Northwest Arkansas Democrat-Gazette
56 road projects at risk
If U.S. fund sinks, state to hurt, panel hears
Fifty- six Arkansas road and bridge projects worth $500 million will go unbuilt if the federal Highway Trust Fund runs dry as forecast in 2015, the state’s top highway official said Wednesday.
The $ 500 million represents about half of what the state highway agency spends on transportation projects in Arkansas every year.
Scott Bennett, the director of the state Highway and Transportation Department, briefed the Arkansas Highway Commission on contingency plans the department will make in the event that Congress doesn’t provide a fix for the rapidly depleting federal fund.
Bennett expects no layoffs and expects that the department will be able to meet its bond repayment obligations.
But he said the state likely would never make up the potential financial hole the loss of federal funds would create in the state’s road-maintenance effort.
“If nothing happens to increase revenue, we will go without a federal- aid highway program in 2015,” Bennett said, noting that the 2015 federal fiscal year begins Oct. 1 next year. “I can’t really express how serious this is. We’re nine months away.”
Frank Vozel, the department’s deputy director and
chief engineer who is retiring after 43 years with the agency, framed the potential cutbacks in terms of safety. Many highway projects result in wider lanes, shoulders and other improvements that make routes safer and reduce the number and severity of traffic crashes.
“You go one year without spending $500 million, how many lives are going to be lost, how many accidents are we going to have,” Vozel said. “To me, that’s a bigger issue than economic development.”
The Congressional Budget Office has forecast that beginning in 2015, the trust fund will once again have insufficient money to meet all of its obligations.
Congress has eliminated previous shortfalls by transferring $41 billion in general revenue to the trust fund, which is funded from the federal tax on gasoline and diesel fuel. An additional transfer of $12.6 billion is scheduled for 2014.
If the transfers continued, Congress would have to transfer $15 billion more in 2015 and “increasing amounts in subsequent years to prevent future shortfalls, if spending was maintained at the 2013 level, as adjusted for inflation,” according to the Congressional Budget Office.
Other options to address the shortfalls are to “substantially reduce spending for transportation programs, boosting revenue by increasing fuel taxes or a combination of both,” the agency said.
As an example, the agency said raising the tax on motor fuels by 10 cents a gallon alone would be needed to bring the trust fund back into balance in 2015.
The federal tax on gasoline now is 18.3 cents per gallon. On diesel, it is 24.4 cents per gallon.
The chronic shortfalls occur partly because revenue has not kept pace with how much spending Congress has authorized. Other contributing factors include more fuel-efficient vehicles and motorists who are driving less in part because of the 2007-2009 recession.
“The trajectory we are now on is not sustainable,” Bennett told the commission.
Earlier this month, U. S. Rep. Earl Blumenauer, D-Ore., introduced a bill in the House of Representatives to raise the federal fuel taxes by 15 cents per gallon to eliminate the gap. The federal tax on fuel hasn’t been raised since 1993, when Bill Clinton was president.
State highway officials here and around the nation cannot wait until Congress acts. Arkansas highway officials have to prepare the budget for the state fiscal year, which begins July 1.
That means, Bennett said, two budgets will have to be prepared by June — one that includes the federal money and one that doesn’t.
In addition to eliminating all projects using federal aid
If the transfers continued, Congress would have to transfer $15 billion more in 2015 and “increasing amounts in subsequent years to prevent future shortfalls, if spending was maintained at the 2013 level, as adjusted for inflation,” according to the Congressional Budget Office.
in 2015, some projects that the department would obligate next year might have to be delayed so that federal money can be used to make bond payments due in 2015.
Under the interstate-repair program, part of the financing includes bonds that are repaid with federal money that the state receives for interstate maintenance. The bond repayments next year total $58 million, some of which will be covered by proceeds from 4 cents of the state tax on diesel. The state tax now on a gallon of diesel fuel totals 22.5 cents.
Even ongoing projects will have to be carefully managed, Bennett said.
“It could eventually even mean slowing down a lot of reimbursements for ongoing projects because of cash-flow problems,” he said.
Bennett doesn’t expect any layoffs even though the salaries of about 130 employees in the agency’s planning and research division are paid with federal money. The department likely will cover the salaries with revenue from state fuel taxes the department normally would devote to matching federal money, Bennett said.
Commissioners said they were glad the department had a plan, to a point,
“We need to emphasize that the plan means there will be a whole lot of highway work not going on,” commission member Robert Moore Jr. of Arkansas City said.
The potential federal cutback will be offset by two new state highway construction initiatives that total about $3 billion and are being financed in part by a half-percentage-point increase in the statewide sales tax that is expected to be in place for 10 years.
Those programs include the interstate- repair program and what the agency has dubbed the Connecting Arkansas Program. The latter encompasses 31 projects to improve 200 miles of interstates and highways, the largest road- construction program the department has ever undertaken.
But that work will result in improvements to only about 4 percent of the state highway system, which totals about 16,000 miles, Bennett said.