Fed DOT Goes to Slow-Pay Status

With Highway Trust Fund dropping into a no-funds pothole, states are put on alert.

With the Highway Account of the Highway Trust Fund about ready to drop into a no-funds pothole, Secretary Anthony Foxx put states on alert yesterday that the DOT will slow payments, going from daily to twice-monthly apportioned distributions.

To see the pothole graph, click here. It actually shows the Highway Trust Fund Ticker but with one look, you'll see the analogy.

The Secretary, in office for about a year, appears to have been communicating consistently with the states and legislative bodies about the funding issue and seeking positive action. Several construction and equipment-related groups also have been pushing for action. And Secretary Foxx' letter to state DOT's was pretty clear: "as we approach insolvency, the Department will be forced to limit payments to manage the reduced levels of cash available in the Trust Fund. This means, among other things, that the Federal Highway Administration will no longer make “same-day” payments to reimburse States."

Here's a segment from the July 1 media release: U.S. Secretary of Transportation Anthony Foxx today sent letters to state transportation departments and transit agencies outlining steps the Department of Transportation (DOT) will soon be forced to take to manage the impending insolvency of the Highway Trust Fund. In both letters, Secretary Foxx outlined the Department’s proposed plan while emphasizing the need for Congress to act in order to avoid such a shortfall.

“There is still time for Congress to act on a long term solution,” said Secretary Foxx. “Our transportation infrastructure is too essential to suffer continued neglect, and I hope Congress will avert this crisis before it is too late.”

The Department’s most recent projections show the shortfall will reach a critical point in the Trust Fund’s Highway Account in just a few weeks, requiring the Department to institute cash management procedures for highways at that time, with a similar cash management plan to follow for the Trust Fund’s Mass Transit Account when it is expected to reach a similar point this Fall.

The DOT's memo is here. Scroll down to see what your state has budgeted for federal highway payments, and its apportionment as a percentage. There are also several related links on the Trust Fund Ticker web page if you'd like to get more information. While some reports suggest the status of U.S. infrastructure is, from an historical standpoint, in relatively good condition, it's clear that not funding current projects soon will have a negative impact on thousands of construction jobs and demand for the tools and equipment you offer.

Source: Mike Martin, Pro Contractor Rentals