Understanding the Projections of the Highway Trust Fund: A Tutorial

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41) authorized General Fund transfers to the Highway Account and Mass Transit Account of the Highway Trust Fund. Based on the most recent monthly estimate of future Highway Trust Fund balances, this general fund transfer will maintain the balance for the highway account above the prudent cash balance level of $4 billion until November 2015. At that time the Department of Transportation may be required to take additional steps to better manage the flow of federal dollars, including slowing the rate of reimbursements to states, in order to maintain a cash balance in the Trust Fund.

Trust fund balances are currently estimated to remain just at or below the prudent balance levels through May 2016, the beginning of the 2016 construction season, whereupon the balances will rapidly decline to the point where the fund will become fully insolvent and DOT will be unable to meet its financial obligations during the heart of the construction season.

It is important to note that new future Trust Fund balance estimates are generated monthly and routinely fluctuate based on updated data on receipts and expenditures. Also, importantly programs funded through the Highway Trust Fund are only authorized through October 29, 2015. Although Trust Fund balances are currently expected to be sufficient to avoid the potential of cash management until that time, should the authorization for these programs lapse on October 30, the Department will be unable to obligate new expenditures from the Highway and Transit programs, impacting reimbursements to States other entities.