WASHINGTON — Federal, state and local departments of transportation have so far obligated $7 billion in federal highway funds during fiscal year 2013, a 56% increase over the same period last year, according to a new report from the American Road & Transportation Builders Association.
Alison Premo Black, ARTBA’s chief economist, attributes the upswing to the passage of federal transportation legislation called MAP-21 last July that provided the funding stability that state and local leaders sought before spending money — including bond proceeds — on transportation projects. Through the same period in fiscal 2012, $4.5 billion had been obligated.
“The current obligations levels are much more in line with what we expect to see in the marketplace,” Black said. “The passage of MAP-21 has provided some stability — obligation levels were quite low in fiscal year 2012 and fiscal year 2011 as state transportation departments were dealing with a series of continuing resolutions for the federal aid program.”
State and local leaders as well as market participants and rating agencies had kept up a constant refrain that the multiple short-term extensions, nine in all, threatened to pressure federally-backed grant anticipation revenue vehicles, or Garvee bonds, and discourage local spending in the face of uncertainty about federal policy.
The new report, based on Federal Highway Administration data, suggests that spending is now back on track despite continuing questions about how to keep the gas-tax-backed federal highway trust fund solvent beyond 2015. Black’s report notes that $16.9 billion in federal money required to be obligated to states will not be dispersed unless Congress passes legislation to continue funding the U.S. government after the current funding measure expires at the end of March.
Federal disbursements are a market barometer because they indicate how many eligible projects state and local governments are beginning. When a state or municipality has a project eligible for federal funds, it enters into agreement with the FHWA and receives federal funding to combine with other grant, loan or bond revenue to finance the project.
