Washington Update

April 17, 2014 Update

PREPARED BY CATHY CONNOR - MANAGER OF GOVERNMENT AFFAIRS

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Congress is on a two-week recess until the week of April 28.  

MAP-21 Reauthorization

MAP-21 expires on September 30, 2014.  Congress and the transportation industry have gotten used to the fact that surface transportation authorization bills are rarely passed on time and a series of short-term policy extensions are usually required.  However, this time, simply extending the authorizing language will not be enough because the Highway Trust Fund will not have sufficient funds to pay for the extensions.  As early as August, the Trust Fund, particularly the Highway account, is expected to be insolvent.  Therefore, Congress must decide not only what policy provisions to include in the next reauthorization bill, they must decide how to find new revenue to fund the bill.  There is strong support from industry for a gas tax increase (the easiest and quickest revenue raiser), including from a number of stakeholders who might be expected to oppose a increase, such as the American Trucking Associations and the US Chamber of Commerce.  However, Congress does not appear to have the will to take on such a politically charged issue prior to the November mid-term elections, if ever.  As a result, Congress will have to pass some sort of short-term funding bill, most likely before they leave for the August recess. 

While there are a number of possible revenue sources other than raising the gas tax, such as the currently popular option of amending the tax code to encourage repatriating corporate overseas profits, it is unlikely that they could be approved and implemented in time.  Therefore, yet another General Fund transfer is likely.  Estimates are that approximately $10B would be needed to be transferred from the General Fund just to provide sufficient revenue through the end of the calendar year - on top of $53B previously transferred over the past few years.  The most likely opportunity for Congress to possibly consider a gas tax increase or other long-term revenue options may be the post-election Lame Duck session of Congress when Members no longer feel as politically vulnerable. 

Here is a link to US DOT's Trust Fund Ticker which is updated regularly.  The latest estimate is that the highway account of the Trust Fund will reach its minimum balance by August 29 and the transit account by September 26.  In anticipation, a number of state DOTs have already announced that they are starting to slow down procurements. 

This situation presents a serious problem for the House and Senate transportation authorizing committees.  While they have jurisdiction over drafting a multi-year MAP-21 reauthorization bill and any required short-term policy and program extensions, they do not have authority over increasing or finding new Trust Fund revenues.  That falls to the Senate Finance Committee and the House Ways & Means Committee, neither of which have indicated how or when they intend to deal with the looming funding crisis. 

Despite not knowing how much money they have to spend on existing, much less, new programs, the House and Senate authorizing committees are moving forward with drafting multi-year reauthorization bills.  The Senate appears to be leaning towards writing a bill with few major policy changes or additions, other than perhaps a more expansive freight title.  They feel that although MAP-21 only authorized two years of funding, it essentially made six-years' worth of policy changes and reforms, many of which have not yet been implemented or tested.  Last week, the "Big 4" bipartisan leadership of the Senate Environment & Public Works (EPW) Committee, chaired by Senator Barbara Boxer (D-CA), which has jurisdiction over the highway program, held a press conference to announce their joint reauthorization principles:

  • Passing a long-term bill, as opposed to a short-term patch;
  • Maintaining the formulas for existing core programs;
  • Promoting fiscal responsibility by keeping current FY'14 levels of funding, plus inflation;
  • Focusing on policies that expand opportunities for rural areas;
  • Continuing efforts to leverage local resources to accelerate the construction of transportation projects, create jobs, and spur economic growth ; and
  • Requiring better information sharing regarding federal grants.

The EPW leaders stated that they hope to act on their bill in early May.  They also indicated that they will encourage the Banking Committee (which has jurisdiction over transit programs) and the Commerce Committee (which has jurisdiction over highway safety programs) to act on their portions of the overall bill as soon as possible so that action can move to the Senate Finance Committee. 

In the House, Transportation &Infrastructure (T&I) Committee Chairman Bill Shuster (R-PA) has indicated he wants to write a more expansive reauthorization bill, including a variety of new policy initiatives especially in the freight area.  He continues to state that the House will pass a reauthorization bill on time, but has not outlined a specific schedule.   

