AASHTO Journal

‘August Redistribution’ Sends State DOTs $3.1B to Use for Projects by Sept. 26

State departments of transportation are currently divvying up $3.137 billion in federal highway program funds, after they recently received authority on Aug. 31 to obligate the unused fiscal 2017 money to various infrastructure projects by the end of this month.

The funding is from what the Federal Highway Administration calls its "August redistribution," an annual budgeting practice under which the agency shifts federal funding authority out of accounts that are not on course to use up their allotted "obligation limitation" for the  year and redirects it to where state recipients are ready to use it.

dollarpump.jpgThis year's amount compares with about $2.8 billion that the FHWA redistributed a year earlier for fiscal 2016.

Joung Lee, policy director for the American Association of State Highway and Transportation Officials, explained that the FHWA makes estimates at the start of each fiscal year about how much of the highway dollars the agency will commit under various program categories.

Then, as summer rolls around and actual spending patterns become more clear, agency officials redistribute the unused obligation limitation from some underspending categories so that state DOTs can apply it in the few remaining weeks of the fiscal year to projects they have targeted.

Lee said that besides the formula funding states receive directly from the Highway Trust Fund each fiscal year for capital projects, the FHWA also makes start-of-year estimates for broad national purpose program areas including the USDOT's infrastructure grants now known as INFRA, plus the government's subsidy costs of TIFIA project loans, the federal lands account and others.

This year, Lee said, the roughly $3.1 billion August redistribution included about $1.4 billion from unused TIFIA loan obligation limitation, plus $1.2 billion from the INFRA grants and predecessor Fastlane grants that have not yet been used. The rest came out of other unobligated national-purpose funds, he said.

Those grants will still be awarded to projects selected in the future, he noted, as the FHWA will reserve the associated obligation limitation from being distributed at the beginning of the next fiscal year on Oct. 1.

States generally receive that extra August funding according to how much they request to FHWA, based on their estimates of being able to quickly put such funding to use by the end of September.

This time, the FHWA said, states requested a total of $5.391 billion in additional formula obligation limitation for fiscal 2017, or much more than the $3.137 billion that was actually available. The amount for each state is listed in the Aug. 31 FHWA notice.

And while the redistributed obligation limitation expires Sept. 30, FHWA Acting Administrator Brandye Hendrickson directed that her division administrators who work directly with the state DOTs "should ensure that this additional obligation limitation is obligated no later than September 26."

So state DOTs are busily finishing up the procedures to put their additional August federal dollars to work.

That ranges from about $16 million each for New Hampshire and the District of Columbia to a timely distribution of $280 million for hurricane-ravaged Texas plus $274 million for California. Elsewhere, Florida receives about $159 million, Pennsylvania $154 million and Illinois $140 million.

Questions regarding this article may be directed to editor@aashtojournal.org.

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