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Highway Transportation Funding Reauthorized? What It Could Mean for Construction


6/11/14

Synopsis
 
In May, a bill to reauthorize funding for the federal highway transportation program was approved by the U.S. Senate Environment and Public Works (EPW). The reauthorization of funding comes at a time when the program was projected to run out of funds this year and expire in September. The bill goes to the full Senate for consideration and would provide long-term funding, giving state and local governments the certainty and stability needed to improve and develop the nation's transportation infrastructure. For contractors receiving federal funding for projects, the risk of the bill not passing through the Senate means critical funding would be unavailable until reauthorization is approved.

Issue
 
The legislation builds on the success of the comprehensive reforms and performance-based approach to transportation investment in the transportation program – titled “Moving Ahead for Progress in the 21st Century Act” (MAP-21). The proposed bill would fund a six-year, $260 billion program at current construction funding levels, adjusting for inflation. Provisions in the bill call for funds used for non-construction costs to be directed to infrastructure construction activities. Other significant highlights include:

  • $6 billion for a National Freight Program
  • $2.4 billion devoted for Projects of Regional and National Significance, with 20% of funds set aside for projects in rural areas
  • Greater transparency on the use of federal funds to show taxpayers where their infrastructure dollars are being spent and to reinforce public trust
  • Increased funding for existing core transportation formula programs to provide states and local governments with a strong federal partner
  • Targeted funds for projects of high importance to a community, a region, or the nation
     

As the bill moves forward to the full Senate for consideration, it will be combined with measures from the Senate Committee on Finance, Committee on Commerce, Science and Transportation, and Committee on Banking, Housing and Urban Affairs.
 
Read the complete Bill Summary here.
 
What Does CohnReznick Think?
Senate passage of the bill will be critical to ensuring that federal funding for existing projects remains available. Contractors should:

  • Sufficiently prepare for the possibility that the funding may not be reauthorized
  • Review your contracts to be sure that you know which ones could be impacted
  • Arrange alternate lines of credit that could serve to finance projects in the event of a temporary government funding hiatus
  • Have a clear understanding of the status of existing contracts and ensure that all billing deadlines that are met will be equally imperative
  • Please reach out to your legislators and encourage them to find a resolution to this very serious situation.
     

CohnReznick urges contractors to proactively contact their local political leaders and industry trade associations to advocate support and passage of this crucial bill as it moves through the legislative process.

Contact
 
For more information, please contact Jack Callahan, Partner and CohnReznick’s Construction Industry Practice Leader, at 732-380-8685, or Stephen Harrison, Partner and Construction Industry Practice – Northeast Regional Director, at 914-922-2107.
 
To learn more about CohnReznick’s Construction Industry Practice, visit our website.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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