The other player in the reauthorization effort, the Administration, still plans to release a formal reauthorization proposal, possibly before the end of April.  It is expected to flesh out the numerous policy initiatives first outlined in the US DOT FY'15 budget request.  

FY'15 Budget and Appropriations

Last week, the House very narrowly passed the controversial FY'15 Budget Resolution drafted by House Budget Committee Chairman Paul Ryan (R-WI) with no Democratic votes.  However, the Senate has indicated it does not plan to pass its own version of a Budget Resolution since it previously agreed to overall spending levels for FY'15 in the December 2013 budget deal.  Therefore, the House and Senate Appropriation Subcommittee are proceeding ahead to mark-up the individual federal agency funding bills.  Last week, the House Appropriations Committee tentatively approved the FY'15 Military Construction/VA and the Legislative Branch funding bills, pending action to approve a formal allocation of funding to the various appropriations subcommittees. 

There is speculation that the THUD (US DOT) appropriations bill may be one of the last to be passed since there is not enough revenue in the Highway Trust Fund to fully fund DOT programs for the entire fiscal year and because the THUD bill may be used as a legislative vehicle for a short-term transfer of General Funds to keep the Trust Fund solvent for some period of time.  On April 3, the various US DOT modal administrators testified before the House THUD Subcommittee in support of their FY'15 agency budget requests.  

Water Resources

The House and Senate continue to work to resolve the few remaining differences in their versions of the Water Resources Redevelopment Act (WRDA) bills which authorize Corps of Engineers programs.  Both sides are very close and the main sticking point seems to be which Corps projects will be authorized for federal funding.  Only projects with Corps of Engineers Chief's Reports will be eligible for funding and the Corps is still in the process of finalizing reports for a few key (and politically connected) projects.  Committee leaders have said they hope to finalize the bill in early May following the recess.  

Tax Extenders Bill

There appears to be a general consensus that comprehensive tax reform will not pass Congress this year, despite the best efforts of retiring House Ways & Means Committee Chairman Dave Camp (R-MI) who released a draft corporate tax reform bill in early March.  Therefore, the new Chairman of the Senate Finance Committee, Ron Wyden (D-OR), has decided to proceed with a temporary tax extenders bill - the EXPIRE Act.  The bill would extend a number of expired or expiring tax breaks for two years - 2014 and 2015.  Wyden's bill includes an extension of the monthly commuter tax benefit parity with parking which expired at the end of 2013.  The bill would restore the transit benefit to $250 per month up from the current $130.  The bill was approved by the Finance Committee last week on a bi-partisan vote.  An amendment, offered by Senator Chuck Schumer (D-NY), to add a $20 per month tax exemption for bike share costs was approved. 

Wyden has indicated he hopes to get the bill through the full Senate before Memorial Day although he has not yet identified the offsets necessary to pay for the extended tax benefits.  The offsets will be hard to find and will be competition for the offsets needed to pay for a Highway Trust Fund "fix".  No word yet on the House's plan to take up a tax extenders bill.  

