Shutdown Spares Some Construction Programs, But Highway Concerns Arise
OK for Now Highway aid is protected because it draws on a trust fund. But states only got 25% of full 2019 allotments, which may affect future lettings.
Photo Credit: Trevor Wrayton/Virginia Dept. of Transportation
The partial shutdown of the federal government is starting to affect some federal construction programs—such as those at the Federal Transit Administration—but other major infrastructure accounts have full 2019 funding and aren’t harmed. The biggest federally funded construction account, highways, is open. But if the shutdown is protracted, states may slow bid lettings.
At ENR press time, as the shutdown entered its third week, no deal was immediately in sight between President Trump, who continues to push for more than $5 billion for a wall on the southwest U.S. border, and top congressional Democrats, who strongly oppose that plan. Democrats’ influence increased with the start of the 116th Congress, as they moved into the majority in the House.
Some construction programs escaped the shutdown, thanks to enactment of full-year fiscal 2019 appropriations bills before the Nov. 6 elections. They include Dept. of Defense, Dept. of Veterans Affairs and Army Corps of Engineers civil-works construction, as well as Dept. of Energy defense environmental cleanup.
Much of the Interior Dept. is closed, except the Bureau of Reclamation, which is funded by the same measure that covers Corps civil works and DOE cleanup. Reclamation “is performing contract activities, including construction, planned for fiscal year 2019,” spokesperson Theresa Eisenman wrote in an email.
The U.S. Dept. of Transportation is swept up in the shutdown, but funding for federal-aid highways continues to flow, a senior administration official says, because it draws on the user-fee supported Highway Trust Fund, not the general fund.
Jim Tymon, American Association of State Highway and Transportation Officials executive director, says, “It means that state DOTs … don’t necessarily have to pull the plug on projects that are under construction right now.”
Brian Deery, senior director of the Associated General Contractors of America highway and transportation division, said via email, “If the shutdown gets resolved without too much delay, the impact on the highway … programs will be minimal.”
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But that could change if the shutdown extends for a long time. Tymon notes that DOT was operating pre-shutdown under a stopgap bill through Dec. 21, about one-fourth of the way through fiscal 2019. In turn, state DOTs got only about 25% of full 2019 highway allotments. “The longer this drags on,” he says, “you’re going to see states, I think, start to draw back on their letting, because they won’t have that [full 2019] money coming in yet.”
Elsewhere at DOT, the Federal Aviation Administration Airport Improvement Program (AIP), providing more than $3 billion a year for infrastructure projects, continues to process grants and “is not affected by the partial shutdown,” an FAA spokesperson said. AIP draws on the Airport and Airway Trust Fund, backed by a passenger ticket tax and other fees.
DOT accounts supported by the general fund, however, could be affected, such as the Better Utilizing Investments to Leverage Development (BUILD) grants. DOT on Dec. 11 announced nearly $1.5 billion in BUILD awards, but Deery says some of those awards “may be slowed down,” due to the shutdown. BUILD formerly was the Transportation Investment Generating Economic Recovery, or TIGER, program.
Deery says that the Federal Transit Administration’s general fund-backed Capital Investment Grant program, which funds new starts, could see a slowdown, too. But Deery says those capital grants are matched by sizable state or local funds, which local transit agencies could use to keep projects on track until federal funding resumes.
Some other FTA infrastructure grants come from the Highway Trust Fund, but a U.S. DOT document issued in December states that FTA will not issue any grants or contracts or reimburse local agencies for construction projects until the shutdown ends. It said 88% of FTA’s workforce is subject to furloughs. While the large majority of Federal Highway Administration workers are funded by the trust fund and protected from the shutdown, most of FTA’s employees are funded by the general fund.
At the Environmental Protection Agency, most workers were furloughed on Dec. 29. Industry officials were studying the shutdown impacts on EPA infrastructure programs, especially clean-water and drinking-water State Revolving Funds (SRFs) and Water Infrastructure Finance and Innovation Act (WIFIA) loans.
Tommy Holmes, American Water Works Association legislative director, said that under SRFs, “money does come back to the states as loans are repaid.” He added, “Therefore, states should be able to continue loans at least for a little while.” But he said EPA can’t seek applications for a new round of WIFIA loans until 2019 appropriations are secured.
