Feds call off highway funding cuts

The federal government is calling off plans to cut payments to states and communities for construction projects in the wake of a transportation funding patch passed by Congress last week.

The Department of Transportation previously said it would have to begin reducing the frequency of payments from its Highway Trust Fund if Congress had not acted to prevent a bankruptcy. 

Transportation Secretary Anthony Foxx said Thursday that the cutbacks will no longer be necessary, even though he wished Congress had approved a longer transportation funding bill.

“As a result of the short-term fix for the Highway Trust Fund that Congress passed on July 31, I am writing to let you know that we will not need to implement these cash management procedures at this time,” Foxx wrote in a letter to state transportation officials.

After a lengthy and fractious debate, Congress passed a law to pour nearly $11 billion into the transportation funding, using money from other areas of the federal budget, like so-called “pension smoothing” and increases in U.S. customs fees. The money is only scheduled to last until May 2015, however.

“While I am pleased that Congress took action to avoid the immediate insolvency of the Highway Account this summer, I am disappointed that they merely kicked the can down the road again,” Foxx wrote. “This is the tenth surface transportation extension — on top of eighteen short term budget measures — in the last 6 years. There is still no long-term certainty.” 

Foxx added that he might have to implement the cutbacks in payments to states again in a couple of months if Congress lets its latest transportation patch go back down the wire. 

“This latest band-aid expires right as the next construction season begins, setting up another crisis next spring,” he said. “So in the coming months, the department will again be required to prepare cash management procedures in anticipation of repeating the same Highway Trust Fund insolvency crisis.

“Americans deserve a multi-year transportation bill that provides the certainty that businesses and communities deserve, creates jobs, and makes necessary policy updates to lay the foundation for lasting economic growth,” Foxx continued. 

The Obama administration has recommended that Congress approve a four-year, $302 billion transportation bill. Lawmakers balked at the president’s proposal to use approximately $150 billion from closing corporate tax loopholes to help pay for the transportation spending, however. 

Obama is expected to sign the temporary transportation funding bill into law soon, despite his stated preference for a longer measure.