Recession-year deficits and plummeting fuel tax revenues could mean bad news for highway projects.

The U.S. Treasury Department estimates state road-building budgets will lose more than $9 billion in federal transportation money next year, according to its new analysis of fuel tax receipts into the Highway Trust Fund.
For the past three years, federal highway funding levels set in the current highway-funding legislation, known as the Transportation Equity Act for the 21st Century (TEA-21), have been increased by the infusion of funding from an element of the current highway financing legislation known as "revenue-aligned budget authority" or RABA. RABA pegs highway funding to fuel tax receipts. Revenue-aligned budget authority, which did not exist prior to TEA-21, was meant to ensure that revenue collected in the Highway Trust Fund above regular authorization levels would be fully spent. However, the language that established RABA also calls for decreases in budget authority and obligation levels should trust-fund revenues fall short of projections. The U.S. Treasury is the agency that makes the projections.
However, the American Assn. of State Highway and Transportation Officials and members of Congress are asking for a fresh look at the Treasury Department's assumptions underpinning the analysis. According to AASHTO, motor fuel tax receipts and other indicators in several states show no such precipitous drop as Treasury suggests is occurring.
Representatives of more than 40 states discussed the issue in a conference call last week, organized by AASHTO. Many echoed the concerns of Virginia Transportation Secretary Whittington W. Clement, who told the Washington Post that the projected loss of $211 million in federal funds for the state would be "another crippling blow" to the state's transportation budget. His department would be forced to cancel or delay more projects.
"Transportation is vital to our economic prosperity. It should be a top priority as we seek to recover from this recession," said AASHTO President Brad Mallory, Secretary of the Pennsylvania Department of Transportation. "Cutting federal highway funding by $9 billion would have a devastating effect on the delivery of needed transportation projects, and would result in thousands of lost jobs. It's totally the wrong direction for the time at hand."