Kentucky delays $185 million in road projects because of feared federal funding crisis

jbrammer@herald-leader.comJuly 2, 2014 

— FRANKFORT — Kentucky has delayed about $185 million in federally funded road projects, including the widening of portions of Interstate 65 between Elizabethtown and Bowling Green, in anticipation of a potential cash crisis in the federal Highway Trust Fund.

The funding problem unfolding in Washington "means money for new projects, preservation efforts and most importantly, improved highway safety and construction jobs is at risk," Gov. Steve Beshear said Wednesday at a Capitol news conference with U.S. Transportation Secretary Anthony Foxx and state Transportation Secretary Mike Hancock.

The three urged Congress to take action by Aug. 1 to shore up the fund that provides about $625 million a year to Kentucky. If not, the fund is expected to run dry, and Kentucky and other states will experience delayed or reduced payments from Washington.

It was not clear how much money Kentucky could lose, but Foxx said the average cut to states would be about 28 percent.

If Congress does nothing and state roads can't be improved, Beshear said, Kentucky motorists should "blame Congress for every teeth-jarring jolt to your cars' and trucks' suspensions when you drive those routes."

The stretch of I-65 where widening has been delayed includes the site of a fiery crash in March 2010 that killed 11 when a tractor-trailer crossed a median and smashed head-on into a 15-passenger van of Mennonites traveling to a wedding in Iowa.

Robert Steurer, spokesman for U.S. Sen. Mitch McConnell, R-Louisville, said in an email that several House and Senate committees are working on an extension for the Highway Trust Fund.

He said McConnell "looks forward to the full Senate addressing this important extension" once U.S. Senate Majority Leader Harry Reid brings the issue to the Senate floor for consideration.

"Democrats in Congress have already objected to President Obama's idea" to boost the fund by closing tax loopholes on companies that make profits overseas, Steurer said.

The fund has traditionally gotten its money from the federal gas tax of 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel. Few are clamoring to raise those rates, which have not changed since 1993, even as inflation and more fuel-efficient cars have slowed the highway fund's growth.

Foxx sent a letter to all state departments of transportation Tuesday, informing them of the looming crisis and explaining how the Federal Highway Administration will implement cash management procedures if Congress does not act.

Normally, Kentucky "fronts" the money for federal highway construction projects to pay contractors and is then reimbursed by the Federal Highway Administration. Without a guarantee of federal reimbursement, Kentucky will weigh the financial risks associated with starting or delaying various projects, Hancock said.

In addition to the I-65 widening project, Kentucky so far has delayed pavement projects on parkways and interstates across the state.

Foxx is visiting various states this week to rally support for congressional action.

Asked if he started with Kentucky because of McConnell, who often is at loggerheads with Obama, Foxx said "we're here because we are standing with governors who mostly are on the frontlines of these issues."

He noted that the state has "a blue basketball team (University of Kentucky) and a red basketball team (University of Louisville) that seem to be doing pretty well. They agree to play the game.

"What we are trying to get done here is to get our Congress — whether they are Democrats or Republicans — coming together to solve this problem," Foxx said.

The campaign of Democrat Alison Lundergan Grimes, who hopes to unseat McConnell in this November's general election, pointed to a June 20 statement that said the looming shortfall could be addressed "by closing tax loopholes that benefit millionaires and billionaires and ending tax breaks that encourage companies to ship jobs overseas."

U.S. Sen. Rand Paul, R-Bowling Green, favors lowering corporate tax rates in an effort to entice U.S. companies to return their profits to America.

Such companies hold more than $2 trillion of profits overseas, Paul said. They would return that money to the U.S. if the repatriation tax rate were lower than the current 35 percent, he said, recommending a 5 percent tax rate.

"We can help fund new construction and repair by lowering the repatriation rate and bringing money held by U.S. companies back home," Paul said. "This would mean no new taxes, but more revenue, and it is a solution that should win support from both political parties."

U.S. Rep. Andy Barr, R-Lexington, called the depleted highway fund a "serious issue" and said he is working with U.S. Rep. John Delaney, D-Md., on a plan to leverage up to $750 billion for infrastructure projects without adding to the federal deficit.

The plan basically would let U.S. corporations that operate in other nations buy into a bond pool for transportation projects in exchange for repatriating their overseas profits at a reduced rate.

Democrat Elizabeth Jensen, who is running against Barr in the November election, blamed the problem on Washington politicians who are unwilling to compromise.

"The longer we delay making needed repairs, the more expensive the eventual cost and the greater the likelihood that we will be dealing with a needless tragedy," Jensen said in a statement.

Jack Brammer: (859) 231-1302. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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