It was recognized that expenditures would exceed income in the early years of the Trust Fund, but this deficit would be overcome by excess revenue in later years. The 1956 Act, therefore, included a provision permitting borrowing or “repayable advances” from the U.S. Treasury. However, this provision was in effect nullified by an amendment requiring pay-as-you-go operation. The amendment (Byrd Amendment) required that if the projected expenditures which would result from a pending apportionment of authorized funds were forecast to exceed projected Trust Fund receipts, then the apportionment was to be appropriately reduced to prevent a deficit.
1956—A Landmark Year
In the 1956 Act, the Congress acknowledged that it was dealing with forecasts of highway needs and of tax revenue and that future legislation might well be needed to bring about proper balancing of receipts and expenditures and of costs and benefits to beneficiaries of highways. Accordingly, it requested the Secretary of Commerce to undertake an extensive investigation which became known as the highway cost allocation study; the final report was completed in January 1961.
The twin 1956 Acts were indeed a major landmark in the highway history of the United States. It was perhaps less than perfect legislation, arrived at after long and sometimes hot debate. Much of it evolved through compromise, aimed at practical solutions.
Nevertheless, the legislation broke with traditions and created some new principles:
- It authorized completion of an entire national highway network—the Interstate System—and provided for its financing (on the basis of costs recognized at that time) .
- It required the establishment of, and broadly defined, location and design criteria for the System.
- It departed from the historic 50–50 Federal-State sharing of project costs and the fixed formula method of apportionment.
- It created a linkage between highway-user tax revenue and highway expenditure and established the Highway Trust Fund.
- It began an accelerated highway improvement program which was to bring about a new era in highway transportation in America.
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