Congress has provided funding for numerous highway demonstration projects in legislation authorizing surface transportation programs as well as in annual appropriations acts for the Department of Transportation (DOT). In some cases, the projects are identified in the legislation itself. In others, they are identified in committee reports accompanying the legislation. These projects are all designated for specific geographic locations within states and for specific purposes, and funds made available for them generally remain available for them until expended. This report includes information we provided to Congress on July 14, 2004, on unobligated funds no longer needed that could be rescinded from highway demonstration projects and also includes a recommendation to the Secretary of Transportation.

As of April 30, 2004, there were 80 highway demonstration projects with unobligated balances that were no longer needed by the states constructing the projects. These projects accounted for about $16.4 million in unobligated funds. These funds were provided in authorization or appropriations acts enacted from 1982 through 2000. The enclosure specifies the following for each of the 39 projects with unobligated balances over $100 as of April 30, 2004: (1) the state in which the project is located; (2) a brief project description; (3) the public law and, where appropriate, committee reports identifying the projects; (4) the budget authority made available; (5) the obligated amounts; and (6) unobligated amounts available for rescission. We also found that 41 of the 80 projects have very small unobligated balances of less than $20 each. The Federal Highway Administration (FHWA) is not routinely identifying highway demonstration projects with unobligated balances that could be rescinded. Rather, according to an agency official, FHWA receives regular requests from GAO, the Department of Transportation's Inspector General (DOT IG), and other parties to identify unobligated balances. Although the review excluded demonstration projects, the DOT IG reported in March 2004 that a significant amount of unneeded obligations exists for highway- and transportation-related grants. As a result, the DOT IG recommended, among other things, that FHWA routinely work with states to identify unneeded obligations.