Federal and state legislation and regulations have been and will continue to be significant change forces for DOTs, impacting funding levels, eligibility, flexibility, available financing methods, project planning and development, and reporting requirements. Most state DOTS have mechanisms in place to anticipate, prepare for, respond to, and even sometimes influence those change forces. They are accustomed to the regular changes that inevitably come with a new administration, at either the state or federal level.

What’s different in the current environment is the growing instability and uncertainty of transportation funding, both at the federal and state levels. Transportation user fees, such as gas taxes and registration fees, have provided stable, reliable, and substantial highway and transit funding for decades, but that is no longer the case. It has been more than a decade since federal transportation funding kept pace with transportation funding needs. That lack of sufficient funding, exacerbated by changing travel habits and increasing fuel efficiency, has repeatedly created federal funding shortfalls. According to the American Association of State Highway and Transportation Officials (AASHTO), since 2008, the federal Highway Trust Fund has been sustained through a series of General Fund transfers now amounting to $140 billion. The next federal funding gap, expected to reduce available federal transportation funding by 40 percent in 2021, has yet to be addressed. The situation is similar at the state level for many DOTs.

The funding instability transportation agencies face inhibits their ability to plan for the future. Efforts to reduce the size of the work force in response to both funding constraints and political pressure, coupled with new federal or state regulations, puts new pressure on state DOTS. For example, the most recent federal transportation authorization legislation (MAP-21/FAST) included new requirements for performance management and development of transportation asset management plans. Deadlines included in the federal legislation required state DOTs to implement new methods and technologies fairly quickly, straining limited staff resources. The continued layering of regulatory initiatives and process changes creates a challenging environment for DOTs working with limited resources.

Ultimately, the federal role in transportation funding may shift, with state legislation and funding gaining importance. Future federal changes may allow DOTs to use more creative funding arrangements, enable broader implementation of tolling, public/private partnerships, or devolution of the highway program to the states. The uncertainty surrounding these potential future shifts creates tension for DOTs between the relatively short-term planning of legislative bodies and the longer-term view necessary for DOTs to plan transportation systems that function for the future.