Other News

  • FHWA and FTA have launched an online dialogue to gather input on the use of programmatic approaches for conducting environmental reviews for transportation projects, in preparation for a rulemaking effort.  Section 1305 of MAP-21 requires DOT to initiate rulemaking to allow for programmatic approaches.  The national outreach effort will continue until May 16.  The agencies will host a webinar on April 23 for interested parties.  Here is a link to participate in the National Dialogue, a link to background information on MAP-21 Section 1305, and a link to register for the webinar. 
  • FHWA has posted an updated Q&A document on its website on MAP-21 Section 1203 performance management provisions.  Here is a link
  • FTA has released a 116-page draft Circular on the State of Good Repair Grants Program - Guidance and Application Instructions.  This is a new Circular which implements provisions in MAP-21.  The State of Good Repair (SGR) Grants Program makes federal funding available specifically for rehabilitating and replacing public transportation assets to keep systems in a state of good repair under three new sections of MAP-21 -section 5326 transit asset management, section 5329 public transportation safety program, and section 5337 SGR Grants program.  Here is a link to both the Federal Register notice and the Circular.  Comments are due to FTA by May 3
  • AASHTO has released a new informational tool designed to educate the public and elected officials about the potential impact of an insolvent Highway Trust Fund.  The "Nation at a Crossroads" is a web-based infographic, mobile app and printed brochure that provides a national perspective on surface transportation investments and also provides state-level information.  The web-based version is available here and the mobile app version can be downloaded here
  • People Update - After a long delay, the Senate last week confirmed former Kansas DOT Secretary Deb Miller to be a member of the Surface Transportation Board.  In another congressional retirement, this week Rep. Tom Petri (R-WI) announced he will not run for reelection in November.  Petri is the chair of the House T&I's Highways & Transit Subcommittee, one of the so-called "Big Four" leading the MAP-21 reauthorization effort.  Petri is another in a long line of moderate Republicans to opt to retire.  Also retiring is long-time TRB Executive Director Bob Skinner.  Bob will end his career at TRB following the January 2015 annual meeting. 
  • Dates to Note - The week of May 12-16 has been designated as Infrastructure Week.  A wide variety of industry groups have joined together to organize numerous events in DC and around the country to bring attention to the importance of infrastructure investment.  Here is a link to a website which will soon include a calendar of events, most of which will be open to the public.  On June 11, the Transportation Constructors Coalition (TCC) and other industry groups will hold a rally on the National Mall in Washington, DC to bring attention to the need to resolve the Highway Trust Fund crisis. 
  • US DOT has announced a public meeting of its National Freight Advisory Committee (NFAC) to finalize recommendations on the development of the National Freight Strategic Plan.  The meeting will take place online as a webinar on Tuesday, April 29, 2014, from 1:00 p.m. to 5:00 p.m. Eastern Time.  Here is a link to register for the webinar.  Members of the public will be able to listen to and view the webinar as observers.  For additional information contract freight@dot.gov or visit the NFAC web site.

 

March 4, 2014 Update

Today, the Obama Administration released its FY'15 Budget Request.  The request comes about a month later than usual because the FY'14 omnibus appropriations bill was only recently completed in mid-January, but it is over a month earlier than last year when the request was severely delayed following the congressional sequestration debate. 

Here is a link to the overall federal budget request (scroll down to click on the US DOT Highlights).  Here is a link to more detailed information on the US DOT portion of the federal budget and a link to the annual US DOT "Budget in Brief", the most readable and understandable of the documents. 

The US DOT FY'15 budget request reflects the comments made by President Obama last week in Minnesota when he outlined his vision for investing in America's infrastructure with a $302B, four-year surface transportation reauthorization proposal.  The current MAP-21 authorization expires at the end of FY'14 on September 30, 2014.  Without an infusion of new revenues, the Highway Trust Fund cannot support any new highway or transit funding in FY'15.  The FY'15 budget request proposes to raise approximately $37.5B per year for four years, totaling $150B, through corporate tax reform.  If approved by Congress, that amount would be enough to fill the $63B funding gap in the Trust Fund and support $87B over four years in new funding.  Note that the Administration's FY'15 budget request reflects this additional funding even though it appears very unlikely that Congress will pass corporate tax reform this year or even during FY'15. 

Therefore, while the industry applauds the Administration's request for significant new transportation funding, it appears unlikely, at this point, that Congress will support the tax legislation needed to make the funding levels described below a reality.

Some highlights of the US DOT FY'15 budget include (keep in mind these funding levels assume Congress passes corporate tax reform legislation and in addition, Congress must approve all funding levels through the annual appropriations process): 

FHWA - $48B for the highway program, up from the current $40.9B level, a 17% increase.

