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Federal transportation funding could fall significantly
09/06/2011
With the federal Highway Trust Fund’s balances running low, Oregon could lose $150-175 million a year in highway funding unless Congress finds additional revenue.
 
Oregon gets about half a billion dollars each year in federal highway program funding, as well as tens of millions of dollars of transit funding. The federal gas and diesel taxes have not been raised since 1993, and Highway Trust Fund revenues have declined significantly since 2007 as a result of economic conditions and reductions in driving due to high gas prices. Highway Trust Fund revenues now lag significantly behind program funding levels. In federal Fiscal Year 2010, the federal surface transportation programs committed over $51 billion in funding from the Highway Trust Fund. However, revenues into the Highway Trust Fund totaled just $35 billion—a difference of more than $16 billion.
 
When the Trust Fund’s balances run out, Congress will be forced to either find additional revenue—whether through a fourth infusion of general fund resources, an increase in user fees or some other source—or cut funding for highway and transit programs to levels supported by revenue flowing into the Trust Fund. To balance the federal transportation program through cuts, highway program funding would need to be cut by about 30 percent, and transit funding would need to be cut by about 40 percent.
 
Because ODOT foresaw the fiscal challenges facing the Highway Trust Fund when it was developing the 2010-13 Statewide Transportation Improvement Program (STIP), the agency assumed a reduction of about 20 percent in federal highway formula funding. Cuts in federal funding, combined with declining state revenues, would eliminate new funding for projects to expand highway capacity in 2014-2015 and cause pavement conditions to begin to deteriorate. Even with the federal funding reductions ODOT has assumed, if a full one-third funding cut is imposed, ODOT will likely need to cut or delay a significant number of projects that are already included in the STIP.
 
Local governments receive about 25 percent of Oregon’s total highway formula program funding. All told, local governments receive well over $100 million per year in federal highway funding. If funding is cut by one-third, local governments would see a reduction in federal highway funding that could reach $30-40 million.
 
Oregon’s transit providers would be especially hard hit if federal funding falls to levels supportable by revenues flowing into the Mass Transit Account. A 40 percent reduction in funding would reduce the ability of transit agencies to purchase new bus and other equipment and likely require service cuts in most areas of the state.