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AASHTO Journal

Highway Trust Fund to Shut Down Monday; <br>U.S. DOT to Furlough Workers Tuesday
The federal Highway Trust Fund will shut down first thing Monday, suspending all payments to state transportation departments, and four U.S. Department of Transportation agencies are expected to furlough employees beginning Tuesday after Congress was unable to reach an agreement this week on legislation to extend surface transportation authorization past its Sunday expiration date.

"No reimbursements to states for their share of federal highway funds, no vouchers they have submitted or will submit to the Federal Administration will be able to be paid beginning Monday, March 1," House Transportation and Infrastructure Committee Chairman James Oberstar, D-MN, told reporters on a conference call this afternoon. "The shutdown of the federal highway program means the Federal Highway Administration will not be able to reimburse states for any federal highway or transit funds."

Both chambers passed extension bills this week but could not agree on one piece of legislation to send to President Barack Obama.

The Senate approved Wednesday a bill extending surface transportation authorization for 10 months, depositing $19.5 billion of general revenue into the Highway Trust Fund, and offering additional federal government support for states and localities who want to sell Build America Bonds to finance infrastructure projects. The House of Representatives responded Thursday by passing a separate bill that would, among other provisions, extend surface transportation authorization for only one month and not include any additional transportation funding or bonds support.

Senate Democratic leaders kept the chamber in session until near midnight late Thursday night attempting to gain approval of the House's one-month extension bill. However, Sen. Jim Bunning, R-KY, continued objecting to multiple requests to adopt the legislation by unanimous consent. Under Senate rules, all senators must concur to passing a bill without a formal debate or vote. Senate Majority Leader Harry Reid, D-NV, said Bunning was the only senator who refused to agree to allow the bill to pass to buy Congress an additional month to work out an agreement on a longer-term extension.

Bunning said he objected because the extensions were not paid for. He proposed covering the bill's $10.3 billion cost by rescinding unobligated balances from the recovery act, an amendment Reid declined to accept.

"I'll be here as long as you're here and as long as all those other senators are here and I'm going to object every time because you won't pay for this and you propose never to pay for it," Bunning said Thursday night. "We have a debt of $14 trillion. We can't sustain it."

Senate Majority Whip Dick Durbin, D-IL, brought up the House measure again this morning but Bunning reiterated his objection. The Senate then adjourned at 11:40 a.m. and will meet again Monday, with no votes scheduled until Tuesday. The House did not bring up the Senate's version of a 10-month extension today after a disagreement among Democrats regarding several provisions meant passage was unlikely if a vote had been called. The House adjourned at 1:36 this afternoon and will meet again Tuesday.

As Congress leaves town for the weekend without extending the legal authority for operations of the Highway Trust Fund, the repercussions will be felt immediately in the early hours Monday as the Federal Highway Administration initiates shutdown procedures. No payments to states or transit authorities can be made after Sunday until a new law is enacted providing authority for such expenditures.

Oberstar told reporters this afternoon that he has reached a deal with Reid and House Speaker Nancy Pelosi, D-CA, to move forward with the Senate version of an extension next week. Under the agreement, Oberstar said the House would accept the Senate's language as is but the Senate would then follow up by passing a revised highway discretionary formula that the House could also approve and send to Obama. Oberstar said that should happen sometime later next month.

"We are deeply concerned about the severe impacts to state and local transportation programs of this disruption of the federal highway and transit programs," said John Horsley, AASHTO executive director. "We commend Chairman Oberstar, Speaker Pelosi, and Majority Leader Reid for reaching an agreement that will enable the House to pass the Senate version of an extension of the highway and transit programs, with the understanding that a later legislative fix will revise how highway discretionary funds are to be distributed. We hope Congress can move this legislation as early in the week as possible so reimbursements to the states can resume."

Furloughs Expected to Begin Tuesday; Impacts of Shutdown Already Hitting States

Administrative expenses from the trust fund can be paid for 24 hours after a shutdown, meaning federal employees whose salaries are paid from the Highway Trust Fund can report for work Monday to have one day to shut down their operations. Most employees from the Federal Highway Administration, the Federal Motor Carrier Safety Administration, the National Highway Traffic Safety Administration, and the Research and Innovative Technology Administration -- some 4,000 U.S. DOT workers in total -- will be barred from coming to work effective Tuesday since no legal authority for their salaries will exist. Only select employees deemed "essential," high-ranking officials appointed by the president and some NHTSA and RITA employees paid out of the government's General Fund, will be able to report for work Tuesday.

FHWA averages $154 million in daily payments to states, Oberstar said, while the Federal Transit Administration averages $31 million, NHTSA averages $3 million, and FMCSA averages $2 million. Those payments will all be suspended effective Monday.

However, collection of the 18.4-cent-per-gallon federal gasoline tax and 24.4-cent-per-gallon federal diesel tax -- the primary revenue sources for the Highway Trust Fund -- will continue because the U.S. Treasury Department has separate authority to collect those highway user fees, Oberstar said.