FTA Capital Improvement Grants - page 12 of the US DOT Budget in Brief (see link above) includes a list of the projects recommended for funding.  A total of $2.5B (a 28% increase) is requested for FY'15 including $1.4B for 12 New Start projects with existing FFGAs, $578M for 7 new New Start projects including $100M each for the Red and Purple lines in Maryland, $275M for the newly authorized Core Capacity program for the Chicago Red and Purple line modernizations and $199M for 6 Small Start streetcar and BRT projects.  In addition, a new $500M Rapid Growth Area Transit program is requested that will fund primarily discretionary BRT projects.  The FTA annual Capital Investment Grants/New Starts Report was also released today and can be found here.  All FTA programs, including the New Starts program, would be treated as mandatory spending funded through the Trust Fund, not the General Fund.

FRA - $5B in FY'15 for a newly configured rail program.  This is an approximately 200% increase over current funding.  The program would be divided into two components - Current Passenger Rail Service (the Northeast Corridor; state corridors; long distance routes; stations; and national assets, legacy debt and Amtrak PTC) and Rail Service Improvement Program (high-speed rail passenger corridors - $1.3B; commuter railroad PTC compliance; rail relocation and grade crossings; and planning and workforce ).  Both components would be funded out of the new rail account of the Transportation Trust Fund. 

FAA - $2.9B for the Airport Improvement Program (AIP) down from the current $3.35B to be offset in part by eliminating guaranteed AIP funding for large hub airports.  The budget recommends allowing the large airports to fund capital projects through increased PFCs, but that would have to be approved by Congress.

TIGER Grants - $1.25B for the FY'15 discretionary TIGER grant program, up from the FY'14 level of $600M.

TIFIA - $1B per year, the same as the current level of funding.

Freight - $1B in FY'15 ($10B over four years) for a new multimodal freight discretionary grant program with rail, aviation, marine and other multimodal projects eligible. 

As proposed in the past, the Administration would rename the Highway Trust Fund the Transportation Trust Fund.  The Fund would include separate highway, transit, rail and multimodal accounts.  Existing gas tax revenues would continue to flow only to the highway and transit accounts.  The additional funding proposed from corporate tax reform would be used in part to fund the new rail and multimodal accounts.  The new accounts would not receive existing gas tax revenue.

The Administration states that they expect to submit a MAP-21 legislative proposal to Congress shortly.  They were criticized for never formally submitting a reauthorization proposal during the last authorization debate.  Pages 4 to 7 of the US DOT Budget in Brief (see link above) include an overview of their proposal.  It appears that the DOT proposal will include rail authorization (PRIIA) language as well. 

A DOT priority is improving project delivery and the federal permitting and regulatory review process through the creation of a new Interagency Infrastructure Permitting Improvement Center to be housed at US DOT and funded at $8M in FY'15.

An emphasis is put on "Fix it First" and a state of good repair approach to highway and transit grants.  The budget also includes a new Fixing and Accelerating Surface Transportation (FAST) competitive grant program to incentivize transformative programmatic reforms which is funded at $1B per year ($500M in FHWA and $500M in FTA). 

Information about the FY'15 budget requests from other infrastructure-related federal agencies will be sent out shortly. 

Other News

  • FTA has posted the FY'14 apportionment tables.  Here is a link to the tables.  The tables will be published in the Federal Register sometime later this week.  Among other things, the information includes FY'14 apportionments for Section 5307 Formula funds, Section 5337 Bus and Bus Facility funds (Table 12), and Section 5309 Capital Investment Grants (Table 7), which include New Start, Small Start and Core Capacity projects.  Here is a link to that specific table. 
  • The total allocated to New Starts/Small Starts/Core Capacity is $2.125B.  Of that amount, $120M is set-aside for unspecified Core Capacity projects.  The FY'14 omnibus appropriations bill did not include any congressionally designated New Start/Small Start earmarks or project allocations.  FTA has allocated the FY'14 funds essentially the same as the requests it made last April in the FY'14 Budget Request (see page 31 of the FY'14 US DOT Budget in Brief.)
  • MAP-21 restructured the steps in the Capital Investment Grant Program process to allow New Starts, Small Starts, and Core Capacity projects to move more expeditiously through the program.  FTA has updated the FAQs for New Starts, Small Starts, and Core Capacity.  Notably, the updated questions now include guidance on entry into Engineering and additional requirements for Project Development entry.  Here is a link to the updated FAQs.
  • In yet another instance of a senior member of Congress retiring, last week Rep. Ed Pastor (D-AZ) announced he would not run for re-election in 2014.  Pastor is the senior Democrat on the House THUD (DOT) Appropriations Subcommittee.  The current THUD Chairman, Rep. Tom Latham (R-IA), has also announced that he plans to retire. 
  • On Wednesday, March 5, the House T&I Committee's special P3 panel, chaired by Rep. Jimmy Duncan (R-TN), will hold a hearing in conjunction with the Highways & Transit Subcommittee.  Here is a link to information about the hearing including the witness testimony and access to a live webcast.  Witnesses include representatives from the Congressional Budget Office (CBO), Texas DOT, Denver RTD, and the Associated General Contractors (AGC). 

