How does the federal shutdown affect local highway projects?

Highway maintenance and construction in northern California and elsewhere should largely proceed normally, despite the federal government shutdown.

Projects such as Interstate 80 between Davis and Sacramento and Route 65 in Placer County are proceeding as scheduled. But there are concerns about future projects.

Current projects proceed as “transportation is kind of unique,” said Susan Howard, director of policy and government relations at the American Association of State Highway and Transportation Officials.

The Federal Highway Administration last week released a notice distributing federal dollars to states for fiscal year 2026, the 12-month period that runs through Sept. 30 of next year.

As a result, “State departments of transportation and localities can continue normal operations with federal reimbursements continuing for work completed,” said a statement from the American Road & Transportation Builders Association.

The ‘Yolo 80’ and other local highways

With staggeringly high price tags, local highway projects depend on federal dollars. The “Yolo 80” work currently underway on Interstate 80 between Davis and Sacramento won nearly $86 million through one federal grant from the U.S. Department of Transportation’s Infrastructure for Rebuilding America program, usually referred to as INFRA.

Rep. Kevin Kiley, R-Roseville, announced over the summer that the state would receive $22.5 million grant to widen Highway 65 in Placer County — a project that has not yet started construction.

That grant came from the Department of Transportation’s Better Utilizing Investments to Leverage Development or BUILD grant program. That award covers 80% of the Highway 65 project’s budget.

Rick Carter, deputy executive director of the Placer County Transportation Planning Agency, said that the shutdown has had no impact on the Highway 65 work: Local officials won’t need to request the funds for another nine to 12 months, when they’re ready for construction. The money will come out of the federal Highway Trust Fund.

The trust fund, which provided funding for most federal transportation operations and programs, is a resource outside the annual appropriations process.

The fund provides certainty in program funding levels because it usually takes years for road projects to be completed. Most of the fund’s money comes from the federal tax on gasoline and diesel fuel.

States make initial payments on the projects and are reimbursed by the federal government.

Concerns about the future

The Federal Highway Administration said in its shutdown plan that it “has sufficient liquidating cash to support several months of reimbursements” to states for highway projects..

Andy Winkler, managing director of housing and infrastructure at the Bipartisan Policy Center, said ongoing projects are unlikely to be affected by the shutdown.

One immediate concern could be the role of other federal agencies in getting projects done. If environmental reviews are needed, for instance, will furloughed officials be available?

“I haven’t heard of any projects on hold because of that,” said Howard, “But it’s in the category where a shutdown could slow things for project approval.”

Winkler noted that a project could need as many as “a dozen or more agencies” before it gets final approval. A project that crosses a body of water, for instance, could need scrutiny by the Coast Guard.

The long-range concern is a shutdown that keeps going. The current shutdown entered its 22nd day Wednesday.

There’s no way to know how long the shutdown could continue, or when or if highway projects will be affected.

The last shutdown, in 2018-19, lasted 35 days, and towards the end, Howard recalled, state agency officials became more nervous about funding.

There’s also the prospect that if and when Congress and President Donald Trump do approve a fiscal 2026 budget, they could cut funding that would impact different parts of a transportation project.

So far, said Howard, so good. “We’re OK now,” she said, “but the biggest concern is the uncertainty.”

This story was originally published October 22, 2025 at 1:11 PM.

David Lightman

McClatchy DC

David Lightman is a former journalist for the DCBureau