Amid mounting concern that the federal Highway Trust Fund will go bankrupt this summer before Congress can intervene, state officials across the country have already begun pulling back or postponing billions of dollars’ worth of highway, bridge and mass transit projects.
After one of the toughest winters in decades, many state and local governments that exhausted their budgets on snow and ice removal now must cut back on projects to fill potholes and repair other damage to highways and bridges.
Related: Why You’ll Need a Tank to Drive America’s Highways
Here are a few examples:
- Arkansas state highway and transportation officials recently pulled the plug on 10 new projects worth an estimated $60 million, including bridge replacements and highway widening, because of growing uncertainty over whether the federal government can keep its commitment to underwrite the costs.
- Tennessee Gov. Bill Haslam earlier this month unveiled a new three-year, $1.5 billion statewide transportation program. But because of uncertainties over federal funding, the state has imposed a moratorium on any early engineering work to help launch the projects.
- North Carolina’s transportation secretary warned recently, “We’re going to have to stop writing checks in July or August” on highway projects if the federal government doesn’t reauthorize transportation funding.
- In Southern California alone, there are about 2,300 bridges classified by the federal government as obsolete or structurally deficient but with no money for repairs or replacement. State officials warn that without added federal money, freeways and bridges will be vulnerable in the event of an earthquake or a fuel-tanker fire like the one that destroyed a bridge on the 60 Freeway in Montebello in December 2011 – closing a large portion of it for months.
“Unfortunately we’re a reactionary society, and we wait for some disaster, God forbid, to happen and then we act,” Hasan Ikhrata, executive director of the Southern California Association of Governments, a regional transportation agency, said in an interview Tuesday. “In this case we should really be proactive and act now and get the funding we need to fix it.”
Related: A Glimmer of Hope for Ending Highway Construction Crisis
State officials are still reeling from a brutal winter that even now is dumping snow in some parts of the country.
Snowstorms forced states and localities to spend millions more than they budgeted for salt, sand, fuel and overtime for employees who drove the plows and filled the potholes. Beth McGinn, a spokesperson for the American Road and Transportation Builders Association, said in an interview yesterday that state transportation departments are facing “a double whammy” of unexpectedly high winter costs and uncertainty over federal funding for capital improvements.
“States have to look at both ends of their budgets – for the maintenance and repairs and the large projects – and they’re feeling a squeeze at both ends,” she said. “The uncertainty at the federal level does have an impact on the ability to plan.”
Related: Obama Looks to Tax Reform to Save America’s Highways
The federal Highway Trust Fund that finances more than $50 billion annually in highway and bridge construction is quickly dwindling and will be bankrupt by late August, at the height of the construction season, according to an update out yesterday from the U.S. Dept. of Transportation (DOT). Spending is running far ahead of the revenues generated by the federal gasoline and diesel fuel taxes.
For years, federal officials have propped up the trust fund, using revenues from a federal tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel. But far more money has been going out than coming in, as changing driving patterns and fuel efficiency have cut back on the fuel tax revenues.
The highway account began fiscal year 2014 with roughly $1.6 billion in cash, according to the DOT. Shortly after that, the government shifted $9.7 billion from the general fund to prop up the sagging highway account. But the surface transportation program continues to spend at a much faster rate than it takes in revenue. As of March 28, 2014, the highway account's cash balance was $8.4 billion.
“We cannot stand by, as the Highway Trust Fund nears critically low levels, and lose new investments in our roads and bridges, especially when these are the very projects that ensure businesses can move goods quickly and efficiently and help ease congestion for commuters across the country,” said Senate Budget Committee Chair Patty Murray (D-WA).
“We should give states the certainty they need to avoid a construction shutdown this summer by making sure the Highway Trust Fund can continue to support projects that create jobs and spur economic growth,” she said.
The trust fund covers nearly two thirds of all government highway transportation spending and is the lifeblood of tens of thousands of construction companies and suppliers and nearly 600,000 workers, according to industry estimates.
Related: Six Ways States Should Spend Their Surpluses
Last week, key senators of both parties offered a ray of hope by announcing the outlines of a new, six-year surface-transportation measure that would put an additional $16 billion a year into the trust fund. The plan, crafted by Senate Environment and Public Works Committee Chair Barbara Boxer (D-CA) and Sen. David Vitter (R-LA), the panel’s ranking Republican, would peg highway funding at current levels, adjusted for inflation. Boxer said she hopes to have a new transportation authorization bill before her committee by month’s end.
State and local officials can’t risk basing construction plans on vague promises and are seeking ironclad assurances. “Congress really needs to address the issue,” said McGinn. “They see the problem but now we just need for them to act quickly.”
As the pothole repair season gets into full swing, many state legislators are still looking for money to pay for winter work, according to a survey by Stateline.
“It’s extraordinarily difficult to budget for the snow and ice season, and we have to do it. It’s not something we can cut back on, because it’s a public safety issue,” Michael Verseckes, a spokesman for the Massachusetts Department of Transportation, told Stateline.
Related: The 10 Worst States for Taxes in 2014
The Massachusetts legislature approved a $30 million increase in the agency’s winter budget and enabled it to borrow up to $50 million more. That’s on top of the $43 million the state originally allocated for winter work, Verseckes said.
Meanwhile, Michigan approved a similar increase, and New York is considering adding local aid to its upcoming budget. Pennsylvania spent its entire winter maintenance budget and is now using money from a major funding boost for transportation passed last year.
Other states, such as Delaware and North Carolina, are using money originally set aside for summer maintenance to cover winter expenses, Stateline reported.
This article was updated on April 16, 2014, at 12:30 p.m.
Top Reads from The Fiscal Times:
