Transportation Official Discusses Effect of Federal Trust Fund Depletion

An article  posted in Governing’s FedWatch blog, describes the state effect of the federal highway trust fund becoming depleted, which is projected to occur in fiscal 2015. Polly Trottenberg, the undersecretary for policy at the U.S. Department of Transportation, outlined the scenarios during a recent Congressional hearing. 

The Federal Highway Administration (FHWA) sends funds to states through six formula programs, but the money isn’t provided in advance. Instead, state departments of transportation enter agreements with FHWA, award contracts to construction companies and then rely on getting payments from the feds in order to make payments to the contractors.

Some states bill the feds daily; others bill them weekly. But if the trust fund gets too depleted, states will start getting reimbursed less and less frequently, perhaps as rarely as twice a month, Trottenberg warned. Even worse for states: If the situation gets bad enough, the feds might only be able to cover a portion of states’ reimbursement requests. If that happens, states could be forced to pull back on some projects.

Fuel efficient vehicles,people driving less, and a gas tax that hasn’t increased in 20 years are affecting gas tax revenues going into the fund.