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DOT prepares stopgap plan as funding for Highway Trust Fund is nearly exhausted

July 1, 2014

On Tuesday, Anthony Foxx, U.S. Secretary of Transportation, issued a warning to states and transit agencies that federal funding for road projects and transit efforts will become limited and states should not expect same-day reimbursement for projects. In fact, because the Highway Trust Fund is expected to run out of cash “in just a few weeks,” the Dept. of Transportation is being forced to implement a “cash management plan beginning Aug. 1” until such time that funding is restored to appropriate levels.

“There is still time for Congress to act on a long-term solution,” said Foxx. “Our transportation infrastructure is too essential to suffer continued neglect, and I hope Congress will avert this crisis before it is too late.”

Without Congressional action, Foxx noted, reimbursement funds, which states count on to pay for maintenance of highways, will dry up without measures to preserve cash.

President Barack Obama in a speech at the  Francis Scott Key Bridge in Washington, D.C., said that jobs are at risk.

"If this Congress does not act by the end of the summer, the Highway Trust Fund will run out,” remarked President Obama. “All told, nearly 700,000 jobs could be at risk next year. Right now there are more than 100,000 active projects across the country, where workers are repaving roads and rebuilding bridges and modernizing our transit systems. Soon, our states may have to choose which projects to continue and which projects to put the brakes on because they’re running out of money.”

“The Coalition for America’s Gateways and Trade Corridors (CAGTC) applauds the president’s sense of urgency regarding the Highway Trust Fund,” said Mort Downey, CAGTC Founding Chairman. “As state DOTs grapple with funding uncertainties this summer, freight projects around the country are grinding to a halt and our economic recovery is suffering. Congress must act.”

Foxx sent letters to the heads of state transportation departments on Tuesday detailing what steps the DOT will take should the funding crisis not be averted. According to the letter, which you can read in its entirety here, states will receive funding based on each state’s “federal formula apportionment in this fiscal year.”

“These cash management procedures will begin on Aug. 1, 2014, for programs funded out of the highway account, with states receiving notification of their first proportional share on Aug. 11, 2014,” Foxx wrote. “This process will be repeated twice a month as additional tax receipts are deposited into the trust fund.  At the beginning of each semi-monthly cycle, you will receive a new cash allocation. We will continue to administer this process until the Congress can reach a solution that provides adequate resources to the fund.”

Bud Wright, executive director of the American Assn. of State Highway and Transportation Officials (AASHTO), urged Congress to act quickly to avert the pending crisis.

“As Transportation Secretary Foxx’s letter to state DOTs shows, the risk to the nation’s surface transportation programs is real and imminent. We are encouraged that Congress is taking the short-term solvency of the Highway Trust Fund very seriously.  We remain encouraged and supportive of ongoing discussions by Congress that would address the short-term solvency issue, which is critical to states,” he said in a statement.

The National League of Cities (NLC) and 49 municipal leagues on Tuesday also sent a letter to leaders on the House and Senate Transportation Committees urging them to support local transportation priorities by providing a stable funding stream.

“Across the nation, local governments own 78% of the nation’s road miles, 50% of the nation’s bridges, and operate the majority of the nation’s transit systems,” the organization wrote. “At the same time, local governments are involved in less than a quarter of the $41 billion in federal funds spent on highways each year and have little say in how federal transportation dollars are invested in our communities.”

NLC wants to see Congress provide states with funding certainty through a multi-year program that addresses the continuing shortfall of the highway trust fund among other efforts.

The current highway bill, MAP-21, expires in September and there are conflicting signs as to whether Congress will address it with anything more than a short-term stopgap bill.

The Highway Trust Fund was established in 1956 to finance construction and maintenance of the U.S. Interstate System and other roads and bridges. It was expanded in 1982 to include mass transit projects, but is funding primarily through fuel taxes, which have not kept pace with inflation.

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