FHWA Issues Order to Rescind $8.7 Billion in State Highway Funds

The Federal Highway Administration (FHWA) has notified state DOTs that, as required by SAFETEA-LU, $8.7 billion in budget authority will be rescinded from their unobligated Federal-aid highway balances on September 30, 2009. While for some states this will not have a direct effect, in many states this order will result in an actual cut in funding for highway construction projects. Each state will lose budget authority in a proportion that matches its percent of the total highway funds that were provided over the six year life of SAFETEA-LU (FY 2004-2009). Congress included the $8.7 billion rescission in SAFETEA-LU as a way to make the total funding in the bill fit within federal budgeting parameters. At the time, the intent was to find other budget offsets to prevent the rescission from actually being implemented. However, Congress never took the necessary action. The impact on states will vary depending on the amount of unobligated budget authority each has on the books and in which highway funding categories. Senator Kit Bond (R-MO) attempted to remedy this situation with an amendment in July when Congress was taking action to keep the Highway Trust Fund solvent by transferring $7 billion from the general fund. While there was significant support to correct the rescission problem, it was not acted on and, therefore, FHWA is required to take this action. AGC is contacting Senators and Representatives pointing out the impact of this rescission on state highway programs and noting that this undermines efforts to create jobs through stimulus funding for highway and bridge improvements.