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The Highway Trust Fund and Paying for Highways

The Highway Trust Fund and Paying for Highways

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Published by Milton Recht
Statement of Joseph Kile, Assistant Director for Microeconomic Studies, The Highway Trust Fund and Paying for Highways, before the Committee on Finance, United States Senate, May 17, 2011
Statement of Joseph Kile, Assistant Director for Microeconomic Studies, The Highway Trust Fund and Paying for Highways, before the Committee on Finance, United States Senate, May 17, 2011

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Published by: Milton Recht on May 18, 2011
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Congressional Budget OfficeCongressional Budget OfficeCongressional Budget OfficeCongressional Budget Office
 Testimony 
CONGRESSIONAL
 
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Statement of  Joseph Kile Assistant Director for Microeconomic Studies
 The Highway Trust Fund andPaying for Highways
before theCommittee on FinanceUnited States SenateMay 17, 2011
This document is embargoed until it is delivered at 10:00 a.m. (EDT) on Tuesday, May 17, 2011. The contents may not be published, transmitted, or otherwise communicated by any print, broadcast, or electronic media before that time.
 
Pub. No. 4275
Notes
Unless otherwise noted, all years referred to are federal fiscal years, which run fromOctober 1 to September 30.Numbers in the text and tables may not add up to totals because of rounding.
 
CBO
Chairman Baucus, Senator Hatch, and Members of the Committee, thank you fortheinvitation to testify on issues related to the funding of highways. My testimony draws on several publications of the Congressional Budget Office (CBO) that discusshighways and other infrastructure related to transportation, water resources, and wastewater.
1
Although the testimony is focused on highways, the principles discussedhere are relevant to all infrastructure that is financed by the public sector.
Summary 
This testimony reviews the status of the Highway Trust Fund and examines threequestions facing the Congress:
How much should the federal government spend on highways?
How should the federal government direct the use of those funds?
How should the federal government raise those funds?
Status of the Highway Trust Fund
The United States spends about $160 billion annually on highways, with aboutone-fourth of that total, or roughly $40 billion, coming from the federal government.Federal highway spending is funded mainly through taxes on gasoline and othermotor fuels that accrue to the Highway Trust Fund. In recent years, the Congress hasspent more on highways than the revenues accruing to the fund for that purpose, andit has supplemented the trust fund’s balance with money from the general fund of theTreasury.The law that authorizes collection of taxes for and spending from the Highway TrustFund is set to expire on September 30, 2011. Even if the provisions of that law areextended, the trust fund will be unable to meet its obligations in a timely manner by the summer or fall of 2012, CBO projects, unless transfers similar to those in the pastare made, other sources of revenue are identified, or spending is reduced.
How Much Should the Federal Government Spend on Highways?
The Congress has a range of options for future spending on highways, and the one itselects will influence the amount and distribution of economic benefits from thenation’s network of highways and roads. Those options include the following:
Limit spending to the amount that is collected in current taxes on fuel and othertransportation activities; doing so would result in spending that would be about$13 billion per year below the current amount.
1.See Congressional Budget Office,
(March 2011);
Issue Brief (January 2011); and
Public Spending onTransportation and Water Infrastructure 
(November 2010).

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