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INFORMATION ALERT

National Conference of State Legislatures
Committee on Transportation

September 5, 2008

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U.S. Department of Transportation (DOT) officials announced today that as of October 1, 2008 the highway account within the Highway Trust Fund will have a zero and more likely negative balance. These same officials indicated that they expect the highway account to take in $2.7 billion during September. However, outlays in the form of reimbursements to states are estimated to be $4.4 billion. To temporarily rectify this situation, the Department is proposing two courses of action:

1. Passage of legislation next week that will allow for the immediate transfer of $8 billion from the general fund to the highway account.
2. Payment of proportional reimbursements to states until the $8 billion transfer is approved.

Regarding (1), the Department is “recommending” passage of this legislation which the administration up to this point has both actively opposed and threatened to veto. Please note that this is a Department recommendation that has not yet been cleared by the White House.

Regarding (2), it is NCSL’s understanding that highway account reimbursements to states occur twice daily. Commencing with next week, there will be no reimbursements honored until Thursday. Then, based upon the amount of funds actually in the account, weekly proportional reimbursements based upon the total amount of requested reimbursements will be made. Therefore, if there are funds available to cover only 75 percent of reimbursements sought, states can only expect to receive 75 percent of their request. This strategy will repeat itself the following week and thereafter until legislation is passed allowing for the $8 billion transfer. DOT officials state they are deploying this strategy to slow the pace of depletion in the highway account.

The DOT announcement stipulated that this action is only a “temporary” solution. They further stated that their proposal will be shared later today with key transportation congressional staff. Congress reconvenes September 8.

For further information as it becomes available and updates on congressional and administrative action, please contact Jeremy Meadows (202-624-8664, Jeremy.meadows@ncsl.org), Paul Snow (202-624-8683, paul.snow@ncsl.org) or Michael Bird (202-624-8686, michael.bird@ncsl.org).