Inaction could delay new federal projects, outstanding reimbursements to state
FRANKFORT, Ky. (July 2, 2014) — Gov. Steve Beshear and Kentucky Transportation Cabinet Secretary Mike Hancock today joined U.S. Transportation Department Secretary Anthony Foxx in urging Congress to act expeditiously on the soon-to-be insolvent federal Highway Trust Fund.
Congress has until Aug. 1 to shore up the HTF or all states will experience delayed payments from Washington. Kentucky participates in the federal reimbursement program where the cabinet “fronts” the money for construction projects to pay for contractor invoices and is reimbursed by the Federal Highway Administration.
Beshear cautioned that without congressional action, Kentucky risks delays in new federal projects, as well as reimbursement for active projects.
KYTC currently has hundreds of millions of dollars’ worth of federal projects that are shovel-ready – meaning they could go to construction this summer. Already this year, KYTC has delayed approximately $185 million in federal projects that include the Interstate 65 widening projects between Elizabethtown and Bowling Green and pavement rehabilitation projects on parkways and interstates across the commonwealth.
“Kentuckians should be concerned about the transportation funding situation unfolding in Washington,” said Beshear. “This uncertainty means money for new projects, preservation efforts and most importantly, improved highway safety and construction jobs, is at risk. Our vast transportation network relies on assistance from the federal highway program. Setting partisan politics aside, Congress must work together to seek a long-term, viable solution to stabilize the future of this program.”
On Tuesday, Foxx issued a letter to all state departments of transportation providing them the latest on the looming crisis and detailing how the Federal Highway Administration will implement cash management procedures in the event Congress does not act.
“There is still time for Congress to act on a long-term solution,” said Foxx. “Our transportation infrastructure is too essential to suffer continued neglect, and I hope Congress will avert this crisis before it is too late.”
Without a guarantee of federal reimbursement, Kentucky will weigh the financial risks associated with starting or delaying these projects, Hancock said.
“With looming insolvency, we cannot be confident that much-needed projects will get off the ground,” he said. “Each state should be equally concerned that Congress resolves this matter quickly. Our transportation system depends on it, and so do our families.”
Since 2008, Congress has made regular transfers totaling nearly $55 billion in order to keep the HTF afloat. Without a fix, the HTF will run dry by late August or early September.
The primary source of revenue into the HTF is the federal motor fuels tax, which is levied at 18.3 cents for gasoline and 24.4 cents for diesel. The federal gas tax was last raised in 1993.
The motor fuels tax, through its history, has been a classic user fee: those who drove on the roads and bridges paid for their construction and maintenance at the pump. The downward trend of vehicle miles traveled as well as more fuel-efficient vehicles on the roadways has contributed to the decline in gas tax revenue.