Federal Transportation Officials Fear Highway Trust Fund to Run Dry

How will it Affect Different States including Texas?

FTA Administrator Peter Rogoff

Although the federal Highway Trust Fund was funded through September of this year by congressional action in June 2012, transportation officials are warning that the fund could run dry before the new fiscal year starts in October. And, if that’s the case, reimbursement payments to the states could slow down. “Based on the numbers we’re seeing coming out of the Treasury Department each month, we won’t make it,” said Peter Rogoff, the U.S. Department of Transportation (USDOT) acting undersecretary for policy, at a recent American Trucking Association meeting.

“That means that as a department, we will be required to slow down our spending in order to maintain a positive balance, potentially in the heart of the construction season,” said Rogoff. Such a slowdown would likely be during the typically peak construction season during the summer months, crippling states’ efforts to meet their transportation infrastructure needs without federal funds.
According to USDOT, based on current spending and revenue trends, the Highway Account began the current fiscal year with approximately $1.6 billion in cash. Congressional action allowed the transfer of $9.7 billion from the General Fund to the Highway Account soon after the start of the fiscal year. USDOT reports, however, that payments are going out of the account faster than receipts are coming in. That has resulted in the cash balance falling by nearly $3.4 billion since the General Fund infusion. By the last week of December 2013, the cash balance was $8.5 billion.

Hardly anyone will argue that the construction industry, bolstered by transportation infrastructure spending, is key to reviving a sputtering economy. There have been a variety of innovative proposals and programs nationwide to increase revenue that can help shore up infrastructure funding.

The Texas Legislature has taken $225 million from its rainy day fund to provide funding to counties whose transportation infrastructure has been damaged by vehicles involved in the recent increase in oil and gas production. The deadline for applying for these funds was recently pushed back a month to give more counties time to discuss creating County Energy Transportation Reinvestment Zones to qualify for the funding. But not all counties eligible for this funding have the resources available for the matching funds they must provide as part of the qualifications.

In Pennsylvania, the state transportation department is expecting responses soon to its request for qualifications, seeking a private-sector firm to participate in a public-private partnership to accelerate the replacement of many of its 4,200 state-owned structurally deficient bridges. The private firm would be responsible for designing, building and maintaining the bridges. The goal would be to replace at least 500 of those bridges in 2015, where the replacements would take 15-20 years to replace if a traditional design-building contract was issued for each.

Legislation has been filed at the federal level and has bipartisan support for innovations such as re-establishing state infrastructure banks to make low-interest loans for transportation projects to establishing a $50 billion infrastructure fund that would support loan guarantees and financing authority for state and local governments.

In spite of filing of legislation that may or may not pass and the implementation of short-term innovative programs aimed at jump-starting transportation spending, many states are still finding their budgets stretched and many still rely heavily on the federal funding from the Highway Trust Fund but are reluctant to make plans without some guarantee money will be available.

“We need to be mindful of the fact that state transportation commissioners, governors and mayors need to start making investment decisions well in advance of August,” said Rogoff. If Congress gives no hint of an improved outlook for federal funding assistance, many of those state and local governments will hold off on projects, he said, and the condition of roads and bridges will continue to deteriorate nationwide.

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