Transportation Trust Funds: Budgetary Treatment

Transportation Trust Funds: Budgetary Treatment

98-63 E
CRS Report for Congress
Received through the CRS Web
Transportation Trust Funds: Budgetary Treatment
Updated April 6, 1998
John W. Fischer
Specialist in Transportation
Economics Division
Congressional Research Service ˜ The Library of Congress

ABSTRACT
This report addresses issues associated with the purpose and use of transportation trust
funds. Understanding how the trust funds operate and how they relate to the federal unified
budget is, in reality, complex and difficult. As a result, there is considerable latitude for
differing views as to whether the trust funds are meeting their intended goals. This report
explores these differing views in the context of legislation that would change the budgetary
treatment of transportation trust funds.
This report will be updated as action on legislation is completed. The budget treatment
issue has now become part of the debate about reauthorization of federal surface
transportation programs. For the most current information on surface transportation
reauthorization see: U.S. Library of Congress. Congressional Research Service. ISTEA
Reauthorization: Highway and Transit Legislative Proposals in the 105th Congress, 2nd
Session. CRS Report 98-221. by John W. Fischer.

Transportation Trust Funds: Budgetary Treatment
Summary
Some Members of Congress believe that the transportation trust funds should
be viewed independently of other federal programs, and that federal transportation
program spending should closely track revenues collected for the funds. Other
Members of Congress believe that the transportation trust funds must be viewed as
components of the entire federal budget and not as a separate element of the budget.
Supporters of changing the budget treatment of trust funds, and especially those
in favor of moving the trust funds off-budget, state that such a change would create
the equivalent of a fire wall around federal transportation programs similar to, but not
the same as, the one that exists for the Social Security program. They believe that
this mechanism would provide an incentive for budget discipline and reserve the full
value of user-fee-funded programs for their mandated purposes. Most importantly,
this action would fulfill what they view as a “contract” between the taxpayer and the
federal government to spend what are essentially viewed by supporters as user fees.
The basic argument of those opposed to changing the treatment of trust funds
is the need to maintain the accountability and integrity of the unified federal budget.
They assert that the “surpluses” in the transportation trust funds do not exist because
the federal government underspends on transportation programs. Transportation
spending increased significantly until FY1995 - FY1996 and then increased slightly
in FY1997. In FY1998, transportation spending is again appropriated at an increased
level. To opponents of changing the treatment of trust funds, this situation
demonstrates that special budget treatment of trust funds is not needed to facilitate
necessary federal expenditures on transportation programs.
The 1 Session of the 105
st
Congress ended without floor action on legislation
th
that would change the budgetary treatment of transportation trust funds. Legislation
giving the transportation trust funds off-budget status was introduced in the House
early in the 105th Congress. The Truth in Budgeting Act, H.R. 4, attracted wide
support in the House and had 242 cosponsors listed as of September 4, 1997. In
addition, the provisions of H.R. 4 were incorporated in H.R. 2400, the Building
Efficient Surface Transportation and Equity Act of 1997, (BESTEA) as Title VII. In
committee markup on March 24, 1998, this title has been modified to take only the
highway trust fund off-budget. Floor action on this legislation occurred on April 1,
1998.
The Senate did not consider off-budget legislation in the 1 Session. Instead
st
,
legislation that could be viewed as a counterproposal to the off-budget initiative has
been introduced. S. 404, the Highway Trust Fund Integrity Act of 1997, proposes the
creation of a “revenue constrained fund” within the federal budget that would have
some, but not all, of the same spending results as the off-budget bill. The Senate did
not consider the budgetary treatment of trust funds during its recently completed floor
action on S. 1173, the Intermodal Surface Transportation Efficiency Act of 1997
(ISTEA II), which provides for the long term reauthorization of surface
transportation programs. It is likely that the budgetary treatment of trust funds will
become an issue in conference on surface transportation legislation.

Contents
Trust Fund Origins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Genesis of the Off-Budget Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Understanding Trust Fund Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Highway Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Airport and Airway Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The 4.3 Cents Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Budget Treatment of Transportation Trust Funds . . . . . . . . . . . . . . . . . . . . . . . 9
Comparisons with the Social Security Trust Fund . . . . . . . . . . . . . . . . . . 10
The Arguments For and Against Changing the Budget Treatment of Trust Funds (i.e.
Off-Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Arguments for Changing the Budget Treatment of Trust Funds (i.e. Off-
Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Arguments Against Changing the Budget Treatment of Trust Funds (i.e. Off-
Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Off-Budget Debate in the 104th Congress . . . . . . . . . . . . . . . . . . . . . . . . . 13
Efforts to Change the Budget Treatment of Trust Funds in the 1 Session of the 105th
st
Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Revenue Constrained Fund (RCF) Option . . . . . . . . . . . . . . . . . . . . . 16
Efforts to Change the Budget Treatment of Trust Funds in the 2nd Session of the
105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The FY1999 Budget Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Transportation Trust Funds: Budgetary
Treatment
The 1 Session of the 105
st
Congress ended without floor action o
th
n
legislation that would change the budgetary treatment of transportation trust funds.
Legislation giving the transportation trust funds off-budget status was introduced in
the House early in the 105th Congress. The Truth in Budgeting Act, H.R. 4
1
,
attracted wide support in the House and had 242 cosponsors listed as of September
4, 1997. In addition, the provisions of H.R. 4 were incorporated in H.R. 2400, the
Building Efficient Surface Transportation and Equity Act of 1997 (BESTEA), as
Title VII. This legislation, which is designed to reauthorize federal surface
transportation programs was marked-up in the Committee on Transportation and
Infrastructure on September 24, 1997, but was not reported at that time. In committee
markup on March 24, 1998, this title has been modified to take only the highway
trust fund off-budget. Floor action occurred on April 1, 1998.
The Senate did not consider off-budget legislation in the 1 Session
st
.
Instead, legislation that could be viewed as a counterproposal to the off-budget
initiative has been introduced. S. 404, the Highway Trust Fund Integrity Act of 1997,
proposes the creation of a “revenue constrained fund” within the federal budget that
would have some, but not all, of the same spending results as the off-budget bill. The
Senate did not consider the budgetary treatment of trust funds during its recently
completed floor action on S. 1173, the Intermodal Surface Transportation Efficiency
Act of 1997 (ISTEA II), which provides for the long term reauthorization of surface
transportation programs. It is likely that the budgetary treatment of trust funds will
become an issue in conference on surface transportation legislation.
The activity in the 105th Congress on this issue builds on the relative success
of off-budget legislation in the 104th Congress. The 104th Congress was something
of a milestone for supporters of the off-budget concept because it was the first time
that either body of Congress had voted in favor of giving the trust funds off-budget
status. The 104th Congress concluded without Senate action on off-budget
legislation.
Prior to the 104th Congress this issue was last addressed by the Senate in 1991
and by the Congress as a whole in the 1980s. All of the attempts to move the
transportation trust funds off-budget in the 1980s failed, in one case by a very narrow
margin. The issue pits those who believe that trust fund revenues should be reserved
1 This report discusses major issues relating to proposals to change the budget treatment of
transportation trust funds. It will be updated as issues develop and new legislation is
introduced. For the most current information about pending legislation, please consult the
Legislative Information System (LIS) at http://www.congress.gov.

