by Lital Shair, Market Research Associate

Updated May 27, 2015

An updated report from the American Road and Transportation Builders Association finds that seven states have delayed or canceled projects, valued at $1.63 billion, out of concern over long-term federal highway funding.

Federal funds, on average, support 52 percent of annual state department of transportation (DOT) capital outlays for highway and bridge projects. Uncertainty surrounding the short and long-term fiscal condition of the Highway Trust Fund continues to have a significant effect on state transportation planning.

MAP-21, the latest surface transportation authorization bill, was set to expire at the end of September 2014. Before a last-ditch effort by members of Congress led to an eight-month extension, DOT officials in 35 states had publicly stated their state programs would be impacted by a shutdown of federal surface transportation funds. In fact, nine states retracted or delayed projects in 2014 totaling over $366 million due to uncertainty about future federal investment.

The highway and transit programs are authorized through the end of May, but Congress and President Obama have approved a two-month extension of the federal highway and public transportation programs which will allow the U.S. DOT to spend funds from the Highway Trust Fund until July 31.  In addition to this looming deadline, the U.S. DOT will be forced to slow down reimbursements to state DOTs in August for federal-aid projects already underway unless Congress generates new revenues for the trust fund.  As a result of continued uncertainty about future federal surface transportation funds, 19 states (indicated on the map below) have expressed concerns about the feasibility of future transportation projects. According to state DOT officials, over $1.1 billion in projects is at risk if federal funding is disrupted. Already, seven states have delayed or canceled projects valued at $1.63 billion.

In addition to DOTs, transit agencies are impacted by this uncertainty as well – the Southeastern Pennsylvania Transportation Authority (SEPTA) delayed the start of a procurement process for a four-year contract until they “see how things transpire in Washington,” according to SEPTA Chief Financial Officer and Treasurer Richard Burnfield. Central Ohio Transit Authority (COTA) President Curtis Stitt stated that without an extension of federal funds, its upcoming Cleveland Avenue Bus Rapid Transit project (slated to begin in 2017) would be at risk; this project relies on $38 million in federal funds from President Obama’s 2016 fiscal-year budget for U.S. DOT. In a joint letter with city and local leaders, Central Indiana Regional Transportation Authority Interim Executive Director Lori Kaplan warned that absent a long-term federal transportation authorization, Central Indiana is at risk of being unable to pursue near-term transportation investments, including the bus rapid transit Red Line project.

The updated report includes a series of news article excerpts of state officials describing how this threat would impact state DOT transportation improvement efforts. Read the report.