WASHINGTON Feb 18 Uncertainty about the future
of federal transportation funding has cast a shadow over many
U.S. states' highway and transit agencies, and Moody's Investors
Service on Tuesday downgraded the ratings of 16 municipal bond
issues tied to U.S. road money.
Known as "GARVEES" for Grant Anticipation Revenue Vehicles,
the bonds are repaid through federal transportation grants. The
rating agency said it had decided to cut the scores of those
GARVEES that rely solely on federal monies and lack cash-funded
debt reserves or other structural protections against possible
interruption to the flow of federal money.
"The downgrades reflect changes in federal liquidity
management which increase the risk of interruption of timely
payments of federal transportation aid due to states and transit
entities," Moody's said in a statement. "These include the
government's recurring episodes of threatened debt ceiling
expirations, government shutdowns, and the threat of depletion
of the highway trust fund balance later this year due to the
fund's persistent structural imbalance."
The major funding bill for the nation's roads and bridges,
commonly called the Highway Bill, is set to expire at the end of
While the Senate public works committee is aiming to finish
drafting a new version by April, governors and mayors are
worried the legislative process will drag out and tie up money
for much-needed repairs.
The current authorization took three years to work its way
through Congress before it was passed in 2012, and states had to
rely on temporary funding measures that left them unable to
commit to major projects.
Meanwhile, the federal account used for transportation,
which is funded by a tax of 18.4 cents per gallon charged
motorists at the pump, will likely go broke next year.
Moody's cut most of the ratings to A1 from Aa3. Those
GARVEES were issued by agencies in California, Georgia, Idaho,
Kentucky, Maine, Michigan, Montana, New Hampshire, North
Carolina, Oklahoma, Rhode Island, Washington, West Virginia and
It also cut the ratings of GARVEES issued by Michigan as
well as agencies in New Jersey to A2 from A1.
The agency did not say how much debt was affected.