This is believed to be the first time since the Highway Trust Fund was created in 1956 that its legal authority will lapse. Most of the federal government was closed from Nov. 13-19, 1995, and from Dec. 15, 1995, to Jan. 6, 1996, during budget disputes that left them without appropriations. However, U.S. DOT was largely unaffected by the government shutdowns then because the department's appropriations bill was signed into law Nov. 15, 1995.

With continued uncertainty about federal funding levels for highway and bridge projects, state transportation departments are already feeling the effects.

The Missouri Department of Transportation withdrew all projects it had advertised for bid in February's bid opening that had been scheduled for today.

"There is not yet agreement between the Senate and the House on a common bill to address the shortfall in federal funding for highway and bridge projects to cities, counties, and states," said MoDOT Director Pete Rahn. "Because of this, MoDOT cannot prudently proceed with the Feb. 26 bid opening."

Horsley said this is the time of year when states begin awarding highway contracts for the spring season.

"There is very little programming going on right now," he said. "Many are either not doing lettings, or sitting on the paperwork waiting for certainty to arrive in the form of an extension."

House, Senate Unable to Reach Agreement on Authorization Extension

To end the shutdown of federal highway and transit programs funded by the Highway Trust Fund that takes effect early Monday, either the House must pass the Senate's amended legislation, HR 2847, or the Senate must approve the House's one-month extension bill, HR 4691, which also addresses temporary extensions for nontransportation programs such as unemployment insurance, Medicare physician payments, flood insurance, and satellite television. The House could also amend the Senate's version of HR 2847 and return it to the Senate for concurrence. Obtaining a vote on either measure in the Senate is likely to take several days if a unanimous consent agreement can't be reached. Senate leaders would have to file a cloture petition to end debate on the measure, a process which can take a full week.

The 2005 surface transportation authorization law known as "SAFETEA-LU" expired Sept. 30, 2009, and has been temporarily extended by Congress three times. No agreement has been reached on moving forward with a full six-year authorization measure due to questions over how to raise additional revenue to pay for expanded federal highways and transit programs.

This week's legislative action began Monday when senators voted 62-30 to limit debate on HR 2847. The bill was then approved 70-28 Wednesday. In addition to the transportation provisions, the Senate's version contains $15 billion in tax cuts for employers that hire workers who have been without recent employment and for small businesses to be able to deduct more expenses from their tax bills.

Five Republicans had joined 57 Democrats in voting Monday to limit debate on the measure. They included Sen. George Voinovich, R-OH, who said Reid promised him before the vote that he will bring a multiyear surface transportation authorization measure to the floor for a vote this year.

Senate Environment and Public Works Committee Chairwoman Barbara Boxer, D-CA, who fought for passage of the Senate version this week, said her panel will begin work on a long-term authorization measure next month. The committee has scheduled a hearing Wednesday, March 3, regarding how transportation investments can stimulate the economy and create jobs. Rahn of the Missouri Department of Transportation will testify on behalf of AASHTO.

Outcome of Senate Version in House Uncertain as Several Members Object

In the House, Oberstar opposes the Senate's 10-month authorization language because of three significant differences with what the House has approved.

Oberstar said in a statement issued last Friday that he has serious concerns regarding how the Senate's version earmarks two discretionary highway categories so that four states (California, Illinois, Louisiana, and Washington state) receive 58 percent of the $932 million allocated and 22 states receive zero. The House version would allow the U.S. Department of Transportation to select projects to use the categories' funds on a competitive basis based on merit. The two categories are Projects of National and Regional Significance and the National Corridor Infrastructure Improvement Program.

Also receiving criticism from Oberstar is that the Senate version provides bonus funding to states based on only six of 13 current state highway formula programs.

Finally, Oberstar objects to the Senate version's reduction in funding by $3 million for the Motor Carrier Safety Assistance Program, which provides money to states for motor-carrier safety enforcement activities. States can ill afford the loss of $3 million in safety funds, he said.

Pelosi told reporters Wednesday that the highway funding formulas would have to be reworked but that she was still hopeful the House could approve the Senate's measure by the end of this week. The speaker did not attempt to bring the bill up for a vote today, however, because of concerns she did not have enough votes, media reports have indicated.

The highway formulas are not the only source of opposition in the House to the Senate version of the jobs bill, however. The Senate version faces objections from some conservative House Democrats concerned the bill's $15 billion worth of tax-cut provisions are not fully paid for and from some liberal House Democrats, who have raised concerns that the Senate version does not contain more provisions to stimulate job creation. The House approved its version of HR 2847 back in December. That bill contained $154 billion for numerous provisions to create jobs, including an additional $37.3 billion for transportation infrastructure projects above and beyond funding provided by the Highway Trust Fund.

2/26/2010
Questions regarding this article may be directed to editor@aashtojournal.org.