AFTER
RECORD 12 EXTENSIONS
CONGRESS PASSES
SURFACE TRANSPORTATION BILL
Bill Obligates
$286.4 Billion
Through September 2009
| After a nailbiting wait, the long-awaited surface
transportation reauthorization bill -- the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy For Users (SAFETEA-LU) --
was passed by both houses of Congress and was signed by President Bush
Wednesday, Aug. 10 in suburban Chicago. SAFETEA-LU authorizes an investment of $286.4 billion over six years on highway and transit infrastructure projects. A total of $295 billion in contract authority and $286.4 billion in guaranteed spending over six years is provided for federal highway, transit and safety programs. The $286.4 billion six-year bill reflects a 38 percent increase over the guaranteed funding levels of TEA-21, reported the American Association of State Highway & Transportation Officials on Aug 5. The five-year total from fiscal year 2005 through 2009 is $244.15 billion. Contract authority is set at $295 billion, and an $8.6 billion rescission of old contract authority is not slated to take place until the end of fiscal year 2009, the final year of the bill. "Overall funding for the bill was perhaps the biggest hurdle causing the delay of the legislation, with the White House pushing for capping the bill at $284 billion," AASHTO said. Although the bill exceeds that figure slightly, Bush said “We worked hard with members of the Senate and the House. I’ll be proud to sign a fiscally responsible highway bill next Wednesday in Illinois.” The bill provides a total of $189.5 billion in obligation limitation for highways with another $3.7 billion or programs exempt from that limitation, such as emergency relief. The allocation for highway safety programs and motor carrier safety programs over five years amounts to $5.65 billion. Follows Six Years of Growth The existing federal law — the Transportation Equity Act for the 21st Century, or TEA-21 — expired Sept. 30, 2003 after six years of phenomenal growth in federal highway spending. Over the duration of the act, federal investment in highways and transit rose nearly 40 percent: highways were guaranteed at $171 billion and transit at $36 billion. The successor bill, informally called TEA-3, was to have been enacted by Oct. 1 of that year or else federal surface transportation funding would be seriously disrupted. However, the program was allowed to expire, and road construction had been kept on life support systems by state and local spending, private sector funds, and the periodic infusion of capital via the record 12 TEA-21 funding extensions, which continued disbursements under the existing program. In early July, AASHTO reported that the overall six-year funding level for the bill had been set at $286.5 billion, a slight increase over the Bush administration’s $284 billion preference, but one that the White House would not oppose. That was well below the $299 billion compromise proposed by the House, and $318 billion proposed by the Senate, in late 2004, but still represented a major increase from TEA-21's $207 billion over six years. New Policy Actions "The bill embraces a number of significant new policy actions that help lay the foundation for addressing the nation’s highway and transit needs," said Pete Ruane, president of the American Road & Transportation Builders Association (ARTBA). "For example, the funding increases for state transportation programs made possible are largely the result of the forward-looking ethanol tax policy reforms initiated by the Congress and signed by the president last year." Innovative funding is advanced by the bill. “This bill also opens the door to the use of federal tax-exempt bonds to help finance some highway and bridge projects," Ruane said. "And it includes provisions that unquestionably will increase safety in highway construction work zones and help get transportation projects completed sooner." That the financing of the federal system is at a tipping point also is addressed by SAFETEA-LU. “Perhaps most significantly, Congress has recognized the current revenue stream to the Highway Trust Fund is not sufficient to meet the federal government’s responsibilities in transportation," Ruane said. "The bill mandates the creation of a bipartisan, ‘blue ribbon’ commission to identify the best ways to finance federal transportation investments post 2009." “Considering the budgetary constraints, House and Senate conferees used every available revenue source to increase funding," said Steve Sandherr, president, Associated General Contractors. “Transportation needs remain great and, while this legislation moves us in the right direction, fully addressing those needs should remain a priority. This bill includes many solid policy changes that we recommended to Congress, changes that will help our members deliver projects quicker and safer.” When Pigs Fly The bill also contains over 6,300 so-called pork barrel projects, with funds earmarked for specific projects within a U.S. representative's districts. While these "demonstration" projects are condemned by taxpayer watch groups, and disavowed by state DOTs because they circumvent the DOTs' programming process, they still represent bridge and road projects which will be built, and are funded within the context of the overall surface transportation bill. Typical of the execration of the pork barrel projects were comments by the Council for Citizens Against Government Waste (CCAGW). Alaska, the third-least populated state, got the fourth most in earmarks, $941 million, thanks largely to the work of its lone representative, House Transportation Committee chairman Don Young, reported CCAGW. "That included $231 million for a bridge near Anchorage to be named 'Don Young's Way' in honor of the Republican," the group said. "Meanwhile, House Ways and Means Committee Chairman Bill Thomas, R-Calif., nailed down $630 million, including $330 million for the Centennial Corridor Loop in Bakersfield, according to Taxpayers for Common Sense." Reopeners and Recissions When it became clear that the White House would not support the $300 billion level of funding, some legislators suggested that TEA-3 contain "reopeners" that would permit the funding levels to be increased after a few years, if additional funding sources could be located. That did not fly, but the bill does contain additional "contract authority" -- the ability to authorize more spending -- above the guaranteed level of $286.5 billion. AASHTO reports both the House and the Senate conferees support the idea of a higher level of contract authority, because it gives states increased flexibility in the use of funds (TEA-21 contained $20 billion in contract authority over the guaranteed levels, $15 billion for highways and $5 billion for transit). But in its effort to appear to reduce government spending, the White House opposed additional contract authority. Now Congress will have to grapple with the potential recission of the $8.5 billion gap between total obligation ceiling limitations and total contract authority. Theoretically, on Sept. 30, 2009, the federal government will take back $8.5 billion in SAFETEA-LU funding. This roll back was required by the Bush administration and will balance the difference between the bill's $286.4 billion in obligation ceilings, and its $295 billion in contract authority required to increase funding to donor states -- those which send more gas tax dollars to Washington than they get back -- thus making the bill more palatable to those states. "The conferees were sensitive to the needs of donor states as well as donee states," said U.S. Rep. Tom Petri (R-Wis.), chairman, House Subcommittee on Highways, Transit and Pipelines July 29. "Donor states will see increases in their rate of return, reaching a 92 percent rate of return in 2008 and 2009. There is a minimum growth rate of 19 percent to protect other states." The obligation ceiling is the maximum amount that can be programmed for current and future projects in a given fiscal year, while contract authority is a form of budget authority that permits obligations to be made in advance of appropriations (see our glossary). "In the case of the highway bill, the obligation numbers are set at $286.4 billion, and that's what Congress expects to actually spend," wrote Laura Meckler of The Wall St. Journal in early August. "But the contracting authority figures, which total $295 billion, are used in tables that the government uses to explain how much money each state [gets] from the bill." State officials know that they aren't going to actually get all of the $295 billion, said Phyllis Scheinberg, chief financial officer at the U.S. DOT, reported Meckler. Rather, she and other officials explained, the higher totals allow states the flexibility to decide where to spend the full allocation of dollars, and where to cut back. For instance, one state might need every dollar available for roads, but be willing to cut back on bridges. However, left unsaid is the possibility that the $8.5 billion can be inserted into the funding process at a later date, a nice way to keep the door propped open for future program increases. Revamped Safety Program "A revamped highway safety construction program has been included," Petri said. "Likewise, we have revised the current border program into a formula fund to meet increasing needs for states facing high infrastructure costs from increasing foreign trade and growing traffic. Environmental streamlining, planning and other administrative improvements seek to make project delivery more efficient without lessening protections. Safety programs administered by the Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration will see increased funding. Important new initiatives to encourage seat belt use, decrease drunk driving and enhance motorcycle training and education opportunities are included. View the Bill The most current version of the bill and supportive materials may be downloaded at http://www.house.gov/transportation/. END |
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