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The Federal Highway Administration held a briefing for state departments of transportation on August 26 regarding its contingency plans for an impending Highway Trust Fund cash flow shortfall due to a continuous and structural cash flow deficit since 2008.

Further complicating HTF cash flow forecasts is the unusual receipt and outlay patterns created by the COVID-19 pandemic.

The Highway Account of the HTF is projected to run out of money around early November if FHWA does not implement cash management procedures outlined in the guidance. Meanwhile, the HTF’s Mass Transit Account is not currently facing an imminent funding shortfall.

Cash management procedures would allocate HTF Highway Account funding reimbursements to states in proportion to their share of the total unexpended balances of all the states; however, reimbursement of the full requested amount may not be possible based on cash-on-hand.

Thus, under the cash management procedures, each state would only be able to bill against a state-specific cap, with “billing overages” being covered in the future payment cycle.

As was the case with prior HTF cash shortfalls in 2008 and 2014, reimbursement windows would be limited around the sixth and 17th business days each month, which is when the agency receives its twice-monthly deposits of tax receipts from the U.S. Department of the Treasury for the HTF.

If necessary, FHWA’s cash management process could begin as early as this October – not in November – in order to create and preserve a necessary “cash cushion” for the HTF.

“The Highway Trust Fund cash shortfall is an important scenario to be aware of – but also one of many possible scenarios between now and the end of September,” said Joung Lee, director of policy and government relations for the American Association of State Highway and Transportation Officials.

“Of course, the infrastructure bill [the Infrastructure Investment and Jobs Act] will solve this issue immediately upon passage since it will transfer $118 billion from the Treasury’s general fund to the HTF – with $90 billion of this amount going to the HTF’s highway account,” he added.

editor@aashto.org

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