	Background

In March 2009, $26.7 billion of Recovery Act funding was apportioned to  all 50 states and the District for activities allowed under the Federal-Aid  Highway Surface Transportation Program, including restoration, repair,  and construction of highways, and for other eligible surface transportation  projects. States Have Used a Substantial Portion of Highway Funds, with Funded Projects Focusing on Pavement Improvements

As of July 17, 2009, $16.8 billion of the apportioned funds had been  obligated for over 5,700 projects nationwide, including $9.8 billion that  had been obligated for over 2,900 projects in the 16 states and the District  that are the focus of our review. About half of Recovery Act highway  obligations nationwide have been for pavement improvements. Specifically, $8.2 billion is being used for projects such as reconstructing  or rehabilitating deteriorated roads. In addition, about $2.8 billion, or about 17 percent of  Recovery Act funds nationally, has been obligated for pavement-widening  projects, and around 12 percent has been obligated for the replacement  and improvement of existing bridges, and the construction of new bridges. DOT  officials told us that although funding has been obligated for more than  5,000 projects, it may be months before contractors mobilize and begin  work. States Have Generally Complied with Program Requirements

Funds appropriated for highway infrastructure spending must be used as  required by the Recovery Act. Give priority to projects that can be completed within 3 years and to  projects located in economically distressed areas, as defined by the Public  Works and Economic Development Act of 1965, as amended. Certify that the state will maintain the level of spending for the types of  transportation projects funded by the Recovery Act that it planned to  spend the day the Recovery Act was enacted. All states have met the first Recovery Act requirement that 50 percent of  their apportioned funds are obligated within 120 days. While officials from almost all of the states said that they  considered project readiness, including the 3-year completion  requirement, when making project selections, there was substantial  variation in the extent to which states prioritized projects in economically  distressed areas and how they identified these areas. Due to the need to select projects and obligate funds quickly, many states  first prioritized projects based on other factors and only later identified  whether these projects fulfilled the requirement to give priority to projects  in economically distressed areas. We also found some instances of states developing their own eligibility  requirements for economically distressed areas using data or criteria not  specified in the Public Works and Economic Development Act. In each of the cases we identified, the states  informed us that FHWA approved the state's use of alternative criteria. However, FHWA did not consult with or seek the approval of the  Department of Commerce, and it is not clear under what authority FHWA  approved these criteria. With one  exception, the states have completed these certifications, but they face  challenges. GAO Has Ongoing and Related Work on Transportation Programs Funded under the Recovery Act

We will continue to monitor states’ and localities’ use of Recovery Act funds  for transportation programs and their compliance with program rules. We also plan to examine the use of Recovery Act funds for the  Federal Transit Administration’s Transit Capital Assistance program—the  transit program receiving the most recovery act funding—in selected states. We reported that  DOT followed key elements of federal guidance in developing selection  criteria for awarding grants under this $1.5 billion dollar program. We also found that FRA’s strategic plan  for high-speed rail outlines, in general terms, how the federal government  may invest Recovery Act funds for high-speed rail development but that it  does not establish clear goals or a clear role for the federal government in  high-speed rail.
Why GAO Did This Study

The American Recovery and Reinvestment Act of 2009 (Recovery Act) included more than $48 billion for the Department of Transportation's (DOT) investment in transportation infrastructure, including highways, rail, and transit. This testimony--based on GAO report GAO-09-829 , issued on July 8, 2009 and updated with more recent data, in response to a mandate under the Recovery Act--addresses (1) the uses of Recovery Act transportation funding including the types of projects states have funded, (2) the steps states have taken to meet the act's requirements, and (3) GAO's other work on transportation funding under the Recovery Act. In GAO-09-829 , GAO examined the use of Recovery Act funds by 16 states and the District of Columbia (District), representing about 65 percent of the U.S. population and two-thirds of the federal assistance available through the act. GAO also obtained data from DOT on obligations and reimbursements for the Recovery Act's highway infrastructure funds.

What GAO Found

A substantial portion of Recovery Act highway funds have been obligated, with most funded projects focusing on pavement improvements. In March 2009, $26.7 billion was apportioned to 50 states and the District for highway infrastructure and other eligible projects. As of July 17, 2009, $16.8 billion of the apportioned funds had been obligated for over 5,700 projects nationwide. About half of the funds has been obligated for pavement improvements such as reconstructing or rehabilitating roads; 17 percent has been obligated for pavement-widening projects; and about 12 percent has been obligated for bridge projects. Remaining funds were obligated for the construction of new roads and safety projects, among other things. States have generally complied with the act's three major requirements on the use of transportation funds: (1) Fifty percent of funds must be obligated within 120 days of apportionment. All states have met this requirement. (2) Priority for funding must be given to projects that can be completed within 3 years and are located in economically distressed areas, as defined by the Public Works and Economic Development Act. Officials from almost all of the states included in GAO's review said they considered project readiness, including the 3-year completion requirement, when making project selections. However, due to the need to select projects and obligate funds quickly, many states first selected projects based on other factors and only later identified whether these projects fulfilled the economically distressed area requirement. Additionally, some states identified economically distressed areas using data or criteria not specified in the Public Works or Recovery Act. In each of these cases, states told us that DOT's Federal Highway Administration (FHWA) approved the use of alternative criteria but it is not clear under what authority it did so as FHWA did not consult with or seek the approval of the Department of Commerce. (3) State spending on transportation projects must be maintained at the level the state had planned to spend as of the day the Recovery Act was enacted. With one exception, the states have certified that they will maintain their level of spending. GAO will continue to monitor states' use of Recovery Act funds for transportation programs and their compliance with program rules. In the next report, in September 2009, GAO plans to provide information on the use of Recovery Act funds for transit programs and for highway programs. Previous GAO work on the act has addressed other transportation issues. For instance, GAO's work on discretionary transportation grants found that DOT followed key elements of federal guidance in developing selection criteria for awarding these grants, and GAO's work on intercity rail funding found that although DOT's strategic plan for high-speed rail generally outlines how the act's funds may be invested for high-speed rail development, the plan does not establish clear goals or a clear role for the federal government.