Obama: Fund Roads Now

This story appears in the July 7 print edition of Transport Topics.

President Obama chided Congress last week for not rectifying the crisis in the Highway Trust Fund, while the U.S. Department of Transportation announced it will begin rationing the reimbursements it sends states for highway work already done.

Transportation Secretary Anthony Foxx notified the states in a July 1 letter that, as of Aug. 1, reimbursements will be sent twice a month rather than daily. Also, the amounts will be only a share of whatever is in the fund when the checks are cut.

Obama said during a speech July 1 alongside the Francis Scott Key Bridge in Washington that if Congress does not act soon, highway projects could be shut down and jobs lost.

“All told, nearly 700,000 jobs could be at risk next year,” he said.  “That would be like Congress threatening to lay off the entire population of Denver or Seattle or Boston.”

There are more than 100,000 “active” transportation construction projects across the country, and unless Congress acts soon to shore up the highway fund, states will have to begin deciding which projects to halt,  said the president, flanked by construction workers and equipment.

The trust fund is facing two crises: Short term, the fund is expected to be insolvent by August if Congress does not come up with some temporary cash. Long term, receipts from the fuel tax have not kept pace with spending, and the transportation funding law, MAP-21, expires Sept. 30.

Congress must extend MAP-21 or write a new law, lest the federal government lose its authority to collect and spend the fuel-tax revenue that supports highways and public transit.

In his letter to the states, Foxx said DOT will distribute the incoming funds “in proportion to each state’s federal formula apportionment in this fiscal year.”

That means if a state receives 5% of all the federal money allocated to states for highways, it will get only 5% of whatever is in the trust fund the day the checks are cut.

States will receive notification of their first proportional share Aug. 11, Foxx said.

“This process will be repeated twice a month as additional tax receipts are deposited into the trust fund,” the letter said. “At the beginning of each semi-monthly cycle, you will receive a new cash allocation.”

Bud Wright, executive director of the American Association of State Highway and Transportation Officials, said that the risk to the nation’s surface transportation programs is “real and imminent.”

Given the trust fund’s impending insolvency, some states have been pulling projects off their monthly construction bidding lists. And officials in several states have warned that unless Congress acts on a long-term solution for transportation, they will dramatically scale back highway projects in fiscal 2015.

“We remain encouraged and supportive of ongoing discussions by Congress that would address the short-term solvency issue, which is critical to states,” Wright said in a statement after Foxx’s announcement.

Obama pulled few punches in his speech, however, placing blame on Republicans for not addressing the trust fund crisis and his four-year plan to pay for transportation.

“It’s not like they’ve been busy with other stuff,” he said drawing laughter from the crowd gathered on the bank of the Potomac River.

The president said Republicans are blocking his $302 billion plan, which he termed a job creator and said would address the nation’s need to improve its infrastructure.

Funding for the plan would come from tax code changes that include repatriating money held overseas by American corporations to avoid paying taxes.

“It’s not crazy,” he said of his plan. “It’s not socialism. It’s not the imperial presidency. No laws are broken. We’re just building roads and bridges like we’ve been doing for the last 50 [or] 100 years.”

The American Society of Civil Engineers, which reports on the nation’s infrastructure every four years, gave it a grade of D+ in the society’s 2013 report. And the Federal Highway Administration has said there are more than 65,000 deficient bridges, meaning they need maintenance, repair or replacing.

This is the second time in three years Obama has gone to the Key Bridge, which spans the Potomac between Washington and Virginia, to call attention to the country’s infrastructure problems.

The bridge stands as proof that in decades past Congress could work to build roads and bridges, transit, ports and airports, the president said.

Leaders of the Laborers’ International Union of North America, who were at the event, said it was time to stop “sugar-coating” the fact that America’s transportation infrastructure is crumbling.

“Congress has no excuses,” the group added. “Unsafe roads and bridges do not discriminate by political party. We are all affected, and we should be able to expect a bipartisan solution.”