Secretary of Transportation Anthony Foxx warned Tuesday that the Obama administration will start rationing federal highway funds to states starting in August, which could slow work on road and bridge projects around the country unless Congress acts to replenish the Highway Trust Fund.
The Obama administration has said it expects federal highway funds to be drained by August, and has proposed a $300 billion highway bill paid for with higher taxes on companies. But Republicans in Congress have resisted that idea, and have proposed spending money saved by ending Saturday mail delivery.
The lack of progress on a deal has led some to worry that federal highway funds will run out, which prompted Foxx to outline how his department would handle the expiration of funds.
“[A]s we approach insolvency, the department will be forced to limit payments to manage the reduced levels of cash available in the Trust Fund,” he wrote.
“We have attempted to provide states with the most equitable, straightforward approach possible for managing this crisis,” his letter said. “To that end, we will distribute incoming funds in proportion to each state’s federal formula apportionment in this fiscal year.
“In addition, I am requiring the U.S. Department of Transportation to restrict travel and administrative spending until these issues are resolved.”
Foxx said these “cash management procedures” will start August 1, and states will start getting proportional shares of federal money on August 11. Proportional shares of the money will then be distributed twice each month.
“We will continue to administer this process until the Congress can reach a solution that provides adequate resources to the Fund,” he wrote. “We may change some aspects of this process should an emergency situation arise or should a change be necessary to further protect the overall safety and efficiency of the national transportation system.”
Earlier this month, the Congressional Budget Office again noted the pending shortfall in the Highway Trust Fund, and said Congress needs to consider raising more money, cutting spending, or some combination of both.
One proposal the CBO has continued to offer is the idea of taxing people based on how far they drive, a controversial plan that has created opposition from conservatives and privacy advocates.
Read Foxx’s letter to states here: