DOT Plans for Delayed and Reduced Payments to States if the Highway Trust Fund Reaches Critically Low Levels
Jul 02 2014
Starting in August, DOT will delay and reduce reimbursements to states for highway construction projects on the nation’s roads and bridges, if Congress fails to act to replenish the fund with revenue.
On average, DOT says states should prepare for a 28 percent cut in federal funds for construction projects. Summer is the height of the construction season, but this shortfall could mean states will have to put the brakes on many projects, which could trigger a construction shutdown. Anticipating this crisis, many states have already taken steps to delay highway construction projects that would ease congestion and make critical repairs to bridges.
Senator Murray is focused on the need to resolve the looming Highway Trust Fund crisis in a responsible way that helps close our infrastructure investment deficit without shifting costs to states. After the announcement from DOT, she said, “The clock is winding down for Congress to avoid lurching toward another unnecessary crisis – this time with a construction shutdown. States and businesses need certainty to create jobs and grow local economies, and as today’s announcement shows, failing to solve the shortfall would mean the exact opposite. Workers and businesses shouldn’t have to pay the price for another manufactured crisis out of Washington, D.C. – so I hope Republicans find a way to push the Tea Party aside and avoid this crisis. Republicans have refused to work with us this year on immigration reform and other policies that would create jobs, but hopefully they can at least work with us to prevent jobs from actively being destroyed.”
DOT has warned for months that without Congressional action to deal with the fund’s revenue problem, the Highway Trust Fund would reach critical levels by this summer.
Projects funded by the Highway Trust Fund are paid for through a system of reimbursement, meaning states pay for the projects upfront and DOT reimburses states for eligible expenses from the trust fund. Right now, DOT typically reimburses states on the same day they submit their voucher for repayment.
With the looming shortfall, DOT is planning to slow down and reduce reimbursements to states. While states will still submit all of their vouchers for eligible expenses, DOT will only distribute the money that’s available in the fund in the same proportion to each state’s share, established by law, creating uncertainty for states and businesses around critical transportation investments that could be creating jobs and helping to grow local economies.
For more on the Highway Trust Fund, here is a link to the Budget Committee’s explainer on the Highway Trust Fund.