The Federal Highway Administration has laid out plans for redistributing to states about $2 billion—and potentially more—that had been set aside more than a decade ago for highway and bridge projects but is still unspent.
The 2016 omnibus appropriations bill, enacted on Dec. 18, mandated the funding shift for the so-called orphan earmarks and said the money had to be parceled out to states by Sept. 30, the end of the current fiscal year.
FHWA’s long-awaited announcement, released on March 8, is another piece of positive news for state highway agencies as well as road and bridge engineers and contractors.
It follows the Dec. 4 signing of the Fixing America’s Surface Transportation, or FAST, Act, which provided a boost of about $2 billion, or 5%, for highway and bridge funding in fiscal year 2016.
The earmark funding “is really a shot in the arm for the construction industry, for the 2016 construction season,” says Jay Hansen, National Asphalt Pavement Association executive vice president. “On top of the FAST Act, this is icing on the cake.”
FHWA Administrator Gregory Nadeau said in a statement, “By providing a path to put nearly two billion stranded dollars to work, we have an important opportunity to support infrastructure projects across the country while at the same time clearing a legacy backlog and promoting good government.”
The appropriations measure says that to be eligible for the funding shift, earmarked projects had to have been authorized or had funds appropriated before Oct. 1, 2005. They also had to have less than 10% of their funds obligated, or spent, as of Dec. 18, the spending bill's enactment date.
FHWA’s lists of potentially eligible old earmarks meeting the under-10% obligation requirement total $1.96 billion.
The impact will vary from state to state. Just counting projects with less than 10% funding obligated, the American Association of State Highway and Transportation Officials calculates that New York has the largest amount of potential repurposed funds, with $207.6 million.
Georgia ranks second, with $166 million; followed by California, with $126.1 million; New Jersey, with $116.9 million; and Pennsylvania, with $101.3 million.
North Dakota and Wyoming, on the other hand, have no eligible orphan earmarks in the under-10% category.
Dave Bauer, American Road and Transportation Builders Association senior vice president of government relations, said in a statement, "While additional construction activity will certainly result...those states able to take advantage of this new flexibility were shortchanged 10 years ago by the designation of funds to projects that could or would not move forward."
Bauer does call the new program "a positive step," but adds that "what the country really needs is a permanent Highway Trust Fund revenue solution that supports increased highway and transit investment for all states."
Also available for "repurposing" are unspent money for projects that have more than 10% of their funding obligated and are completed, according to FHWA. NAPA’s Hansen points out that FHWA’s data shows that unobligated amount is $3.3 billion on top of the $1.96 billion. But not all of that $3.3 billion may end up being reused.
The appropriations statute attaches another string to the money, specifying that the funds must be reused on other projects located within 50 miles of the original earmarked project.
FHWA’s March 8 guidance document says states must submit requests by Aug. 29, identifying projects on which they want to redeploy funds. If FHWA gives its signoff, states then have until the end of fiscal 2019 to actually obligate that money.
Lloyd Brown, an American Association of State Highway and Transportation Officials spokesman, said via email, “There is significant need throughout the states so we are confident these funds will be put to use as quickly as possible.”
U.S. DOT took a similar step in August 2012, when it made more than $470 million in unused earmark dollars available to states for other projects. The new plan is more than four times as large.
Story corrected on 3/11/16 to fix errors in some individual states' funding totals and rankings.