Federal highway funds to take big hit

| 1/30/2002

President Bush plans to slice $9 billion in federal aid to state highway programs next year. A drop in fuel tax collections and shrinking truck sales are listed as the primary reasons for the reduction.

The federal government pitches in for road projects across the country through taxes on fuel and truck and tire sales. The money - about $28 billion a year - is put into a national highway trust fund and distributed annually to states based on the amount of fuel sold and other factors.

The funds available to states have increased each of the past three years. But an analysis by the Treasury Department, released this month, shows the funds will shrink about 28 percent during the next budget year.

Projects across the nation will likely be delayed or canceled because of the drop in federal funding, says a spokesman for the American Association of State Highway and Transportation Officials. For most projects, states are required to supplement the federal money with at least 20 percent of their own. AASHTO says those states are not likely to be willing or able to pick up the slack when the federal money vanishes.

Among the biggest losers of highway funds will be California, Texas, Florida, Pennsylvania and New York. AASHTO also estimates the cuts will likely cost the construction industry 144,000 jobs nationwide when the projects they were working on are dropped.