AASHTO Journal, 27 March 2015
More than $1.3 billion worth of highway projects in four states have already been pulled from 2015 bidding for design, construction or rights-of-way acquisition, as state departments of transportation tally up the economic cost of an uncertain flow of federal money from the Highway Trust Fund.
On March 24, Arkansas added considerably to a list of projects it cannot bid out for 2015, owing to the pending May 31 expiration of Highway Trust Fund program authority and the risk that the federal share of project costs may not be repaid to states when the bills come due.
The Arkansas State Highway and Transportation Department said it withdrew 56 planned construction projects from its April 21 bid opening, with an estimated contract value of more than $112 million. That includes $50 million that was authorized by the Arkansas Highway Commission for a major annual highway overlay program that repairs road surfaces.
With that announcement, the AHTD said it has now withdrawn 61 projects in all from 2015 bid openings, worth a total of $162 million.
That is in addition to $715 million in projects idled by Georgia, $400 million by Tennessee and more than $28 million by Wyoming, for a $1.3 billion total just from states that have publicly announced project halts.
Officials from some other states have said they have difficulty planning multiyear projects without knowing how much they can count on in federal funds, so that the lack of certainty from Congress prevents more economic development than if they operated under a long-term federal program.
In Arkansas, the AHTD also released a detailed list of the projects it has withdrawn from this year’s plans, and a map showing the scores of counties affected across the state.
Director Scott Bennett said especially after a harsh winter for Arkansas, canceling the 2015 overlay program “is going to make repairing the damage that has occurred even more challenging.”
Bennett described the impact of the project cuts, beyond removing $162 million this from the state economy.
“Now that we have cancelled our overlay program for this year, there are few areas in the state that are not affected by projects withdrawn from the April bid letting,” he said. “If you stop and think about the economic impact this has – not only on construction jobs, but the lost commerce that results in each local area because construction isn’t taking place – then you begin to understand the trickle-down effect and the urgency of solving this national problem.”
The projects pulled from April bidding may not be the end of the delays in Arkansas. It has another bid letting scheduled for June 9 and has to decide well in advance which projects to advertise. So the AHTD will need to decide by May 1st, a spokesman said, which highway projects it can let to contract for the June bid opening.
In addition, if Congress provides anything other than a long-term extension of the federal program, Arkansas could face further project delays in successive bid rounds.
Bennett described the May 31 deadline as a “fiscal cliff” for the Highway Trust Fund, and said, “Congress must act soon to solve this problem by reinvesting in our nation’s infrastructure.”
The state agency’s announcement explained that highway projects in Arkansas are initially paid with state funds, and then the state seeks reimbursement from the Highway Trust Fund for the federal portion.
It pointed to a national infographic prepared by the National Association of State Highway and Transportation Officials that include total federal share of many states’ annual highway capital spending, which shows that Arkansas normally relies on the federal program for 70 percent of its capital investment in roads.
The AHTD updated its section in that infographic, to include its latest bid withdrawals. It also said federal money for Arkansas that is at risk from the May 31 deadline includes $490 million in highway spending and $32 million for transit, affecting an estimated 14,000 jobs and 220 projects.