CRS-2
only for spending on specific programs, against those who believe that trust fund
revenues should remain an intrinsic part of the unified federal budget.
The philosophical issues surrounding the transportation trust fund debate are
often viewed as being straightforward and relatively easy to understand. Understand-
ing how the trust funds operate and how they relate to the federal unified budget is,
in reality, complex and difficult. As a result, there is considerable latitude for
differing views as to whether the trust funds are meeting their intended goals. In
addition, there is also considerable room for debate about how much spending the
trust funds can support.
Trust Fund Origins
Two major transportation trust funds exist: the highway trust fund and the
airport and airway trust fund. The highway trust fund consists of two separate
accounts — highways and transit — which are sometimes mistakenly referred to as
separate trust funds. In practice, the highway account and the transit account are
discussed as though they were separate entities, with the highway trust fund being
synonymous with the highway account. There are other smaller transportation trust
funds, but they generally are not the focus of the budget treatment debate. These
include the inland waterways trust fund, the harbor maintenance trust fund, and the
national recreational trails trust fund. The national recreational trails trust fund is
actually a set-aside within the highway trust fund and would be affected by any
decision to change the budget treatment of the highway trust fund.
The oldest and largest of the trust funds is the highway trust fund. This fund
was created by a separate revenue title in the Federal-Aid Highway Act of 1956
(1956 Act) (P.L. 84-627). The 1956 Act provided funding for construction of the
now virtually complete Dwight D. Eisenhower Interstate Highway System. In
addition, the 1956 Act provided some funding for other federal highway programs.
The highway trust fund was established as a way to provide funding for capital
construction, and this remains its principal focus.
In light of the current budgetary climate, it is interesting to note that the
Eisenhower Administration did not originally propose the trust fund “pay-as-you-go”
financing system established in the 1956 Act. The Administration, concerned about
increasing federal spending, instead proposed the creation of a Federal Highway
Corporation with bonding authority; it was to receive a specific portion of the federal
gasoline tax to fund its activities. The Administration viewed this mechanism as
preferable to incurring an increase in general revenue spending.
Over the last 40 years, the highway trust fund and the federal program it
supports have been changed numerous times.2 In almost every instance, Congress
has chosen to expand the scope of the federal highway program. At various times
2For a more detailed history of the trust fund see: U.S. Library of Congress. Congressional
Research Service. Federal Excise Taxes on Gasoline and the Highway Trust Fund: A Short
History. CRS Report 97-853E. by Louis Alan Talley.

CRS-3
over the same period Congress has also chosen concomitantly to increase the
revenue stream into the trust fund by raising federal excise taxes on motor fuels. The
most recent change in the structure of the federal highway program occurred with
enactment of the Intermodal Surface Transportation Efficiency Act of 1991 (P.L.
102-240) (ISTEA). ISTEA also reauthorized the trust fund revenue title. The last
change in the levels of revenue dedicated to the trust fund occurred in 1990, as part
of the Omnibus Budget Reconciliation Act of 1990 (OBRA90) (P.L. 101-508).3
The second transportation trust fund to be established, the airport and airway
trust fund, was created by the revenue title of the Airport and Airway Development
Act of 1970 (P.L. 91-258). The “aviation trust fund,” as it is also known, was
established to provide funding for capital improvements to the Nation’s airport and
airway system. The scope of the aviation trust fund, like the highway trust fund, has
been expanded over time. The most recent reauthorization of aviation programs
occurred with passage of Federal Aviation Administration Authorization Act of 1996
(P.L. 104-264). The most recent change in the levels of revenue dedicated to the trust
fund occurred as part of the Taxpayers Relief Act of 1996 (P.L. 105-34 ).
The transit account, created by the Surface Transportation Assistance Act of
1982 (P.L. 97-424), represented the provisional culmination of a long-term
congressional debate about the position of transit as part of the national transportation
system. The transit account gave the transit industry a consistent federal funding
source for capital spending on new and rehabilitated infrastructure and for other
purposes.
Revenue sources differ for the various trust funds. The highway trust fund is
financed by sales taxes on tires, trucks, buses, and trailers as well as truck usage
taxes, but approximately 90% of trust fund revenue comes from excise taxes on
motor fuels. The majority of the motor fuel revenue dedicated to the trust fund i
4
s
derived from an 18.4 cents per gallon tax on gasoline. Of this, 18.3 cents is dedicated
directly to the highway trust fund. The transit account receives an allocation
equivalent to the revenue generated by 2.85 cents of the tax on motor fuels dedicated
to the highway trust fund. The remaining 0.1 cents goes into the leaking
underground storage tank (LUST) trust fund. In addition, the fund receives interest
on the balances of the fund held in the U.S. Treasury securities.
The aviation trust fund normally receives the vast majority of its funding from
a percentage tax on domestic airline tickets (9% in FY1998, dropping to 8.0% in
FY1999, and 7.5% in FY2000) and a flight segment tax ($1.00 per segment in
FY1998. This tax rises gradually to $3.00 in FY2003, and is thereafter subject to
indexation for inflation). Additional funding is obtained from taxes on aviation fuels,
Federal
3
fuel taxes were raised 4.3 cents by the Omnibus Budget Reconciliation Act of 1993
(OBRA93)(P.L. 103-66). This permanent tax was originally levied for deficit reduction
purposes and was deposited in the Treasury’s general funds account. As will be discussed
later in this report, these revenues are now being deposited in the highway trust fund.
4 For a discussion of federal transportation fuel taxes see: U.S. Library of Congress.
Congressional Research Service. Transportation Fuel Taxes: What the Taxpayer Relief Act
Has Wrought. CRS Report 97-824E, by Bernard A. Gelb.

