The Arkansas Highway and Transportation Department said Tuesday that it has trimmed three projects worth $30 million from its January bid letting in case uncertainty over federal highway funding isn't resolved next year.
It is the second time in nine months the department has had to alter its construction plans.
In March, the agency announced it was pulling 10 projects from its April letting because state highway officials expected that the federal government would cut back highway disbursements to states before the federal fiscal year ended in September.
This summer, Congress reached a deal that kept federal highway funds flowing to the states. Eventually, all but one of the 10 projects the department pulled from the April list were awarded contracts. The department opened bids on the final project but deemed the bids too high.
The agency said it delayed a total of 15 projects overall in 2014 because of the funding uncertainty.
"Same song, second verse," Scott Bennett, the department director, said in a news release Tuesday.
He and other state highway officials made the decision after the U.S. Department of Transportation projected that the federal Highway Trust would run short of money as early as July without congressional action. When that happens, the Federal Highway Administration begins releasing money only as it comes into the trust fund.
The trust fund is the conduit through which federal fuel taxes are distributed to the states. The trust fund typically pays for 80 percent to 90 percent of a federal-aid project on interstates and U.S. highways. But in recent years, reimbursements for authorized projects have outstripped what the fund collects. And because there is no agreement to raise taxes to cover the added commitments, the fund periodically has required an infusion of general revenue money.
Given the uncertainty, the state Highway Department has little choice but to delay some construction projects, according to Bennett.
"Based on our current projections, if we execute all contracts that are scheduled for the January letting, the Department may not have adequate state funds available to pay our bills during the period of reduced or delayed Federal reimbursements next summer," he said.
As a result, the department said it would open bids on 21 projects rather than 24 projects. The remaining projects are worth an estimated $80 million. The projects removed from the list were:
A major widening of a section of Arkansas 1 in Lee and Phillips counties.
Paving Arkansas 220, the only gravel highway left in the state, in Crawford County.
Replacing a bridge over Cedar Creek on County Road 72 in Franklin County.
A new Congress, with Republicans in the majority in both chambers, convenes in January. According to the American Association of State Highway Officials, negotiations over a broad agreement on overall taxes and revenue that could include the Highway Trust Fund may come in March, when it is time for Congress to raise the federal debt ceiling to allow more borrowing.
The trust fund runs out of spending authority on May 31, but Congress would need to extend it for several months to allow continuing negotiations, according to the association's analysis. President Barack Obama has said that he expected any long-term deal involving the Highway Trust Fund to be part of a broader tax overhaul that would take until late summer or early fall to negotiate, the association said.
But state highway agencies can't rely on the assumption that an agreement will be reached.
"The Federal government is putting the States in a real bind regarding the implementation of much-needed highway projects," Bennett said in the release. "We are hoping that a long-term revenue solution for the Federal Highway Trust Fund can be found so we in Arkansas and across the country can continue to award planned construction projects and adequately invest in our nation's infrastructure."
More projects may be delayed. The department said it plans to evaluate each of its seven other lettings next year until the funding shortfall is resolved.
A section on 12/24/2014
Print Headline: U.S. cash unsure, state cuts 3 highway projects from January's bid list