/ Financial / FHWA Notice Clears Way for State DOTs to Tap Full FAST Act 2018 Highway Funding

FHWA Notice Clears Way for State DOTs to Tap Full FAST Act 2018 Highway Funding

Parul Dubey on April 26, 2018 - in Financial, News

State departments of transportation finally have access to all of their scheduled federal highway program funds for fiscal 2018, after the Federal Highway Administration issued a formal distribution notice April 16.

That day the FHWA notified the state agencies of their full-year federal-aid highway program obligation limitation levels, which is the funding amounts they can obligate to projects during the federal budget year that ends Sept. 30.

The FHWA action followed the March 23 enactment of the 2018 omnibus appropriations, which had in turn followed a series of short-term government funding extensions as Congress continued to debate full-year budget issues.

Under those stopgap spending measures, state DOTs could only tap a prorated fraction of their funding for federal-aid highway projects, and only at 2017 levels that did not include a scheduled annual increase.

The new FHWA notice also means the DOTs can finally get their scheduled annual funding increase for this year that Congress had authorized in 2015 in its Fixing America’s Surface Transportation Act but which only kicks in after lawmakers approve each year’s appropriations level.

In earlier, short-term funding notices the FHWA had told the DOTs they were on course to share about $42.972 billion at 2017 levels. Under the new notice they will share about $44.234 billion for all of 2018, it said.

While the money is finally flowing as directed under the FAST Act, state officials say the start-stop of federal distributions up to now has been disruptive to some of the projects they were planning for early in the 2018 construction season. DOTs often draw up their bid lists the prior autumn and winter, but many states must wait for Congress to finalize their federal funding stream in order to line up all the money they will need to pay contractor bills.

State DOT executives had told lawmakers the repeated short-term extensions prevented some of them from committing to as many road projects for the spring season project bids, while they waited for Congress to provide them full funding for 2018.

The same thing happened during 2017 when Congress did not finalize full-year spending levels until early May, and the state DOTs were well into their construction season before the FHWA’s May 24 notice distributed their 2017 funding levels.

Now that the FHWA has distributed the regular highway program funding levels, state DOTs are still waiting for another large funding notice for a special allocation that Congress included in the omnibus measure.

Lawmakers voted to add $1.98 billion to formula-based highway funds for states above the scheduled FAST Act level. Congress specified that the FHWA make that extra money available as block grants that give DOTs wide discretion on how they target the funds for their road system needs.

A staff analysis by the American Association of State Highway and Transportation Officials said the special funding can be used for construction projects that are eligible under the FHWA’s Surface Transportation Block Grant Program, and that 53 percent of the total is to be “suballocated” to projects based on population.

That suballocation means localities will control how those dollars are to be obligated for projects in urban areas, but the state agencies will carry out the work.

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