FHWA Gives States $4.8 Billion in Extra FY20 Highway Funding

FHWA Gives States $4.8 Billion in Extra FY20 Highway Funding

August 28, 2020  | Jeff Davis

Today, the Federal Highway Administration distributed an additional $4.8 billion in fiscal 2020 federal-aid highway funding to states as part of the “use-it-or-lose-it-by-September-30” August redistribution process.

FHWA sent a formal funding notice to state DOTs distributing $4.762 billion to the 50 states and the District of Columbia, an all-time high for the annual August redistribution of the obligation limitation on federal-aid highways.

A one-page printable table showing each state’s final total dollar amounts for fiscal 2020 for each type of highway formula funding may be downloaded here.

Each year, the annual DOT appropriations bill sets a limit on the total dollar amount of aggregate federal-aid highways contract authority that can be obligated. (A small amount of annual contract authority is exempt from that limit – in 2020 it was about $700 million, of which $601 million was apportioned to states). Of the total obligation limitation, an initial amount is reserved each year for allocated (non-formula) FHWA programs, but FHWA never uses that whole amount, so at the end of every July, FHWA figures out how much obligation limitation they won’t be able to use by September 30 and ask states how much additional money they could obligate by that deadline. The money is then distributed to states by how much they say they can use by the deadline, not by their regular shares of formula funding.

The overall amount of money that gets reserved for allocated programs at the start of each year has been going up lately, mostly due to large carryover balances in the INFRA and TIFIA programs that FHWA has not been able to spend quickly. And as the size of the initial reservation goes up, the size of the August redistribution does as well. Before the FAST Act, the August redistribution was a $1-2 billion annual affair.

As the table shows, total federal-aid highway formula funding from all sources (Highway Trust Fund and general fund) totaled $45.0 billion in 2020, $582 million more than in 2019. But not every state saw an increase over last year – while the initial distribution of highway obligation limitation in 2020 was $963 million above last year, the general fund appropriation for highway formula programs that supplements the Trust Fund money was $1.173 billion below last year. Then, while this year’s August redistribution was $789 million above last year, since that money is not distributed by formula, some state DOTs received less highway formula funding in 2020 than they did in 2019.

Georgia, for example, received $137 million less in 2020 than they did in 2019, but this appears to be because they did not request enough money in the August redistribution – their $39 million share of the redistribution was only 0.82 percent of the total, whereas the Peach State gets 3.36 percent of the regular formula-based funding. Likewise, my beloved Volunteer State got $70 million less in 2020 than they did in 2019, which is roughly the amount by which their August redistribution decreased.

There had been some speculation that some states might not request any August redistribution money – in order to request the money, you have to have the state matching share (usually 10-20 percent of the project cost) on hand, and COVID-related revenue drops raised questions if some states would have enough matching money. Apparently they did (though it may explain why some states requested less money than usual in the August redistribution process).

The final 2020 totals, in millions of dollars, versus 2019:

FY 2019 FY 2020 Change
Contract Authority Exempt from Limit $599.4 $601.3 +$1.9
Initial Obligation Limitation Distribution $36,628.8 $37,592.2 +$963.4
General Fund Formula Distribution $3,204.0 $2,031.1 -$1,172.9
August Obligation Limit. Redistribution $3,972.7 $4,762.1 +$789.4
TOTAL FORMULA FUNDING $44,404.9 $44,986.7 +$581.8
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