The Arkansas Highway and Transportation Department will trim 10 highway projects worth an estimated $62 million from a list of projects to be awarded contracts next month because agency officials anticipate that the federal government will cut back highway reimbursements to states before the fiscal year ends in September.
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It is the first concrete move by state highway officials in anticipation of the federal Highway Trust Fund running out of money before Sept. 30. Until now, they have repeatedly issued warnings, most recently at last month’s state Highway Commission meeting when they first disclosed that they were considering cutting back the number of projects they expect to award in April.
In December, department officials announced that 56 road and bridge projects worth $500 million wouldn’t be built if the trust fund, which covers roads, bridges and transit spending, isn’t replenished in the 2015 federal fiscal year, which begins Oct. 1.
Scott Bennett, director of the state Highway Department, made the announcement on the 10 April projects at the end of a commission meeting Monday that was called to address the department’s response to last week’s winter storm, which came under criticism from Gov. Mike Beebe and others.
Last week, President Obama formally unveiled his administration’s 2015 budget, which included a four-year fix to close the gap between receipts from the 18.4-cent-pergallon federal gasoline tax and planned spending from the trust fund as part of a $302 billion plan for transportation and public-works projects.
Spending from the trust fund has outstripped receipts by $20 billion annually in recent years.
The transportation projects would be funded by a one-time repatriation tax on offshore earnings under the president’s proposal. House Ways and Means Committee Chairman Dave Camp, R-Mich., had a similar proposal in a tax overhaul plan he unveiled last month.
Neither are permanent fixes, though, and the budget doesn’t address a long-term shortfall between gas taxes and road funding that widens as automakers increase the fuel efficiency of their vehicles.
Bennett said Monday that the department couldn’t afford to wait on Congress to pass a final budget for fiscal 2015. The department relies on full reimbursements from the federal government for federal-aid projects because it has to use state money to pay the contractors before it can receive the reimbursements.
“We have a cash-flow system where we look at different scenarios, and when you look at the scenario of delayed reimbursements from the federal Highway Trust Fund we start to put ourselves in a bad position,” Bennett told the commission. “We’re going to have to look at every one of these bid lettings and look at what can be let to contract and what can’t be let to contract.”
After April, the commission has scheduled meetings to award highway contracts in June, July and September.
The 10 projects culled from the April list includes a job that would bring a four-lane highway connecting Jonesboro to U.S. 67 and Little Rock closer to reality. The project involves applying the base and surfacing on the Cash bypass on Arkansas 226.
“We desperately have to have 226,” Jonesboro Mayor Harold Perrin said after landing in Little Rock on a flight from Washington, D.C., where he had attended a meeting of the League of Cities. “I certainly wish they hadn’t pulled it.”
Perrin participated in a meeting Tuesday that included U.S. Transportation Secretary Anthony Foxx in which the pending insolvency of the trust fund was a topic.
“It looks like it’s going to be a hard way to go unless Congress does something about it,” Perrin said.
The projects deleted from the April meeting includes six projects on state highways, three city projects and one county project.
Two of the projects are in Pulaski County: Replacing a bridge on Roosevelt Road near the State Fairgrounds and a bridge on Remount Road over Five-Mile Creek in North Little Rock.
Other projects include work on U.S. 167 in Independence County and U.S. 63 in Lawrence County.
Still, contractors will find no shortage of work at the April meeting, which kicks off the summer construction season. A total of 70 projects worth $147 million are scheduled to be awarded.
The big-ticket items - work on Interstate 40 in Monroe County and Pope County and on Interstate 55 in Crittenden County - are part of the state’s $1 billion interstate repair program, which voters approved in November 2011. Bonds have been issued to help pay for the projects. The bonds are paid back with proceeds from the federal interstate maintenance program that are remitted to the state. Only interstate projects are eligible for the program.
Other projects, such as overlays, city-aid projects and state-aid projects, are paid with state money. Nine projects targeting highways in the Fayetteville Shale natural-gas development area are being paid for by proceeds from an increase in the natural gas severance tax that the Legislature enacted in 2008.
Front Section, Pages 1 on 03/12/2014