States Receive Dire Warning on the Highway Trust Fund

The American Association of State Highway and Transportation Officials released a letter sent by Deputy Secretary of Transportation John D. Porcari on June 24, 2009 to the chief executive officers of every state department of transportation in the country. The letter advised them of an impending cash shortfall in the Highway Trust Fund (HTF). The HTF is the federal funding source for thousands of state highway projects. The HTF funds the “regular projects” not the stimulus projects

The HTF, as well as the trust funds in each state are funded by taxes on gasoline. With more fuel efficient cars and less driving the funds at all levels are not producing the revenues expected.

The press release stated:

The Deputy Secretary’s letter put all state DOTs on notice, warning that instead of sending states overnight reimbursements for transportation investments, the Federal Highway Administration could begin to ration state repayments; possibly shifting to weekly or bi-weekly payments in the event that state reimbursement requests exceed the cash available in the Highway Trust Fund.

Faced with the same crisis ten months ago, Congress transferred resources from the general fund back into the HTF to prevent a shutdown of the Federal Highway Program.

We now are facing the crisis I wrote about in March. This could have been avoided by adding money to the stimulus bill for the HTF but alas no money was provided. Secretay LaHood has called for an 18-month delay in a new authorization bill as noted by my colleague Bob Poole. Current estimates to carry the HTF through the end of September 2010 range from $13-20 Billion.

As it stands now, the states are scrambling to spend the stimulus money while at the same time are faced with uncertainty for their ongoing “regular” projects. Delays (even by a few days) in reimbursements to the states to make their payments to contractors will work against all the stimulus money and make life difficult for the states and needed transportation projects.