U.S. road fund short, may pinch big projects

Big projects could face pinch unless Congress acts soon

The federal highway trust fund will run out of money this month, requiring delays in payments to road projects in Michigan and other states, Transportation Secretary Mary Peters said Friday.

The trust fund -- a federal account used to help pay for highway and bridge projects -- will run about $8.3 billion short by the end of September, Peters said during a conference call with reporters.

The shortfall will mean short delays -- and in some cases a temporary reduction -- in payments to states for infrastructure projects the government has agreed to help finance.

Michigan Department of Transportation spokesman Bill Shreck said the agency wasn't sure how the funding crisis would affect roadwork under way in the state. That includes the enormous $170-million Ambassador Bridge Gateway Project in Detroit, "but it's headed nowhere good right now."

"A lot depends on what Congress does," Shreck said. "We're concerned but in wait-and-see mode."

But Shreck said Michigan had been notified that payments made to the states would be reduced by 20%-30% starting Sept. 18. He called the shortfall "the first real volley in a crisis" over transportation funding as fuel consumption declines nationwide, reducing revenue from gasoline taxes.

Peters blamed the funding shortage on the high price of gasoline, which has prompted Americans to drive less. This means less fuel has been purchased, and less gasoline taxes collected for the trust fund. Americans drove 50 billion fewer miles from November to June than during the same period a year earlier.

Compounding the problem, Peters said, is federal lawmakers' habit of loading up highway spending bills with pet projects, or earmarks, for their home states. The current highway spending bill has more than $24 billion in earmarks, she said.

Peters urged immediate passage of legislation that has $8 billion for highway funds.

Less than two months ago, the White House said President George W. Bush would be urged to veto such a bill if it reached his desk. Taking money from the general fund to prop up the highway system was "both a gimmick and a dangerous precedent that shifts costs from users to taxpayers at large," the White House said.