administration, however, revenues through fiscal year 1999 will fall $5.9 billion short of money to be paid out of the account. This shortfall is expected to trigger the Byrd Amendment in fiscal year 1995--a financial safeguard mandating a reduction in outlays in the face of revenue shortfalls--and to grow substantially during the remaining 2 years of the authorization period. Most of the projected shortfall is attributable to an expected decline in collections of highway excise taxes. Congress could resort to several strategies--which include implementing, modifying, or suspending the Byrd Amendment--to address the anticipated revenue shortfall. All of these options have advantages and disadvantages that Congress will need to weigh carefully in deciding how to deal with the shortfall.
