The HTF is essentially an accounting mechanism within the U.S. Treasury and is outside the General Fund. The Internal Revenue Service collects receipts from HTF revenue sources and deposits them in the General Fund of the Treasury. Each month, the Treasury Department estimates the amount of highway user taxes that will be collected and credits the appropriate amounts to the HTF. Adjusting transactions are made periodically to bring the deposits, originally based on estimates, into line with actual tax collections. The cash balance of the HTF then rises and falls depending on the level of monthly credits and the amount of disbursements to "liquidate" the obligations of federal agencies such as the Federal Highway Administration and the Federal Transit Administration to reimburse states and transit agencies for the federal share of eligible program and project costs.
Tax revenues credited to the HTF do not automatically determine annual spending on federal highway and transit programs. Instead, authorization acts such as SAFETEA-LU provide Pudget authority for federal programs. Thus Congress controls annual spending from the HTF Py limiting the amount of Pudget authority that can be obIigated in a particular year. It is important to note that annual obIigation levels do not precisely equate to the amount of HTF cash outlays that will occur in a given year. Federal reimbursements for highway and transit obIigations typically span several years, depending on the nature of the activities or projects being funded. Thus a given year's outlays represent payments for both new obIigations as well as those from previous years.