DALLAS — The Tennessee Department of Transportation plans to delay $400 million of road projects until fiscal 2016 due to uncertainties over whether federal highway funding will continue uninterrupted past the May 31, 2015 expiration of the latest extension of the Highway Trust Fund.
Transportation Commissioner John Schroer told state lawmakers that federal transportation grants account for half of Tennessee DOT's annual budget and fund 90% of the department's capacity expansion projects. The state does not issue bonds for highway projects, which are accomplished on a pay-as-you-go basis.
"Federal funding continues to flow sluggishly," Schroer said in last week's letter to members of the Tennessee General Assembly. "Because we do not have a full fiscal year's funding, the department has had to scale back on future contracts."
The deferral will affect 12 construction projects totaling $177 million and 21 property acquisitions totaling $221 million that were to be accomplished in fiscal 2015, he said. Another 13 projects due to be completed in fiscal 2014 were shifted earlier this year into fiscal 2015.
"While these projects are only delayed and not canceled, they represent almost $400 million in transportation investments that could be helping to modernize our transportation network and reducing congestion and making Tennessee a more attractive destination for economic expansion," Schroer said.
Congress extended the solvency of the highway fund to May 31, 2015 in late July with an $11 billion transfer from other federal funds, Schroer said If Congress fails to pass a multi-year surface infrastructure bill before that deadline, states could once again face a significant cutback in federal reimbursement for road, bridge, and transit projects, he said.
"This piecemeal funding of projects and programs is having a significant impact on how and when state departments of transportation and metropolitan planning organizations deliver much needed investment in our transportation networks," Schroer said.
Schroer urged the lawmakers to contact Tennessee members of the U.S. Congress and push for enactment of a fully funded, multi-year highway bill.
Without additional investment in transportation infrastructure, the U.S. will fall behind economically, he said.
"Our competition in the developing markets of China, India, and Brazil, among others is making the investments in infrastructure that we are not making what will ultimately impact our ability to be economically competitive on the world stage," he said.
Tennessee DOT's total state revenues of $826.6 million in fiscal 2014 included $393 million from the gasoline tax. The state gasoline tax of 21.4 cents per gallon brings in $658 million a year, but $242 million is distributed to cities and counties and $22 million goes into the general fund.
Tennessee issued $317 million of road bonds from 1958 to 1977, but none since then.
The road system includes 13,884 miles of state roads and 1,100 miles of interstate highways.
U.S. Transportation Secretary Anthony Foxx said he was not surprised that Tennessee and other states are nervous over the uncertain fate of the federal HTF, which each year provides more than $50 billion of transportation grants for state projects.
"Some thought that when Congress passed a 10-month funding patch in August, the worst was over," Foxx said. "It wasn't over. Not even close."
"We knew this would happen. We said this would happen," Foxx said. "And now we're seeing the terrible, and very predictable, outcome."