CRS-4
cargo waybills, and international departures and arrivals. The aviation trust fund
also receives interest on the balances of the fund held in U.S. Treasury securities.
The Genesis of the Off-Budget Debate
Two philosophically different views about how trust funds relate to the budget
frame the current debate. According to off-budget proponents, the trust fund
mechanism represents a contract with the taxpayers to spend revenues on the specific
activities identified as the purpose of the trust fund. In the view of those who support
the unified budget approach, a dollar of federal revenue is a dollar of federal revenue.
Spending decisions, therefore, need to be in the context of national rather than
programmatic requirements.
In straightforward terms, the debate about the budget status of the transportation
trust funds is about the allocation and control of federal spending. The transportation
trust funds have enjoyed consistent congressional support as the principal funding
sources for highway, transit, and aviation activities. There are, however, two
longstanding issues — balance and appropriate use — that have periodically arisen
over whether this funding mechanism is succeeding in meeting its stated objective.
The balance issue is the most visible of the two and drives the budget treatment
debate to a large extent. By far the most contentious disagreement over trust fund
spending arises because actual federal spending for trust fund programs often does
not match program spending levels set in authorizing legislation. The disagreement
over spending levels usually reflects the differing priorities that congressional
committees face. For example, the authorizing committees with authority over
transportation programs often support full funding for these programs. Budget and
appropriations committees, by contrast, often view transportation spending as
competing with other federal needs within a broader context of fiscal policy.
Transportation programs have been subject to obligation limitations or ceilings
(usually in appropriations legislation) with a resultant decrease in transportation
program spending vis-a-vis authorized levels. The obligation limitation mechanism
allows Congress to control outlays for programs operating with contract authority.
The obligation limitation does not, however, represent a permanent cutback in
funding, as these funds are retained as unobligated balances for later use. Higher
obligation levels could, therefore, be required in future years to facilitate spending
down unobligated balances should Congress deem this desirable.
The appropriate use issue is rooted in an ideological debate over the intended
use of trust fund revenues. One school of thought advocates that trust funds should
only be expended for capital transportation projects. Another school believes trust
funds should pay, at least in part, for the administrative costs of providing transporta-
tion services. Use of trust funds to pay for transit operating expenses, for example,
is viewed by some as outside the intended scope of the trust fund mandate. Perhaps
the longest running dispute of this type involves the level of the trust fund
contribution to the operation and maintenance expenses of the Federal Aviation

CRS-5
Administration (FAA). This dispute, apparently settled for the moment, dates back
to the Nixon Administration.
Understanding Trust Fund Balances
Unexpended balances exist in both the highway and aviation trust funds. The
significance of these balances and the reasons for them differ. A complete
understanding of these balances is difficult, in part because of the complexity of trust
fund accounting and because of the policy framework in which these funds have
existed.5
The Highway Trust Fund
The trust fund, and the programs operating out of the Federal Highway
Administration (FHWA) and the Federal Transit Administration (FTA) that it
supports, must be periodically reauthorized by Congress. The ISTEA provided this
authority through FY1997. At the beginning of FY1998 these programs are
continuing to operate as a result of a short term authorization approved near the end
of the 1 Session of the 105
st
Congress.
th
At the end of FY1996, as shown in appendix table 1, the highway account of the
highway trust fund had an unexpended balance of $12.1 billion. The transit account,
as shown in appendix table 2, had an unexpended balance of $9.5 billion for the same
period. It should be understood, however, that there are future commitments against
these balances. Hence, they do not represent cash balances available for immediate
use. A reason for this is that highway programs operate with contract authority rather
than budget authority.
Contract authority is tantamount to, but does not actually involve, entering into
a contract to pay for a project at some future date. Under this arrangement, specified
in Title 23 USC, authorized funds are automatically made available to the states at
the beginning of each fiscal year and may be obligated without appropriations
legislation. Appropriations are still required, however, to make outlays at some
future date to cover these obligations. States, therefore, may obligate more funds
than they actually could outlay at that time, although this does not appear to have
drawn down the trust fund balance. For budgetary reasons, Congress routinely limits
how much may be obligated in appropriations acts, which does not eliminate these
funds, but only delays the timing of their actual use.
Highway and transit grant programs work on a reimbursable basis: states pay for
projects up front and federal outlays are made to them only when work is completed
and vouchers are presented to the U.S. Department of Transportation (DOT), perhaps
months or even years after the project has begun. Work in progress is represented in
the trust fund as obligated funds and although they are considered “used” and remain
as commitments against the trust fund balances, they are not subtracted from
5 Detailed financial information about the trust funds is found in the appendix at the end of
this report.

CRS-6
balances. Trust fund balances, therefore, appear high in part because funds sufficient
to cover actual and expected future commitments must remain available.
Both the highway and transit accounts have substantial short- and long-term
commitments. These include payments that will be made in the current fiscal year
as projects are completed and, to a much greater extent, outstanding obligations to
be made at some unspecified future date. Additionally, there are unobligated
amounts that are still dedicated to highway and transit projects, but have not been
committed to specific projects.
In FY1994, for example, the highway account showed future commitments of
$42.6 billion. If these commitments had been charged against the balance in the
highway account at that time, it actually would have shown a deficit. To guarantee
the ability to make good on these commitments, Congress, through the Byrd
amendment to the Federal-Aid Highway Act of 1956, as amended, restricted the
growth of these commitments to a level not to exceed the current year’s unexpended
balance plus projected income for the following two fiscal years. The Byrd
amendment is an automatic device that requires no additional congressional action
to implement.
To develop a more meaningful account balance, it is necessary to calculate what
would be available at the end of a fiscal year, including expected future revenues and
unpaid commitments. The resulting figure is often referred to as the “surplus.”
Obviously, this process is very sensitive to both expenditure and revenue estimates.
In addition, the figure adjusted for the Byrd amendment can be either higher or lower
than the unadjusted number, depending on the level of commitments against the
unexpended balance and whether the adjustment includes expected interest earnings
or changes in anticipated excise tax collections.
Whether this ending balance is a “true” surplus is subject to debate. Although
this figure represents uncommitted funds that theoretically could be used for highway
projects, the FHWA has argued that maintaining a safe “cushion” of between $1-3
billion is necessary for the highway account to ensure adequate liquidity against
changing revenue projections or unanticipated problems. Equally important, these
funds are not lost to the states (unless they lapse), but remain in each of their
accounts as unobligated balances. To date, no federal transportation funds have ever
lapsed because of a limitation placed on obligation levels. Based on projections by
the Congressional Budget Office, it would appear that the trust fund could support
additional spending on highway and transit programs over the next few years,
without creating conflict with the above-mentioned criteria.
A similar procedure can be used to calculate an available spending balance for
the transit account. A mechanism similar to the Byrd amendment, but requiring only
one additional year's revenue in the calculation, limits commitments from the transit
account. The idea of maintaining a safe “cushion” would be equally valid for the
transit account, reducing the amount of funds conceivably available for a one-time
increase in obligations.
In part because of its effect on the federal deficit, Presidents have often
discouraged increased program spending by requesting obligation limitations. If

