Facing Highway Cash Crunch, DOT Plans to Slow Reimbursements
As the Highway Trust Fund slips toward a deficit, the U.S. Dept. of Transportation has laid out a detailed plan to conserve its cash by slowing down aid distributions to states in August.
DOT Secretary Anthony Foxx notified state DOTs on July 1 that unless Congress adds revenue to the trust fund, his department will cease its current daily reimbursements on Aug. 8 and instead shift to twice-a-month distributions.
President Obama weighed in on the issue in a July 1 speech in Washington, D.C. With the Key Bridge across the Potomac River as a backdrop, Obama said, "Now here's the problem—If this Congress does not act by the end of the summer, the Highway Trust Fund will run out."
The trust fund’s highway account is projected to start showing red ink around the end of August, unless Congress approves additional money.
Leaders of the Senate Finance Committee are working on a rescue plan and are expected to vote during the week of July 7 on a proposal to add about $8 billion, enough to keep the trust fund in the black through December.
Congress needs to act on a trust-fund fix by Aug. 1, when lawmakers start a month-long recess.
In his letter to state DOT chiefs, Foxx said that “as we approach [trust-fund] insolvency, the department will be forced to limit payments to manage the reduced levels of cash available in the trust fund.”
He added, “This means, among other things, that the Federal Highway Administration will no longer make ‘same-day’ payments to reimburse states.”
Foxx said that unless new revenue is added, DOT will put in place the new system on Aug. 1, and notify states what their initial shares will be on Aug. 11.
“At the beginning of each semi-monthly cycle,” Foxx told the state officials, “you will receive a new cash allocation.”
Bud Wright, the American Association of State Highway and Transportation Officials executive director, said in a statement, “As Transportation Secretary Foxx’s letter to state DOTs shows, the risk to the nation’s surface transportation programs is real and imminent.”
Wright added, “We remain encouraged and supportive of ongoing discussions by Congress that would address the short-term solvency issue, which is critical to states.”
Among those attending Obama's speech were Laborers' International Union of North America General President Terry O'Sullivan and other top officials of the union. They said in a statement: "Congress has no excuses....We are all affected and we should be able to expect a bipartisan [trust-fund] solution."