Lack of Federal Funds Hinders Plans for Highway Spending, States Say

This story appears in the Oct. 13 print edition of Transport Topics.

When Mike Hancock surveys Kentucky’s highway network, he casts a worried eye on its major freight routes — interstates 65, 71 and 75.

“As we look down the road, I can see that congestion’s going to become more of an issue in those corridors,” the state’s transportation secretary said.

Indeed, the trucking industry estimates traffic congestion nationally already costs it $9.3 billion a year in lost time and productivity

Addressing issues that loom “down the road,” though, is a planning luxury that the states — which build and maintain the nation’s highways — no longer have, their transportation leaders said.

“How are we supposed to plan projects six years from now when we don’t know how much federal funding we’re going to have more than six months from now,” said Travis Brouwer, who oversees public and intergovernmental affairs for the Oregon Department of Transportation.

Congress hasn’t passed a long-term transportation-funding bill since the four-year SAFETY-LU reauthorization in 2005; the lawmakers’ latest funding effort, a nine-month patch to a hemorrhaging Highway Trust Fund, expires May 31.

Lurching from one short-term funding bill to another has resulted in deteriorating highways and bridges, a decadelong construction slowdown, states reaching their borrowing limits and a planning process shaped by uncertainty instead of goals, state officials said.

“It puts us more into the contingency planning than it does . . . long-range planning,” Brouwer said. “We have to spend so much of our time focusing on what could happen if the federal government doesn’t come through with the funding.”

That uncertainty “makes it more likely that you have to react to the hand that you’re dealt rather than sit down and really come up with a comprehensive long-term solution,” said Jim Tymon, chief operating officer and director of policy and management for the American Association of State Highway and Transportation Officials.

Oklahoma Secretary of Transportation Gary Ridley said states need funding certainty in order to put construction contracts out for bid and that he believes the next Congress will avoid a funding crisis, come May.

“Now, that being said, we still have to find out how we’re going to fund transportation in the long term, and that’s always been the problem,” Ridley added.

The May deadline for a new transportation reauthorization law is what Kentucky’s Hancock called “a nightmare scenario” for states if a divided Congress, that might be more so by then, can’t agree on how to pay for transportation.

By May, states typically have let contracts and started their construction season but could see the federal money stalled, reduced or unavailable, Hancock said.

Virginia Secretary of Transportation Aubrey Lane said such an event would be devastating for his state, given that 57 cents of every road-construction dollar comes from the federal government.

“About 90 days out [from the May deadline], if it doesn’t appear that they’re going to get this resolved, we’ll . . . slow down our construction budget,” Layne said.

The slowing, though, began years ago across the country and has led to what many transportation advocates call an infrastructure deficit, as two reports published last month documented.

“Investment in highways, roads and bridges fell 3.5% each year from 2003 to 2012,” said a report published by the National Association of Manufacturers on Sept. 23. At the same time, the cost of construction materials rose 10% a year from 2003 to 2008, the NAM report said.

The Pew Charitable Trusts issued a report Sept. 23 with similar findings.

“Between 2002 and 2011, overall spending on surface transportation fell by $27 billion, or 12% in real terms,” Pew said. “States have experienced a particularly large decline, with spending falling by $20 billion, or 20% in real terms, over this period.”

The slowdown is being tracked monthly by the American Road and Transportation Builders Association.

“Year to date, nationwide, the real value of highway and bridge contracts are down 16% compared to where they were last year [January through August],” ARTBA Chief Economist Alison Premo Black said.

“That’s in 34 states where awards are down, so that’s widespread,” Black said.

There’s financial evidence that, without a large funding infusion by the federal government, infrastructure spending is unlikely to rebound in the states because they’ve been taking on debt for years as federal investment shrank.

According to the Federal Highway Administration, 25 states have taken advantage of a federal program that allowed them to borrow against their future federal highway allotments.

And some states are approaching the safe debt level with transportation bond programs of their own.

“We now have approximately a third of our state highway fund resources tied up in debt service, and that is the money we get from the state gas tax [and vehicle registrations],” Oregon’s Brouwer said.

It will take the state 20 years to pay off the debt, he said.

“As a result it does constrain what we can do, going forward.”