Feds warn of highway funding cutoff

The Obama administration is warning state transportation departments that it will have to stop authorizing payments for construction projects on July 31 unless Congress reaches a deal to extend federal infrastructure funding. 

The current transportation funding measure is scheduled to expire on that date, and lawmakers are struggling to come up with a way to pay for an extension. 

The Department of Transportation said Friday its Highway Trust Fund will dip below $4 billion, which is the level that triggers "cash management procedures," on the day of the looming infrastructure deadline. 

The agency revived a Highway Trust Fund ticker Friday that it has used in the past to warn lawmakers of the consequences of allowing the infrastructure funding measure to expire.

"With a shortfall in the Highway Trust Fund approaching, cash management steps are not far away," the transportation department said in a blog post on its website. 

"Because the HTF supports critical roadwork by State DOTs, these cash management procedures will slow improvements and basic repairs on roads across the U.S," the blog post continued. "To keep Americans informed, we've posted on our website the projected cash flows for the HTF's Highway Account and Mass Transit Account."  

Lawmakers are grappling with a shortfall in transportation spending that is estimated to be about $16 billion per year, and they have not passed an infrastructure package that lasted longer than two years since 2005.

The current transportation funding legislation includes about $50 billion in annual spending on road and transit projects.

The traditional source for transportation funding is revenue collected from the 18.4 cents per gallon federal gas tax. But the tax, which has not been increased since 1993, only brings in about $34 billion per year. 

Lawmakers have turned to other parts of the federal budget to fill the gap in recent years, but transportation advocates have complained the resulting temporary patches prevent states from completing long-term construction projects.

The Congressional Budget Office has estimated it will take about $100 billion to close the gap long enough to pay for a six-year transportation funding bill, as requested by the Obama administration.

Transportation supporters have pushed for a gas tax increase. They say it would be about 30 cents per gallon now if it had been indexed to inflation in 1993.

Lawmakers have been reluctant to ask drivers to pay more at the pump, and Republicans have called an increase a nonstarter.

The Obama administration, meanwhile, has suggested lawmakers approve a six-year, $478 billion transportation funding bill that it says can be paid for largely with taxes that could be collected on corporate profits that are stored overseas. 

Republicans have said they are open to the idea, known as repatriation, but the parties have squabbled about how much to tax those corporate funds and whether it should be mandatory or voluntary.