Americans use less gas, hurt highway trust fund: CBO
WASHINGTON (Reuters) - Declining gasoline purchases, due to higher prices, are hurting the federal fund that pays to maintain the nation's highways, the director of the Congressional Budget Office said on Thursday.
The fund is built on an 18.4 cent tax levied on each gallon of gas. It had been forecast to run out by 2009, but the fund is now shrinking more quickly, Peter Orszag testified to a Senate panel.
"Our March baseline did suggest that it would be exhausted in 2009 and an imbalance of roughly a billion and a half dollars would occur during that time period," he said of the CBO's projections on the fund's future.
"Since March, gas prices have caused gasoline consumption to decline. So the incoming revenue will be lower than what we projected in March and the imbalance in 2009 will be more significant," Orszag added.
Average U.S. gasoline prices have risen some 80 cents per gallon since the end of March to a record $4.11, up $1.13 from a year ago.
The office, which audits the economic impact of congressional bills and programs, will release new projections by the end of summer, he noted.
Orszag also said the soon-to-expire transportation law, known as SAFETEA-LU, had anticipated the depletion of the highway trust fund.
"Many people have wondered why this is occurring and I would just point out Congress purposefully saw the balance in the highway trust fund and tried to have it exhausted by the end of 2009 ... and you're going to come pretty close," he said.
From 1995 to 2000, the fund had a surplus of between $10 billion and $23 billion, according to the CBO, and in 1998 Congress cut $8.017 billion from it.
On Thursday, the Senate Appropriations Committee sent legislation to the full Senate to restore that amount in the coming year as part of a larger infrastructure funding bill. The House Ways and Means committee is considering similar legislation.
The Congress will take up drafting a new transportation bill next session.
The gas tax has become an issue in the presidential election, with presumptive Republican nominee John McCain proposing to suspend the tax for a short period to speed economic recovery. Barack Obama, the expected Democratic nominee, has said suspending the tax would provide little relief.
(Reporting by Lisa Lambert and Georgina Coolidge; Editing by Dan Grebler)
