/ Financial / FHWA Tells State DOTs How Much Contract Authority They Lose This Year in Rescission

FHWA Tells State DOTs How Much Contract Authority They Lose This Year in Rescission

Parul Dubey on July 5, 2017 - in Financial, News

The Federal Highway Administration informed state departments of transportation how much each is losing as of June 30 in certain categories of highway program contract authority, as Congress required in the fiscal 2017 government funding bill that it sent to President Trump on May 4.

The cuts, or “rescissions” in budget parlance, range in size. The FHWA notice listed California at the high end losing nearly $89 million in contract authority, Texas taking an $85 million hit, Ohio having $41 million stripped out and Pennsylvania close behind at just under $40 million.

In all, Congress rescinded $857 million in contract authority that DOTs had not already obligated by May 31, as an offset for spending elsewhere in the budget.

The cuts are taking effect at a time when states continue to hope for a promised infrastructure investment plan from the Trump administration, but also when the president has offered a 2018 budget proposal that would make further cuts in federal transportation spending.

In addition, the 2017 rescission could be just a small example of what’s to come. Congress in passing the Fixing America’s Surface Transportation Act in 2015 also included a one-time, $7.6 billion rescission of unused contract authority that will hit state DOTs on July 1, 2020, unless Congress changes that provision in the meantime.

Joung Lee, policy director at the American Association of State Highway and Transportation Officials, told the AASHTO Journal that a series of rescissions – especially the looming 2020 cuts – could significantly squeeze the state agencies.

“Even the smaller ones this year limit states’ ability to program their federal funds across many categories of the federal highway program,” he said. “But the much larger cuts to contract authority coming under the FAST Act, when combined with the most recent action, have the potential to disrupt highway project planning for a number of state DOTs.”

Congress in ordering the 2017 rescissions, like it did with the FAST Act, also specified that the reductions could not curb federal funds for some accounts. Those include transit, congressional earmarks, national-purpose programs administered by the FHWA, the program to improve road-rail crossings, some highway safety programs and funds distributed to municipalities for local road improvements.

That meant the state agencies would have to absorb the cuts proportionally in their other highway program accounts, including the core formula-apportioned funds DOTs use to help pay for projects on their state-owned road systems and interstate highways as well as those that fund alternatives such as bike and walk paths.

While the individual rescission amounts were under $10 million for a number of states, that group includes many that have small populations to help share the costs of infrastructure but with large amounts of roadway to care for. They include an $8 million reduction that Montana’s DOT will need to absorb, $6.6 million less for Nebraska, an $11.5 million cut for Oklahoma and $5.7 million less for Maine. 

These reductions also come after some states’ legislatures recently approved increases in state funding following long public information campaigns, but with the expectation that the federal funding would continue.

For instance, Indiana, Tennessee, South Carolina and West Virginia legislators this year approved increases in motor fuel taxes and other fees to improve their highway systems. Now, as of June 30 the rescission is taking $21.6 million in contract authority from Indiana, Tennessee faces a rescission of $18.5 million, South Carolina is losing $17.8 million and West Virginia nearly $10.4 million.

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