By Dave Bauer, senior vice president, government relations, ARTBA
The Senate is scheduled to take up a FY 2018 budget resolution the week of Oct. 16 that, among other things, assumes constraining Highway Trust Fund (HTF)-supported spending to what existing revenues could support following FY 2020. The 2015 Fixing America’s Surface Transportation (FAST) Act reauthorization law infused the trust fund with $70 billion from other parts of the federal budget and these resources are projected to be exhausted at the end of FY 2020.
While the spending plan does not include specific programmatic funding levels, it does include total mandatory transportation funding levels over the next 10 years. HTF spending is considered mandatory because highway and transit contract authority is distributed to state and local governments upon enactment of surface transportation program authorization laws. These programs constitute the vast majority of transportation mandatory spending.
Those tables show a $51 billion drop in transportation mandatory spending in FY 2021, to $3.9 billion. Total transportation investment would rebound in FY 2022 and beyond, but to levels of spending roughly $20 billion a year below what is projected in FY 2020. This cliff scenario is the result of virtually all incoming FY 2021 HTF revenue being used to fulfill prior year spending commitments and little remaining resource to support new investment in FY 2021. ARTBA is working to secure an appraisal of the annual programmatic investment levels that would result from scaling back trust fund spending to existing revenues.
Although this particular budget’s primary purpose is to set in motion a parliamentary process that will allow Republicans to pass tax reform legislation with a simple majority vote in the Senate, it also cuts $632 billion in non-defense domestic spending and the transportation programs are part of those reductions. It is interesting to note the same procedure was used in January to pass an FY 2017 budget resolution to circumvent an expected Democratic filibuster of efforts to repeal and replace Obamacare and that budget showed no dramatic drop in transportation funding.
The Trump administration’s FY 2018 budget proposal recommends constraining HTF spending to the levels existing revenues could support and notes this would result in $95 billion in surface transportation investment cuts through FY 2027. While the administration’s proposal pushes for a $1 trillion infrastructure package with $200 billion in direct federal spending, the same document urges state and local governments to fill the gap that would result from reduced HTF spending.
It is important to remember that budget resolutions are not binding and that the primary purpose of the Senate proposal is to advance tax reform legislation. At the same time, this illustration of the trust fund’s fiscal reality is a critical reminder of the need to enact a permanent solution to the HTF’s structural revenue deficit as soon as possible and ideally as part of that same tax bill.
ARTBA will continue to use every opportunity, including the budget debate, to make sure members of Congress and the Trump administration don’t lose sight of the need to address this critical national priority.