Federal funds obligated by federal, state and local departments of transportation (DOTs) have increased $7 billion during the current fiscal year which began last October 1, according to the according to the American Road & Transportation Builders Association’s (ARTBA) latest analysis of Federal Highway Administration (FHWA) data.
That’s an increase of 56 percent over the $4.5 billion obligated during the same period last year. According to ARTBA, the obligation of federal funds is a leading indicator of state level market activity.
When a state or local DOT has an eligible project ready to go under the federal-aid highway program, it enters into an agreement with the FHWA that obligates the federal government to pay its share of the costs. The project can then proceed to bidding and construction.
“The current obligations levels are much more in line with what we expect to see in the marketplace,” said ARTBA Chief Economist Dr. Alison Premo Black. “The passage of MAP-21 has provided some stability – obligation levels were quite low in FY 2012 and FY 2011 as state transportation departments were dealing with a series of continuing resolutions for the federal aid program.”
The $2.3 billion in federal funds obligated in January was 13 percent higher than the $2 billion obligated during January 2012, but 3.9 percent less than the $2.4 billion during January 2010. At that point in time, state DOTs were rushing to obligate the last of their American Recovery & Reinvestment Act funds, ARTBA reports.
And while the increase in obligations are a good sign, Black offers some caution. He says that if states are to receive the $16.9 billion in highway funds required to obligated before the fiscal year ends, legislation will need to be enacted before the end of March in order to fund the federal government.