Photo by Luke Jones is licensed under CC BY 2.0
The recent announcement that the federal Highway Trust fund’s projected financial demise has been extended by six months is turning out to be a double-edged sword.
Public officials in states that depend on federal appropriations to help finance high-dollar transportation infrastructure projects had mixed emotions when it was announced that the funding is now expected to last through the end of the third quarter of Fiscal Year 2016. While they breathed a sigh of relief because the fund will apparently be solvent longer, the stability of the fund has been so volatile in recent years that most were also reluctant to launch any long-term projects. The fact that there is no assurance of funding beyond the deadlines created by short-term fixes makes it almost impossible to initiate long-term projects.
In fact, a number of states, according to the American Association of State Highway and Transportation Officials, actually withdrew projects from bid openings because of the uncertainty of future federal funds. Those withdrawn represented $1.5 billion in construction projects. A few of the states instead opted to spend some of their funds on maintenance and short-term projects, further exacerbating the country’s critical infrastructure problems.
Arkansas is one of the states that opted to withdraw projects from bid openings – 87 of them. Arkansas State Highway and Transportation Department (AHTD) Director Scott Bennett explained that contractors on these Highway Trust Fund-financed projects are paid with state funds and the state is then reimbursed for the federal portion of the project by the trust fund. “We have no way of raising revenue to offset the reduction, delay or loss of federal dollars that Arkansas depends upon for 70 percent of its highway construction program,” said Bennett. He added that Arkansas chose to take “a more fiscally conservative approach” and suspend contracting for projects to avoid having to stall the projects later because of funding issues.
Since the announcement was made that the trust fund will remain solvent until the end of the third quarter of next year, Arkansas hopes to reinstate some of the projects. Other states may follow suit, but construction has been pushed even farther into the future.
State officials with projects already approved for financial assistance now likely have funding assurance through June 2016, but no new projects will be funded after the current short-term funding extension ends on Oct. 29. That leaves Arkansas and other states on the bubble for federally funded projects scheduled for next year. There are 130 such projects in Arkansas with a combined price tag of about $520 million.
Should another short-term fix for the Highway Trust Fund occur, it would likely mean yet another withdrawal of projects from bid openings. State officials agree that despite assurance of current project funding through next June, a longer-term fix is still needed.
U.S. Transportation Secretary Anthony Foxx agrees. He is fearful that members of Congress, who have only weeks to authorize more funding before the current Highway Trust Fund extension expires, will find another excuse for yet another short-term fix.
Both the House and Senate are working on a solution for funding the Highway Trust Fund, but they have not been able to reach a consensus. The current federal gas tax is the primary source of funds and it has not increased since 1993. And, taxpayers appear to have little interest in tax or fee increases. The two chambers of government cannot agree on any other funding option.
At a recent National Press Club meeting, former Mississippi Gov. Haley Barbour put the nation’s infrastructure problems into perspective for both taxpayers and members of Congress. “We should be focused on transportation infrastructure, not just for construction jobs, but for the economic competitiveness it gives us,” Barbour said.
And, now once again, the clock is ticking.
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