How Might Transportation Funding be Impacted by Debt Deal?

Posted by Content Coordinator on Tuesday, August 2nd, 2011


Written by Larry Ehl

Whether by the hands of the new fiscal commission or through the alternative automatic cuts, federal transportation funding is going to decline dramatically compared to recent years.  The Senate transportation proposal, which counted on a $12 billion infusion of general funding, suddenly looks just a little less attainable.  So too is the prospect of a better-funded bill in two years, if Congress doesn’t pass a bill this year.

Highway and transit spending from the trust fund will be protected, but almost certainly limited to incoming revenue. Infusions of general funds seem likely to remain a practice of the past.  It’s the purely discretionary funding-based programs that are most at risk: intercity passenger rail, New Starts (new commuter rail and transit systems), TIGER, many of the FAA programs, the Army Corps’ water infrastructure programs, and perhaps some of the Coast Guard programs depending on the final deal.  Those programs could be retained but scaled back, eliminated,  turned into a loan program, or continued at the expense of highway and transit programs or other areas of spending (e.g., housing, education).  Unless Congress raises the gas tax, and that seems like a long shot.

Late last week Transportation Weekly’s Jeff Davis noted the Boehner and Reid plans had a similar impact:

“Total new discretionary spending would essentially be frozen in 2012 and 2013 at the 2011 levels (and remember that the 2011 levels were cut sharply three months ago from the 2010 levels. Then new discretionary spending would be allowed to increase by about 2 percent per year in fiscal years 2014-2021.

Streetsblog DC’s Tanya Snyder noted on Monday afternoon that there is

“nothing in the legislative text that says anything specifically about transportation or the Highway Trust Fund, but it’s clear that the cuts mandated in the agreement will affect all sectors. This comes after several rounds of budget cutting this spring. Although some key programs, like high-speed rail, were high-profile victims at that time, solid investments like TIGER and other livability initiatives survived. Some of the cuts were really phantom savings, cutting contract authority that was never going to be used anyway. There are no more easy cuts left to be made in transportation.

. . . .Under the normal spending cuts regime (not the nuclear option of the automatic, across-the-board cuts) the Department of Transportation is grouped with all other discretionary spending for cuts. The Highway Trust Fund is not discretionary, since it has its own funding source. Streetsblog has asked Senate staffers if any of this will make it harder for the Finance and EPW Committees to justify spending $12 billion more than trust fund receipts, as spelled out in the Senate transportation bill – even if that $12 billion comes from another budget item and doesn’t add to the deficit. No response yet.” (“Debt Deal Could Mean More Painful Cuts for Transportation“)

Transportation for American also wrote about this topic today: What does the debt ceiling deal mean for transportation?

Read full version ( How Might Transportation Funding be Impacted by the Debt Deal?

About TransportationIssuesDaily
“I’m Larry Ehl, founder and publisher of Transportation Issues Daily (TID). Let me tell you why I decided to launch TID, and why I believe it will be an invaluable tool for transportation stakeholders.

After more than two decades as a government-affairs and transportation professional – for much of the past 8 years as Federal Relations Manager for the Washington State Department of Transportation (WSDOT) – in 2009 I started what became a nationally recognized blog on federal transportation issues.

My goal was to keep interested parties up to date on the sometimes-chaotic, mystifying, and always-changing state of affairs around federal transportation issues and funding.”

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