Feds warn states about highway funding cut off

The Obama administration is warning state transportation departments that it will have to stop authorizing payments for construction projects on May 31 unless Congress reaches a deal to extend federal infrastructure funding. 

The current transportation funding measure is scheduled to expire on May 31, and lawmakers are struggling to come up with a way to pay for an extension. 

Transportation Secretary Anthony Foxx has said previously that the agency has enough money to cover existing projects until the end of summer, but he said in letter to state departments of transportation on Monday that he will be unable to make new payments if Congress allows the law that authorizes the federal government’s infrastructure spending to expire. 

{mosads}”As you know, the most recent Congressional extension of the surface transportation authorization, Moving Ahead for Progress in the 21st Century, is set to expire on May 31, 2015, less than three weeks from now,” Foxx wrote. 

“Unless Congress acts prior to this date, the Federal Highway Administration (FHWA) will be unable to make new obligations of Federal-aid funds for your department’s highway projects,” he continued. “Furthermore, unlike last summer’s cash shortfall when states faced the prospect of delayed payments, under a lapse in authorization, reimbursements on all projects will be halted completely, not simply delayed.” 

The transportation funding debate has loomed large in Washington as the deadline draws closer without the introduction of legislation to prevent an interruption in the infrastructure spending. 

The expiring measure is itself an extension of a 2012 transportation bill that was supposed to last until September 2014. That measure was a $109 billion bill that was supposed to cover two years’ worth of transportation projects, but it was extended for eight months by lawmakers last summer. 

Lawmakers in both parties have expressed a desire to pass a new transportation funding bill now that the bill is coming due again, but consensus on how to pay for it has been elusive. 

The traditional source of transportation funding has been revenue from the 18.4 cents-per-gallon federal gas tax. The tax has not been increased since 1993, however, and has struggled to keep pace with construction costs as U.S. cars have become more fuel efficient. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in about $34 billion annually at its current rate. Lawmakers have turned to other areas of the federal budget in recent years to close the gap, but transportation advocates have complained the resulting temporary patches are preventing states from undertaking badly needed large construction projects. 

Transportation advocates have pushed Congress to increase the tax for the first time in two decades to pay for a long-term infrastructure funding extension, but lawmakers have been reluctant to ask drivers to pay more at the pump. 

The Obama administration, meanwhile, has suggested that lawmakers approve a six-year, $478 billion transportation funding bill that it says can be paid for largely with taxes that could be collected on corporate profits that are stored overseas. 

Republicans have said they are open to the idea, known as repatriation, but the parties have squabbled about the rate of the corporate taxes and whether the charges should be mandatory or voluntary. 

Foxx said in his letter to state transportation officials that the Obama administration’s plan would end the streak of short-term infrastructure funding bills in Washington that has lasted for the better part of a decade. 

“In an effort to provide long-term stability, the administration’s GROW AMERICA proposal and Fiscal Year 2016 budget request call on Congress to enact a six-year, $478 billion surface transportation reauthorization proposal in an effort to move away from the uncertainty caused by short-term extensions that undermine state transportation programs,” he wrote. 

“Not only does this proposal provide states with extended funding certainty, it also increases overall transportation investment by 45 percent, providing funding growth and smart policy reforms to strengthen the American economy,” Foxx concluded.