WASHINGTON — Funding from the federal government is now being parceled out from the American Recovery and Reinvestment Act, and states and localities are deciding where to invest their money.
The act provides $27.5 billion in highway funding — 30% to metropolitan and rural areas, and the rest to states — and about $6.9 billion for transit and $8 billion for high-speed rail. California is slated to receive the highest amount of highway funding, at $2.57 billion; Texas is second with $2.25 billion. The funds are apportioned by urbanized areas as well, with the Los Angeles-Long Beach-Santa Ana region expected to get the highest amount at $268 million and New York-Newark slated second, for $210 million.
The U.S. Department of Transportation sent out guidelines and regulations on stimulus funding to states and metropolitan planning organizations, or MPOs, earlier this month. For the most part, sources said, the regulations follow the usual rules for funding to states and localities through the Federal Highway Administration, Federal Aviation Administration, and Federal Transit Administration.
Exceptions include the deadlines for obligating funds. States have 180 days to commit at least 50% of their funds, and regional councils have a year. If they fail to meet their deadlines, they lose the money and it becomes reallocated to other recipients.
The regulations prohibit states and localities from pulling a bait and switch and using recovery funds to simply plug holes in their budgets. The rules carry a “maintenance of effort” provision that was part of the stimulus act and requires states to carry on funding their projects while receiving stimulus money.
“Some of our state departments [of transportation] are asking essentially, do they have to follow it? And the answer is yes,” said Joung H. Lee, senior analyst for transportation finance and business development at the American Association of State Highway and Transportation Officials.
Lee said it would be possible for a state or MPO to be more conservative in its requests for recovery grants because of the requirement, but that governments probably would carefully consider their budgets in any event. However, he added, states with budget processes that don’t match up with the stimulus schedule may be finding it more challenging to decide which projects to fund.
Projects that were funded with state or local resources can be converted into recovery-funded projects if they meet all of the necessary requirements for receiving federal aid, according to the FHWA. But the administration stipulates that states and MPOs cannot be reimbursed for prior project costs.
Projects that are funded with bonds or other debt can use the recovery funds to help pay for them only if the project has not been funded with a so-called advance construction method, and has not been authorized for advance construction.
Advance construction allows states to put non-federal funds toward a project at some stage of the project, while retaining their ability to convert the project into a federally funded one and receive reimbursements through the FHWA. The practice makes it easier for states to do a larger number of projects at the same time. But the Highway Administration’s recovery regulations forbid recipients from doing conversions or advance construction authorizations “on any part of a project” that is funded using stimulus aid.
