Uncertain Federal Funding Delays 56 Arkansas Highway Projects

Uncertainty over federal funding has caused the Arkansas Highway & Transportation Department (AHTD) to withdraw 56 construction projects set for an April 21 bid cycle.

The estimated value of projects is more than $112 million and includes $50 million authorized by the Arkansas Highway Commission for its 2015 highway overlay program, according to an AHTD statement issued Tuesday (March 24). This brings the total number of projects withdrawn from the 2015 bid openings to 61. The estimated construction value of these withdrawn projects is $162 million.

“Now that we have cancelled our overlay program for this year, there are few areas in the State that are not affected by projects withdrawn from the April bid letting,” said AHTD Director Scott Bennett said in the statement. “If you stop and think about the economic impact this has – not only on construction jobs, but the lost commerce that results in each local area because construction isn’t taking place – then you begin to understand the trickle-down effect and the urgency of solving this national problem.”

Go here for a link to the projects that were withdrawn from bid openings.

FEDERAL FUNDING ISSUE
Arkansas is part of the American Association of State Highway and Transportation Officials (AASHTO), an organization that has been a frequent critic of how the federal government funds highway construction. Bennett said in the statement that problems with the federal Highway Trust Fund will result in more costly infrastructure problems.

“(O)ur State’s highway infrastructure has suffered severe damage from a harsh winter weather season. The lack of an overlay program is going to make repairing the damage that has occurred even more challenging,” Bennett noted. “As the Federal Highway Trust Fund heads towards the fiscal cliff, we are not only facing reduced and delayed reimbursements later this year, we are also facing the absence of a Federal-aid highway program next year. Congress must act soon to solve this problem by reinvesting in our Nation’s infrastructure.”

AHTD officials say they evaluate each round of bidding to ensure that state funds can cover the project in the event of reductions or delays in federal funding.

“Highway construction projects in Arkansas are initially paid with State funds, and then the State seeks reimbursement from the Federal Highway Trust Fund for the Federal portion of those payments. Without action from Congress, reimbursements from the Federal Highway Trust Fund are expected to be curtailed this summer,” noted the AHTD press release.

The American Road and Transportation Builders Association, a group with a clear interest in freeing up more federal highway funding, also reported Tuesday that four states – Arkansas, Georgia, Tennessee and Wyoming – have canceled or postponed $780 million in road and other transportation projects because of the federal funding uncertainty.

According to the association, the federal Highway Trust Fund (HTF) is on average the revenue for 52% of all highway and bridge capital investments made each year in the states. Money for the fund is set to expire May 31 unless Congress acts.

“The HTF has suffered five revenue shortfalls between 2008 and 2014, and the next cash crisis is expected to occur in summer 2015,” noted the ARTBA report.

ARTBA President and CEO Pete Ruane said the problem is “avoidable” if Congress would act.

“This is one of the most easily avoidable crises because Congress has known the May deadline was coming for about eight months. Yet, here we are again flirting with another economic meltdown in the peak of the construction season,” he said.