CRS-7
more trust fund money were used, the federal government would have to either
decrease spending on other programs, raise taxes, or increase borrowing to prevent
an increase in the deficit. This suggests that although surplus balances in the
highway trust fund do exist and at times may be either larger or smaller than
generally thought, they exist at least partially because of budgetary considerations.
The Airport and Airway Trust Fund
Balances in the aviation trust fund are more difficult to understand against the
backdrop of legislative provisions mandating certain spending priorities and recent
events that allowed the fund to lapse for extended periods of time. Nonetheless, it
is clear that the aviation trust fund maintained a sizable balance for much of its
existence. As shown in appendix table 3, the aviation trust fund had an unexpended
balance of $11.4 billion at the end of FY1995. After accounting for commitments
against the unexpended balance, the fund showed an uncommitted balance, or
“surplus,” of $5.1 billion. At the end of FY1996, the unexpended balance had
dropped to $2.5 billion and the uncommitted balance had dropped to $2.3 billion.
This dramatic one-year change was due to a confluence of events beginning in 1996
which severely affected fund revenues without a concomitant change in federal
program spending. This situation will be described in more detail subsequently, but
it is indicative of the peculiarities that have been associated with the history of this
trust fund. Another example, was the legal restriction placed on use of the fund to
pay FAA operational expenses in the 1980s, but since dropped, that had a significant
effect on the fund balances.
During the 1980s, restrictions on the use of the aviation trust fund monies were
legislated by the authorizing committees because of policy differences with the
executive branch and the appropriations and budget committees in Congress. These
restrictions included mechanisms that automatically limited the availability of trust
fund monies in certain instances under the guises of a “cap” and a “penalty clause.”
The major disagreements centered on how much of the trust fund should support
FAA operations vis-a-vis Treasury general funds.. The net result of these restrictions
was a several year increase in an already uneven relationship between fund revenues
and spending and a concomitant build up in the unexpended balance in the fund.
Another reason the aviation trust fund balance grew in the 1980s was related to
delays and problems in implementing the FAA’s National Airspace System (NAS)
Plan, now known as the Capital Investment Plan (CIP). It entails installation of a
complex advanced automation system (AAS) and other equipment related to air
traffic control. The AAS integrates considerable new capital investment in
computers, radar, and weather monitoring equipment required for managing the
explosive growth in air traffic that took place over the last decade. As the NAS
implementation plan continued to slip, primarily for technical and procurement
reasons, trust fund revenues accumulated faster than they were spent. This action
accelerated the surplus buildup, which increased even faster as interest accrued on
the balance. In recent years, supporters of the off-budget position have also argued
that airport improvement program spending, at below authorized levels, was
responsible for additional growth in the surplus

CRS-8
All of the previous problems associated with the balances in the aviation trust
fund pale in importance in view of unexpected events affecting the trust fund that
occurred initially in 1996 and reoccurred in early 1997. On January 1, 1996, and
again on January 1, 1997, authority to collect taxes for the aviation trust fund expired.
The first expiration lasted almost 8 months and cost the trust fund approximately
$4.0 billion in revenues. The second expiration was much briefer, about two months,
costing the trust fund an additional $1 billion. To a significant extent the “surplus”
in the aviation trust fund was greatly diminished by these events. The taxes would
have expired again on September 30, 1997, without further reauthorization.
After a spring and summer of uncertainty, the aviation tax reauthorization
unexpectedly became part of the revenue debate about the balanced budget. The
result of this debate was the Taxpayer Relief Act of 1997 (P.L. 105-34) which
imposed a new system of aviation taxation effective October 1, 1997. The new
system is a compromise that tries to accommodate a demand by some parts of the
industry for a tax system related to aviation activity (in this case flight segments were
used), but at the same time maintain the strength of the old system by retaining a
somewhat reduced ticket tax.. The new taxes will raise an additional $3 billion during
the next 5 years, over what might have been expected if the old system had been
reauthorized without change
The 4.3 Cents Dilemma
The Taxpayer Relief Act of 1997 made another major change in the revenue
stream for the transportation trust funds. Prior to October 1, 1997, 4.3 cents of the
fuel tax had been deposited in the Treasury general fund for deficit reduction.
Transportation interest groups have long argued that it was inappropriate to use fuel
taxes for deficit reduction, arguing instead that all fuel taxes be reserved for
transportation purposes. Congress had not accepted this logic when the 4.3 cent
charge was enacted as part of OBRA93. During consideration of the Taxpayer Relief
Act of 1997, however, the Senate added a provision, later accepted in conference,
that redirected the 4.3 cent tax to the highway trust fund or the airport and airway
trust fund in most instances. For those funds designated for the highway trust fund
there was a further split that provides 3.45 cents to the highway account and reserves
the remaining 0.85 cents for the transit account.
This change provides the trust funds, and especially the highway trust fund, with
a dramatically increased revenue base. A 1.0 cent increase in the federal fuel tax is
generally viewed as providing something over $1.2 billion in new revenue for the
highway trust fund. As a result, the highway trust fund could receive over $5.0
billion in additional revenue during FY1998.6 Growth also occurs in the airport and
airway trust fund as a result of the redirection of the 4.3 cents associated with
There
6
are several estimates that indicate that the actual increase in revenue could equate to
as much as $6.2 billion per year depending on increased fuel use associated with economic
growth and the increasing popularity of sport-utility vehicles.

