Feds warn transit agencies about funding cut off

The Obama administration is warning public transportation agencies that it will have to stop authorizing payments for  new transit projects on May 31 unless Congress reaches a deal to extend federal infrastructure funding. 

The current transportation funding measure is scheduled to expire on May 31, and lawmakers are struggling to come up with a way to pay for an extension. 

Transportation Secretary Anthony Foxx has said previously that the agency has enough money to cover existing projects until the end of summer, but Acting Federal Transit AdministratorTherese McMillan said in letter to transit agencies on Tuesday that she will be unable to make payments for new construction contracts if Congress allows the law that authorizes the federal government’s infrastructure spending to expire. 

{mosads}”As you know, the most recent Congressional extension of the surface transportation authorization, Moving Ahead for Progress in the 21st Century, is set to expire on May 31, 2015, less than three weeks from now,” McMillian wrote. 

“As you may recall from the 2-day surface authorization lapse that occurred in March 2010, while revenue will still be deposited in the Highway Trust Fund, if Congress does not act prior to May 31, no new contract authority will be available for capital projects, essential maintenance, or operational support,” she continued.

“As a result, it is likely that some agencies would be forced to reduce vital transit services or cut routes. However, the Federal Transit Administration would continue to have the ability to reimburse grantees for costs obligated prior to the authorization lapsing subject to the availability of funds in the Mass Transit Account.” 

Foxx issued a similar warning to state departments of transportation on Monday. 

The Department of Transportation is required by law to set aside 20 percent of the money from its Highway Trust Fund for transit projects. The fund, which takes in money from the 18.4 cents-per-gallon gas tax that is paid by drivers, is expected to run out of money this summer unless Congress acts to replenish it. 

The transportation funding debate has loomed large in Washington as the deadline draws closer without the introduction of legislation to prevent an interruption in the infrastructure spending. 

The expiring measure is itself an extension of a 2012 transportation bill that was supposed to last until September 2014. That measure was a $109 billion bill that was supposed to cover two years’ worth of transportation projects, but it was extended for eight months by lawmakers last summer. 

Lawmakers in both parties have expressed a desire to pass a new transportation funding bill now that the bill is coming due again, but consensus on how to pay for it has been elusive. 

The traditional source of transportation funding has been revenue from the federal gas tax since its inception in the 1930’s. The tax has not been increased since 1993, however, and has struggled to keep pace with construction costs as U.S. cars have become more fuel efficient. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in about $34 billion annually at its current rate. Lawmakers have turned to other areas of the federal budget in recent years to close the gap, but transportation advocates have complained the resulting temporary patches are preventing states from undertaking badly needed large construction projects. 

Transportation advocates have pushed Congress to increase the tax for the first time in two decades to pay for a long-term infrastructure funding extension, but lawmakers have been reluctant to ask drivers to pay more at the pump. 

The Obama administration, meanwhile, has suggested that lawmakers approve a six-year, $478 billion transportation funding bill that it says can be paid for largely with taxes that could be collected on corporate profits that are stored overseas. 

Republicans have said they are open to the idea, known as repatriation, but the parties have squabbled about the rate of the corporate taxes and whether the charges should be mandatory or voluntary. 

McMillian said in her letter to transit agencies that the Obama administration’s plan would end the streak of short-term infrastructure funding bills in Washington that has lasted for the better part of a decade. 

“As you may know, the Administration’s GROW AMERICA proposal and FY 2016 budget request call on Congress to enact a 6-year, $4 78 billion surface transportation reauthorization proposal in an effort to provide long-term stability,” she wrote. 

“Not only does this proposal provide states and local transit agencies with extended funding certainty, it also increases overall transportation investment by 45 percent, providing funding growth and smart policy reforms to strengthen the American economy,” she concluded.