Alaska Highway Projects Likely Safe Despite Federal Shortfalls

News that the Federal Highway Trust Fund is running out of money is worrying a lot of states, but not Alaska. 

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 In a letter to transportation departments all over the country earlier this month, the federal Department of Transportation announced that if Congress did not take immediate action, the trust fund would be depleted in a matter of weeks, forcing federal highway officials to institute cash management procedures in August. At that time, federal officials will use a formula established by law to determine how much money each state will receive.

But the shortfall in federal funds is not likely to disturb Alaska’s highway projects.  Jeremy Woodrow, a spokesman for the state Department of Transportation, says that Alaska has cash management tools that other states don’t have.

“We’ve been working with the department of revenue to ensure that we will be able to fund current projects that are under construction. The state of Alaska is in a good position because our projects are funded out of the general fund.”

Woodrow says Alaska has a financial buffer zone that allows its transportation department to continue, mainly because of the state’s savings account. Alaska pays contractors out of state funds, then bills the Federal Highway Administration for reimbursement. Woodrow says there may be a slowdown in reimbursements at worst. He also says it is not likely that any large Alaska projects will be affected long term.

“Well, large projects such as Juneau Access or the Knik Arm Crossing may be affected in the short term, but if the federal government doesn’t find a solution for a long term, it might affect those projects or the funding of those projects moving forward. But in the near term it shouldn’t affect them too much, because what we are looking at is just a temporary portion of time where we won’t be receiving reimbursements.”

US Secretary of Transportation Anthony Foxx expressed confidence that Congress would act to avoid the shorfall in his July 1 letter to the states. If Congress does not act, federal transportation officials will have to adopt similar restrictions in mass transit reimbursements to the states by fall of this year.

The federal highway trust fund was established in 1956 to finance the country’s highway system. It was expanded in 1982 to include mass transit systems.