How did additional funding for public transit go from $85 billion (really $110 billion) in President Biden’s American Jobs Plan, down to $48.5 billion in the June bipartisan infrastructure “framework,” to $39.2 billion in the final bipartisan infrastructure deal?

The Original March 2021 AJP

The original American Jobs Plan was not presented to the public in traditional terms (either in terms of federal agency spending, or else in terms of budget functional category spending, which are the two traditional breakdowns). The White House invented its own categories, which became known as “buckets,” that included cross-jurisdictional slugs of funding. As originally announced by the White House on March 31, 2021 and then clarified in late May, the “AJP” called for $2.2 trillion in above-baseline spending over ten years, offset by a net $1.7 trillion in tax increases over the same period, for a total of $529 billion in net deficit increases over a decade.

The original bucket-jurisdiction proposal made by the White House was, in retrospect, bad for mass transit because it treated the electric vehicle concept as being the same thing across all modes. According to the White House, in essence: an electric car is the same as an electric tractor-trailer is the same as an electric mass transit bus is the same as an electric school bus.

But, in reality, electric cars and electric tractor-trailers are not going to share the same charging stations, nor will transit buses, nor will school buses. And the Federal Transit Administration already has a low-no emission bus program, and it is embedded deeply in the middle of the big FTA budget account and can’t be pulled out. So the emphasis on all things EV being in the same funding bucket suggested by the White House was not helpful in terms of focusing on mass transit spending, because the White House’s approach separated electric transit buses from the rest of mass transit.

When it came to transportation, here were the funding buckets suggested by the White House in the original AJP, as reflected in the USDOT Budget Highlights document (the port money and the resilience money are DOT-only portions of much larger funding buckets):

Of the $140 billion dedicated to DOT for widespread adoption of EVs, $100 billion was for rebates to new EV light duty vehicle buyers, $25 billion was for grants to mass transit agencies for electric transit buses, and $15 billion was to go towards a national EV charging network. The $20 billion for electric school buses was to go to EPA, not DOT.

The June 24 Bipartisan Infrastructure Framework

After an initial few weeks of negotiating directly with Senate Republican committee ranking members, through Shelley Moore Capito (R-WV), wore through, President Biden began negotiating the infrastructure part of his agenda with an ad hoc group of bipartisan Senators, led by Sens. Kyrsten Sinema (D-AZ) and Rob Portman (R-OH). Those negotiations culminated in a June 24, 2021 announcement by the White House that the group had agreed on a framework to spend $579 billion in guaranteed money above current spending levels on various kinds of infrastructure over the next decade, of which $312 billion would be for transportation generally.

The framework announced by the White House and the Senators kept the bucket-based structure, for the most part, with some exceptions. Most importantly, the “BIF” combined the roads-bridges bucket with the transformative projects bucket, for a combined “Roads, Bridges and Major Projects” bucket. Second, the BIF jettisoned the proposed $100 billion in EV rebates until subsequent legislation, leaving only the EV charging, transit bus, and school bus funds in the scope of the infrastructure bill.

This $40 billion for other EV funding was reduced by the June 24 framework into $15 billion, which was then broken up into two buckets in the framework, of $7.5 billion each. In the White House press announcement, they were called “EV infrastructure” and “Electric buses/transit.” But in the slightly more precise summary table put out by Senator Sinema, they were called “EV: Infrastructure” and “Low and no carbon bus, ferry.”

As it turns out, that low and no carbon bus money wound up going entirely for school buses, not transit buses. All of the money for electric mass transit buses had already been consolidated into the “Public Transit” bucket in the June 24 deal, taking new above-baseline transit funding from $110 billion in the President’s original plan ($85 billion in the transit bucket plus $25 billion for electric transit buses from the EV bucket) down to $48.5 billion in the June 24 framework. For apples-to-apples modes, the $579 billion in the June 24 framework was $253 billion less than the amounts proposed for the comparable programs in the original March 2021 AJP, as best we can tell:

President Biden and his team had signed off on a framework that reduced the total above-baseline funding for roads, bridges, and major projects by 31 percent ($49 billion) from the combined total in the original American Jobs Plan. But the White House had also endorsed a framework that reduced above-baseline funding for public transit from $110 billion (including the electric transit buses) to $48.5 billion, which was a 56 percent reduction from the original request.

And transit spending would soon be reduced further.

Exchange of offers

Throughout July and August, the bipartisan Senate group kept up discussions with the White House. A few Senators from the bipartisan group were assigned to each funding bucket as a working group, and they exchanged proposals with the White House and got technical advice from Senate committees.