February 26, 2014 Update

Today is a big day for transportation news.  The President made a major announcement about the Administration's proposal for a surface transportation reauthorization bill and how to fund it, the House Ways & Means Committee Chairman released a draft of a plan for tax reform that includes a proposal for funding the Highway Trust Fund, the House Transportation & Infrastructure Committee held a Roundtable on MAP-21 reauthorization, and US DOT released the Notice of Funding Availability (NOFA) for the FY'14 TIGER grant program.  

President Obama's Vision for 21st Century Transportation Infrastructure

Today in Saint Paul, Minnesota, the President outlined a vision for investing in America's infrastructure with a $302B, four-year surface transportation reauthorization proposal.  Here is a link to a White House Fact Sheet on the President's plan.  More details about the proposal will be included in the Administration's FY'15 budget request which will be released next week on March 4.  It is unclear if the Administration will submit a formal MAP-21 reauthorization bill to Congress. 

The President proposes to help pay for the bill by dedicating $150B in a one-time revenue infusion from corporate tax reform.  The Administration estimates that $63B of that amount would go to plugging the current hole in the Highway Trust Fund balance and $87B would go to support increased spending levels for key surface transportation programs.  However, this funding plan will require congressional approval.  It is unclear if Congress will support this proposal or if Congress will pass a corporate tax reform bill this year (see below).  MAP-21 expires on September 30, 2014 and without some additional revenue, even a short-term extension is not possible. 

Other provisions of the Administration's reauthorization proposal include:

  • Funding for high-speed rail
  • Creating a new multimodal freight grant program
  • Authorizing the TIGER grant program permanently
  • Prioritizing "Fix-it-First" investments
  • Improving project delivery and the federal permitting and regulatory review process
  • Building more resilient communities
  • Continuing to attract private investment through TIFIA, a National Infrastructure Bank, America Fast Forward Bonds, etc.

House Corporate Tax Reform Proposal

This morning, House Ways & Means Committee Chairman, Dave Camp (R-MI) released draft tax reform legislation, the Tax Reform Act of 2014. 

Here is a link to a press release on the Ways & Means proposal that includes highlights of the provisions that would impact both the personal and corporate tax code.  Here is a link to the draft legislation, a section by section of the bill, an executive summary and other materials. 

The proposal includes "dedicating $126.5B to the Highway Trust Fund to fully fund highway and infrastructure investment through the HTF for eight years".  It does not appear to include an extension of the currently expired transit commuter benefit parity with parking. 

Chairman Camp himself admits that it is highly unlikely the House, much less the full Congress, will actually pass tax reform legislation this year since it is an election year which, if nothing else, means a shorter than usual congressional session.  Senate Majority Leader Harry Reid (D-NV) has said the Senate will not take up tax reform this year.  

TIGER NOFA

The FY'14 omnibus appropriations bill included $600M for the TIGER discretionary grant program.  That amount is up from the $474M appropriated in FY'13 after sequestration.  To date, $3.5B in TIGER grants have been awarded.

