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State DOTs Grapple With Funding Uncertainties

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As state transportation agency chiefs gathered for their annual winter meeting in Washington, D.C., they received some encouraging news from Congress on highway and transit funding for the short term, but not as many answers as they had hoped about the murky longer-range legislative picture.

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During the American Association of State Highway and Transportation Officials’ legislative briefing on March 2-4, Congress cleared—and President Obama signed—a bill that extends highway and transit authorizations for seven months, the seventh stopgap since the last multiyear measure lapsed in September 2009. Also enacted while the meeting proceeded was a temporary appropriations bill to keep transportation and other federal programs operating, though only for two weeks.

The estimated 200 attendees welcomed those needed, but modest, steps forward. However, some state DOT officials said in interviews that they have been holding off on larger highway projects because of prolonged stop-and-start federal funding, the delay in the authorization of a multiyear highway-transit bill and fiscal problems stemming from the recession.

U.S. Transportation Secretary Ray LaHood, speaking at the AASHTO meeting’s crowded opening session on March 2, extolled the Obama administration’s proposed framework for a $556-billion, six-year highway-transit bill. “It is bold, it is big,” he said.

But LaHood gave state DOT and industry officials in the audience few hints about the central question of where the administration plans to find the revenue to fund that measure. He appeared to close off one obvious financing source, repeating the administration’s view that “an increase in the gas tax is not on the table.” LaHood said, “With unemployment at [about] 9%, the President has said he doesn’t want to raise the gas tax.”

LaHood also said that U.S. DOT is working with the Office of Management and Budget on a detailed legislative text to flesh out the outline released on Feb. 14. He said he hoped that bill will be released soon.

In the meantime, LaHood said DOT would be “very responsive” to state proposals to impose tolls on highways as long as the revenue would be used to expand those arteries’ capacity. “We believe in tolling,” he said. “Tolling has to be a part of the mix.”

Key House and Senate lawmakers are working on their versions of a multiyear transportation bill. House Transportation and Infrastructure Committee Chairman John Mica (R-Fla.) told attendees, “I don’t have a bill in my back pocket,” but he has had several public meetings around the country in recent weeks to gather views from interest groups about what they would like to see in the bill.

Mica also has his own priorities for the legislation. First, he said, “We have to stabilize the [Highway] Trust Fund.” The fund’s outlays have outrun its income, requiring infusions totaling $34.5 billion from the general fund since 2008. But Mica didn’t specify how he would provide the trust fund with the stability he is looking for.

He also wants to tap federal funds he contends have been unused, saying he thinks $40 billion to $100 billion could be found from those sources. In addition, Mica is seeking to include provisions to expedite project delivery and promote “creative financing,” using federal dollars as leverage for non-federal infrastructure investment.

In the Senate, Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) is working on the highway portion of a new long-term transportation bill. She said in a March 3 statement, “Our goal is to get this legislation enacted by the end of this year.”

While state DOTs wait for that multiyear measure, some are coping by taking a conservative approach to their highway programs.

West Virginia, for example, is going slow on large highway projects. State DOT Secretary Paul A. Mattox Jr. says, “We’re very hesitant to move them forward without a six-year bill that gives us a road map of what our future funding’s going to be.” In the meantime, Mattox says, “We’re doing basically a lot of preservation and renovation to our existing facilities in West Virginia.”

Alabama DOT continues to carry out highway project planning but has had to defer some larger projects because of the lack of a reauthorization, says chief engineer Don Vaughn. “Without spending authority, we had to hold off until we could get the extension,” he says.

Vaughn notes, “Because of our limited dollars, we’re basically turning into a maintenance organization. To preserve the system that we have is just about taking all of our available dollars,” leaving little funding for projects aimed at increasing traffic-carrying capacity.

In Nebraska, Randall D. Peters, the Dept. of Roads’ deputy director for engineering, says, “We’ve made a priority choice, or a philosophical choice, to prioritize asset-preservation projects above capital expansion projects, given the revenue environment that we’re projecting.”

Peters says Nebraska does have some large projects but says jobs of that size “don’t have a great shelf life if the money doesn’t materialize.” He explains that if a major project is delayed, its already completed environmental record-of-decision may have to be reevaluated because of changed conditions during the period it is on hold. That new environmental review would take time and delay starting construction.

When federal highway reauthorizations have been delayed in the past, states kept work going by drawing on their own funds while waiting for the federal money to come through. The technique is called advance construction. But in Michigan, for example, dips in state gas tax revenue and vehicle registration fees have hampered its ability to use advance construction, says Chris Hundt, a transportation planner in the state DOT’s intermodal policy division. He says, “As our state revenues are squeezed, our ability to do that is constrained as well.”

Hundt says that because of Michigan’s revenue squeeze and the series of temporary federal authorization extensions, the state has had to push back some bid lettings until after March 30, its target date for having all its highway projects under construction.

But at least one state is bucking the trend of holding back: Indiana is moving “full steam ahead,” says DOT Commissioner Michael B. Cline, who notes that fiscal 2011 will be a record highway construction year, totaling about $1.6 billion.

Indiana is in the midst of a 10-year, $12-billion highway program called “Major Moves,” which Gov. Mitch Daniels (R) initiated in 2005. Of the program’s $12-billion total, $2.6 billion comes from the 2006 lease of the Indiana Toll Road. Other funding sources include federal and state aid as well as interest on the toll-road lease proceeds, says state DOT spokesman Will Wingfield.

High-speed passenger rail was another hot topic at the AASHTO meeting, in part because of the recent decision by Florida Gov. Rick Scott (R) to turn down more than $2 billion in U.S. DOT funds for an Orlando-Tampa route. While Washington state Transportation Secretary Paula Hammond was leading an AASHTO rail session on March 4, she announced the breaking news that a Florida court had denied a challenge to Scott’s decision.

Scott’s action followed similar rejections of federal rail aid by fellow Republican governors John Kasich of Ohio and Scott Walker of Wisconsin. But U.S. DOT’s LaHood noted in his remarks to the AASHTO group that 35 states have accepted federal intercity high-speed-rail funds, adding that, in the past two weeks, he has received at least a half-dozen letters from governors and U.S. Senators who say their states are ready to receive more federal rail funds.

Washington state, for example, so far has received $760 million from U.S. DOT for passenger-rail upgrades on a corridor from Oregon to Vancouver, British Columbia, says Hammond. She told ENR that if U.S. DOT decides to redistribute the Florida funds to other states, “we are very interested in [reapplying] to continue to build on the incremental improvements in service, reliability and speeds that we have in our corridor.”

 

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