Idaho takes financial precautions as federal highway fund dwindles

The DOT and Congress are looking for revenue.

cmsewell@idahostatesman.comJuly 9, 2014 

Idaho receives 55 percent of its $571.4 million annual roads budget from the federal Highway Trust Fund. With the possibility of the trust fund running dry in August, Idaho Transportation Department has been tracking the fund's status, said ITD spokesman Reed Hollinshead.

Bracing for a possible stoppage in federal funding, ITD in mid-May temporarily suspended bidding for future projects. ITD resumed advertising for bids on Tuesday after the U.S. Department of Transportation said last week that it would start reducing payments to states for road and transit projects starting Aug. 1.

Confirmation of receiving reduced federal payments as opposed to no payments at all eased ITD's concern enough to cautiously resume the bidding process, Hollinshead said.

Beginning Aug. 1, the states will have to live paycheck to paycheck, receiving funds just once every two weeks as money is collected through federal gasoline taxes.

The move may put pressure on Congress to approve at least a short-term fix before its August break begins. The DOT estimates that the highway fund will hit zero in late August, potentially idling several hundred thousand workers as midterm elections loom in the fall.

Transportation Secretary Anthony Foxx wrote his state counterparts July 1 that they would see, on average, a 28 percent reduction in funds.

"Depending on how they manage the funds, each state will feel the effects differently, but everyone will feel the impact sooner or later," he wrote.

Congress has just 15 working days to reach an agreement before the August recess.

If the end of July nears with no agreement reached, ITD will make contingency plans to scale back on projects. The agency wants to avoid halting work on projects already underway, so projects not yet begun would be delayed first, Hollinshead said. For example, ITD typically opens about three bids per week; delaying these bids, even for a few weeks, could provide enough savings to ride out the impasse.

A cut in federal funding does not mean Idaho would be in trouble for repaying its highway construction debt. The state used bonds called Grant Anticipation Revenue Vehicles - known as GARVEE - to finance projects by pledging future federal highway grants as repayment on the debt.

The $857 million GARVEE program includes improvements along four major highways: Interstate 84 and Idaho 16 in the Treasure Valley, U.S. 95 in North Idaho, and U.S. 30 in southeast Idaho. The state's annual bond payment is about $60 million - about 20 percent of its annual federal funding.

The first $60 million in federal money the state receives each year must go to repayment. ITD officials say Idaho is not at risk of being unable to pay its debt because lawmakers were conservative setting up the program.

In the unlikely event Idaho should no longer receive federal money, bond-holding investors would be the ones stuck with the bad bonds, not the state, according to ITD.

Since the Interstate Highway System was created in 1956, a per-gallon tax on motor fuels has supported federal spending on transportation. The tax has been stuck at 18.4 cents for gasoline and 24.4 cents for diesel since 1993, and it has lost its buying power to inflation.

Since 2008, federal transportation spending has exceeded the balance of the trust fund, and Congress has avoided the gas tax debate by transferring more than $50 billion from the federal treasury to keep it afloat. While some lawmakers say they don't want to resort to that approach again, they may have no other options if they can't reach an agreement.

Republicans want the general-fund transfers to be offset with spending reductions elsewhere, but Congress is running out of offsets. A proposal that Republicans in the House of Representatives circulated last month to pay for a patch in the highway fund by cutting back Saturday mail delivery went nowhere.

Groups that represent business, construction, labor and trucking have been pushing to increase the federal gasoline tax. Last month, Sens. Christopher Murphy, a Connecticut Democrat, and Bob Corker, a Tennessee Republican, offered a bill that would raise the tax by 12 cents a gallon.

But President Barack Obama has never endorsed a gas tax increase, and conservative House Republicans are all but assured to oppose one. Obama favors closing corporate tax loopholes to shore up the highway fund, but his plan hasn't attracted much support on Capitol Hill.

Cynthia Sewell: 377-6428, Twitter: @CynthiaSewell

Idaho Statesman is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service