WASHINGTON — State transportation officials are warning of dire consequences for both improvement projects and the bond issues they may use to finance them if Congress allows federal aid for state and local highway and transit projects to end Sept. 30.
"There is a crisis brewing," said Susan Martinovitch, director of the Nevada Department of Transportation and president of the American Association of State Highway and Transportation Officials.
Both the federal gasoline tax and the authority for the Department of Transportation to spend the money aiding states and localities expire at the end of fiscal 2011. "Failure puts nearly everything we do at risk," said Kentucky Transportation Secretary Mike Hancock.
Hancock, Martinovitch, and officials from other states were meeting in Louisville and held a press conference to publicize how worried they are becoming.
"I cannot put out projects [for bid] not knowing if I'll have federal funding," Martinovitch said. "Projects currently under construction will need to be shut down."
Hancock said he was hoping there would be no ripple effect in the municipal bond market. He has no issuance coming up and therefore hasn't had to hold back. If there were a pending issue, Kentucky would be working with its bond advisors, Hancock said, adding, "My guess is we'd decide to wait" until there is some action from Congress.
Nevada has issued about $100 million of debt in recent years for road projects. Martinovitch said if she didn't get the federal money, "I won't get anything done but make bond payments and struggle to find money for that."
There are 11 legislative days before the transportation programs expire. In that time, the House and Senate must agree to continue the 18.4 cents per gallon gasoline tax to keep money in the Highway Trust Fund. They also must agree to the 21st extension of the Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU, which expired in 2009.
It will have to be an extension because there is no possibility of reconciling longer-term proposals now on the table. Senate Democrats are backing the two-year, $109 billion bill outlined by Senate Environment and Public Works committee chair Barbara Boxer, D-Calif. House Republicans are supporting a six-year, $230 billion bill.
Boxer plans to move on an extension in early September that would take four months to complete and thus escape the so-called super-committee's deficit-reduction plans, which are due by Nov. 23.
AASHTO executive director John Horsley said "we have not heard from" House Transportation Committee chairman John Mica.
Hancock said he has been confident Congress would pass the gas tax and extension without a fuss. Now, after the stalemate over policy provisions that shut down the Federal Aviation Administration, "I look back and my confidence is shaken," he said.