Stimulus Funding for Roadway Construction Programs
Over the past several decades, the United States has faced numerous challenges that have adversely affected our economy. However, none of those prior challenges resembled the COVID-19 pandemic. Before the pandemic changed our lives, elected officials in Washington, DC were contemplating the framework of a new infrastructure bill. Now, just a few months later, those discussions have appropriately changed to dealing with the pandemic fallout and notably, the passage of several economic stimulus packages. Currently being discussed are plans for another new stimulus package with the potential for funds allocated toward infrastructure improvements.
While remote work and shelter-in-place orders have helped “flatten the curve,” they’ve also brought about a serious decline in vehicle miles traveled. Most of the funding for roadway construction projects comes from revenues generated by fuel sales, licensing fees, and vehicle sales and registrations. Significant decreases have occurred in most of these categories over the past two months. Vehicle miles traveled in Iowa has declined by approximately 40% since March 13, 2020, while vehicle sales have also dropped. Truck freight volume has stayed relatively stable at this point.
Much of the revenue collected from these sources by the State of Iowa contributes to the Road Use Tax Fund (RUTF), which is administered by the Iowa DOT. Counties and cities receive an apportionment of these funds based on population and are used to reconstruct, widen, rehabilitate, or overlay existing roadways. RUTF also supports projects targeted for safety improvements via the Transportation Safety Improvement Program (TSIP). With the probable reduction in RUTF revenues, a federal stimulus package becomes more imperative to keep construction projects moving forward.
On March 31, 2020, the Iowa DOT sent a memo to cities, counties, MPOs, and RPAs to provide guidance on how to prepare for stimulus funds in the event they become available. The level of funding is unknown at this time, nor if it will completely offset the amount of RUTF lost during these travel declines. The focus thus far has been on RUTF shortfalls, but other shortfalls such as Local Option Sales Tax (LOST) funding will impact some communities, as well.
Keeping Road Projects on Track & Maintaining our Economic Vitality
Past experience places Snyder & Associates in a unique position to be ready to help should an infrastructure stimulus package become law. In 2009, the American Recovery & Reinvestment Act (ARRA) federal stimulus program was enacted. Snyder & Associates designed many ARRA pavement rehabilitation and replacement projects. Since these projects didn’t require public right-of-way, this greatly streamlined the environmental compliance requirements associated with gaining federal aid — leading to the quick completion of the roadway designs. Typical projects were simple surface overlays with some minor patching. These “shovel-ready” projects fit the goals of the ARRA, allowing funds to be spent quickly to help stimulate the economy.
Studying the current dialogue from lawmakers, we believe this potential stimulus program may differ from prior programs. Given the uncertainty, it’s prudent to consider projects that meet the following criteria:
- Could be designed and developed rapidly in preparation for stimulus funding
- Are “Shovel ready” — no land acquisition needed, no environmental impacts, and could be ready for construction bids within a few months
- Have RUTFs allocated — in the event RUTF drops, it would be known how much stimulus funding is needed to offset the shortfall
- Have alternative funding sources allocated that are also negatively affected by COVID-19 — such as LOST funding
Our professionals stand ready to help you through the intricacies of this process. When compiling a project list, for instance, we can advise which projects may not qualify for “SWAP” when using stimulus funds. This is similar to recent changes with Iowa DOT state funds due to the impending shortfall of RUTF cash flow. The Snyder & Associates team will ensure you’re following all federal-aid requirements necessary for receiving stimulus funding.
If you’re interested in discussing steps to better position your community for using stimulus funding on roadway projects, please fill out the following form and we’ll get in touch with you.