In a letter this week which commended President Barak Obama for his “expressed support for significant increased investment in transportation infrastructure,” eight major transportation and construction organizations also warned the President that a proposal contained in the Administration’s budget request to eliminate multi-year contract authority, “would undermine the very fabric of the financing mechanisms” for transportation at the very time that the nation is looking to transportation investments to help rebuild the economy.

Contract authority is a little-known budget keeping mechanism which allows states to plan and execute projects that take several years for completion. It is based upon the fact that transportation programs are funded by dedicated user fees, such as the motor fuel tax, rather than by annual appropriations. The contract authority solution for multi-year capital investment was first enacted in 1956 for highways and later extended to transit and aviation.

In a letter to President Barack Obama, the transportation leaders state, “The predictability that contract authority provides is essential for states and local governments to make long term commitments to major transportation investment projects. In 1998 with the passage of the TEA 21 legislation, Congress recognized this unique budget situation and established funding guarantees tied to the trust funds.”

Click here to read the entire press release and/or click here to download the PDF letter.