Here is a link to the NOFA

Here is a link to the US DOT press release about the TIGER NOFA

Here is a link to the US DOT TIGER website

Key points include:

  • No pre-applications are required for this round of TIGER
  • Up to $35M may be awarded for Planning Grants
  • Date for Grants.gov to begin receiving applications is April 3, 2014
  • Deadline for applications is April 28, 2014 at 5:00 p.m. EDT 

US DOT will be offering several webinars on various aspects of the TIGER application process.  There are no registration fees for these sessions, but space is limited.  Advance registration is required and available by clicking on the webinar topic listed below:

March 12th - How to Compete for TIGER Discretionary Grants

March 19th - Preparing a TIGER Planning Grant Application

March 26th - Preparing a Benefit Cost Analysis (BCA) for a TIGER Discretionary Grant

House T&I MAP-21 Roundtable

This morning, the House T&I Subcommittee on Highways & Transit heard from a variety of business and labor groups, including the American Trucking Associations, the US Chamber of Commerce, the AFL-CIO, the National Association of Manufacturers, Transportation for America, Retail Leaders Association and Highway Users Alliance, regarding the reauthorization of MAP-21.  The event was well attended by committee members including the so-called "Big 4" - Reps. Shuster, Rahall, Petri and Norton.  All the stakeholder participants strongly supported a long-term, predictable, well-funded reauthorization bill. 

Here is a link to more information about the event. 

 

January 14, 2014  Interim Update

Late yesterday, congressional appropriators released the text of the $1.9 trillion, government-wide FY'14 appropriations bill.  The current, temporary Continuing Resolution (CR) runs out this Wednesday, January 15 at midnight.  Congress is expected to pass another, very short-term, three-day CR later today.  They hope the extra three days will give them enough time to quickly pass the massive FY'14 funding bill before they go out on recess next week for the Martin Luther King holiday.  

The House and Senate appropriations committees have been working to pull together the omnibus bill which covers all federal agencies - both domestic and defense - ever since the two-year budget deal was agreed to in early December.  The budget agreement provided some relief from the sequester cuts and set overall funding levels for both FY'14 and FY'15.  Few, if any, of the details of what is in the bill emerged during the negotiations, so once again, Congress will vote on a critical bill essentially sight unseen.  The House is expected to vote on the bill as early as today, with the Senate following on Wednesday or Thursday.  

As you may recall, neither the House nor the Senate were able to pass their respective FY'14 US DOT funding bills because of the $10B difference in total funding levels.  However, the House and Senate DOT bills were essentially the same on funding levels for those key programs funded through the Highway Trust Fund - the highway and transit formula programs.  The primary focus of the DOT funding negotiations has been on funding for discretionary programs such as Amtrak, TIGER, transit New Starts, etc. 

Here is a link to the full text of the 1,528-page bill - http://goo.gl/OSc3uU - the US DOT provisions are on pages 1407-1480 of the bill text PDF file.

Specific program funding levels are below.  In addition: 

  • House language (Denham amendment) prohibiting federal funds for the California high-speed rail project was dropped.
  • An Administration request to move the Research & Innovative Technology (RITA) modal administration to the US DOT Office of the Secretary (OST) was included.  The head of RITA will now be an Assistant Secretary rather than a modal administrator.  There is a slight reduction in funding.  

 Program

FY 2013 Enacted

Post Sequestration Level

FY 2014 House

Comte Passed

FY 2014 Senate

Comte Passed

Final FY 2014 Bill

Core Highway Program

$39.7B

$40.3B

$40.3B

$40.3B

Supplemental Bridge Program

$0

$0

$500M

$0

Transit Formula Programs (including Bus and Bus Facilities)  

$8.5B

$8.6B

$8.6B

$8.6B

Transit Capital Grants (New Starts/Small Starts/Core Capacity))

$1.85B

$1.8B

$1.94B

$1.94B

plus unused prior year funding for a total of $2.13B

Airport Improvement Program (AIP) Grants  

$3.1B

$3.35B

$3.35B

$3.35B

Amtrak - Total

$1.5B

$0.95B

$1.45B

$1.39B

TIGER Discretionary Grants

$474M

$0

$550M

$600M

Washington DC WMATA

$142M

$125M

$150M

$150M

High Speed Rail

$0

$0

$100M

$0

Information about FY'14 funding for other infrastructure-related federal programs will be sent out shortly.