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The recent turmoil in financial markets may affect the ability of some state and local governments to use bond financing for transportation projects, which typically provides about 5 to 10 percent of project funding each year. Bond markets were inoperative in September, and interest rates on tax-exempt bonds soared. Since then, rates have eased, but are still above last year's level, which may temporarily affect plans to issue transportation-related bonds.

According to the ARTBA forecast, some states already have announced cutbacks in highway and bridge projects in response to budget shortfalls. Maryland will delay at least $1.1 billion of scheduled highway construction projects during the next six years. North Carolina anticipates having to cut $200 million from its highway program by June. New York State plans to eliminate 10 percent of its projects because of budget difficulties. Other state and local governments are making similar adjustments to the revenue shortfall.

Nationwide, the impact is showing up in new contracts awarded for highway and bridge construction projects, which were down $1.7 billion, or 3.7 percent, through November 2008.

Reauthorization of the federal highway and transit programs before Sept. 30 — the earlier in the year the better — also has market implications, according to ARTBA, since lack of clarity on future federal funding beyond that date could cause some state and local highway agencies to go slowly in committing federal funds for new projects.