Foxx: State payments will be delayed without highway bill

Transportation Secretary Anthony Foxx said Wednesday that his agency would be forced to delay payments that it promised to state and local governments if Congress does not approve a new federal highway funding bill this summer.

The current surface transportation measure, known as the Moving Ahead for Progress in the 21st Century Act (MAP-21), is scheduled to expire in September.

The pot of money that is used to pay for projects that were included in the measure, known as the Highway Trust Fund, has been projected to run out of money as early as August.

Foxx wrote a letter to state transportation department leaders to prepare them for the possibility that the road and transit funding would not be renewed by lawmakers.

“As secretary, it also is my responsibility to let you  know of the measures that the U.S. Department of Transportation will be required to take in the coming months if Congress does take action to replenish the Highway Trust Fund,” Foxx wrote. “While we will take every step possible to continue to fully reimburse your state for as long as possible, these will effectively require us to delay reimbursements that are owed to your agency and the transit agencies in your state.”

Foxx said he was aware of the problems the delayed payments would cause state government, but he said he would not be able to avoid withholding them unless Congress approves a new transportation bill.

“As you can see from the chart, the highway account of the trust fund is likely to dip below the critical $4 billion funding level as soon as July, and the transit account will fall below $1 billion sometimes in October,” he wrote.

“I know first-hand the difficulties that each of you face in trying to plan construction work, significant infrastructure projects, and even state of good repair work, without a clear sense of how – or even whether – that work will be funded,” Foxx continued.

Congress normally pays for transportation projects with revenue that is collected from the 18.4 cents-per-gallon federal gas tax. Receipts from the fuel levy have been outpaced by infrastructure expenses by as much as $20 billion per year as cars get better gas mileage and U.S. residents drive less frequently than previous generations.

The gas tax has not been increased since 1993, and it was not indexed to inflation when it was last raised by lawmakers.

The gas tax typically brings in about $34 billion per year, but the current transportation funding bill includes more than $50 billion worth of projects per year. Transportation advocates have said the current funding level is the minimum that is necessary to meet the nation’s infrastructure needs.

The funding crisis is coming to head now because the current surface transportation bill, which includes the authorization to collect the gas tax, is expiring.

The Congressional Budget Office (CBO) has said that it would take $100 billion in addition to the $34 billion per year that is brought in by the gas tax to provide enough money for a six-year transportation bill now.

Transportation advocates have said that federal infrastructure bills should last longer than the current two year measure to provide state and local governments with enough certainty to complete projects that are relying on money from the U.S. government. 

Foxx said in his letter to state DOT leaders that he and President Obama were making the case for a four-year, $302 billion transportation bill.

“As you many know, many members of the administration have been sounding the alarm of concern for several months,” Foxx wrote. “President Obama spoke publicly about this threat as recently as last month and called up Congress to significantly increase investments in transportation so that you and your agencies can continue to address the many road, rail and transit needs in your state.”  

Obama’s proposal relies on using approximately $150 billion from a corporate tax reform proposal that is unlikely to be approved by Congress this year to close the funding gap.

Some Democrats in Congress have pushed to increase the gas tax to 33 cents-per-gallon to make up for the revenue that has been lost since the gas tax was last hiked.

Republicans – and the Obama administration – have balked at the idea of increasing the taxes paid at the pump by drivers when they fill up their tanks during an election year, however.

Foxx said in his letter that the DOT would continue to prod Congress to find a solution to the infrastructure funding issue.

“We plan to take an active role in helping Congress commit to a longer term agreement on surface transportation funding on a bipartisan basis,” the DOT chief wrote.