Arkansas Reinstates Some 2015 Roadway Projects, Warns on Long-Term Risks

AASHTO Journal, 4 September 2015

Since Congress acted this summer to give the Highway Trust Fund a new short-term injection of funds, Arkansas Highway and Transportation Department officials have reinstated 27 road improvement projects that they had withdrawn from 2015 bidding over lack of federal program certainty.

But the agency also warned that unless Congress passes a long-term transportation bill, by early 2016 it could again be idling projects that could put hundreds of millions of dollars into the state economy.

So far this year, the AHTD has delayed 87 projects that were estimated to be worth $411 million, because agency officials could not know when they might receive the federal funding share and did not have enough state funds to cover project costs in the meantime.

scott bennett.jpg  Scott Bennett    Photo: AHTD 

But Congress voted July 30 to again extend the 2012 MAP-21 law to keep the trust fund operating through Oct. 29, along with transfers of $8.1 billion more into the trust fund. “This short term infusion of funds is projected to keep the Federal Highway Administration from having to implement cash management procedures until the spring of 2016,” the Arkansas agency said.

As a result, Arkansas will add those 27 delayed projects worth an estimated $163 million to its scheduled Oct. 13 bid letting and could add more back in coming months.

AHTD Director Scott Bennett thanked the Arkansas congressional delegation for voting to extending MAP-21 and helping provide the additional money.

“This will allow some of the delayed projects to be phased back into bid lettings scheduled for October, December and possibly February 2016,” Bennett said. “This is great news for the state’s economy.”

For now, that still leaves 60 projects the agency delayed from its 2015 construction plans as it waited for certainty out of Washington about the federal program and funding stream, including 49 highway surface overlay projects valued at more than $50 million.

However, Congress could end the uncertainty soon with a long-term bill.

The Senate also passed a multiyear measure before leaving for the summer recess, and is awaiting one to emerge from the House so the two chambers can enter negotiations toward a final bill. Once Congress returns this month from its late-summer recess, the House is expected to soon unveil its own measure.

If a final multiyear bill passes Congress this fall, Arkansas and other states that have delayed projects due to federal program disruptions could then make longer-term project plans.

Meanwhile, even the temporary funding addition helps Arkansas planners. Bennett noted that Arkansas depends on federal dollars for 70 percent of its highway construction program, so when the federal funding is uncertain “we have no way of raising revenue to offset the reduction, delay or loss of federal dollars.”

Arkansas is one of five states that publicly disclosed project delays totaling more than $1.6 billion this year, and news reports have listed others for a total of more than $2 billion in delayed construction as Congress kept providing only short extensions.

Officials in some states have also said the federal uncertainty forced them into spending mainly on shorter-term projects or maintenance, putting off capacity projects they need to keep up with commerce or population growth.

Even though Arkansas is putting projects back into its bid pipeline, the AHTD warned that unless Congress acts many more projects will again face delays beyond next spring when the currently identified federal funding runs out.

“At risk in 2016 in Arkansas are 130 projects worth an estimated construction value of $520 million,” the agency said. “Without a long-term solution, the likelihood of resuming the task of withdrawing of projects from bid openings beginning in early 2016 is a grim possibility.”

Bennett also said the AHTD has asked Gov. Asa Hutchinson to provide the agency with $35 million from surplus state funds so that it can lock in a surface overlay program in 2016, after scrubbing it from this year’s bids.

Traditionally, that is a 100-percent state-funded program costing between $30 million and $50 million. “However, because of a shortfall in state highway revenue, this year’s overlay program had to be financed with federal funds and was subsequently cancelled,” the department said.

Also, overlays using federal funds require different and higher standards, it said, so not every highway in the state qualifies.

Hutchinson has also begun a process to identify potential new sources of boosting dedicated state revenue for road projects, through a designated “Governor’s Working Group on Highway Funding” that could develop ideas for the legislature to consider.

“We appreciate the leadership and support of Gov. Hutchinson in establishing this working group, and we look forward to the results leading to a long-term, sustainable way to increase our investment in Arkansas’ highway system,” Bennett said.

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