AASHTO sends letter to U.S. Senate urging action to fix highway fund

The impact of the DOT's plan to manage the Highway Trust Fund shortfall will be devastating to states already hard hit by the economic slowdown, and the construction industry that has suffered from the housing crisis, according to AASHTO.

The Trucker News Services

9/9/2008

John Horsley, executive director of the American Association of State Highway and Transportation Officials (AASHTO), has sent the following letter to the U.S. Senate urging action on the Highway Trust Fund fix.

“On behalf of the state departments of transportation I want to emphasize the urgency of immediate action to address the insolvency of the Highway Trust Fund. In short, the Highway Trust Fund is out of cash and the U.S. DOT is taking drastic action to slow the drawdown of less than a $1.4 billion balance.

“On Friday, the Federal Highway Administration announced that it will not only reduce the distribution of payments to the states from twice daily to once a week, it will also proportionately reduce the amount of those payments, based upon available revenue. After this Thursday, U.S. DOT officials say, states may receive only 70 percent reimbursement of their claims, or less.

“According to U.S. DOT officials, the FHWA on an average day transfers $185 million to the states, increasing to $250 million a day in the busy summer construction season. Under the FHWA’s plan, transfers would decrease by $55 million daily, or $277.5 million per week. The impact of that decline in funds will be devastating to states already hard hit by the economic slowdown, and the construction industry that has suffered from the housing crisis.

“Of particular concern to the states are the following:

• States will be hard-pressed to meet payments to contractors

• Interest payments of GARVEE bonds that are backed by assumed federal highway aid, may have to be met from state resources

• States hoping to issue new bond packages face an uncertain reception in the finance community, and

• Faced with federal reimbursement reductions, states may consequently be forced to reduce funding to local governments.

Clearly the economic impacts will be severe and are unacceptable. The Congress has a ready vehicle to resolve this problem through the transfer of $8 billion from the General Fund to the Highway Trust Fund, as enacted by the House in H.R. 6532. This transfer would solve the immediate problem.

We urge you to enact this vital legislation before week’s end.”