Prepared for the Coalition of Northeastern Governors
The following has been developed to broadly present numerous concepts and policy proposals being discussed in Washington related to transportation spending. Many of these terms, programs, and efforts have been discussed interchangeably. The purpose of this memo is to try and demystify the many proposals and pieces that are being discussed.
Recently, there has been significant talk around increasing transportation and infrastructure funding. Too often, the press, trade magazines, and others conflate some of the specifics. The purpose of this memo is to outline the many different paths that are being considered by Congress and discuss what is likely to move, what is likely to die, and what we can expect in the next several months.
To fully understand this, we will break the efforts into four categories and discuss each separately before providing final analysis.
- COVID RELIEF/STIMULUS
This describes legislation that is in direct response to the ongoing COVID-19 pandemic. The President signed the CARES ACT in March, which includes $25 billion in funding for transit agencies and more than a billion for Amtrak.
The House has since passed the HEROES ACT, which includes $15 billion for State and local highway agencies as well as $15 billion for transit agencies with most of the funding ($11 billion) going to metropolitan areas over three million in population. The Senate has yet to take up the HEROES ACT, but McConnell has suggested that work will begin in the next month.
The President has recently referenced that he is ready to begin negotiating a second stimulus package. There will likely be a push for additional funding directed to State and local governments (including transportation agencies) as well as relief for private companies who are looking to avoid being subject to litigation and lawsuits as result of COVID-19. The size and scope of such legislation is still unclear currently and serious negotiations well likely not begin until after the 4th of July.
- SURFACE TRANSPORTATION REAUTHORIZATION
The current Federal transportation authorization legislation, the FAST Act, expires at the end of FY 20. Congress will need to pass a long-term bill or extend the FAST Act. Federal transportation bills have traditionally been funded by gas tax revenue, but the Federal gas tax has not increased since the early 90s and the spending power of the gas tax has decreased in such a way that general fund dollars are needed in order to simply keep funding levels on par with inflation. While both parties have expressed a desire to increase transportation spending, neither has committed to either increasing the Federal gas tax or finding a new funding source.
Some attest that the COVID-19 pandemic and the need for job creation will provide Congress with some cover to increase transportation spending without raising additional revenue.
The Senate began their process last year introducing the ‘America’s Transportation Infrastructure Act’. The Senate Environment & Public Works Committee acted on the legislation, which only includes highway funding (other committees handle transit, funding, safety, research, and rail). The legislation would provide $287 billion over five years for highway funding, compared to $225 billion authorized in the FAST Act.
The Banking Committee, which has jurisdiction over transit funding, has not acted and has not indicated that it will do so soon. Likewise, the Commerce Committee with jurisdiction over safety and rail issues has not acted. Both Committees have held a number of hearings and are reportedly drafting their titles of the bill.
In the House, the Transportation & Infrastructure Committee has cleared its version of a surface reauthorization known as the INVEST Act. (Summary included). That legislation will be combined with other pieces and will represent an infrastructure package that will be on the House floor next week.
The INVEST Act was written solely by Democrats and has faced criticism from traditional stakeholders, like AASHTO, and advocates for being partisan. Due to the partisan nature of the bill, its unlikely to invigorate action in the Senate. The Senate Majority Leader has inferred that he would oppose going to conference with such a House transportation bill if it was not bipartisan, like the Senate America’s Transportation Infrastructure Act is.
Given the timing and lack of consensus on a path forward, it appears that the House and Senate are most likely poised to extend the FAST Act at least for a few months and likely into 2021. President Trump could influence that decision.
- INFRASTRUCTURE PACKAGE
Throughout the past two years both Republicans and Democrats have discussed a desire to create an infrastructure package which would include funding for transportation, broadband, schools, etc. The President has referenced the idea multiple times citing the need for a $2 trillion bill etc.
Next week, the House is poised to take up HR 2, which is a $1.5 trillion infrastructure package which includes a number of infrastructure priorities included in the ‘Green New Deal’. That legislation also includes the aforementioned INVEST Act passed by the House Transportation & Infrastructure Committee. HR 2 is widely being considered a Democratic messaging piece and is unlikely to advance, however, parts of the legislation – like the INVEST Act – could eventually be pulled out and included in a bi-partisan/bi-cameral surface reauthorization or a stimulus package.
- FY 2021 APPROPRIATIONS
In addition to all these proposals, Congress will also have to pass a budget for FY 2021. House and Senate Appropriations Committees are poised to unveil their FY 2021 funding proposals over the next several weeks. The House Appropriations Committee will begin moving their bills through Committee at the beginning of July and hope to be on the floor by the end of the month. The Senate was on a similar trajectory, but recently their bills have been held up over discussions on how to move forward on additional COVID funding.
It is unclear how Congress will handle their annual spending bills, options include:
- FY 2021 spending bills could pass on their own or en bloc before the end of September, which is unlikely given the outstanding issues;
- FY 2021 spending bills could be delayed (which has been the practice for much of the last 20 years) and Congress could pass continuing resolutions for week, months, and even for the entire fiscal year; or,
- FY 2021 spending bills could also serve as a legislative vehicle for additional COVID emergency relief or stimulus funding.
WHAT TO EXPECT
At some point this year, Congress is likely to inject funding into transportation, what is not clear is the mechanism it will use and what form it will take. The most likely scenario is that Congress will pass some type of COVID emergency relief package similar in nature to the CAREs Act, which could include additional funding for highways, transit, and rail. At this point it does not. In addition, it’s thought that at some point FY 2021 appropriations bills will include some increases in overall funding. Right now, it appears that a long-term surface reauthorization is not seen as a priority this year and unless the President presses the Senate to act immediately, we will inevitably see an extension of the highway trust funded programs into next year.
At the same time, it appears that talk of an ‘infrastructure package’ will continue to be politicized and its unlikely that a massive infrastructure spending bill will pass, however, its likely that some items could make their way into an appropriations or emergency spending bill.
That said, now more then ever, things change quickly here in Washington, and it would be foolish to say that any of these concepts is either a sure thing or dead.