Highway Trust Fund Solvent for Another Nine Months

In the midst of the health care debate, the President signed the HIRE Act (Hiring Incentives to Restore Employment Act) containing several transportation provisions including an extension of the authorization for federal highway and transit programs through December 31, 2010 as well as providing $19.5 billion to the Highway Trust Fund.

According to the American Association of State Highway and Transportation Officials AASHTO) organization, the measure will:

1. Extend surface transportation authorization until the end of this calendar year. The previous extension of the 2005 surface transportation authorization law known as “SAFETEA-LU” was scheduled to expire March 28.
2. Deposit $19.5 billion into the Highway Trust Fund to reimburse the trust fund for interest payments not received since 1998. This will ensure the trust fund’s solvency into next year.
3. Restore in this fiscal year $8.7 billion in highway contract authority to the states that had been rescinded at the end of Fiscal Year 2009.
4. Fund the federal highway program’s contract authority for FY 2010 at $42 billion, up from $30 billion, returning the program to its FY 2009 funding level.
5. Provide $4.6 billion in additional federal subsidies for Build America Bonds, a program created by the American Recovery and Reinvestment Act of 2009. The bonds allow states and municipalities to finance infrastructure projects with an interest subsidy from the federal government. State and local governments have issued $78 billion worth of Build America Bonds during the program’s first year. (The House Ways and Means Committee this week approved a further expansion of Build America Bonds
6. Allow the Highway Trust Fund in the future to collect interest on its deposits, as all other federal trust funds are authorized to do.
7. Restructure fuel-tax exemptions for government vehicles currently paid out of the Highway Trust Fund so future payments come out of the General Fund rather than the trust fund, increasing money available for highway and transit projects in future years.

Then just as the legislation was being signed the House of Representatives approved a measure by voice vote Wednesday that would make two funding distribution changes to the HIRE Act signed Thursday by the President. Bottom line was to distribute the Fiscal Year 2010 funding for Projects of National and Regional Significance as well as the National Corridor Infrastructure Improvement programs among all states based on each state’s share of FY 2009 highway apportioned funds.(The current language in the HIRE Act would distribute these funds to 29 states that received such funds under the 2005 surface transportation reauthorization law known as “SAFETEA-LU.”) The bill would also distribute additional highway formula funds provided for FY 2010 among all 13 of the highway programs rather than among just six of the programs as the current HIRE Act language would require.

The bill would also extend the Federal Aviation Administration’s authority for three months, from March 31 to July 3. The Senate is still debating a longer-term FAA reauthorization measure; however that is not expected to be reconciled with the House version before the end of this month, requiring a 12th short-term extension for FAA

And so the story goes.

The good news is the extension on the highway bill gives time for the debate that is needed as we have discussed here before.