States in 2010 continue to face budget woes stemming from the nation's recession; and transportation programs, as a result, will face tough times, state transportation officials said this week at Governing magazine's State of the States symposium in Washington.

AASHTO Executive Director John Horsley on Wednesday moderated a discussion with Missouri Department of Transportation (MoDOT) Director Pete Rahn and Ohio Department of Transportation (ODOT) Director Jolene Molitoris.

Many states found it necessary to cut the level of state spending on transportation because of a decline in transportation-related revenue. However, because of the availability of stimulus funds, spending on highways and transit rose by a net of $9.2 billion in 2009, Horsley said. The recovery funding was a lifeline, he said, because states face a decline in transportation revenues from state fuel taxes, and vehicle registration fees, sales taxes, and property taxes.

In 2010, 25 states plan to cut transportation spending. Forty-four states faced budget a budget gap of $113 billion in 2009, and 46 states face a gap of $142 billion, Horsley said. To balance state budgets this year, some states will transfer transportation funds to their general fund.

State departments of transportation are using economic recovery dollars to repair infrastructure and create jobs. More than 250,000 direct, on-project jobs have been created through highway and transit programs, Horsley said. Transportation received only 6 percent of stimulus funds, but transportation jobs account for more than 25 percent of the jobs created by the American Recovery and Reinvestment Act (ARRA).

"You have to balance the good news with the bad news," Horsley said. "The bad news is that states face the toughest revenue situation in 50 years. The good news is that states have done a terrific job implementing the economic stimulus program." A copy of Horlsey's presentation is available at www.transportation.org.

Rahn said that it's hard to talk about transportation in 2010 and remain optimistic, as states are overburdened and underfinanced. "States tell me that what they're dealing with today is bleaker than ever imagined," Rahn said. "Transportation isn't thought of unless it's not working."

Economic recovery dollars have enabled states to green light many ready-to-go projects, Rahn said, but by March 2, 100 percent of stimulus funds will have been obligated. He noted that in his state, contractors rely on MoDOT for 40 to 90 percent of their portfolio, and when the state can't finance projects their business suffers.

Molitoris, former Federal Railroad Administrator, said transportation advocates are fighting for a system that will make America globally competitive. "I want you to think about transportation as the key to our global competitiveness," she said.

She said that with the recent influx of high speed rail funding, the time has come to bring America's system up-to-date. Many states began building their own high speed rail lines years ago without federal support, and now that they have the backing of the Obama administration great things can happen. The federal government will have to explore new sources of revenue to make this happen, she said, and states must partner with the private sector.

"All modes must act together as a system and integrate in the optimum way," she said.