April 27, 2015

BY MARK NIQUETTE

Bloomberg News (TNS)

COLUMBUS, Ohio -U.S. states are taking more financial responsibility
for roads and bridges as the expiration of federal transportation
funding approaches, straining a partnership that dates to the
administration of President Dwight D. Eisenhower in the 1950s.

At least six states have delayed about $2 billion in construction
projects because of the uncertainty, and others are making contingency
plans to pay contractors. Five states, all with Republican governors,
increased fuel taxes this year, while Minnesota and Michigan are
pursuing legislation or ballot measures to raise additional money.

The Congressional Budget Office projects that the U.S. Highway Trust
Fund, which provides federal dollars for roads and transit, will
become insolvent after the current funding bill, itself only a
10-month fix, ends May 31. There’s been no long-term funding plan
since 2009, and Congress has failed to address an estimated $58
billion annual shortfall for surface transportation. States are
charting their own courses.

”They have to do that,” Tennessee Commissioner of Transportation
John Schroer said. ”I don’t think we have any other option.”

States accounted for 40 percent of the average $213 billion in annual
highway and transit spending from 2008 to 2012, with local entities
paying 35 percent and the federal government 25 percent, according to
the Pew Charitable Trusts in Washington. Yet in some states, federal
funding accounts for more than half the transportation budget.

While U.S. infrastructure deteriorated, spending declined as cars
became more fuel efficient and collections from state and federal
gasoline taxes declined. Expenditures at all levels fell $27 billion,
or 12 percent, between 2002 and 2011, and revenue for the Highway
Trust Fund has fallen short of expenditures for more than a decade,
Pew said.

About $163 billion is needed annually over a six-year period for
highways, bridges and transit systems, yet only about $105 billion is
being invested, according to a December report from the American
Association of State Highway and Transportation Officials and the
American Public Transportation Association.

The needs are pressing enough that even when states raise revenue,
they can’t afford to lose dollars from Washington, U.S. Transportation
Secretary Anthony Foxx said.

”The federal funding is still foundational,” Foxx told reporters in
Washington last week. ”They could take one step forward and two steps
back if the federal government ends up going over this cliff.”

The Obama administration has proposed a six-year, $478 billion plan,
and there have been proposals that include raising the federal
gasoline levy or taxing U.S. companies’ offshore profits brought home.
None has advanced.

Amid the uncertainty, Arkansas, Delaware, Georgia, Montana, Tennessee
and Wyoming have delayed construction projects totaling about $2
billion, and more are likely to as the deadline approaches, according
to the U.S. Department of Transportation.

Some states, including Iowa, are proceeding with the expectation of
continued funding, and planning to borrow to pay contractors if that
doesn’t happen, said Jim Tymon, chief operating officer of the highway
officials group.

The roles of federal and state governments are changing by default as
Congress fails to act, said Joshua Schank, president of the Eno Center
for Transportation, a nonpartisan policy research group in Washington.

The Washington Post – States shoulder road-building burden as government stalls