Concerns raised on transportation funding outlook

Concerns among the House, Senate and U.S. DOT staff rise as prospects for a negative balance in the Highway Trust Fund by 2009 emerge

News AASHTO Journal March 14, 2007
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Prospects for a negative balance in the Highway Trust Fund by 2009 are already causing concern among House and Senate staffers and U.S. Department of Transportation (DOT) budgeteers, over how and when to address the coming shortfall.

David Ekern, commissioner of the Virginia DOT moderated a panel at the Washington Briefing last week addressing the revenue and budget outlook for transportation in Fiscal Year (FY) 2008.

Phyllis Scheinberg, assistant secretary for Budget and Programs and chief financial officer at the U.S. DOT, outlined the administration's FY 2008 budget proposal, noting that, if implemented, it would result in a $200 million shortfall in the Highway Account of the Trust Fund in FY 2009. The administration's proposal would fund the highway and transit programs at the SAFETEA-LU levels, but would suspend the Revenue Aligned Budget Authority (RABA) for FY 2008, to save some $631 million in obligations. The administration also has proposed a rescission of some $1.3 billion in unobligated balances of apportioned funds.

Staff from both appropriations and authorizing committees questioned the elimination of RABA, saying that such a move would, in fact, not comply with the funding guarantees of the law. David Napoliello, professional staff for the highway section of the House Appropriations Subcommittee on Transportation of the Housing and Urban Development and Related Agencies Committee, noted that the appropriators "fully support SAFETEA-LU," and that a bill that suspended RABA would be subject to a point of order in the House. However, he said that if the RABA funding is provided, the appropriators also are concerned they will have to confront a much larger shortfall problem and solve it in only one year, because of the $200 million deficit. Scheinberg described how the deficit in FY 2009 will grow to close to $800 million. A shortfall of $800 million in the Trust Fund's highway account would require a $3.2 billion cut in the highway program, because of the four-to-one payout rate for obligations.

Jim Kolb, staff director of the Subcommittee on Highways and Transit discussed the subcommittee's upcoming agenda, including the passage of the SAFETEAU-LU technical corrections bill now pending in the House. Kolb also said the subcommittee has great concerns over the Highway Trust Fund's future balance and plans to hold a hearing on the matter by the end of March.

Mort Downey, former deputy secretary of transportation, said that it is possible that the immediate shortfall could resolve itself through increased revenues or decreased outlays, but that the real concern lay beyond 2009.

"In 2010, we won't even get out of the starting blocks" with a reauthorization, he said, because there will be no balance in the Highway Trust Fund on which to draw. "I would urge you to keep your eye on the longer term ball," he said. Downey is the chair of a forum organized by the National Academy of Public Administration, which is examining the issue of intergovernmental relations in the transportation program. He noted that the federal program contributes only 25% of overall spending, and that it is important to examine what every level of government is doing and "how we are focusing investments toward a goal" of a national system.

Responding to questions, Napoiello said that he would expect a "return to earmarking" in the FY 2008 appropriations bill, although the continuing resolution that funded the transportation program for the remainder of FY 2007 generally omitted earmarks. He noted that earmark reform would shed more sunlight on the earmarking process, and added that the volume of appropriations' earmarks had declined from $2 billion in 2004 to $1 billion in 2006. He said that Appropriations Committee Chairman David Obey has a goal of reducing earmarks by 50% in the overall appropriations bills, but it was uncertain if that would be applied to every bill in the same manner.

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