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BUDGET FORECAST SHOWS POTENTIAL FOR $16 BILLION IN CUTS TO HIGHWAY FUNDING - WILL HAMPER STATES' ABILITIES TO IMPROVE INFRASTRUCTURE

July 11, 2007

Washington, D.C.—Today, the Bush administration released its mid-session budget review which updates the data included in the President’s budget released in February. The budget estimate released in February forecasted a $700 million Highway Trust Fund (HTF) shortfall in Fiscal Year (FY) 2009. Today’s update increases the forecasted shortfall to more than $4 billion in FY 09.

“America’s transportation system is the heart of our country’s economy and to neglect it is a disservice to our nation,” said Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America (AGC). “The cuts in FY 2009 from the promised level of $43.4 billion to about $27 billion, would result in a 37 percent reduction in spending on our nation’s infrastructure. Neglecting our transportation infrastructure will only make it more difficult for America to compete in the world market.”

Because of the spending rate in the HTF, it will require Congress and the President to find additional revenues to plug the $4 billion hole or cut highway funding for FY 09 by an estimated $16 billion. That dramatic reduction in funding would impact every state in the country because the highway program is financed by gas tax revenues that are deposited into the HTF. If the deficit is not patched, it is estimated that in 2009, California will lose $1.35 billion, Florida would lose nearly $673 million, New York would lose approximately $634 million and Texas will lose more than $1.1 billion.

The mid-session review also increased the forecast shortfall to $9 billion in 2010 and to $15 billion in 2011. Those amounts will also require significant reductions in spending if Congress and the administration can not agree on methods to plug the funding gap. Transit funding will also be impacted long term, because it too is funded primarily by the HTF.

Sandherr continued, “This budget news comes at a critical juncture for the highway program, and federal, state and local governments will all feel the pinch. AGC has been working with our allies in the State DOTs on solutions to fix the problem, which we have presented to both the administration and Congress.”

The Associated General Contractors of America (AGC) is the largest and oldest national construction trade association in the United States. AGC represents more than 32,000 firms, including 7,000 of America’s leading general contractors, and over 11,000 specialty-contracting firms. More than 13,000 service providers and suppliers are associated with AGC through a nationwide network of chapters. Visit the AGC Web site at www.agc.org. AGC members are "Building Your Quality of Life.”

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