October 19, 2018

The Federal Highway Administration has reported the year-end balances and cash flow of the Trust Fund in an updated Table FE-1, revealing that the Trust Fund ran an $11.8 billion cash deficit in fiscal year 2018 and ended with a total balance of $44.5 billion. This is over $3 billion higher than the $44.2 billion that the Congressional Budget Office projected six months ago, because of slightly slower-than-expected outlay growth and higher-than-expected tax receipts and interest (mostly from truck sales).

The reporting also shows that net transfers from the Highway Account to the Mass Transit Account surged to $1.6 billion this year, up 45 percent from last year. (The table reports that gross transfers from the HA to the MTA were $1,700,000,000.00 which is a suspiciously round number given that the FY17 number was $1,174,500,000.00, but there you go. This was balanced by a transfer of $66.3 million from transit to highways.)

It is impossible to know in advance precisely how much money state DOTs and MPOs will “flex” from highways to transit for individual projects in a given year – CBO uses a plug of $1.0 billion per year for its forecasts while the Office of Management and Budget uses a plug of $1.3 billion per year.  In recent years the actual total has been around $1.1 billion, showing CBO more right, but $1.6 billion is different enough that both agencies may want to rethink those forecasts in the future.

(If anybody knows where the state-by-state flex totals are reported, we would love to compare FY18 with previous years to figure out which states or megaprojects caused this surge.)

In other news, the changing interest rate environment means that the Trust Fund was credited with $745 million in interest income, up from $383 million in FY17 and $124 million in FY16 (despite the fact that the balances on which the interest was paid dropped measurably in each of those years).

(Ed. Note: The payment of interest to federal trust funds – the federal government paying money to itself – has always been questionable, but given that the entirety of the remaining balance can conceivably be attributed to the $70 billion general fund transfer from the FAST Act, most of which was based on a very sketchy offset of confiscating money from the Federal Reserve, the fact that the Trust Fund gets a $745 million bonus this year as a reward for that $70 billion transfer is laughable.)

The balance and outlay data from Table FE-1 is shown below along with a more detailed breakdown of the FY18 taxes from the September 2018 Treasury report on the Trust Fund.