The American Association of State Highway and Transportation Officials recently submitted a proposal to Congress as part of its FY 2025 appropriations process to fix the distribution of federal highway dollars through the “August Redistribution” process.
[Above photo by AASHTO]
Specifically, AASHTO recommends providing four-year obligation limitation for all nationally-focused “allocated programs” from the Highway Trust Fund or HTF – such as the Transportation Infrastructure Finance and Innovation Act or TIFIA loan program and the Infrastructure for Rebuilding America or INFRA discretionary grant program.
The organization pointed out that, under the current procedure, obligation limitation is provided to the formula program for states and allocated programs for national purpose programs upon passage of the annual appropriations legislation. Yet many of those allocated programs are subsequently slow-spending and are unable to use their share of the obligation limitation by the end of each fiscal year.
At that point, unused obligation limitation is then made available to state DOTs, but the Federal Highway Administration must wait until each August to ask state DOTs to utilize this unused obligation limitation by the end of the fiscal year – September 30 – via the August Redistribution process.
“In 2023, state DOTs were asked to obligate $7.9 billion or 15 percent of the total federal highway funding they received that year in just one month via the August Redistribution process,” AASHTO said. “This ‘wait-and-hurry up’ process deprives state DOTs of the full fiscal year to strategically plan and deploy investments to deliver on the promise of the Infrastructure Investment and Jobs Act. It is also important to note that this is not ‘new money’ for state DOTs. In the next fiscal year, obligation limitation distributed to the states is reduced by the amount provided through August Redistribution the previous year, and all allocated programs are made whole for the obligation limitation they were unable to spend.”
Unfortunately, AASHTO said the large amount of unused obligation limitation made available in 2023 during the August Redistribution process was not an exception, with FHWA currently estimating an $8.7 billion redistribution this August.
“As noted in our February letter to Congressional leadership, state DOTs have reached a point where it will be extremely difficult – if not impossible – to obligate such a large sum in just 30 days this summer,” AASHTO stressed. “We remain concerned that federal highway funding could potentially lapse at the end of this fiscal year if state DOTs are unable to absorb over 16 percent of their annual program in one month’s time. The proposed legislative fix to August Redistribution is necessary to improve this situation and avoid the possibility of a larger federal funding lapse in the summer of 2025.”
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