On July 29, 2014, the Senate passed the Highway and Transportation Funding Act of 2014, following the House of Representatives’ passage two weeks earlier. The Act was signed by the President on August 8, 2014. 

The Act, in part, temporarily reauthorizes funding of the Federal Highway Trust Fund (the “HTF”) until May 31, 2015.  The HTF is a component of the Federal-Aid Highway Program, which reimburses states for federal-aid highway projects.  For example, on any given federally-funded project, the Washington State Department of Transportation (“WSDOT”) pays its contractor for completed work from available state funds and receives reimbursement from the HTF.

Congress’ passage of the Act comes just in the nick of time.  The HTF needs to maintain a balance of $4 billion in order to manage cash flow, but was projected to become insolvent later this month.  If Congress failed to pass the Act, the U.S. Department of Transportation was scheduled to begin slowing reimbursements to states for eligible projects.  Without sufficient balances in the HTF, Washington’s current project payments could have been curtailed, and future projects could have been delayed.  WSDOT identified forty-three highway projects totaling $29 million that could have been impacted if the HTF became insolvent.  Read more.

The Act is only a temporary solution, giving Congress some breathing room to address a much larger problem.  Congress will now likely turn its attention to the passage of a long-term transportation bill.  With a temporary (nearly ten-month) relief, there is hope that a more permanent solution can be facilitated.  The Obama Administration supports the GROW AMERICA Act as a permanent solution, which would increase funding for highways, bridges, and transit and rail systems over four years.  Several other proposals are being advocated by both parties.  Any long-term transportation bill, however, is likely to be highly controversial.

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