The Highway Trust Fund
The previous sections have only peripherally mentioned the Highway Trust Fund (HTF). This has been intentional. The fact that the HTF is the source of funds for the Federal-Aid Highway Program (FAHP) has a limited impact on the financial procedures under which the highway program operates. The use of the Trust Fund provides two direct benefits to the highway program: (1) It allows the program to operate with contract authority through the 1974 Budget Act, and (2) it provides the opportunity for revenue aligned budget authority (see discussion under "Appropriations"). The following section briefly describes the operation of the HTF.
Before 1956, the year Interstate System authorizations were greatly increased, the HTF did not exist. Cash to liquidate previously incurred obligations for the FAHP came from the General Fund of the Treasury. Budget authority came through the granting of contract authority, as it does now. Although taxes on motor fuels and automobile products were in existence, they were not linked to funding for highways. At the time, financing for the highway program and revenues from automobile and related products were included under the public finance principle of "spend where you must, and get the money where you can." Aside from this, the program operated in terms of authorizations, obligations, appropriations, and reimbursements—much as it does now.
The Federal-Aid Highway Act of 1956, coupled with the Highway Revenue Act of that same year, increased authorizations for the Federal-aid Primary and Secondary Systems, authorized significant funding of the Interstate System, and established the HTF as a mechanism for financing the accelerated highway program.67 To finance the increased authorizations, the Revenue Act increased some of the existing user taxes, established new ones, and provided that most of the revenues from these taxes should be credited to the HTF. Revenues accruing to the HTF were dedicated to the financing of Federal-aid highways. The passage of the Highway Revenue Act of 1956 also increased the political acceptability of the additions in the user taxes and provided earmarked revenues to finance the larger highway program.
The imposition of the taxes that are dedicated to the HTF, as well as the authority to place the taxes in the HTF and to expend from the HTF all have expiration dates which must be extended periodically. The 1956 Highway Revenue Act provided for the imposition of the taxes that support the HTF through June 30, 1972, and the transfer of such taxes and the payment of refunds through June 30, 1973. Expenditures from the HTF were authorizedthrough June 30, 1972. The life of the HTF has been extended several times by subsequent legislation, most recently by the TEA-21, which extended the imposition of taxes through September 30, 2005,68 and the transfer of the taxes to the HTF and the payment of refunds through June 30, 2006. The TEA-21 authorized expenditures from the HTF through September 30, 2003.
The HTF was created as a user-supported fund. Simply, the revenues of the HTF were intended for financing highways, with the taxes dedicated to the HTF paid by the users of highways. This principle is still in effect, but the tax structure has changed since 1956.