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Congressional Budget Office Says CAFE Standards Will Cut Highway Trust Fund by 21% by 2040

May 3, 2012

WASHINGTON – The U.S. Congressional Budget Office (CBO) says improved fuel economy will cut the Highway Trust Fund by $57 billion between 2012 and 2022. The U.S. federal government uses the Highway Trust Fund to pay for its surface transportation program.

The CBO’s analysis found that the drop in funds would not occur overnight, however. Boosting fuel economy of the new-vehicle fleet from 34.1 mpg in 2016 to 49.6 mpg by 2025 would result in a 21% drop in revenue over a period of nearly 30 years (the 21% drop would fully manifest in 2040) as the federal government implemented the new standards. The largest share of the Highway Trust Fund’s revenue comes from gasoline taxes, according to the CBO.

To make up for this shortfall, the CBO suggested potential actions U.S. policymakers could take, ranging from cutting highway and mass transit spending, moving more money from the Treasury's general fund to the Highway Trust Fund, or increasing the gasoline tax. The CBO said the federal government could also explore raising funds from other sources.

The CBO’s report stated that although the Highway Trust Fund’s balances remained stable for years, its expenses have exceeded its receipts for most of this decade. So far, the federal government has covered the gap between revenue and expenses by transferring money from the Treasury’s general fund.

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