Corrections to the Federal Highway Trust Fund

B-275490 Dec 05, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Or correct Highway Trust Fund income data provided by the Department of the Treasury and is bound to make apportionments to the States based on the data reported by the Treasury. DECISION The Department of the Treasury (Treasury) and the Department of Transportation (Transportation) ask whether they are authorized to correct certain clerical accounting and reporting errors relating to appropriations in the Highway Trust Fund (HT Fund). The Secretary is required to transfer at least monthly from the general fund of the Treasury amounts appropriated to the HT Fund based on Treasury estimates of the specified excise taxes for the month. 26 U.S.C. The Secretary is further directed to make "proper adjustments . . . in the amounts subsequently transferred to the extent prior estimates were in excess of or less than the amount required to be transferred.". View Decision Matter of: Corrections to the Federal Highway Trust Fund File: B-275490 Date: December 5, 1996 Because of a clerical error, the Financial Management Service, Department of the Treasury, failed to credit actual excise tax receipts to the Highway Trust Fund for the quarters ending June 30, September 30, and December 31, 1993, as required by law. 26 U.S.C. Secs. 9601, 9503. The Secretary of the Treasury has the authority to correct the clerical accounting and reporting errors by restating the fiscal year 1994 and 1995 income statements for the Highway Trust Fund provided to the Department of Transportation. The Secretary of Transportation has no authority to administratively adjust, modify, or correct Highway Trust Fund income data provided by the Department of the Treasury and is bound to make apportionments to the States based on the data reported by the Treasury. DECISION The Department of the Treasury (Treasury) and the Department of Transportation (Transportation) ask whether they are authorized to correct certain clerical accounting and reporting errors relating to appropriations in the Highway Trust Fund (HT Fund). Treasury believes that it has the authority to, and should, correct errors made in recording collections and resulting appropriations attributable to the HT Fund by restating the fiscal years (FY) 1994 and 1995 income statements for the HT Fund provided Transportation. Transportation believes that it must apportion HT funds to the states based on the income statements provided by the Treasury. For the reasons explained below, we agree that Treasury may adjust the FY 1994 and 1995 HT Fund income statements and that Transportation must base its apportionment on the corrected income statements. BACKGROUND Federal Aid Highway Program The Federal Aid Highway Program distributes billions of dollars of federal funding annually to the 50 states, the District of Columbia, and Puerto Rico for highway construction, repair, and related activities. To finance the highway program, Congress established the HT Fund as a trust fund account in the Treasury of the United States, 26 U.S.C. Sec. 9503(a) (1994), designating the Secretary of the Treasury as trustee, 26 U.S.C. Sec. 9602(a). Congress has provided the HT Fund with a permanent indefinite appropriation of amounts received in the Treasury from certain gasoline, diesel fuel, and other excise taxes paid by highway users. 26 U.S.C. Sec. 9503(b). Statutory Responsibilities of Secretary of the Treasury The Secretary of the Treasury (Secretary), as trustee of the HT Fund, must fulfill certain accounting and administrative functions. [1] Specifically, the Secretary is required to transfer at least monthly from the general fund of the Treasury amounts appropriated to the HT Fund based on Treasury estimates of the specified excise taxes for the month. 26 U.S.C. Sec. 9601. The Secretary is further directed to make "proper adjustments . . . in the amounts subsequently transferred to the extent prior estimates were in excess of or less than the amount required to be transferred." Id. To discharge its duties as trustee, Treasury uses estimates provided by the Treasury's Office of Tax Analysis (OTA). Each month OTA submits to the Treasury's Financial Management Service (FMS) an estimate of the specified excise taxes that will be covered into the general fund for the upcoming month. Upon receipt of the monthly OTA estimate, FMS records the amount of the estimate and on the 8th business day of the month transfers from the general fund 50 percent of the estimated amount to the HT Fund and the remaining 50 percent of the estimated amount to the Fund on the 18th business day of the month. The statutory scheme recognizes that the actual amount of highway taxes covered into the general fund may be greater or less than the amounts previously estimated and transferred to the Fund. Pursuant to 26 U.S.C. Sec.