U.S. Secretary of Transportation Mary E. Peters today directed the Federal Highway Administration to take immediate steps to protect the solvency of the highway account of the Highway Trust Fund and called on Congress to act quickly
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The recent and sudden decline in American driving and the resulting decline in gas tax revenue during the summer have accelerated the predicted shortfall.

"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," she said in a midday press conference. "Outlays are now expected to exceed receipts by more than $8 billion for fiscal year 2008. In September alone, we expect the Highway Account will take in $2.7 billion but have reimbursement requests totaling $4.4 billion.

"At current spending rates, we will start the new fiscal year on October 1 with a zero balance in the Trust Fund, and will continue to spend more than we take in."

Peters announced that the federal government would begin making reimbursements to states on a weekly basis starting next week. In addition, she said the agency would make funds available on a pro-rated basis. For example, if there are only enough funds to cover 80 percent of requests, the highway agency will pay only 80 percent of each.

Peters added that states would receive the balance of the funds in the following week, and then any new requests would also be dealt with on a pro-rated basis. She added that the department will also review its personnel and purchasing policies and consult with other federal agencies receiving highway funds to find ways to free up additional funding for reimbursing state partners.

She called on Congress to provide immediate short-term relief by passing pending legislation, already approved by the House of Representatives, that would make an additional $8 billion available for the highway trust fund. She urged Congress, however, to avoid adding pet projects, new earmarks or unrelated provisions on the must pass legislation and to get the bill done by the end of next week.

Four times this year, Republicans in the Senate have blocked a measure that would shore up the fund, according to the Associated Press.

Responding to today's announcement about the rationing of federal highway reimbursements to the states, American Association of State Highway and Transportation Officials Executive Director John Horsley said, "This unprecedented action by the FHWA is going to have grave repercussions for the states, for hundreds of thousands of workers in the construction industry, and the driving public."

Horsley continued, "It will worsen the financial crises many states are already facing, and it will delay or halt needed transportation projects and leave contractors and suppliers with IOUs instead of cash to pay their workers."