AASHTO Journal - AASHTO Seeks Flexible Use of ARP Funds for State DOTs

In a four-page letter, the American Association of State Highway and Transportation Officials has asked the U.S. Department of the Treasury to permit states to use American Rescue Plan or ARP funds to cover a broad array of transportation expenses.

[Above photo by the Louisiana Department of Transportation & Development]

“AASHTO recommends that the final rule for the Coronavirus State and Local Fiscal Recovery Funds or CSLFRF established by the ARP explicitly defines all transportation expenditures as eligible activities under ‘revenue loss,’” the group said in its July 16 letter.

U.S. Treasury Department. Photo by Matt Robinson.

“[AASHTO] also recommends this eligibility is clearly conveyed to be separate and apart from those covered under investments in infrastructure of the interim final rule designated only for asset classes comprising water, sewer, and broadband,” it noted.

The group noted that this direct aid to state departments of transportation is helping prevent “significant cancellations and delays” of transportation projects, as well as prevent potential job losses in both state DOT and private sector workforces.

According to a survey of state DOTs conducted earlier this year, AASHTO estimated state DOTs are facing a $28 billion loss in revenues from fiscal year 2020 through FY 2024 due to the COVID-19 pandemic – a figure representing the loss of state-based user fees such as state fuel taxes, vehicle fees, sales taxes, tolls, and other mode-specific revenues.

Those losses are due largely to reductions in motor vehicle travel that occurred during 2020 due to the pandemic, mainly because of stay-at-home orders and travel restrictions.

Even with the $10 billion in COVID relief aid provided via a legislative package passed in December 2020, AASHTO estimates state DOTs still face an additional $18 billion in revenue loss through FY 2024.

In addition, as capital projects typically require a multiyear obligation and outlay of funds, AASHTO asked the Treasury to allow obligation of funds three years beyond FY 2024 through FY 2027.

That is consistent with the “3+1” availability of contract authority provided out of the federal Highway Trust Fund for the Federal-aid Highway Program, the group said in its letter.