U.S. Highway Trust Fund Faces Insolvency Unless Congress Acts

Absent congressional action, the Federal Highway Administration will begin limiting reimbursements on federally funded transportation projects beginning Aug. 1.
(Published Jul 14, 2014)

It appears Congress may act in the nick of time to shore up the U.S. Highway Trust Fund (HTF) until at least May 2015. Key House and Senate committees took steps on July 10 toward keeping highway and transit aid flowing to states. Congressional democrats and President Barack Obama are advocating for a six-year transportation plan; however, republicans say more time is needed to develop long-term transportation funding solutions. The May 2015 extension is a compromise that will provide stability in the short term.

On July 1, U.S. Transportation Secretary Anthony Foxx sent a letter to Minnesota Department of Transportation (MnDOT) Commissioner Charlie Zelle indicating that, absent congressional action, the Federal Highway Administration (FHWA) will begin limiting reimbursements on federally funded transportation projects beginning Aug. 1, 2014.

Secretary Foxx noted that, by the Congressional Budget Office’s estimate, the HTF will need an additional $6.6 billion and the Mass Transit Account will need another $1.5 billion in order to meet anticipated obligations through Dec. 31, 2014.

Minnesota projects affected
At this point, it appears three Minnesota city projects would be impacted by an HTF insolvency—projects in Duluth, Cloquet, and East Grand Forks. Eight counties might see reimbursement delays, and an unspecified number of state projects could be shuttered. A protracted insolvency would likely compound problems for states and local units of government.

Transportation stakeholders, including the National League of Cities (NLC) and all 49 state municipal leagues, have pushed for federal transportation funding. Writing on behalf of the 19,000 cities and towns across the country, the executive director of the NLC along with the executive directors of all state leagues, urged Congress to take action on a long-term reauthorization of surface transportation programs before the current program expires on Sept. 30. Citing local governments’ role as majority owners and operators of surface transportation programs, the group also called for a greater say over how federal transportation dollars are invested in local communities.

The League of Minnesota Cities will continue to monitor developments at the federal level in the coming weeks.

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