Enviros say CBO overstated impact of new standards on highway fund

Source: Jason Plautz, E&E reporter • Posted: Wednesday, May 9, 2012

Environmentalists are accusing the Congressional Budget Office of using “shell game” tactics in a report last week that warned of a $57 billion hit to the highway trust fund under new fuel economy standards.

A pair of blog posts from environmentalists yesterday say that the report by the nonpartisan CBO lays out a hypothetical situation and that the headline numbers in the report are overstated by 10 to 20 times.

Rather than a 13 percent hit to the highway trust fund through 2022 due to fuel economy standards, they say, the impact would be just 1 percent.

“Salacious as it may sound, CBO’s analysis rings far closer to fiction than reality,” wrote Jim Kliesch, a clean vehicles analyst with the Union of Concerned Scientists. He added that the report “isn’t so much inaccurate as it is irrelevant.”

The CBO report says an Obama administration rule that would double fuel economy standards to 54.5 mpg for cars and light trucks by 2025 would also reduce gasoline consumption. That, the office said, would mean a 21 percent drop in receipts from the already dwindling federal gasoline tax over several years, which could translate to a $57 billion drop if that took place through 2022 (Greenwire, May 3).

However, Kliesch writes, the actual impact through 2022 would be just $2.5 billion, because the full vehicle fleet would not turn over for several more years. The $57 billion figure, they say, came from a hypothetical case where the CBO applied the 30-year total decrease to an 11-year period. The same point was also made by Natural Resources Defense Council analyst Deron Lovaas in a separate blog post.

The CBO does note the distinction in a footnote, saying that the new corporate average fuel economy (CAFE) standards “would not take effect until 2017, so they would reduce gasoline tax revenues between 2012 and 2022 by less than 1 percent, CBO estimates.”

Politicians and interest groups have warned that lowered fuel consumption from the CAFE standards — set to be finalized next month — could mean further hits to the trust fund, which provides money for roads, bridges and transit systems. That has led to some calls for an alternate funding system based on vehicle miles traveled or another user fee, but none has gained much political traction.

Lovaas said the tactic was a “shell game” that made “the effects of the changes in fuel efficiency standards appear more dire than they are to the trust fund.” However, he added, there is still a crisis with the trust fund, which CBO has estimated will go bankrupt as early as fiscal 2013 because of diminished returns from the gas tax.

“It’s high time to get serious about transitioning to revenue tools to supplement the gas tax, which politicians are fearful to touch,” Lovaas said.

“Scare tactics by inflating the effects of fuel efficiency on the Highway Trust Fund will only fuel the fire of politicians clinging to their old ways and not seeking innovative and modern solutions to solving transportation funding.”