FHWA Fund Redistribution Causes Consternation for States
[Stay on top of transportation news: Get TTNews in your inbox.]
As the Federal Highway Administration issued its August redistribution of $8.69 billion in unspent highway funds among states, the American Association of State Highway and Transportation Officials reiterated concern about states lacking time to allocate the money.
AASHTO noted Aug. 30 that the redistribution was made available from the Highway Trust Fund for fiscal 2024 federal funds for state DOTs to obligate for transportation projects by Sept. 25.
“This ‘redistribution’ occurs late in the federal fiscal year when HTF’s ‘allocated programs’ — federal programs for national purposes separate from formula dollars to states — do not fully use their share of funding during the year, which is subsequently redistributed to state transportation agencies,” AASHTO noted.
The organization repeatedly has identified concerns with the annual August redistribution time frame. In June, AASHTO submitted a proposal to Congress asking to fix the process, noting that many of the allocated programs are “slow-spending” and unable to use their obligated funds by the required end of fiscal year.
At the end of the fiscal year, unused funds are made available to state departments of transportation. However, FHWA must wait until each August before asking state DOTs to spend redistributed funds by Sept. 30.
The HTF allocations are national funds for planning and construction programs.
“For a variety of reasons, a given program may be unable to obligate its share of the obligation limitation by the end of a given fiscal year. In recognition of this, Congress has established a statutory process to allow FHWA to redistribute such obligation limitation to states that can, by the year-end deadline, obligate more than their initial share of the ceiling,” according FHWA.
AASHTO’s letter to Congress noted that in 2023, state DOTs were asked to obligate $7.9 billion (15%) of the total annual federal highway funding received in one month through the August redistribution.
The @USDOTFHWA issued an August Redistribution of $8.7 billion in federal-aid highway program obligation limitation to #stateDOTs for FY 2024.
AASHTO DTU: https://t.co/e5N7c3XLHrhttps://t.co/Ic4ln6R2GJ — AASHTO (@aashtospeaks) September 4, 2024
In Congress, concerns with the August redistribution of FHWA funds were raised in March during a House hearing on stakeholder views of the U.S. Department of Transportation discretionary grants. The hearing was held before the Committee on Transportation and Infrastructure.
Jared Perdue, Florida’s transportation secretary, described the redistribution of federal funds as a major concern every August by “having to take additional funds at the eleventh hour of building our programs in the form of formula distributions.”
Perdue
“So the discretionary funds that are not moving are then being redistributed to us as formula, but over the life of the authorization, that reduces our actual formula allocation balance,” he said. “The allocation for the discretionary grant program still stays at what it is.”
Perdue noted in March that state DOTs were “over halfway through” the IIJA authorization for infrastructure funding yet only 30% of grants had been awarded.
“A lot less than that has actually been authorized and obligated,” he said. “So that redistribution amount continues to grow. We, as a state, are being asked to take more and more and more, and all that does is draw down on the formula funds that we can actually spend in the future.”
According to FHWA’s FY24 redistribution among the states, the largest amounts went to Texas ($1.16 billion), California ($622 million) and New York ($423 million). Florida, New Jersey and Pennsylvania were allocated $400 million.
Want more news? Listen to today's daily briefing below or go here for more info:
