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Another Temporary Extension of the Highway Program Seems Inevitable

Posted by Ken Orski on Thursday, March 1st, 2012

Innovation NewsBriefs
Vol. 23, No. 9

With every passing day the likelihood of yet another temporary extension of the highway program becomes greater. Although the Senate stands a good chance of approving the needed offsets (“pay-fors”) and passing its $109 billion two-year bill by the March 31 deadline, the House has a much tougher row to hoe.

Having abandoned its earlier proposal for a $240 billion five-year bill for lack of sufficient support, Speaker Boehner and John Mica must now overcome internal disagreements and craft a new bill acceptable to a majority of House members. This may mean a shorter-term bill (perhaps as short as 18 months) at a reduced level of $37 billion/year, according to congressional sources.

But with only 13 legislative days in March (the House will be in recess from March 9 to 18), chances of placing the bill on the President’s desk by March 31 seem remote. Another temporary extension, probably until Memorial Day, seems inevitable.

What if this still does not leave enough time for the House to pass a bill or for the two Houses to reach agreement on a final version of the bill? Would it make sense to extend the present law into 2013 in the hope that the next Congress, unencumbered by election-year politics, will be freer to craft genuine fully-funded multi-year transportation legislation?

The implications of a temporary extension beyond 2012 are more serious than meet the eye. Assuming that spending under a further extension would continue at current levels, the Highway Account of the Trust Fund Trust Fund would be left with only $6.3 billion by the end of FY 2012 according to the latest CBO projections. Once the projected balance in the Highway Account fell below $2 billion (which would occur sometime toward the end of this year or early in 2013), obligation limitation (and contract authority) would need to be adjusted so that the balance in the Trust Fund would not fall below that level. CBO estimates that U.S. DOT would have to rescind $27 billion of FY 2013 obligation limitation, leaving only about $12-13 billion in spending authority for the rest of FY 2013. (CBO Analysis of S. 1813, February 7, 2012).

Such action would have grave consequences for all transportation stakeholders.  it’s not surprising therefore that the transportation community is united in its insistence that Congress pass reauthorization legislation this year — even if this simply gains a short respite of 18 months before the law has to be revisited again.

C. Kenneth Orski is a public policy consultant and former principal of the Urban Mobility Corporation. He has worked professionally in the field of transportation for over 30 years, in both the public and private sector. He is editor and publisher of Innovation NewsBriefs, now in its 22nd year of publication.

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