New York City received a substantial slice of the transportation stimulus pie: $266 million, more than was received by 18 states and any other municipal government. At a recent hearing before the City Council Committee on Transportation, NYCDOT Commissioner Janette Sadik-Khan said that this funding had helped to advance 25 projects that would otherwise have been cut in this fiscally difficult environment. But some projects “have become mired in the state’s budget crisis,” she said, arguing for federal legislation that would allow more federal transportation aid to go to cities directly.

Stimulus projects funded through the Federal Transit Administration — for example, the improvements to the ferries and docks at St. George Ferry Terminal — are the furthest along, she said. Street and bridge projects funded through the Federal Highway Administration (FHWA) are lagging behind. The key reason is that these projects are funded through different paths. For FTA projects, the federal government transfers money directly to the city; for FHWA projects, funds are transferred from the federal government to NYSDOT, which releases them to NYC only after reviewing the city’s expenses.

Filtering the money through the state means additional paperwork, audits, and oversight hoops. On average the city DOT budgets an additional year for projects requiring state pass-through, a city official told MTR. The state DOT has yet to institute an electronic submission process, the official said, so NYCDOT submits “boxes and boxes of paperwork” in order to get reimbursed for payments to contractors and other bills. When outstanding bills go unpaid, the City is left with a cash flow problem, and the only way to move projects forward is to dig into City capital funds.

The delay caused by this extra bureaucratic layer has been worsened by the state budget crisis, the commissioner said, telling council members that NYCDOT has had “considerable difficulty” in encumbering (committing money for) its federally funded projects since last October. This means projects that are ready to go aren’t going.

Additionally, when federally funded projects aren’t encumbered within the required timeframe, future allocations are put at risk. Sadik-Kahn estimated that $400 million in future federal allocations to the City could potentially be lost and warned that the problems in Albany could lead “NYSDOT to attempt to reduce or divert the City’s share of Federal highway aid going forward.”

While the city works with NYSDOT and the governor’s office to expedite the pass-through of funds, it is also advocating for a longer-term solution. The city has drafted federal legislative language which would enable it and 14 other large cities to receive FHWA funds directly. Sadik-Khan argued that NYC “[has] the institutional capacity to manage these funds effectively and efficiently,” pointing out that the city DOT is as large or larger than two-thirds of the state transportation departments in the US.