On November 21st, congressional and presidential approval prevented a $7.6 billion reduction to federal highway funding, ensuring that 2020 highway projects—specifically those that rely on federal funding—will stay on track. While this information will cause many contractors to breathe a sigh of relief, skeptics have noted that permanent solutions to these funding woes have yet to materialize.
Designed “to provide long-term funding certainty for surface transportation infrastructure planning and investment,” the 2015 Fixing America’s Surface Transportation (FAST) Act authorized $305 billion for highway funding and other transportation-related programs. Intended to provide a dedicated source of federal dollars for fiscal years 2016 through 2020, the FAST Act helps provide states with the certainty they needed to carry out extensive highway development, maintenance, and safety programs and projects.
Initially authorized in 2015, the $7.6 billion cut was slated to take effect on July 1, 2020. This reduction was originally envisioned as a way to reduce the FAST Act’s overall cost. With regards to Minnesota, Iowa, North Dakota, and South Dakota, this reduction would have equaled over $140 million in lost funding. Notwithstanding the uncertainty that accompanies these types of reductions, the absence of this federal funding would have undoubtedly led to fewer projects being awarded, and would have severely impacted many projects commenced prior to the reduction’s effective date.
Looking to the future, various states and groups have sought the passing of a multi-year surface transportation reauthorization measure to ensure that the modernization of America’s infrastructure continues as planned. Commentators have suggested that the main issue with the FAST Act, as well as similar legislation, is a lack of a robust funding source. This is something that Congress will need to address in a relatively short amount of time, as the FAST Act is set to expire on September 30, 2020.
While the prevention of this $7.6 billion cut is beneficial for the upcoming construction season, the future of federal highway funding in general still remains uncertain. Simply because Congress was able to pull off an eleventh-hour maneuver this time does not mean that it will be able to do the same in the future. With a keen eye on the FAST Act’s September 2020 expiration date, contractors should expect to see new legislation that will undoubtedly affect the next several construction seasons.
CONTRACTOR’S CORNER is a series providing updates on current and developing topics affecting the construction industry. If you have questions, comments, or recommendations for future installments, please email aaron@wellelaw.com.
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