The American Association of State Highway and Transportation Officials sent a letter to Congressional leaders on February 26 requesting action to prevent a “potential lapse of critical highway funds” provided by the Infrastructure Investment and Jobs Act or IIJA at the end of the current fiscal year.
[Above photo by AASHTO]
AASHTO said the lapse risk is driven by the unprecedented growth of the Federal Highway Administration’s “August Redistribution” of highway funds over the last several years.
Caused by slower-spending non-formula Highway Trust Fund or HTF accounts such as the TIFIA loan program and INFRA discretionary grants, AASHTO warned Congress that the loss of HTF dollars at the end of this fiscal year has become a real possibility.
Each August, FHWA asks state departments of transportation to take additional HTF funding to ensure that dollars authorized for non-formula programs do not expire.
For 2024, the U.S. Department of Transportation estimates that $8.5 billion will be available through August Redistribution – on top of the roughly $7 billion made available each of the last two years.
Critically, those dollars are not “free,” AASHTO stressed – they represent an advance on the next year’s HTF dollars, which results in a significant reduction in formula funding provided to states at the beginning of the next fiscal year.
[Editor’s note: AASHTO issued a two-page “issue brief” in December 2023 regarding the August Redistribution process; offering a range of potential legislative solutions to this particular funding dilemma.]
Additionally, AASHTO noted that providing 15 percent of annual highway funding to state DOTs in August, with a requirement to rush obligation of such large sums in 30 days, forces state DOTs away from meeting their strategic capital investment goals.
In fact, AASHTO warned Congressional leaders in its letter that state DOTs have reached a point where it will be extremely difficult – if not impossible – to obligate $8.5 billion in just 30 days this summer.
Thus, if a legislative fix is not enacted, AASHTO believes federal highway funding faces a potential lapse at the end of the current fiscal year.
“While this is a technical issue, August Redistribution has the practical effect of being a hindrance to the thoughtful planning and project development process that state DOTs rely upon to make sound transportation infrastructure investments,” AASHTO said.
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