CRS-9
aviation fuel use, but the growth is not as dramatic, given the context of the new
overall aviation taxing structure discussed in the previous section of this report.
The redirection of the 4.3 cent tax was not accompanied by an increase in
transportation spending authority as part of the balanced budget agreement. Hence,
while these funds will be assigned to the trust funds, and will count toward the
balance in the fund for the purpose of determining interest payments, the funds are
not available for transportation activities. Instead, the balanced budget agreement
continues to assign spending of these revenues without regard to their changed
actuarial placement. The net result of this situation is the likelihood of significant
growth in the unexpended balance of all affected transportation trust funds. The
highway trust fund will be particularly affected by this situation.
This situation has incensed supporters of increased spending for federal
transportation who, as previously mentioned, believe that trust fund revenues and
transportation program spending should be linked. Supporters of this position, and
this includes some Members of Congress, have vowed to make increased
transportation spending, linked to the 4.3 cent revenue stream, a major component
of the FY1999 budget agreement debate.
It appears that the supporters of spending the 4.3 cent revenue stream have won
their case, at least for the moment. H.R. 2400 and S. 1173 both rely on the additional
funding provided by this revenue stream to pay for the large increases in
transportation spending found in each of these bills. What remains to be determined
is how this increases will be accommodated by offsets and other actions in the
FY1999 congressional budget agreement.
Budget Treatment of Transportation Trust Funds
Only the highway trust fund predates the adaptation of the unified budget
concept that began in FY1969. Prior to the unified budget, the federal government
operated with essentially three budgets: administrative, consolidated cash, and
national income accounts. All federal trust fund activities were accounted for in the
consolidated cash budget and the national income accounts budget.
The adoption of the unified budget made all trust fund receipts and expenditures
part of the annual budget process on an actuarial basis. In making its decision to
include trust funds in the unified budget, Congress apparently relied on the
recommendations of President Johnson’s Commission on Budget Concepts. The
Commission identified several major justifications for the inclusion of all trust funds
in the budget including: Congress’ ongoing responsibility to establish taxes for and
benefits to be derived from trust funds; the possible “incentive to finagle budget
totals by inventing new trust fund expenditures, ... outside the budget;” and the
possibility that trust funds outside the budget “distort priorities of social choice and

CRS-10
lead to bad program decisions.” The Commission recognized that arguments could
7
be made to support the exclusion of trust funds from the budget. However, it argued
successfully that better budget accountability necessitated that trust funds be
examined as part of the overall budget.
Comparisons with the Social Security Trust Fund
Those who seek to move the transportation trust funds off-budget frequently
refer to the off-budget status of the social security trust fund as a potential model. As
a result of OBRA90, the social security trust fund was specifically excluded from
budget calculations for the unified federal budget. The legislation did not, however,
remove the costs of administering the social security program from the budget. This
is worth noting because all of the administrative expenses of the FHWA and a large
portion of the FAA’s operating and maintenance expenses are derived from the trust
funds.
A further, and very important, difference from the transportation trust funds is
the social security system’s permanent appropriation. This allows the Social Security
Administration to distribute funds on a formula basis without any congressional
action. Although Congress can, and does, revisit the issue of social security spending
from time to time, there is no annual appropriations process or periodic authorization
process as there is for transportation programs.
Finally, the total federal deficit is the difference between all federal revenues
and outlays including both on-budget and off-budget accounts. The outlays and
revenues of the social security system are part of this computation.
The Arguments For and Against Changing the Budget
Treatment of Trust Funds (i.e. Off-Budget)
The budget status of the transportation trust funds is at its root a discussion
about money and who should have the authority to spend it. What follows is a
synopsis of the major arguments that have been put forward to support and oppose
taking the trust funds off-budget.8
Tax Institute.
7
Federal Trust Funds: Budgetary and Other Implications. New York, 1970.
p. 20
8 For a discussion of the proponents positions on the off-budget debate see: Shuster, Bud.
Money to Get America Moving. Washington Post. September 15, 1997 (also available at
www.house.gov/transportation/bestea/shuster.htm) and Young, J.T. Phantom Highway
Surplus. Journal of Commerce. November 5, 1997. p. 7A

CRS-11
Arguments for Changing the Budget Treatment of Trust Funds (i.e.
Off-Budget)
! The transportation trust funds represent a contract with the Nation’s taxpayers.
Motorists, airline passengers, and others are paying user fees with the
expectation that these fees will be utilized for the programs with which they
are associated. If the trust funds are not going to be used for their stated
purposes, the excise taxes that fund them should be eliminated.
! According to the Federal Highway Administration and others, there are
significant infrastructure needs nationwide that are not being met. If the trust
funds were made available by changing the budget treatment of trust funds,
they could support needed additional federal transportation spending. Prior
to the increase in revenues to the highway fund discussed earlier, proponents
have sometimes identified the possible additional spending as being up to $2
billion annually on highways and transit, and $1 billion annually on aviation.
Given the new revenues to the fund these estimates are now likely to be much
higher.
! Inclusion of the trust funds in the unified budget subjects their outlays to the
budget process, thereby making them liable to legislated spending limitations,
which are not based on an analysis of national transportation spending needs.
! Using the trust fund balances to help mask the size of the overall federal
deficit perverts the unified budget process by giving a false impression of the
magnitude of the deficit and thereby distorts the overall budget process.
! Taking the transportation trust funds off-budget, or otherwise changing their
budget treatment, would not encourage others to seek changes to additional
trust funds. This is because transportation trust funds differ from other trust
funds by being user-fee financed, having a self-regulating deficit precluding
mechanism in the form of the Byrd amendment, and by funding long-term
programs.
! Proponents of the off-budget position reject the argument that trust fund
surpluses are the result of intergovernmental transfers resultant from the
payment of interest on balances in the fund. They argue that interest payments
are a fair mechanism for compensating the funds for their temporary use to
fund other federal activities. In addition, the regulations requiring interest
payments predate the transportation trust funds and are applied to all trust
funds.
! Taking the trust funds off-budget would eliminate the temptation they present
to those seeking funding sources for other projects.

CRS-12
Arguments Against Changing the Budget Treatment of Trust
Funds (i.e. Off-Budget)
! The unified budget is an essential tool for understanding how the federal
government collects and spends all of its funds. Any federal activity affects
the economy as a whole. Attempts to isolate specific activities, such as
transportation, from view could distort overall federal economic policy
formulation.
! Many of the “surpluses” in the transportation trust funds are derived, at least
in part, from intergovernmental transfers, in large part as a result of interest
paid by the treasury on trust fund balances. These payments could be viewed
as subsidies to transportation at the expense of other federal programs. As a
result, the surpluses have often distorted the trust fund balances in the same
way that off-budget advocates claim that the surpluses distort the federal
deficit.
! When viewed from a historical perspective, outlays from the trust funds have
exceeded revenues into the funds in many years, particularly in the 1980s and
well into the 1990s. This is only possible because of the aforementioned
intergovernmental transfers and the compounding of the interest payments.
This is particularly true for the highway trust fund. This situation shows that
the federal government’s transportation program spending in recent times is
in line with, or exceeds, what the trust funds should provide by way of outlays.
! Changing the budget treatment of transportation trust funds could encourage
the advocates of other federal spending programs to seek similar status. If a
significant number of these requests were granted the unified budget process
would cease to afford Congress the ability to determine national priorities on
a recurring basis.
! Off-budget programs with automatic spending authority dilute the control of
Congress over policy decisions. Such a situation is at odds with the constitu-
tional mandate for Congress to approve all federal spending.
! Off-budget status for specific transportation activities, such as highways,
could decimate funding for non-trust fund federal transportation programs that
would have to take the brunt of any deficit reduction efforts because they are
all part of the same budget function area (function 400).
! The unified budget does not prevent Congress from spending more on
transportation if it so chooses. In fact, transportation spending has risen
significantly over the last four decades.

