Local transportation projects in North Carolina could suffer if Congress doesn’t find a way to replenish the federal Highway Trust Fund, which is now in danger of going broke.
U.S. Transportation Secretary Anthony Foxx informed state transportation officials last week that the Highway Trust Fund will need to reduce its payments beginning Aug. 1 unless Congress agrees on a solution.
On Thursday, the bipartisan leadership of the Senate Finance Committee neared an agreement on legislation to keep the trust fund from running out of money next month, setting up a clash with the House just weeks before the deadline.
If no solution is reached, the fund is expected to run out of money before September. Used to finance road construction nationwide, the Highway Trust Fund is financed mostly by federal gas tax revenue.
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The North Carolina Department of Transportation is getting more than a quarter of its budget – almost $1.2 billion – from the federal trust fund in the current fiscal year.
The state has enough money to navigate a short-term drought in federal funding, and ongoing projects will not be significantly impacted, said department spokeswoman Nicole Meister.
But questions about transportation finance don’t end with the trust fund. With current funding set to expire Sept. 30, Congress must reauthorize payments to secure federal funding for next fiscal year.
If Congress does not reauthorize the transportation bill by Oct.1, North Carolina will not be able to proceed with more than 100 highway projects that expect to receive federal funding, Meister noted. In Charlotte and surrounding counties, 31 projects would be at risk, including parts of the construction on Interstate 485.
“Right now, we are OK in terms of the short-term slowdown in reimbursement,” Meister said. “We don’t anticipate having a significant impact here for ongoing projects. But what we need by Oct. 1 is for them to pass legislation that authorizes transportation funding at the current level or higher. ”
Some senators have called for increasing the gas tax to help support the fund. But in an election year, support for raising a tax that affects so many Americans has been weak, particularly from Republicans.
In his letter to transportation officials last week, Foxx – who previously was Charlotte’s mayor – noted that the immediate effects of the shortfall will vary from state to state.
“We’re a little more solvent than some other states in that we don’t rely as much on federal dollars,” said Jen Thompson, a spokeswoman for DOT’s 10th division, which includes Charlotte and the surrounding areas.
Quest for long-term fix
If Congress does not reauthorize the transportation funding bill before it expires in September, the consequences will affect roadwork projects across the state.
A DOT list of at-risk projects includes more than $17 million worth of work to I-485, which has been an ongoing project since 1988. The outerbelt’s final leg is scheduled to be completed in December.
Congress’ inaction could also put the state in danger of losing approximately 20,000 construction jobs, Meister said.
“The bottom line is that we need a long-term funding solution that helps shore up the trust fund,” she said.
Bob Morgan, president of the Charlotte Chamber, was one of dozens of chamber leaders nationally who signed a letter to Congress urging action on the trust fund.
Charlotte’s rapid growth makes such funding crucial, Morgan said.
“The challenge in (population growth) is how do we continue to move people and product through this region in an efficient way,” Morgan said. “The answer is that we continue to invest in a comprehensive transportation infrastructure.”
Rough road ahead
Several factors have contributed to the shortfall in the federal trust fund. The gas tax has not been adjusted for inflation since 1993. The cost of road construction, meanwhile, has risen sharply. The increasing fuel efficiency of cars has also played a role, as decreasing gasoline usage means less money is paid into the fund.
The Senate’s deal would replenish the trust fund by prolonging customs fees on importers that would otherwise expire, taking money from a separate trust fund for fixing underground storage tanks and changing rules on private pension contributions.
But the proposal adds many smaller provisions that House Republicans have rejected, such as extending penalties on tax preparers who do not comply with stringent reporting rules for the child tax credit. The New York Times contributed.