State transportation officials are planning for a possible shortfall of federal highway dollars that could begin as early as August, cutting a flow of money that pays as much as 80 percent of the cost of Maine’s road and bridge projects.
The federal Highway Trust Fund, which helps states pay for transportation projects, is expected to become insolvent by the end of July unless Congress acts to replenish it.
Last year, Maine received $165 million in federal funds to help pay for hundreds of projects. During the peak construction season, federal officials reimburse the state at a rate of $5 million to $10 million a week, said Karen Doyle, director of finance for the Maine Department of Transportation.
This summer, it is still unclear how the state would deal with any reductions.
“I think the biggest question at this point is, is this really going to happen?” Doyle said. “We’re all optimistic that we won’t have to go there. But in any event, we’re sure that in the next couple of weeks we’ll come up with something.”
Revenue for the Highway Trust Fund comes from the federal gas tax, which is 18.4 cents per gallon, a rate that has not been raised since 1993. Because of inflation and the increased efficiency of modern vehicles, fuel tax revenue doesn’t go as far as it used to, according to the Congressional Budget Office.
By comparison, Maine’s taxes for gasoline and diesel are now 30 cents and 31 cents, respectively, and were last increased in 2010.
The state plans to complete 425 capital projects in 2014, costing $190 million, according to the Department of Transportation’s three-year work plan.
Funding varies for each project, but in general, many are about 80 percent financed by the federal government, said MDOT spokesman Ted Talbot.
Still, according to Doyle, the department expects it will need about $110 million more than it now gets in federal and state funding each year to properly repair and maintain the state’s highway and bridge system.
Maine’s interstate highway system is burdened by its sprawling geography, said Maria Fuentes, executive director of the Maine Better Transportation Association.
Maine is more effective than other states in using paving projects to “patch what you have,” she said.
Maine ranks 33rd among the states for the number of deficient bridges, according to a study by the Reason Foundation, a California-based policy group.
Of Maine’s 2,402 bridges, about 30 percent don’t measure up, according to Transportation Makes America Work, another transportation advocacy group. The group says 342 are “structurally deficient,” and 379 are functionally obsolete.
Transportation Makes America Work estimates that road projects are responsible for the equivalent of nearly 17,000 full-time jobs.
The state did authorize $160 million in bridge reconstruction money, but that funding has run out, Fuentes said.
“Where we fall really, really short is in terms of the highway reconstruction and rehab projects,” she said. “The obvious reason is that it costs far more to (reconstruct) a road or a bridge than it does to pave a road.”
Unless a deal is reached in Washington, the federal Department of Transportation plans to space out its payments to the states starting in August, and reduce them based on a formula that spreads the financial pain equally throughout the country.
“The department will continue to take every possible measure to fully reimburse your state for as long as we can,” U.S. Transportation Secretary Anthony R. Foxx wrote in a letter sent to every state. “However, as we approach insolvency, the department will be forced to limit payments to manage the reduced levels of cash available in the trust fund.”
Transportation policy groups expect a funding measure to be approved just before the deadline, but how lawmakers will do that is still unclear.
In the past, Congress has provided periodic infusions of cash as a stopgap, as it did in October, when $9.7 billion was transferred into the account from the general fund. Since then, about $3.8 billion has been spent from the Highway Trust Fund, and if spending is left unchecked, the fund will run out of cash by the end of August, according to the U.S. Department of Transportation.
“The Senate Finance (Committee) and the House Ways and Means Committee are having discussions, and their plan is to have a fix before August 1,” said Pat Jones, executive director and CEO of the Interstate Bridge, Tunnel and Turnpike Association. “So there’s more acts of this drama yet to play out.”
The Obama administration has proposed allowing states to levy tolls on interstate highways to fund reconstruction projects, a major shift in the way states could pay for transportation infrastructure. Jones’ group has come out in support of both a fuel tax increase and the shift toward tolling.
This spring, a third option emerged when Sens. Chris Murphy, D-Conn., and Bob Corker, R-Tenn., proposed increasing the federal fuel tax by 12 cents per gallon over the next two years, and pegging the tax rate for future years to the rate of inflation.
The Highway Trust Fund covers about half of the nation’s transportation spending, in the process providing valuable jobs, Corker and Murphy said in a prepared statement.
Fuentes, however, said any deal involving tax increases is unlikely.
“I don’t think there’s any political will in Washington to raise the federal fuel tax,” she said.