Federal Funding ImpactApril 1, 2014
In response to questions about a possible interrupition of federal funds, the following was provided by Norma Ortega, Caltrans Deputy Director Finance:
At nearly $3.6 billion in 2014, Federal Highway Funding makes up a large portion of transportation funding in California, and is chiefly used for the construction portion of transportation projects at the state and local level. Approximately 40% of federal highway funds are subvented directly to local transportation agencies, many of whom rely heavily on that funding. Local agencies, including cities, counties, and regions would be affected in a variety of ways depending on other fund sources and the sophistication of each region’s financial management. However, given the importance of federal dollars in transportation, no agency would go unaffected in the case of interruptions to federal funding.
In the case of an impasse at the Federal level that would interrupt funding for transportation, the Department would recommend that no new projects be allocated until challenges at the federal level are overcome. While the Department maintains a sufficient cash balance to weather a short-term disruption of federal reimbursements, we can only do so with the assurance that the federal government will continue to honor commitments made to projects already underway. It is imprudent to recommend allocation of new projects until transportation funding at the federal level is solidified, because federal funds continue to be the primary funding source for construction projects on the state highway system. The State Highway Operations and Protection Program (SHOPP) is charged with the preservation and maintenance of the existing transportation infrastructure, and is largely funded with federal funding. The SHOPP would be essentially halted if federal funds dried up.