CRS-13
The Off-Budget Debate in the 104th Congress
On February 7, 1995, Representative Shuster, Chairman of the House
Committee on Transportation and Infrastructure, with cosponsorship from committee
majority and minority leadership, introduced H.R. 842, the “Truth in Budgeting Act.”
The bill as introduced would have afforded the highway, aviation, inland waterways,
and harbor maintenance trust funds off-budget status.
The proposed legislation enforced the off-budget status of the trust funds by
prohibiting their inclusion in the budget of the United States and the congressional
budget, and by exempting the trust funds from any general budget limitations. The
bill detailed specific safeguards against deficit spending from the various trust funds
and a process for determining the availability of funds for additional spending from
the trust funds. The legislation did not call for a permanent appropriation, leaving the
role of appropriation committees unchanged. On May 3, 1995, the House Committee
on Transportation and Infrastructure reported H.R. 842 to the House. The legislation
passed in committee on a unanimous voice vote without amendment.
The principal supporters of this legislation in the House were the
aforementioned Chairman and leadership of the Committee on Transportation and
Infrastructure. In addition, the legislation had the strong support of Representative
Clinger, then Chairman of the House Committee on Government Reform and
Oversight. The off-budget argument also had the ardent and active support of most
transportation and construction trade interest groups. It also had the support of many
business groups, such as the U.S. Chamber of Commerce. These organizations
banded together in “The Alliance for Truth in Transportation Budgeting.” This
organization conducted a very visible effort in support of H.R. 842.
Opposition to the legislation in the House came largely from Members of the
Budget and Appropriations Committees. The Chairman of the Subcommittee on
Transportation of the House Committee on Appropriations, Representative Wolf,
opposed taking the trust funds off-budget. Budget Committee Chairman Kasich also
opposed to the legislation.
The Clinton Administration similarly took a strong stand against H.R. 842. In
a March 27, 1995 letter to the Chairman and Ranking Members of the principal
committees considering this legislation, the then Director of the Office of
Management and Budget, Alice Rivlin, took a strong stand against efforts to move
the trust funds off-budget. The letter detailed the Administration’s objections to the
legislation and discussed what it viewed as serious budgetary problems with the off-
budget initiative. Opposition to this legislation outside of Congress and the
Administration also exists.
The budget resolutions passed by Congress for FY1996 and FY1997 continued
to treat the transportation trust funds as part of the unified budget. Both proposals
required significant decreases in transportation program spending over the next 7
years as part of an overall federal deficit reduction program. As a result of these
recommendations it is likely that all federal transportation programs supported either
by the trust funds or by general funds would be subject to reduced funding.

CRS-14
Representative Shuster attempted to bring up the off-budget issue as part of the
floor debate on the FY1996 House budget resolution. The Rules Committee,
however, did not allow this issue to be brought to the floor at that time. Instead,
Speaker Gingrich announced the formation of a Speaker’s Task Force on
Transportation in mid-1995 to address this issue and make a recommendation to the
House on how transportation funding issues, including the off-budget issue should
be addressed. The task force was to be chaired by the Speaker and included
Representatives Shuster, Livingston, Wolf, Kasich, Molinari, Franks (NJ) and
Hobson. No deadline for a task force recommendation was established. During the
remainder of the 104th Congress, the task force met intermittently and has disbanded
without putting forth any specific recommendations.
Pending the task force’s recommendations there was little congressional
attention to the off-budget issue during the summer of 1995. This situation changed
briefly in September 1995, however. The House Committee on Transportation and
Infrastructure reported H.R. 2274, the National Highway System Designation Act of
1995, which incorporated the provisions of H.R. 842. By agreement with the House
leadership, the bill was stripped of its off-budget provisions during consideration by
the Rules Committee. In return for dropping these provisions, proponents of H.R.
842 apparently were promised a floor debate and vote on the issue before the end of
the first session of the 104th Congress. The crowded legislative calendar at the end
of the first session precluded this debate.
House Floor consideration of H.R. 842 occurred on April 17, 1996. Several
amendments were considered and all but two were defeated. The two amendments
that were approved were both introduced by the sponsors of H.R. 842 and could be
viewed as perfecting amendments. The amendments insured that future
transportation program spending would be subject to the presidential line-item veto
and required that the annual interest level accruing to the transportation trust funds
not exceed the level accruing to other federal trust funds.
Final passage of H.R. 842 came on a vote of 284 to 143, with 5 Members not
voting. This represented a much larger margin of success than many observers had
forecast prior to the vote. Supporters of the legislation hoped that this high level of
support would provide the bill with the momentum needed to bring about Senate
action.
Interest in the off-budget debate in the Senate, however, could be viewed as
tepid. Senators Lott and Baucus introduced legislation, S. 729, that would have the
same effect as the H.R. 842. Lobbying efforts supporting the Senate legislation
intensified following House passage of the legislation. Several Senators, including
Environment and Public Works Committee Chairman Chafee and Budget Committee
Chairman Domenici, are on record as opposing any change in the budgetary
treatment of trust funds and circulated a “Dear Colleague” letter confirming this
position. The 104th Congress ended without any Senate action on the off-budget
proposal.

CRS-15
Efforts to Change the Budget Treatment of Trust Funds
in the 1st Session of the 105th Congress
Chairman Shuster and other supporters of the off-budget concept frequently
stated their intention to make an off-budget bill one of the first pieces of legislation
introduced in the 105th Congress. They followed through on this promise by
introducing H.R. 4, The Truth in Budgeting Act, on January 7, 1997. The bill also
received expedited attention in the House Committee on Transportation and
Infrastructure and was reported to the House on March 5, 1997. The legislation has
attracted wide support in the House with 242 cosponsors listed as of September 24,
1997.
The off-budget debate has always been a major component of the argument
about federal transportation program spending. The authority to operate these
programs, contained in the Intermodal Surface Transportation Efficiency Act of 1991
(P.L. 102-240)(ISTEA), expired at the end of FY1997.9 These programs are
currently operating on an interim funding basis, but this interim funding will expire
by the summer of 1998.
As part of the reauthorization debate there are a number of Members seeking
major changes in the ISTEA structure. The seemingly most contentious change is a
possible reallocation of assistance among states, combined with a significant increase
in federal surface transportation program spending. The additional spending,
required by these proposals, could come from off-budget legislation, creation of a
"revenue constrained fund" (RCF)(discussed in the next section), and/or from tapping
all, or part, of the 4.3 cent fuel tax that has been redirected to the highway trust fund.
Reauthorization legislation typically requires a revenue title, which means that
the overall operation and funding of the highway trust fund will be part of the
reauthorization debate. In fact, the off-budget issue has now become part of
reauthorization legislation under consideration in the House. The provisions of H.R.
4 were incorporated in H.R. 2400, the Building Efficient Surface Transportation and
Equity Act of 1997 (BESTEA), as Title VII (introduced September 4, 1997). This
legislation was marked-up by the Committee on Transportation and Infrastructure on
September 24, 1997, but was not reported at that time.
Proponents of the off-budget initiative have retained the same support base that
promoted the effort in 104th Congress. The field of opponents is also essentially the
same, with the leadership of the House Budget and Appropriations Committees
actively opposing the off-budget bill.
9 For a discussion of ISTEA issues and legislation see: U.S. Library of Congress.
Congressional Research Service. Highway and Transit Program Reauthorization: ISTEA
Revisited? CRS Report 97-194E. by John W. Fischer and William A. Lipford; and ISTEA
Reauthorization: Highway Related Legislative Proposals in the 105th Congress 2nd Session.
CRS Report 98-221E. by John W. Fischer.

