Report gauges fuel economy standards’ drain on Highway Trust Fund

Sources: Congressional Budget Office; CP staff

Impending fuel economy standards for light-duty vehicles have the potential to reduce Highway Trust Fund (HTF) receipts by 21 percent and increase federal transportation programs’ reliance on U.S. Treasury general funds.

In its new “How Would Proposed Fuel Economy Standards Affect the Highway Trust Fund?” report, the Congressional Budget Office measures diminished fuel tax receipts attributable to corporate average fuel economy (CAFE) standards the Environmental Protection Agency and National Highway Transportation Safety Administration outlined last year. Applicable to 2017–2025 model years, they call for mileage in cars and other light-duty vehicles to climb from 34.1 mpg to 49.6 mpg.

Gas tax receipts from vehicles subject to the proposed CAFE standards represent 60 percent of HTF deposits. The CBO report applies trends in from lower gasoline tax receipts over the longer term to the next 12 years, concluding: A 21 percent reduction in collections from light-duty vehicles would result in a $57 billion drop in revenues deposited in the trust fund over the 2012–2022 period.

 Options policymakers could consider to stabilize the HTF, report authors note, include: reducing spending on highways and mass transit; transferring additional money from the Treasury’s general fund; and, increasing the gasoline tax or raising revenue from other sources. In addition to projected funding and policy challenges, the 10-page CBO report details highway and mass transit funding formulas, plus tables and charts tracking HTF current and future financials; copies can be downloaded here.