Arkansas Highway Director Says More Road Projects Could Be Cut

The Arkansas Highway and Transportation Department could be forced to cancel some of the two dozen projects totaling $250 million planned the rest of this fiscal year if Congress doesn’t act to shore up the federal Highway Trust Fund soon.

The U.S. Department of Transportation is projecting the fund will be insolvent by August. In March, AHTD Director Scott Bennett announced the department was canceling plans to take bids on 10 federal projects totaling $62 million because of the shortfall.

Bennett said in an interview Thursday (April 24) that the department spends about $60 million monthly this time of year, and about 70 percent of its construction programs are funded by federal aid. He is expecting to receive less federal money as August nears, requiring the state to make up the difference. Absent congressional action, he said, “I think there’s a chance that you could see us not awarding any projects that are funded with federal funds.”

The Highway Trust Fund funded about $40 billion in highway projects nationwide in fiscal year 2014, but revenues are not keeping pace with expenditures. The authorization for the current surface transportation program, MAP-21, ends in September.

Rep. Rick Crawford, who represents eastern Arkansas’ First Congressional District and sits on the House Transportation and Infrastructure Committee, expects to see increased activity on a new transportation bill in the next few weeks. He believes that both the House and the Senate will pass new highway bills between now and September, but the conference committee won’t be able to reconcile the two versions in time – especially considering this is an election year.

Instead, he predicts there will be a short-term extension with funding that shores up the trust fund until the new program is passed. He doesn’t think a general budget transfer is likely. Instead, he expects the leadership will help identify “some short-term pay-fors that will allow us to pass a short-term extension while we’re working on the longer-term bill.”

Bennett is not as confident that Congress will act in time.

He said the worst-case scenario would be no funding through the 2015 fiscal year. That would affect this year’s upcoming 24 projects totaling $250 million, and 56 projects totaling $500 million for 2015.

With no federal funds, the highway department could operate an overlay program, perform routine maintenance, and pay highway bonds. It would still have income from the Connecting Arkansas Program, which is funded by the half-cent sales tax passed by voters in 2012. But certain jobs, such as bridge replacements and installing cable median barriers, wouldn’t happen.

More revenues will be needed long term. Federal fuel taxes – 18.4 cents per gallon for gasoline, 24.4 cents for diesel – make up the bulk of highway funding, but they have not been increased since 1993 and were not indexed to inflation. Because those taxes no longer sufficiently fund highway needs, MAP-21 transferred about $20 billion from the general fund to highways.

But there is no political will for raising fuel taxes – especially in an economy still recovering from the Great Recession. So where would the money come from?

“That’s the big elephant in the room,” Crawford said. “I mean, the reality is that the trust fund is insolvent, and we’ve got to figure out a way to create a revenue stream to recharge that trust fund and sustain it over the long term.”