As Shutdown Stretches On, Transportation Officials Worry About Long-Term Effects

Local transit agencies are being hit harder than state highway departments. But the shutdown is only part of the problem for transportation funding.
by | January 14, 2019 AT 11:32 AM
Commuters wait for the L train in New York.
Commuters wait for the L train in New York. (AP/Mary Altaffer)

 SPEED READ:

  • The shutdown is impacting thousands of workers in transportation-related agencies, including the Federal Railroad Administration and the Federal Transit Administration, as well as federal safety inspectors.
  • Generally, local transit agencies are being hit harder than state highway departments.
  • Even once the shutdown is resolved, transportation funding faces uncertainties in Congress that could delay construction projects.
  • One state, Oklahoma, has already announced it will delay bids on 45 projects worth about $137 million.
 

So far, transportation agencies that rely heavily on federal funds have been spared from major consequences from the federal government shutdown. But the longer the impasse in Washington continues, industry officials warn, the harder it will be to keep state and local agencies running normally.

The three-week partial closure of the federal government became the longest in U.S. history over the weekend, and about a quarter of the federal workforce -- some 800,000 people -- are either working without pay or furloughed as a result.

Not all federal programs are affected the same way. Most of the employees with the Federal Railroad Administration and the Federal Transit Administration, as well as safety inspectors, have been furloughed. But airport safety screeners who work for the Transportation Safety Administration must continue to work, even though they aren’t getting paid. Meanwhile, workers with the Federal Highway Administration aren’t affected.

The same is true for state and local agencies that depend on federal money to pay for construction, repairs and sometimes, day-to-day operations. Local transit agencies, for example, tend to be hit harder by the shutdown than state highway departments.

“We’re finding that, in many cases, our members need those dollars, and there’s no one there to answer the phone and to release the funds,” says Paul Skoutelas, the president and CEO of the American Public Transportation Association, which represents the transit industry. “Grants are either waiting to be approved or have been approved, but there’s nobody to activate those funds. So agencies are experiencing cash-flow issues around that.”

 

How Are Transit Services Being Impacted by the Shutdown?

Transit systems of all sizes are trying to figure out how to make their dollars stretch in the meantime -- by either tapping reserves or taking out loans. The shutdown of the Federal Transit Administration can even make it difficult for systems that have money to spend it.

One agency, Skoutelas says, is waiting on a letter from the federal government before it can spend its own money because the agency wants to be eligible for federal reimbursement once the government starts operating again.

“No one at the moment has declared any service disruptions. Stopping services is a last resort for these agencies,” Skoutelas says. “But everyone is beginning to feel the difficulties of trying to meet payments for vendors, normal operating expenses and, in some cases, just trying to move [construction] projects forward.”

State transportation departments are more insulated from the effects of the shutdown because they largely -- but not entirely -- depend on money from the federal Highway Trust Fund. That money comes from federal gas taxes and is deposited into the trust fund, which was set up specifically to protect transportation money from being used to run the rest of the government.

“It highlights how fortunate we are to have a federal highway trust fund, because when we run into situations like this, it does continue to operate,” says Jim Tymon, the executive director of the American Association of State Highway and Transportation Officials (AASHTO). “It means state DOTs and transit agencies don’t necessarily need to pull the plug on projects that are under construction right now.”

 

For Transportation Funding, Shutdown Is Only Part of the Problem

The government shutdown isn’t the only hiccup in the federal appropriations process this year. There are other quirks complicating the finances for transit and highway agencies.

Even before the shutdown, Congress could not agree to a full-year spending plan for the federal fiscal year, which began Oct. 1. So it passed legislation, called a “continuing resolution,” that kept the government running through December at the same spending levels as the prior year. But that created several problems related to transportation funding:

  • Transit agencies won’t necessarily be able to start applying for grants to fund new construction projects once the shutdown is over. The FTA typically only makes grants available during a fiscal year once it has had five months’ worth of appropriations, according to APTA. So far, in the 2019 fiscal year, it’s had less than three. So there has to be a longer-term deal before any 2019 grant money starts going out the door.
  • Congress did not increase the amount of money it authorized to spend from the Highway Trust Fund. That means lawmakers aren’t following the plan for annual increases that they devised in 2015 when they passed the current surface transportation law known as the FAST Act.
  • States can’t immediately access their whole year’s worth of 2019 money from the Highway Trust Fund, as they could in other years. Typically, the Federal Highway Administration makes that money available at the beginning of the fiscal year in October. But the continuing resolution only included authorization for FHWA to distribute about a quarter of the yearly total, says Tymon, the head of the state transportation officials group.

The uncertainty on Capitol Hill could delay states’ construction schedules, Tymon says.

“With the construction season coming up here, states are usually bidding projects in the winter, so we are ready to put shovels in the ground as we get into late winter and early spring,” he says.

Oklahoma officials announced last week they will delay bids on 45 highway projects worth about $137 million for January and February. But Tymon says most states haven’t reached that point yet.

The hitch in transportation funding comes even as advocates hope Congress will pass an infrastructure package this year. President Donald Trump proposed a $1 trillion infrastructure plan during his 2016 campaign, and congressional Democrats have said that a major building program could be one area where they could work in a bipartisan fashion with the president and GOP lawmakers.

Plus, the five-year surface transportation law that’s currently in effect expires at the end of next year, and Congress typically takes months, if not years, to fashion the massive highway bills.

Tymon, from AASHTO, says transportation officials should be ready to press their case once the government shutdown is over.

“My experience is after some of these trying times like this government shutdown, they usually try to find some common ground so they can show they’re not as dysfunctional as they seem,” he says. “So maybe this is an opportunity for infrastructure to [play] that role.”

This appears in the Infrastructure newsletter. Subscribe for free.