Balance the Highway Trust Fund Act

Bill Number

S. 3786

Origin Chamber

Senate

Congress

119th Congress, Session 2

Policy Area

Transportation and Public Works

Status

Introduced

Latest Action

2026-02-05: Read twice and referred to the Committee on Environment and Public Works.

Last Updated

2026-02-26T16:31:20Z

AI-Generated Summary

Purpose of the Legislation

The "Balance the Highway Trust Fund Act" aims to ensure that federal spending from the Highway Trust Fund (HTF) does not exceed the actual revenue collected for it, promoting fiscal balance by tying obligations (legal commitments to spend money) directly to estimated receipts from fuel taxes and other sources.

Key Provisions

• General Limitation on Highway Programs (Section 2(a)): For each fiscal year, obligations for federal-aid highway and highway safety construction programs cannot exceed the most recent estimate of "net highway receipts" (revenues deposited into the HTF, excluding the Mass Transit Account) as calculated by the U.S. Department of the Treasury under the Internal Revenue Code.
• Distribution Rules for Obligation Authority (Section 2(b)):
• Excludes distribution for administrative expenses under 23 U.S.C. § 104(a) and funding for the Bureau of Transportation Statistics.
• Withholds distribution equal to any unobligated balances (unused funds) from prior years for allocated or apportioned highway programs.
• Calculates a proportion of available authority based on authorized appropriations (adjusted for exclusions) and distributes it proportionally to various highway programs allocated or apportioned by the Secretary of Transportation.
• Remaining authority is distributed to states for other apportioned programs (excluding specific sections) based on their share of total authorized amounts.
• Redistribution of Unused Authority (Section 2(c)): After August 1 each fiscal year, the Secretary of Transportation must revise distributions if states cannot obligate their full share and redistribute to states with capacity to spend, prioritizing those with large unobligated balances from certain bridge and highway programs.
• Application to Research Programs (Section 2(d)): The limitation applies to transportation research under 23 U.S.C. Chapter 5, but this authority remains available for four years and is additional to future limitations.
• Redistribution of Certain Funds (Section 2(e)): Within 30 days of distributing obligation authority, the Secretary must allocate any unallocated authorized funds (excluding certain rural programs) to states proportionally, making them available for general highway purposes under 23 U.S.C. § 133(b).
• Limitation on Mass Transit Account (Section 3): Amends 49 U.S.C. § 5338 to cap total obligations from the HTF's Mass Transit Account at the most recent estimate of "net mass transit receipts" by the Treasury, overriding other laws.
• Effective Date (Section 4): The Act and its amendments take effect on October 1, 2027, the start of fiscal year 2028.

Significant Changes to Existing Law

• Introduces strict caps on obligations tied directly to Treasury-estimated receipts, replacing or overriding prior laws that allowed broader spending authority (e.g., under 23 U.S.C. and 49 U.S.C.) even if it created HTF deficits, which are often covered by general Treasury transfers.
• Alters distribution mechanisms by mandating proportional cuts across programs and states when receipts fall short, and excludes certain non-construction items from obligation authority.
• Applies similar receipt-based limits to the Mass Transit Account for the first time in this manner, potentially curtailing transit funding flexibility.
• Adds redistribution requirements to prioritize efficient spending, differing from previous ad-hoc adjustments.

Potential Impacts

• On Government Agencies: The U.S. Department of Transportation (DOT) and its Federal Highway Administration will face reduced flexibility in obligating funds, potentially delaying project approvals and requiring more frequent revisions to spending plans. The Treasury Department gains a larger role in influencing transportation budgets through receipt estimates.
• On Citizens: Could lead to slower or scaled-back highway maintenance, construction, and safety projects, affecting commuters, freight transport, and rural access. Transit riders might see reduced federal support for public transportation, impacting urban mobility.
• On International Relations: Minimal direct impact, though reduced highway funding could indirectly affect U.S. trade efficiency by slowing infrastructure improvements critical for goods movement across borders (e.g., with Canada and Mexico).
• Overall, if fuel tax receipts decline (e.g., due to electric vehicle adoption), funding could shrink, forcing states to seek alternative revenues or prioritize projects.

Main Stakeholders Affected

• States and Local Governments: Primary recipients of HTF funds; they may receive less obligation authority, impacting their ability to plan and execute road, bridge, and transit projects.
• Federal Agencies: DOT (including Federal Highway Administration and Federal Transit Administration) for implementation; Treasury for receipt estimates.
• Transportation Industry: Contractors, engineers, and unions involved in highway and transit construction, who could face fewer opportunities.
• General Public: Drivers, transit users, and taxpayers, as the Act promotes fiscal restraint but may result in deteriorating infrastructure if receipts lag.
• Environmental and Advocacy Groups: Those pushing for sustainable transport might see mixed effects, with potential cuts to transit but also incentives for efficient spending.

Notable Legal, Constitutional, or Political Implications

• Legal: Reinforces congressional control over spending under the Appropriations Clause of the Constitution by linking expenditures to dedicated revenues, potentially reducing reliance on deficit-financed transfers from general funds. May face challenges if seen as unduly restricting executive discretion in fund distribution.
• Constitutional: Aligns with balanced budget principles but could raise questions about federalism, as it shifts more burden to states without increasing their revenues.
• Political: Emphasizes fiscal conservatism by addressing HTF insolvency (a long-standing issue), likely appealing to deficit hawks but drawing opposition from infrastructure advocates who argue it underfunds critical needs amid growing demands. As an introduced bill (S. 3786, 119th Congress), its passage would signal a shift toward pay-as-you-go transportation policy, influencing future authorization bills like the next surface transportation reauthorization.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Lee, Mike [R-UT]

Recent Actions

• 2026-02-05: Read twice and referred to the Committee on Environment and Public Works.
• 2026-02-05: Introduced in Senate

Bill Versions

• Balance the Highway Trust Fund Act — issued 2026-02-05 — PDF (7 pages)