DALLAS – A Senate transportation appropriations measure for fiscal 2017 that would reclaim more than $2 billion of unobligated state highway contract authority from earlier federal funding allocations could wipe out the modest infrastructure investment gains in the recently enacted five-year federal funding bill, according to state and national transportation groups seeking to eliminate the provision.
The transportation appropriations bill adopted by the Senate last week would rescind $2.21 billion of unobligated funding in fiscal 2017, which begins on Oct. 1.
The cuts would be applied to federal highway programs that are most widely used by the states, said Jim Tymon, chief operating officer at the American Association of State Highway and Transportation Officials (AASHTO).
"The Senate's proposed 2017 rescission would cause big programming headaches for state DOTs because many states have planned for projects that would be funded from the specific federal program categories that would be subject to that rescission," Tymon said.
The rescission provision is not included in appropriations legislation for the Transportation Department on May 18 by a subcommittee of the House Appropriations Committee. The committee will meet Tuesday to consider that panel's transportation proposal.
Multiyear federal transportation funding bills, including the recently enacted Fixing America's Surface Transportation (FAST) Act, provide states with specific annual contract authority spending levels based on a formula that accounts for population and road miles in the system. However, lawmakers also cap what each state can spend in a given fiscal year by setting obligation limits that are less than the contract limits.
The FAST Act provides $44 billion of highway contract authority to states from the Highway Trust Fund in fiscal 2017 but sets an obligation limit of only $43.3 billion.
The accumulated difference between the authorized formula funding and the lower obligation limit will total $24 billion by the end of fiscal 2016, according to a letter sent to House Appropriations Committee leaders that was signed by top officials at AASHTO, the National Governors Association, and the National Conference of State Legislatures.
"These balances represent commitments to the states and have traditionally provided states with flexibility to apply the obligation limitation to each state's unique needs and top priority highway programs," the groups wrote.
The advocates said the proposed rescissions would significantly hamper state transportation departments' flexibility to allocate their annual federal funding.
"They could go so far as to force states to cut actual highway expenditures at a time when we need to be investing in our nation's infrastructure, potentially eliminating the modest investment gains made in the FAST Act," they wrote. "This is not a simple and harmless budgetary maneuver."
State transportation departments have already drawn up project lists for the year ahead, and most are on budget years that begin July 1 instead of the federal year that starts in October. Most state legislatures have already adopted their fiscal 2017 budgets, AASHTO said.
California would lose $190 million of unobligated funding authority from the 2017 rescission, according to an AASHTO projection, while Texas would lose $174 million. Other major cuts include New York's, at $106 million, and Ohio, at $102 million.
Congress pulled back unspent highway balances 14 times between 2002 and 2011 to offset other federal spending or to reduce the overall deficit scoring in long-term projections, AASHTO said.
The Senate's proposed fiscal 2017 cutbacks are in addition to $7.6 billion of unobligated rescissions set for the end of fiscal 2020 by the five-year FAST Act, said AASHTO policy director Joung Lee said.
"If this rescission were to happen, at best there would be a major reduction in states' flexibility to manage their highway programs," Lee said. "At worst, it could lead to cuts in federal funding for vital projects all over the country for that year."
