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Clarifying Reauthorization Bill Math

Posted by Ken Orski on Monday, October 31st, 2011

Innovation NewsBriefs
Vol. 22, No. 29

An October 26 letter from Sen. Barbara Boxer (D-CA) chairman of the Senate Environment and Public Works (EPW) Committee to Rep. John Mica (R-FL), chairman of the House Transportation and Infrastructure (T&I) Committee has brought to the surface the confusion over funding of the multi-year surface transportation authorization.

Sen. Boxer asked Rep. Mica for clarification as to “whether the proposal you support fully funds surface transportation programs at $339 billion over six years, or if news reports stating that you support funding levels of $286 billion are correct.” She added that the Senate proposal for $109 billion would fund the programs “at current funding levels indexed for inflation” over two years. The committee, Boxer wrote further, is seeking offsets of $12 billion which is the estimated revenue shortfall of the Highway Trust Fund over two years. “I am willing to consider a six-year transportation bill at current funding levels plus inflation if its is fully paid for in a way that had bipartisan support and does not cut jobs elsewhere in the economy.”

A bit of clarification of Sen. Boxer’s own position is in order:

In its latest (August 30) report, the Congressional Budget Office (CBO) estimated that over the next six years (FY 2012-2017) dedicated taxes will generate a total of approximately $234 billion in revenue and interest ($204 billion in the Highway Account and $30 billion in the Transit Account). This comes up to an annualized revenue of $39 billion/year. Both Houses seem to accept the validity of this projection.

CBO also estimated that the Highway Trust Fund (HTF) ended FY 2011 with positive balances of approximately $14 billion in the Highway Account and $7 billion in the Transit Account. It is these unspent balances that have made it possible for Sen. Boxer to come up with a two-year $109 billion budget even though HTF revenue over that period is expected to amount only to $78 billion. The remaining $31 billion is proposed to be covered with $19 billion in unspent HTF balances and $12 billion in (as yet undetermined ) offsets. The November 9 EPW Committee markup of its transportation bill may throw some new light on where the offsets are coming from. So far, the Senate Finance Committee, which is responsible for the revenue title of the bill, has not disclosed if it has found the necessary money.

According to Sen. Boxer, a six-year program “at current funding levels plus inflation,” would require $339 billion and offsets of approximately $75 billion. CBO projects the six-year outlays at a somewhat lower level of $323.4 billion ($267.4 from the Highway Account, $56 billion from the Transit Account). At this level of expenditures, CBO estimates that the six-year revenue shortfall requiring offsets would total $68 billion ($55 billion in the Highway Account, $13 billion in the Transit Account)

While Rep. Mica has not been specific about the dollar amounts he is seeking for his six-year bill, he has been quoted as saying—at least that’s what Sen. Boxer alleges— that the House bill would be funded at the level of the “current bill.”  That bill, SAFETEA-LU, was funded at $286 billion. At that level of funding, the required offsets over the six-year period would amount to $52 billion according to our calculations.

Should the next reauthorization be funded at “current bill level,” i.e. the SAFETEA-LU level? Or should it be funded at “current funding level” i.e. the FY 2011 level which includes a hefty chunk of one-time emergency stimulus funding, ostensibly aimed at creating jobs? Semantic as these differences may appear, they represent real dollars. But the dispute so far is purely academic for neither party seems to have found yet the necessary extra money to achieve its funding goal.

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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