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State: Looming federal fund shortfall will not hit road projects – yet

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WASHINGTON – Despite a possible shortfall in the federal highway trust fund, the Arizona Department of Transportation does not anticipate delays of any current or scheduled projects this summer, a spokeswoman said.

But that could change come September, when the U.S. Department of Transportation predicts that the trust fund – which pays for about 75 percent of road projects in the state – will fall short of its obligations.

“Once September comes, then we’ll have to reassess,” said ADOT spokeswoman Laura Douglas. “But basically, through the summer, we have enough operating capital to maintain our reimbursement schedule.”

In the meantime, highway officials and advocacy groups around the country will be keeping their eyes on Congress, which is wrestling with plans to replace MAP-21 – or Moving Ahead for Progress in the 21st Century – the law funding the transportation trust that is scheduled to expire on Sept. 30.

Much of Arizona’s highway construction and maintenance is funded from the trust fund, which reimburses states for their transportation expenses. About 75 percent of Arizona’s approximate $1 billion highway construction budget for 2014 came from the federal level, Douglas said.

The trust fund is running dry because national fuel taxes, its primary source of revenue, can no longer keep pace with infrastructure costs. Michael Green, a spokesman for AAA, said the automobile club has urged Congress to raise the gas tax from its current rate of 18.4 cents per gallon so the fund can better cope with demand.

“We’re really looking for Congress to show leadership on this issue,” Green said.

The tax was last increased in 1993, Green said, but the fund has since been buffeted by inflation and higher fuel efficiency, which have combined to cut its spending power in half.

As the gas tax has lost its spending power, the fund has needed revenue from other sources. It took a $9.7 billion transfer from the Treasury’s general fund last September to meet obligations, according to the U.S. Transportation Department.

Several options have been proposed to renew the trust fund. The White House supports a four-year, $302 billion transportation bill funded by corporate tax reforms. The Senate introduced a bill in May to reauthorize current funding levels for the next six years, though the source of that funding is yet to be decided by the Senate Finance Committee.

There is currently no official proposal on the House side. Jim Billimoria, a spokesman for the House Committee on Transportation and Infrastructure, said in an email that the committee is working on a bill to reauthorize the trust fund, though no details were immediately available.

And the House GOP could have a plan of its own. Beth McGinn, a spokeswoman for the American Road and Transportation Builders Association, said the Republican House leadership issued a memo last week proposing a vast reduction in Saturday mail service, with the savings used to keep the trust fund going through next May.

But McGinn said highway infrastructure desperately needs repairs across the nation, and a long-term agreement would give states confidence to plan far ahead, as opposed to the two years provided by the last highway bill.

“The state DOTs, they need the certainty of … the funding coming in, the revenue stream coming in to the highway trust fund, that they’re going to be able to put that investment to work in their state,” she said.

Douglas said ADOT officials, who have construction projects planned on a five-year schedule, also hope any new bill is a long-term proposition.

“Right now, we’re operating on these short-term fixes and these continuing resolutions,” she said. “And when you’re talking about projects that require that dedication of funding … you really need that dedicated funding – a long-term funding solution.”