Senate Passes Highway Trust Fund Fix

September 11, 2008

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The Senate late Wednesday approved legislation to transfer $8 billion to restore solvency to the Highway Trust Fund.

The measure now goes back to the House for a second vote after being amended by the Senate. The Senate bill provides the aid this year; the House bill, which was passed in July when funds were expected to last a little longer, had made it available in fiscal 2009, starting Oct. 1.

Hundreds of millions of dollars of construction projects have been put on hold as a result of Friday's announcement by U.S. Secretary of Transportation Mary Peters that federal-aid payments to the states would be withheld because of a shortage of funds.

"Put plainly, the Highway Account of the Highway Trust Fund will not have cash available to reimburse state highway expenditures -- not at some point in the distant future, but as soon as this month," Peters said in a press conference last Friday. "Outlays are now expected to exceed receipts by more than $8 billion for fiscal year 2008." In September alone, she said, the DOT expects the Highway Account will take in $2.7 billion but have reimbursement requests totaling $4.4 billion.

"State departments of transportation are breathing a collective sigh of relief across the country," said John Horsley, executive director of the American Association of State Highway Administrators.

Peters commended the Senate for their action but said further action is needed to prevent these problems in the future: "The lesson is clear, it's time to embrace a new approach to transportation that does not rely on high fuel consumption and instead directs funds where they are actually needed. Congress must eliminate the billions in wasted spending, thousands of unneeded earmarks and hundreds of conflicting and contradictory special interest programs in order to make sure states don't face this situation again."

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