The Highway Trust Fund (HTF) will reach bankruptcy by the
end of August unless congressional action is taken, according to an
announcement this week by the Department of Transportation (DOT). The
department had previously projected that the HTF would run out of money in
September without congressional action. By law, the HTF cannot run a negative balance or
use additional borrowed funds. DOT has warned that the transportation
funding shortfall could force state and local governments to cancel
infrastructure projects scheduled to begin this summer because federal money
will not be able to assist with construction costs.
However, a recent story by Governing, a magazine focused on public policy issues affecting
states and municipalities, reports that Arkansas and Tennessee have already
reduced the number of transportation projects scheduled for this summer because
of the uncertainty surrounding federal funding.
States are reimbursed by the federal government for money
they have already spent on projects, so they are likely to hurry up and turn in
their paperwork as soon as they can to make sure they get their money before
the HTF exhausts its funds. That problem is compounded if states ask for their reimbursements
early, and the HTF would run out of money even sooner.