Arkansas State Highway and Transportation Department officials have reported that about 30 of the 87 highway projects withdrawn from bid in the 2015 schedule will be reinstated in the October bid opening.
Recent legislation, enacted by Congress, extends Moving Ahead for Progress in the 21st Century (MAP-21) until Oct. 29 and also transfers $8.1 billion from the general fund to the Federal Highway Trust Fund, or HTF. This short-term infusion of funds will keep the Federal Highway Administration (FHWA) from having to implement cash management procedures until spring 2016.
Read more about the legislation here.
“This will allow some of the delayed projects to be phased back into bid lettings scheduled for October, December, and possibly February 2016,” said AHTD Director Scott Bennett. “This is great news for the state’s economy as we head into the fourth-quarter of the calendar year.”
Click here for a list of reinstated projects.
Since December 2014, AHTD has been evaluating its cash flow to ensure continued payments to contractors for ongoing federally funded highway construction projects in the event cash management procedures were implemented this fall. Contractor payments on federal projects are initially paid with state funds, and then the state seeks reimbursement from the HTF for the federal portion (80 percent) of the payments.
“With the threat of reduced or delayed federal fund reimbursements looming this fall, we opted to take the more fiscally conservative approach and not let projects to contract that we might have to suspend or cancel in the future because of the inability to make contractor payments,” Bennett said.
“Our priorities have been to ensure that we do not suspend any ongoing work, that we cover the bond payment for our Interstate Rehabilitation Program and that we keep our employees working. In forecasting our cash balance with reduced federal reimbursements, we would reach a balance by the end of this year that would not be compatible for meeting these priorities.”
Short-Term Solution
Bennett said other state transportation departments have access to other funding sources, including lines of credit from general state revenue, but that’s not possible in Arkansas, which depends on the federal government for 70 percent of its highway construction program.
Arkansas is among five states that have withdrawn $1.5 billion in construction projects, reports the American Association of State Highway and Transportation Officials, which estimates that the number could be even higher because states may not be reporting withdrawn projects.
HTF short-term funds will provide relief until spring 2016, but uncertainty remains for federally funded projects scheduled for 2016. In Arkansas, 130 projects worth an estimated $520 million in 2016 are at risk.
The last time the U.S. Department of Transportation shut down because of expired legislation was in March 2010, and it has taken an infusion of more than $73 billion into the HTF since 2008 to avoid reduced or delayed federal fund reimbursements.
Forty-nine resurfacing projects, valued at $50 million, are not part of the list of reinstated projects. That’s because the latest HTF fix comes when the overlay season is winding down and weather is not conducive to completing the work.