State officials confident federal highway funds will come through

July 17, 2014

State officials are so confident Congress will pass a deal to cover a shortfall in a federal highway fund that they have not solidified contingency plans that would be needed if the money runs out next month.

Will Wingfield, a spokesman for the Indiana Department of Transportation, said the agency has been watching the situation closely and has started to prepare plans. But he said officials feel “pretty confident” that Congress will step in.

“Generally speaking, the federal government has kept money flowing for infrastructure,” Wingfield said. “At this point, we do not anticipate any impacts to our projects.”

The federal Highway Trust Fund, which is financed with a per-gallon tax on gasoline, is set to run out of money next month, in part because cars are becoming more fuel efficient. And the U.S. Department of Transportation has said it will cut construction payments to states by 28 percent on Aug. 1 if Congress doesn’t act.

That’s important because the trust fund has allocated $37 billion to states for highway projects for the year ending Sept. 30 and is the source of most of the federal dollars provided to states for roads and infrastructure. However, the tax has not increased since 1993 and does not adjust with inflation.

Cuts mean projects across the country could be delayed, which the White House says could put as many as 700,000 people out of work nationwide.

Indiana receives more than 40 percent of its total state highway and transit funding from the federal government, according to the Pew Charitable Trusts. That money is used to match Indiana dollars for highway projects.

On Tuesday, the Republican-controlled U.S. House voted to cover the missing money in part by allowing companies to delay payments to pension plans, which in turn boosts their taxable income. The House bill also transfers money from an underground storage tank fund and customs fees.

The bill must now go to the Democrat-majority Senate, which is expected to take up the proposal later this month.

But out of concern about the shortfall and funding cuts, some states are holding back spending. Arkansas, which gets about 45 percent of its highway funding from the federal government, has opted not to move forward with more than $100 million in project bids, according to Stateline, a Pew website that tracks state activity.

Rhode Island officials have also temporarily stopped some new highway projects and Missouri officials are sticking only to maintenance for now, Stateline says.

But officials in Indiana say they believe a federal solution is near, even if it’s not a permanent one.

Laurie Mauldin, vice president at Appian, an Indianapolis-based transportation consulting firm, said that in the past, several short-term funding extensions were needed to find the best solution.

“We would absolutely like to see a bill as long as it is a good bill for Indiana,” Maudlin said.

The House fix will be one of those short-term solutions that will allow projects to continue, she said.

In the meantime, Indiana lawmakers have recently improved funding for roads and infrastructure, Wingfield said. That’s in part through additional appropriations but also by shifting the funding for some state operations away from the state gas tax to other sources.

Mauldin said that new funding has provided stability, especially in the last few months.

“The Legislature and the governor have increased state funding for state highways by about $800 million and about $600 (million) of that has gone to INDOT,” Wingfield said.

Rep. Dan Forestal, D-Indianapolis, serves on the House Roads Committee as well as an interim committee studying roads and infrastructure. He said committee members have not yet met this summer, but when they do, he expects that they will discuss future funding options.

“I would anticipate that we are probably going to have to” create legislation, Forestal said. “What exactly that looks like, I couldn’t say definitively.”


Recent Articles by Emily Metheny, The Statehouse File

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