Financial woes loom for MoDOT funding
Wednesday, July 9, 2014
The financial uncertainty about the Federal Highway Trust Fund running out of money by the end of the month has trickled down to Jefferson City.
The idea of the fund becoming insolvent has Missouri Highway and Transportation Commissioner Lloyd Carmichael, Springfield, feeling “very anxious for results on this very serious issue.”
The trust fund has been around for decades as a way for the federal government to reimburse states for transportation construction and maintenance, according to the Missouri Department of Transportation’s Chief Financial Officer Roberta Broeker.
“It is funded from a federal fuel tax of 18.4 cents per gallon (of unleaded fuel),” Broeker said. According to Broeker, Congress has throughout the years repeatedly authorized reimbursements of more money than the federal fuel tax was generating.
“Cars are more fuel efficient, Americans are driving less, constructions costs are higher, and the fuel tax has not kept up with the rate of inflation,” Broeker said. “The last time the federal fuel tax was raised was in 1992.”
Federal Transportation Secretary Anthony Foxx last week informed the nation’s state-level transportation agencies the federal transportation department would begin Aug. 1 with a “cash management procedure.”
Broeker said this means MoDOT will have to make some difficult decisions.
“Instead of getting a full reimbursement, Missouri will only get a share of the remaining funds in the trust,” Broeker said. In the current fiscal year, MoDOT has received $913,719,741 in appropriations from the trust fund using an 80:20 ratio of reimbursement. As of Aug.1, the 80:20 ratio is ignored and Missouri can only receive up to 2.41 percent of available funds under the “cash management procedure” as dictated by federal law.
Every state is also facing a similar stark reality, Broeker said. Across the Mississippi River, Illinois will receive 3.61 percent of available funds. Arkansas’ will get 1.32 percent, Iowa 1.25 percent, Kansas .96 percent and Nebraska .73 percent.
“Across the nation, every state is going to wrestle with how they respond to the trust fund becoming insolvent,” Broeker said. Hindering MoDOT’s ability to plan for life after Aug. 1, is the fact the department is unsure of exactly what their percentage translates to in real dollar amounts.
In a written statement from Foxx, state transportation agencies, like MoDOT, will not know what their exact dollar amount will be until Aug. 11, when the first reimbursement payments are made under this “cash management procedure.”
If the federal trust fund becomes insolvent, MoDOT will be faced with not paying outstanding debts to contractors, beginning new projects or not completing projects already under construction.
Carmichael said in a June 25 meeting in Jefferson City he would recommend cancelling contracts and not beginning new construction projects, if Congress does not act before Aug. 1.
According to the Missouri Department of Economic Development, the halting of construction and cancelling contracts could devastate the state’s economy, sparking job losses to the 107,200 Missourians who work in the construction industry statewide.
“If Congress does not act, it puts all of us in a very difficult situation financially,” Carmichael said. “I hope we will get the necessary action, in time, to avoid having to make that decision to avoid a financial crisis.”
Steve Walsh, press secretary for U.S. Rep. Vicki Hartzler, R-Harrisonville, said the congresswoman is “very concerned about solvency of the Highway Trust Fund and is looking for potential solutions … that result in a stable funding stream for the Highway Trust Fund this year and for years to come.”
Calls and emails to offices of U.S. Sens. Claire McCaskill and Roy Blunt, and U.S. Reps. Blaine Luetkemeyer and Sam Graves were not returned as of press time.
Even if voters pass Constitutional Amendment 7, a 3/4-cent sales tax to fund transportation improvements across the state, on Aug. 5, the state’s transportation agency will not see a reprieve from this financial worry, Broeker said.
“All of that money (in Constitutional Amendment 7) is restricted to just those construction projects in the list accompanying the ballot measure,” Broeker said. “It will do nothing for the projects already started or planned in the future.”
The state’s transportation agency will not be breaking ground on any Constitutional Amendment 7 projects until early to mid 2015.
The Missouri Highway Transportation Commission will have a joint meeting with MoDOT staff today, beginning at 10 a.m. The Highway Trust Fund is currently not on the agenda, but may be discussed by MoDOT Director David Nichols or the commissioners in their respective reports.
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