U.S. Transportation Secretary Warns State DOTs of Actions Should HTF Reach Shortfall this Month

AASHTO Journal, 11 July 2014

While the House and Senate are hashing out plans to keep the Highway Trust Fund afloat in the short term (see related AASHTO Journal story here), U.S. Transportation Secretary Anthony Foxx last week sent a letter to state transportation departments to let them know the steps the Federal Highway Administration will take should the HTF drop below a $4 billion balance, which is expected to happen by the end of the month without a solution from Congress.

“The Department will continue to take every possible measure to fully reimburse your state for as long as we can,” Foxx said in his letter. “However, as we approach insolvency, the Department will be forced to limit payments to manage the reduced levels of cash available in the trust fund. This means, among other things, that the Federal Highway Administration will no longer make ‘same-day’ payments to reimburse states. We have attempted to provide states with the most equitable, straightforward approach possible for managing this crisis. To that end, we will distribute incoming funds in proportion to each state’s federal formula apportionment in this fiscal year.”

Those cash management strategies are set to begin on Aug. 1 for programs funded through the Highway Account, and states will receive notification of their first proportional share on Aug. 11. That process will continue twice a month as tax receipts are deposited into the HTF and states will receive a new cash allocation at the beginning of each semi-monthly cycle, though the entire process is open to alteration in case of emergency. USDOT officials said this strategy will allow state DOTs to “direct available cash to what they determine to be the highest transportation priorities and choose which projects receive reimbursement.”

And while USDOT is preparing for a HTF shortfall at the end of the month, Foxx said that there is still time for a solution to keep the HTF afloat and eliminating the need for these cash management strategies.

“There is still time for Congress to act on a long-term solution,” Foxx said. “Our transportation infrastructure is too essential to suffer continued neglect, and I hope that Congress will avert the crisis before it is too late. I urge you to stand with me in calling on Congress to ensure the solvency of the Highway Trust Fund while committing itself to a sound, bipartisan, and long-term solution that will ensure the stability of our surface transportation system for our nation for the next several years.”

Other groups have come forward to ask Congress to find a solution before the end of the month. Seven stakeholder groups at the state and local level—the National Governor’s Association, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the National Conference of State Legislatures, the Council of State Governments, and the International City/County Management Association—sent a letter to congressional leaders on Monday, urging them “to ensure the continued solvency of the HTF, while committing to pass a long-term agreement on surface transportation funding as part of a multi-year reauthorization of the Moving Ahead for Progress in the 21st Century Act.”

That letter further states that states and local communities have stepped up to find ways to fund, finance, and fix transportation infrastructure, but that they need help to continue to do so.

“We cannot do it all,” according to the letter. “We believe that a commitment to surface transportation at all levels of government is necessary and that each level—including the federal government—has a crucial role to play to achieve overall success and keep America competitive in a 21st century economy.”

Foxx’s letter sent to state DOTs is available here. The letter sent to Congress by the seven state and local government groups can be found here.

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