By Rob Stapleton
Alaska Journal of Commerce

More than $100 million in federal funding for Alaska highway projects may be held up due to a shortfall in gas tax income. The result could put a damper on planned 2009 highway construction projects in Alaska until federal highway trust funds are replenished, according to Alaska Department of Transportation officials and contractors.

To avoid the shortfall, the U.S. Department of Transportation plans to move $8 billion from the U.S. general fund to the highway trust fund, according to Alaska DOT officials

“Alaska does not have a dedicated transportation fund and instead is making contractor and consultant payments and payroll payments from the (state) general fund,” said Jeff Otteson, statewide planning director in the Alaska DOT. “So, if we expect there will be a delay of one or several weeks, there is no immediate concern, since the state general fund has adequate room to handle the delay in cash flow.

“But, if we were to believe the fix needed to the HTF would not occur or would be delayed for much longer than a few weeks, we would have to reassess what that means,” he added. “This is new ground for us (and all states) so it's hard to give an exact scenario when we would start to delay or even suspend projects. For the moment, we think the funding fix will be achieved and thus there is no expectation of any impact to projects here in Alaska. “

The highway trust fund is paid for through a gas receipts tax. When people buy gasoline, for example, they pay an extra 18.3 cents a gallon at the pump.

But with the recent spike in fuel prices, people are driving less, and so are paying less in fuel taxes. The highway fund has been in danger of running out of money for years, transportation officials say. It is now projected to run out of money by the end of September.

“If that happens, contractors will be forced to lay off workers by November,” said Ken Simonson, economist for the construction trade group Associated General Contractors of America.

AGC said in a Sept. 8 release that Congress needs to take immediate action on the highway funding issue.

Secretary of Transportation Mary Peters made a call to state departments of transportation Sept. 5 warning of the shortfall and her plan to take action, according to Otteson.

Peters had originally planned to adopt a House bill to pay the highway trust fund but that action was rejected in the Senate on Sept.8.

There is some concern that the shortfall would not be addressed until after the November election or even until after the new president takes office in January 2009.

The federal highway trust fund coffers are not as plump as in the past due to several factors, Otteson said.

“People aren't driving as much, and are now using more efficient modern cars,” he said. “The nation just isn't using fuel like they used to.”

The Safe Accountable Flexible Efficient Transportation Equity Act, or SAFETEA LU, provides for the funding for highways, highway safety and public transportation.

The bill totals $244.1 billion, and was signed into law by President George Bush on Aug. 10, 2005. This act was to have provided funds through 2008 for highway projects.

“Congress knew back in 2005 that there would be a shortfall when they passed the SAFETEA LU Act and with the high cost of fuel the model is crumbling,” said Otteson. “It was known then that the act would not fund projects into 2009.”

Rob Stapleton can be reached at rob.stapleton@alaskajournal.com">rob.stapleton@alaskajournal.com.