Thus, despite rather widespread belief to the contrary, contract authority limitations (or cutbacks) have not resulted in loss of apportionments to states nor planned expenditures from the Highway Trust Fund. They have resulted in a "dampening" in the rate of contract obligations, aggregating about $2.2 billion over a five year period an amount equivalent to less than half of the estimated contract obligations for the current fiscal year. In other words, the net effect of contract authority limitations has been to extend the total highway program by about five months without reduction in total size or scope.

Column 7 of Table 2 shows disbursements from the Highway Trust Fund, by fiscal year, covering the Federal share of costs of completed work under Federal-aid highway programs. The amounts through the fiscal year ending June 30, 1970 are official. The amounts for the 1971 and 1972 fiscal years are recent estimates by the Secretary of the Treasury. Cumulative disbursements are shown in column 8. The estimated total through the fiscal year ending June 30, 1971 is $49.474 billion.

11

Unliquidated obligations at the end of each fiscal year are shown in column 9, Table 2. They are the differences between the cumulative contract obligations against the Trust Fund, column 5, and the cumulative disbursements. The estimated unliquidated obligations the amount owed by the Fund -on June 30, 1971 total $7.501 billion. That amount is a legal requirement of the Trust Fund to finance the work already under contract obligation as it is completed and vouchers are submitted by the states for reimbursement.

Figure 3 shows graphically the relationship of Trust Fund disbursements to total contract obligations through the fiscal year ending June 30, 1971. At any point in time the vertical distance between the disbursement and obligation lines represents the amount of unliquidated obligations remaining to be paid from the Highway Trust Fund as work under contract is completed. For any dollar amount the horizontal distance between the two lines represents the time lag for cumulative disbursements to equal cumulative obligations. On the average, about three years passes from the time authorizations are apportioned and made available to the states until an equivalent amount of work has been completed and paid for from the Trust Fund.

Revenues accruing to the Highway Trust Fund, by fiscal years, are shown in column 10 of Table 2. The amounts through

the fiscal year ending June 30, 1970 are official. The amounts for the 1971 and 1972 fiscal years are recent estimates by the Secretary of the Treasury. Cumulative revenues are shown in column 11. The estimated total through the fiscal year ending June 30, 1971 is $53.122 billion.

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Column 12 of Table 2 shows the Highway Trust Fund cash balance at the end of each fiscal year the difference between cumulative revenues, column 11, and cumulative disbursements, column 8. By law the Trust Fund must have a balance at the end of each fiscal year. Trust Fund revenues in excess of current expenditures are invested by the Treasury in public debt securities with interest on the borrowings credited to the Trust Fund. The estimated 1971 fiscal year Trust Fund revenues of $5.75 billion, shown in column 10 of Table 2, include $180 million in interest payments on borrowings from the Trust Fund during the year.

The estimated Trust Fund cash balance on June 30, 1971 is $3.648 billion. This is not a surplus, contrary to opinions held by many, because unliquidated obligations against the Trust Fund the amount owed as obligations come due on the same date are estimated at $7.501 billion. The difference, $3.853 billion, represents an unfunded liability against the Trust Fund over and above the indicated cash balance on June 30, 1971. If the Federal-aid highway programs were all terminated as of June 30, 1971, and no further contract obligations made against the available unobligated balance (column 6), revenues to the Trust Fund would need to be continued for approximately eight months to meet the unfunded liabilities on June 30, 1971.

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The net status of the Trust Fund at the end of each fiscal year - Trust Fund balance less unliquidated obligations is shown in column 13, Table 2. At any point in time there has always been an unfunded liability, or deficit. This has not presented any problem in Trust Fund operations, nor has it limited progress on the Federal-aid highway program, because of the normal time lag between contract obligations and equivalent reimbursements.

Figure 4 shows graphically relationships of the Federal-aid highway authorizations and contract obligations to Trust Fund revenues and disbursements since 1956, together with status as of June 30, 1971.

Under existing law, the Highway Trust Fund is scheduled to terminate on September 30, 1977. Cumulative revenues to the Fund by that date under existing legislation are estimated to total $95.069 billion.

A recent report by the Secretary of the Treasury projects total disbursements from the Trust Fund for Federal-aid highway programs by that date at $92.963 billion. The projection is based on assumptions that:

Table 3 shows the projected annual authorizations, by program, under the Treasury assumptions. They total $5.9 billion annually through the 1976 fiscal year, then decrease in the 1977 and 1978 fiscal years because of "completion" of the Interstate System. The Interstate System funding of $4 billion annually for the 1974 through 1976 fiscal years has already been authorized by the 1970 Highway Act. The $1.986 billion shown for the Interstate System in fiscal year 1977 is the remaining amount necessary to finance the $62.5 billion Federal share of total system costs, based on the 1970 cost estimate. Cumulative authorizations from inception of the Trust Fund through the 1978 fiscal year, column 11, total $92.963 billion. Of that amount $30.463 billion is for Federal-aid primary, secondary, urban, TOPICS and other related highway programs as detailed on Tables 1 and 3.

Table 4 shows projected status of Federal-aid highway programs and the Trust Fund by fiscal years based on the Treasury assumptions. The format of Table 4 is identical with

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