GOAL Multiyear bill desired, but not pending in Congress yet. (Photo courtesy of the Virginia Dept. of Transportation)

The clock is ticking for the federal highway program and the construction firms that rely on it. State transportation agencies are anxiously keeping one eye on Congress, hoping lawmakers will avert a cutoff of federal highway funds looming on Sept. 30. That deadline stems from the 1998 Transportation Equity Act for the 21st Century. The massive bill that has pumped more than $220 billion into highway and transit programs since its 1998 enactment expires on that date. Past multiyear highway bills also ran out before Congress passed new ones and money continued to flow. But this time, things are different: TEA-21 has a provision that prevents the Federal Highway Administration from reimbursing states for funding obligations they incur after the statute’s last day.

If that worst case comes true, "We’d be demobilizing projects," says Douglas B. MacDonald, Washington Transportation Secretary. "There’d be all kinds of craziness in the project delivery system. All that does is cost taxpayers money."

In addition, if no extension is enacted, it would inflict pain on FHWA itself. "We would have to start an orderly shutdown of the organization if we were unable to get a continuation," says Administrator Mary E. Peters.

Peters and state transportation chiefs believe Congress will stave off the imminent crisis. Says Don Vaughn, Alabama Dept. of Transportation deputy director: "It would have too drastic a negative impact on this country for everything to stop." Peters says that "it likely will go down to the wire."

What states, the U.S. DOT and engineering and construction firms really desire is a new, six-year transportation measure that assures a sizable boost in federal aid over TEA-21’s. DOT Secretary Norman Y. Mineta Sept. 7 told the American Association of State Highway and Transportation Officials’ annual meeting: "Enacting anything less than a full, six-year reauthorization bill will greatly endanger the ability of our nation’s mayors, governors, state and local transportation leaders to make important long-term planning and investment decisions for their communities. They and all of you deserve a six-year bill, and nothing less."

But it looks like Congress will come up with "less," for now. With no long-term bill even introduced by House or Senate committees by ENR press time, there’s virtually no chance a multiyear bill will become law by Sept. 30.

Nearly all agree the expected legislative "fix" will just be temporary, extending perhaps six months. House Transportation and Infrastructure Committee leaders are working on a six-month extension that is likely to be introduced by Sept. 12, says spokesman Steve Hansen. "Essentially what it would do is continue funding at the 2004 budget level for the six months." That would mean $16.19 billion for highways and $3.65 billion for transit, he says.


A senior Senate Environment and Public Works Committee staffer confirms the panel is considering an extension. "Nothing’s been decided," he says. "We’re looking at three to six months."

That may be palatable for a while. "If there’s a six-month extension enacted before the 30th [it would be] manageable, but not good," says Timothy Martin, Illinois DOT secretary. "If there is no increase, our state and many states will go into a maintenance mode of fixing only what we have." Illinois’ fiscal 2004 program will be about $1.7 billion, down $400 million from 2003. Based on current federal aid levels, he projects 2005’s program will be $1.4 billion.

An AASHTO survey, released Sept. 7 at its meeting in Minneapolis, says that a six-month extension would cause delays in $2.1 billion in projects and lose more than 90,000 private-sector jobs. "This is a capital construction program," says John Horsley, AASHTO executive director. "States can’t issue contracts to design a system or...build a facility if they don’t know beyond this year what the funding will be."

The projected impact would be spread unevenly: 33 of the 45 states that responded to AASHTO’s survey predicted project delays. "We are...more than likely going to hold projects back," says Richard Whitney, Indiana DOT’s chief financial officer.

But the other dozen, which include such big roadbuilders as Texas and Florida, say a six-month bill would pose little or no problem. "We expected the authorization to be delayed, and we’ve built up adequate cash reserves to cover it, so we’re in pretty good shape," says Lowell Clary, Florida DOT assistant secretary for finance and administration.

With a short continuation, "the negative is it doesn’t achieve all the goals that we’re trying to achieve," says John R. Njord, Utah DOT executive director. "The need is significant, and just continuing at the same level that we’re at today does not address the need. But it enables us to continue to work as we are today."

In Utah, officials are planning as if federal aid will hold steady for six months. That means no cutbacks, but no major growth. "For my state, it puts a clamp on us because we don’t know what the future holds as far as funding is concerned," Njord says.

Transit projects also would be affected, the states report. North Carolina’s DOT told AASHTO that with a short extension "the structure and funding levels of major [Federal Transit Administration] programs cannot be assured beyond the short term. This hurts transit systems that are in the process of designing new start projects," such as Charlotte and the Triangle Transit Authority.

Some states say six-month bill would have negative results: 
CALIFORNIA Reducing number of projects advertised and awarded.  
CONNECTICUT Delaying phases on 24 already advertised projects, totaling $90.4 million.  
GEORGIA Delays or changes affecting 90 projects, totaling $324 million. Some would have been bid this winter. 
INDIANA Construction program would be down $60 million from plan.   
MISSOURI If reauthorization delayed until after late October, dramatic reduction in lettings starting in December. No new major projects started until long-term funding assured. Includes new bridges in St. Louis and Kansas City. 
MICHIGAN Severe capital program disruption. Construction firms hesitant to expand, bid prices will rise.  
SOUTH DAKOTA If no new bill is assured by January, then March-September 2004 lettings would be cancelled.
But other states see no effect: 
FLORIDA No impact—DOT has unobligated balances for six-12 months.
LOUISIANA No adverse highway program impacts with six-month, one-year or two-year bill.
TEXAS "Virtually no impact" on bid lettings.
Source: State Reports to AASHTO Survey  

Design firms and contractors are feeling the ripple effect. Joe Prego, vice president for business development with American Infrastructure Inc., Worcester, Mass., says, "You see projects from 2005 now pushed to 2007 and 2008. They say, ‘We just don’t have the money.’"

Sal Mancini, president of Skanska USA Civil, says that aside from work in New York City, the long-range outlook for large projects isn’t good. "This year’s projects are in the pipeline and have been funded," he says. "But looking down the road to 2004 and 2005, it looks bleak."

Ann D. Warner, vice president and manager of government programs for Bechtel Infrastructure Corp., says a federal funding hiatus creates confusion about when projects will advance. "I think the biggest concern in having a lapse or short-term extension is how to provide money to the programs that are about to enter construction." For transit projects, if there is no FTA full-funding grant agreement, "You can’t be sure that project funds are going to be available...."

For states already struggling with severe fiscal pain, the uncertainty over highway funds is one more big headache. Says Washington’s MacDonald: "This whole thing is no way to run a railroad."