Highway work at risk as Congress considers next recovery bill

With fuel tax revenue down as people drive less during the pandemic, state transportation officials fear prospects for highway projects

State-level highway planners are worried about a fall in gas tax revenue. (David McNew/Getty Images file photo)
State-level highway planners are worried about a fall in gas tax revenue. (David McNew/Getty Images file photo)
Posted August 4, 2020 at 6:00am

As Congress wrangles with the latest attempt at a coronavirus relief package, state highway departments are increasingly alarmed at the possibility of some $37 billion in budget shortfalls.

Most states pay for their highways with federal support and a state gas tax. But with a precipitous drop in driving since March, they’ve struggled. 

And while empty airports and subway cars have provided very visible symbols of the decline in travel caused by COVID-19, empty highways have not yet ignited the imagination of lawmakers trying to figure out where to throw federal dollars during this crisis.

Highways were not included in the roughly $2 trillion relief bill that passed Congress in March, although that bill provided $150 billion to states and localities to use as they needed. About 75 percent of that money has been allocated, according to the National Association of State Budget Officers, with the delays largely spurred by states awaiting guidance from the Treasury Department. 

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And while the House included $15 billion for state departments of transportation in the bill it passed May 15, a series of bills introduced in the Senate last week that were aimed at responding to the crisis included nothing for them. 

Meanwhile, 16 states have announced project delays or cancellations valued at nearly $5.01 billion, according to the American Road and Transportation Builders Association, which has tracked the pandemic’s impact on highway construction.

Twenty local governments and authorities have announced project delays or cancellations worth $4.54 billion.

“I think almost every state in the country is going to have a story about projects they are either having to cancel or delay because revenue just isn’t there that they had planned for from the beginning of the year,” said Jim Tymon, the executive director of the American Association of State Highway and Transportation Officials. 

He said states were crippled when they faced several months of steep reductions in vehicle miles traveled — a reduction that meant less gas tax revenue coming in. 

Down 40 percent in April

Federal Highway Administration statistics reflect the decline: In April, Americans drove about 40 percent fewer miles than they did the previous April. That figure improved modestly in May, when the decline amounted to 25.5 percent when compared with May 2019.

Despite the rebound, “you can’t make those dollars up,” Tymon said. “Everyone is hurting at this point. Everyone has a budget shortfall.”

“There is ongoing concern over how things play out on the revenue side,” said Alison Black, chief economist with the road builders group.

In Maine, Commissioner Bruce Van Note of the Maine Department of Transportation estimates that the shortfall through the end of fiscal 2021 will be $61 million.

A July bond issue vote helped a bit, allowing the state to delay the ramifications for roughly the rest of this calendar year, but “there is no playbook for a pandemic,” he said. It’s unclear what 2021 will look like.

“We desperately need some flexibility and some additional congressional help on emergency relief funding,” he said. 

Even before the pandemic, he said, state DOTs were struggling. “We were competently managing the slow decline of our transportation system” by shifting dollars to fill in the most-needed gaps, he said. 

Now, he said, “people will see it by what we won’t do next year.”

“This is going to be bad,” he said. “But it’s not going to happen for a while.”

Adie Tomer, head of the Metropolitan Infrastructure Initiative at the moderate Brookings Institution, acknowledges that states have seen a steep decline in gas tax revenue. But he questioned whether highways should be a priority during an era of economic calamity.

“What people need is money in their pocket,” he said. “They’re not worried about potholes in the roads right now.”

Still, Tymon said he’s optimistic that money for state DOTs will be in the next iteration of COVID-19 relief.

“Is this a little bit of a wake-up call for us with the Senate not including this in their initial package? Absolutely,” he said. “But I think the end product will include it.”