Letter to Ranking Member Gregg Regarding DOT's Projections of Highway Trust Fund Solvency
On June 24, we issued a results of our review related to the solvency of the Highway Trust Fund, conducted at the request of Senator Judd Gregg, Ranking Member of the Senate Budget Committee. As requested, our objectives were to evaluate: (1) the basis for the Department’s projection of the magnitude and timing of a Highway Account cash shortfall; (2) how that projection would vary under different assumptions; and (3) the triggers the Department uses to decide that the risk of insolvency for the Highway Account requires action by the Administration and Congress. We found that the Department used a reasonable methodology to project the magnitude and timing of a cash shortfall. However, some of its assumptions were outdated, as the Department did not use actual year–to–date data to adjust total revenue or outlay estimates. This could yield a margin of error in those projections of up to $1 billion in magnitude and 2 weeks in timing. We also found that the Department’s cash balance forecasts vary largely due to factors outside the Department’s control. While the accuracy of the Department’s projections could be incrementally improved, the range of defensible values for the factors influencing those projections makes it difficult to estimate precisely either the magnitude or timing of the cash shortfall. Finally, we found that the Department relies on cash balance forecasts to trigger formal notification to Congress and the States of a potential insolvency in the Highway Account. While the Department greatly increased the amount of data publicly available regarding the balance of the Highway Account, until recently it has lacked a consistent and easily understood message regarding the timing and magnitude of a cash shortfall.