State Highway Spending Down Slightly in July

State highway departments may be reacting to the coronavirus revenue crisis by making significant cutbacks in future spending plans, but the effect on the actual spending currently going on day-to-day, for projects out in the field, is very slight so far.

This week, the U.S. Department of Transportation updated the reporting on Highway Trust Fund cash flow through July 31, 2020. (We covered the revenue side last week, which showed the Trust Fund’s dedicated excise taxes rebounding to normal levels after a few rough months.)

Spending from the Highway Account of the Trust Fund – the vast majority of which is same-day or next-day reimbursements to state DOTs for federal-aid highway work already completed, totaled $4.547 billion in July. This was a $387 million increase over the June 2020 level, but more importantly, it was only $206 million (or 4 percent) below the two-year average of Highway Account outlays in July 2018 and July 2019.

The following chart shows monthly Highway Account outlays for FY 2020 (the thick black line) versus the monthly outlays for the previous four years of the FAST Act. (The October-November 2016 weirdness was a one-off incident – the Federal Highway Administration was switching computer systems so all payments stopped for a week and change in October 2015 and then caught back up the following month.)

As of July 31, the Highway Account had a closing balance of $12.375 billion and the Mass Transit Account had a balance of $5.475 billion. At this rate, the Highway Account is on pace to end fiscal 2020 with a balance of $8 to $10 billion (down noticeably from the Congressional Budget Office’s March baseline prediction of $15.3 billion, and the Transit Account should end the year at around $4 billion, more or less in keeping with the earlier baseline.

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