Congress is taking a big step back on transportation programs for local governments this September with a 30 percent cut to overall federal transportation funding. The deadline for Congress to pass new infrastructure legislation to follow the successful five-year run of the Infrastructure Investment and Jobs Act (IIJA) was set for Sept. 30, 2026. However, this year only the House advanced legislation through Committee – the BUILD America Act (H.R.8870). Without a full reauthorization bill passed by both the full House and Senate, Congress was forced to include a short-term extension in the budget to try to shift the IIJA deadline to Dec. 11. Unfortunately, this tactic won’t work for about 30 percent of the IIJA transportation funding.
As a result, the U.S. will see a substantial $36.8 billion in automatic cuts to transportation programs starting Sept. 30.
How Division J Program Cuts Hurt Local Access to Transportation Support
While Congress’ extension to December buys them a bit more legislative time after they return from elections, the extension only works for a portion of the transportation programs in IIJA that were funded. They extended programs that use the Highway and Transit Trust Fund that provides formula funding primarily to states and transit, but unfortunately, this leaves all the programs funded under the “Division J” appropriations section of the IIJA unfunded until Congress returns. The $36.8 billion in Division J transportation cuts are broad, impacting both formula funding and grant activities for roads, rail, bridges, transit, safety and much more.
Regrettably, Congress’ transportation cuts will impact local governments more than most. Congress provided local governments with increased access to federal funding over the last five years in the IIJA primarily through grants, but now, with this 30 percent cut, local access to federal transportation programs drops considerably unless we can either encourage Congress to 1) supplement Division J funding or 2) fully reauthorize the transportation programs.
Federal Transportation Programs Facing Cuts
The $36.8 billion in cuts includes 25 competitive grant programs that were very popular for local governments, and many of these programs were oversubscribed with applications from across the country that exceeded available funding. Three key grant program examples include:
- Better Utilizing Investments to Leverage Development (BUILD): The BUILD competitive grant program is incredibly popular and oversubscribed due to its flexibility, economic potential and multimodal approach in addition to being among the first transportation programs to allow cities to apply directly. It received $1.5 billion in FY 2026 advance appropriations to support the construction of multimodal surface transportation projects. Recently, applicants requested $12.8 billion more in funding than was available, and cuts to this program will be felt nationally as funding contracts.
- Safe Streets and Roads for All (SS4A) Grant Program: This safety grant program received $1 billion in FY 2026 advance appropriations to support thousands of local roadway safety projects that save the lives of Americans. Sadly, almost 100 lives are lost every day on our roads. As a program that has solely been funded through IIJA, significant work to improve intersections, sidewalks and signals is still needed. In recent SS4A applications, nearly $3.4 billion more in funding was requested than was available. Since the program started, the federal government also reports traffic deaths in the U.S. fell to record lows in 2025 — a 6.7 percent decrease from 2024 — and the second-lowest traffic fatality rate in recorded history, showcasing the value of targeted local road safety investments.
- Railroad Crossing Elimination (RCE) and Consolidated Rail Infrastructure and Safety Improvements (CRISI): These competitive rail grant programs received advance appropriations to support rail safety, passenger rail and short-line railroad projects. More than 186 rail projects have been made possible through RCE alone, and applications exceed available funding.
Additionally, the September cuts also include funding to 10 formula programs, but three notable examples of needed programs include:
- Bridges (Bridge Replacement, Rehabilitation, Preservation, Protection, and Construction Program): $5.5 billion in annual formula funding to repair and replace bridges. Despite improvement over the last five years, 1 in 3 bridges still needs to be repaired or replaced.
- Transit (State of Good Repair Grants and Programs for Seniors and Disabled): $1 billion each year for replacements and upgrades and targeted funding to urbanized and rural areas to improve transit for older adults and people with disabilities.
- Ferry Boats (Construction of Ferry Boats and Ferry Terminal Facilities): $68.4 million in annual formula funding for state DOTs, local governments and publicly owned entities for public maritime transportation infrastructure.
How to Fix the Transportation Cuts
Congress will return home for election season and be making time to meet with constituents. We encourage leaders to take minute to ask them: will they reverse the cuts and support renewing transportation funds that local governments can put to work at home?
Let us know at advocacy@nlc.org, and we’ll follow up with their office to share more information. Try to be specific about what type of transportation funding you need and make sure the Representative or Senator tells you who to follow up with in their office.
Next, when Congress returns in November, the Senate may finally put their draft bill out or the House and Senate could work out a deal to extend or renew programs to keep up funding at IIJA or higher levels. No matter what happens, it would need to happen quickly because the number of days Congress will be in DC for business are limited until Dec. 11.
NLC will keep you updated, but be proactive — go ahead and be in contact with your Members of Congress about key projects that need transportation federal funding and why Congress’ support of local governments can make a big difference.
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