CRS-16
The Revenue Constrained Fund (RCF) Option
Senators Chafee and Bond introduced legislation near the beginning of the 105th
Congress that can be viewed as an alternative to the off-budget initiative. The
Highway Trust Fund Integrity Act of 1997, S. 404, deals only with the highway
account of the highway trust fund. The legislation would create a new budget
category called a revenue constrained fund (RCF). The RCF would remain on
budget, subject to special budget rules.
The RCF is straightforward in concept. The RCF links revenues to the fund and
spending from the fund. Under the RCF spending for highways would equal last
year’s revenues. If revenues go down, spending goes down. Hence the description
of this concept as “constrained”.
Supporters of the RCF see it as a way to allow increased spending for highways
based on actual trust fund revenues. This position is supported by historical growth
in the trust fund revenue stream which has been gradual and sustained. From the
perspective of the federal budget, supporters of the RCF view it as being essentially
revenue neutral.
The RCF proposal is silent on how to treat existing unexpended balances in the
highway trust fund. Supporters of the legislation view the RCF as a clean starting
point for the future.
Supporters of the off-budget position have generally welcomed the RCF as a
step in what they see as the right direction. They do not, however, view it as going
far enough towards freeing the trust funds from the budget process.
The off-budget idea has known proponents in the Senate, but has not attracted
the level of support seen in the House. It is also likely that the RCF proposal will
compete with the off-budget initiative in the Senate. As a result, it is not possible to
predict whether trust fund budget legislation will ultimately fare better in the Senate
in the 105th Congress than it did in the 104th.
Efforts to Change the Budget Treatment of Trust Funds
in the 2nd Session of the 105th Congress
In early February the Speaker of the House formed a task force charged with
working out the Leadership’s plan for the FY1999 budget cycle. Reauthorization of
surface transportation programs was an important component in this discussion.
Chairman Shuster apparently convinced the Leadership of the need to press forward
on H.R. 2400 at the funding levels proposed in the 1 Session. As part of th
st
e
agreement reached by the task force, the Transportation and Infrastructure Committee
could move its reauthorization bill to the floor with off-budget provisions. These
provisions, however, could only affect the highway trust fund and would affect the
future operation of the fund.

CRS-17
On March 24, 1998, the House Committee on Transportation and Infrastructure
marked-up H.R. 2400 and reported it. By prior agreement with the House leadership
the manager’s amendment to the bill modifies the off-budget provision so that it
refers to only the highway trust fund. This provision takes the highway trust fund
off-budget beginning in FY1999.
On March 26, 1998, the House Committee on Ways and Means reported the
revenue title of H.R. 2400. As part of the same Leadership agreement this provision
reduces the beginning of year unexpended balances for FY1999 in the highway
account and mass transit account to $8.0 million and $5.5 million respectively. In
addition, the title provides that interest paid on balances in the trust fund in future
years will not accrue to the trust fund.
There are still a number of Members of the House known to be opposed to the
off-budget provisions of H.R. 2400. Amendments to undue the leadership agreement
were offered when H.R. 2400 was considered on the floor on April 1, 1998. All of
these efforts were unsuccessful by wide margins.
The Senate in its consideration of reauthorization of surface transportation
programs, S. 1173, did not address the budget treatment issue. This means that off-
budget treatment may become an issue during conference on the respective House
and Senate surface transportation reauthorization bills.
The FY1999 Budget Agreement
The budget status of the transportation trust funds is likely to become entangled
in the debate about the FY1999 congressional budget resolution. The balanced
budget agreement reached by the Clinton Administration and congressional
leadership in FY1998 provided transportation programs in general, and surface
transportation programs in particular, with only modest increases in funding during
the life of the agreement. These levels are well below those in H.R. 2400 and S.
1173.
Under existing budget rules additional transportation spending must be offset
by decreased spending on other governmental activities in the discretionary part of
the budget. The Senate Budget Committee in its FY1999 budget proposal has
accommodated the increased spending levels in S.1173, by using offsets proposed in
the Clinton Administration budget. The Administration, however, had a different set
of spending priorities in mind when it proposed these offsets and is expected to
object to the Senate plan in its current form.
The House Budget Committee has not yet proposed an FY1999 budget plan.
It is not expected to act until after the Easter district work period. H.R. 2400
accommodates this timetable by including a provision in Title 11 that requires that
offsets be found in conference. It is not clear that the Senate will agree to this
arrangement.

CRS-18
Conclusions
Regardless of where trust funds reside in terms of the unified budget, they
remain federal accounts with a dedicated revenue stream. As such, they must still be
accounted for from an actuarial standpoint. The observation that the “devil is in the
details” would seem to be applicable in this context.
Congress, of course, can revisit any issue as changing situations may dictate.
The current “security” of the social security trust fund occurred only after a decade
of consideration and there are still those within Congress who would like to see the
budget status of this trust fund revisited. The transportation trust fund’s budget status
has now been revisited over the course of a decade as well. It remains to be seen
whether Congress will decide to move the transportation trust funds out of the unified
budget or leave their budget status unchanged.

CRS-19
For Additional Reading
U.S. Congress. House. Committee on Transportation and Infrastructure. Truth in
Budgeting Act. Report to accompany H.R. 842. Report 104-499, Part I. 104th
Congress, 2nd Session. Washington, U.S. Govt. Print. Off., March 27, 1996.
19 p.
U.S. Congress. House. Committee on the Budget. Truth in Budgeting Act. Adverse
Report with Dissenting Views to accompany H.R. 842. Report 104-499, Part II.
104th Congress, 2nd Session. Washington, U.S. Govt. Print. Off., March 29,
1996. 18 p.
U.S. Congress. House. Committee on the Budget. The Implications of Taking the
Transportation Trust Funds Off-Budget. Hearings. Serial No. 104-25. 104th
Congress, 2nd Session. Washington. U.S. Govt. Print. Off., March 28, 1996.
65 p.
U.S. Congress. House. Joint Committee on Taxation. Present Law and Background
Information on Federal Transportation Excise Taxes and Trust Fund
Expenditure Programs. Report (unnumbered). Prepared for the use of the
Committee on Ways and Means. Washington, U.S. Govt. Print. Off. November
14, 1996. 109 p.
U.S. Congress. Senate. Committee on Appropriations. Transportation Trust Funds,
Fiscal Year 1990. Hearings, 101st Congress, 1st Session. Washington, U.S.
Govt. Print. Off., May 11, 1989.
U.S. Congressional Budget Office. Paying for Highways, Airways, and Waterways:
How Can Users Be Charged? CBO Study. May 1992. 75 p.
U.S. General Accounting Office. Airport and Airway Trust Fund: Effects of the
Trust Fund Taxes’ Lapsing on FAA’s Budget. GAO/RCED-96-130.
Washington, U.S. Govt. Print. Off., April 1996. 10 p.
U.S. Department of Transportation. Federal Highway Administration. Financing
Federal-Aid Highways. FHWA-PL-92-016, May 1992.

CRS-20
Appendix
Table 1. Balances of the Highway Account
of the Highway Trust Fund,
FY1988-FY1996 (in millions of dollars)
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
Tax Revenue During the Period
Total Tax Revenue
12,836
14,359
12,472
14,494
15,664
16,046
14,660*
20,420
22,034
20,689
Cash Outlays During the Period
Total Annual Outlays
14,038
13,603
14,375
14,687
15,518
16,641
19,011
19,472
20,018
20,871
Net Income Before
-1,201
756
-1,903
-193
146
-595
-4,351*
948
2,016
-182
Interest
Interest on
809
776
981
810
909
818
754
547
658
802
Investments
Change in Cash
-392
1,532
-922
617
1,055
223
-3,597*
1,495
2,674
620
Trust Fund Balances
Unexpended
9,412
9,019
10,551
9,629
10,246
11,301
11,524
7,927
9,421
11,658
Balance, Start of
Year
Change in Cash
-392
1,532
-922
617
1,055
223
-3,598*
1,495
2,674
620
Unexpended
9,019
10,551
9,629
10,246
11,301
11,524
7,926*
9,421
12,095
12,278
Balance, End of
Year
* The U.S. Treasury failed to credit the trust fund with $1.6 billion in tax revenues collected in FY1994. These revenues have been credited to
the FY1995 beginning balance. This accounting situation distorts the FY1994 numbers.
Source: U.S. Government. Office of Management and Budget. Budget of the United States Government, various years.

CRS-21
Table 2. Balances of the Transit Account of the Highway Trust Fund,
FY1988-FY1996 (in millions of dollars)
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
Tax Revenue During the Period
Total Tax Revenue
1,277
1,269
1,395
2,485*
1,070*
1,949
2,008
2,192
2,617
3,198
Cash Outlays During the Period
Total Outlays
696
849
879
1,054
1,268
1,916
3,364
3,179
3,336
3,663
Net Income Before
582
420
516
1,431
-198
33
-1,355
-987
-719
-465
Interest
Interest on Investments
384
469
581
664
746
710
684
621
665
638
Change in Cash
966
889
1,097
2,095
548
743
-672
-366
-54
173
Trust Fund Balances
Unexpended Balance,
4,202
5,168
6,057
7,154
9,249
9,797
10,617
9,945
9,579
9,525
Start of Year
Change in Cash
966
889
1,097
2,095
548
743
-672
-366
-54
173
Unexpended Balance,
5,168
6,057
7,154
9,249
9,797
10,474
9,945
9,579
9,525
9,698
End of Year
* The U.S.Treasury over credited FY1991 tax receipts and applied corrections in FY1992.
Source: U.S. Government. Office of Management and Budget. Budget of the United States Government, various years.

CRS-22
Table 3. Balances of the Airport and Airway Trust Fund,
FY1988-FY1996 (in millions of dollars)
1988
1989
1990
1991
1992
1993
1994
1995
1996c
1997
Tax Revenue During the Period
Passenger Ticket Tax
2,815
3,201
3,219
4,341
4,012
2,677
4,528
4,768
2,123
3,389
Waybill Tax
168
181
178
222
249
255
284
361
151
331
Fuel Tax
117
629
141
140
167
121
187
211
3
128
International Departure Tax
95
106
180
217
231
223
218
233
128
194
Total Tax Revenuea
3,189
3,665
3,700
4,910
4,644
3,261
5,217
6,363
2,369
4,027
Cash Outlays During the Period
Federal Aviation
Administration:
Airport Grants-in-aid
825
1,135
1,220
1,541
1,672
1,931
1.620
1,826
1,450
1,489
Facilities & Equipment
1,043
1,088
1,317
1,512
1,885
2,166
2,434
2,639
1,866
2,310
Research, Engineering, &
170
128
154
179
214
212
226
232
186
218
Development
FAA Operations
830
478
807
2,032
2,110
2,279
2,199
2,546
2,223
1661
Total Annual Outlaysb
2,896
2,858
3,528
5,299
5,978
6,654
6,547
7,384
5,806
5,758
Net Income Before
293
807
172
-389
-1,334
-3,393
-1,330
-1,021
-3,437
-1,731
Interest
Interest on Investments
893
1,009
1,245
1,297
1,273
1,040
837
757
759
481
Change in Cash
1,185
1,816
1,417
908
-61
-2,353
-493
-264
-2,678
-1,250
Trust Fund Balances
Unexpended Balance, Start of
9,935
11,120
12,936
14,353
15,261
15,200
12,851
12,386
5,167
4,355
Year
Change in Cash
1,185
1,816
1,417
908
-61
-2,353
-465
-264
-2,678
-872
Unexpended Balance, End of
11,120
12,936
14,353
15,261
15,200
12,847
12,386
11,365
2,516
3,483
Year
a Includes refunds of taxes and offsetting collections.
Includes offsetting collections and additional payments.
b
c All trust fund activities for FY1996 are affected by the lapse in revenue collection authority during the January - August 1996 period.
Source: U.S. Government. Office of Management and Budget. Budget of the United States Government, various years.

CRS-23