But, in Congress, nothing is final until everything is final, so eventually, Republicans (led by Rob Portman) and Democrats (led by Steve Richetti at the White House and Kyrsten Sinema on the Hill) started exchanging “global offers” that traded concessions in one working group’s funding bucket for giveaways in another working group’s funding bucket.

Only one of these offers got leaked to the media, and it was the global offer from Democrats to Republicans at 6 p.m. on Sunday, July 25, 2021. From a transportation point of view, the most interesting thing about this offer is that it does not mention intercity rail issues at all, meaning that the topic had already been agreed to by both sides and “closed out” or put to bed.

The second most interesting thing about this offer was this:

In exchange for agreeing to Republican proposals on Highways, Dems offer the following on transit:

• Reduce Transit BIF agreement from $48.5B to $43.5B
• Transit reauth topline: $69.9B (reduced from previous offer of $73.875B), $15.6B for transit in year 5.
• Discretionary appropriations at $24.35B.

The offer also proposed a specific funding breakdown of the extra general fund money and proposed to accept new transit reauthorization policy language as previously presented to Republicans by Democrats.

So, the first $5.0 billion of the June 24 mass transit funding level in the BIF was given away by Democrats on July 25 in exchange for Republican concessions on the overall highway funding level (as opposed to the overall “major projects” funding level) and how highway funding was to be allocated between programs. (Republicans gave President Biden all the money he wanted for bridges, in particular).

There were at least one more round of offers after this, and whatever happened then, Democrats agreed to lower transit funding once again in exchange for other considerations elsewhere in the bill, this time by $4.4 billion. This time the reduction came entirely from the general fund advance appropriations for the Federal Transit Administration, reducing that amount of money from $24.35 billion to $20.00 billion, and reducing the total above-baseline mass transit funding provided by the bill down to $39.2 billion.

This was only the mass transit funding bucket, not the Federal Transit Administration funding total. As the bipartisan bill stands now, it has $21.25 billion in general fund advance appropriations for FTA, not $20.00 billion. The bill appropriates $1.0 billion to FTA for a new rural ferry program and $250 million to FTA for a new electric or low-emission ferry program. And the bill was intended to include an extra $1.25 billion for the regular FTA ferry program as part of the section 5307 program, but this got left out of the Senate-passed bill but may be added later in a technical corrections bill.

What now?

In any case, transit advocates feel slighted in that the original White House announcement of the BIF promised them $49 billion for the mass transit funding bucket (even though it was always $48.5 billion rounded up to $49) and they wound up getting $39.2 billion (plus the extra ferry funding from a separate bucket). The mass transit lobby wants its missing $10 billion (really $9.3 billion) back. (Even though the $1.25 billion for ferries from a separate funding bucket makes the loss really $8.05 billion, and if the corrections bill is enacted, an additional $1.25 billion for ferries will reduce the loss to just $6.8 billion.)

Transit advocates are looking to reopen the bipartisan bill by getting additional funding for mass transit as part of the budget reconciliation bill that will move through Congress in September and October.

But the missing $10 billion in transit funding was not just “dropped” from the final bill. It was affirmatively traded away by Democratic negotiators at the White House and on Capitol Hill, in exchange for other negotiating concessions elsewhere in the bill from Republicans.

In any negotiation of this magnitude, you can’t necessarily reopen any part of the deal without reopening the whole thing. Without knowing what, precisely, the Democrats traded the extra transit spending for, it is hard to know if those trades were worthwhile. But, if Democrats now seek to reopen the deal and add back extra mass transit funding via reconciliation, members of the bipartisan Senate negotiating team might feel obligated to reopen the other parts of the bill that were negotiated in exchange for the lowered transit funding.

For example, it was clear that Davis-Bacon prevailing wage applicability was one of the last sticking points in the bipartisan negotiations, and that Democratic insistence on Davis-Bacon applying to the private as well as the taxpayer-provided funding flowing through a proposed national infrastructure bank was such a dealbreaker that the negotiators wound up jettisoning the entire $20 billion I-Bank from the final deal. If the deals that were struck to reduce the size of the transit funding bucket get reopened in reconciliation, perhaps the creation of an national infrastructure bank free from Davis-Bacon applicability would be an acceptable quid pro quo for more transit money. (Or just a clarification that Davis-Bacon does not apply to any transit money provided by the reconciliation bill, or something else annoying like that demanded by the people to whom Democrats traded the extra transit money in the first place.)

Remember, if any of the Republican Senators who negotiated this bipartisan deal decide that adding extra transit money, or high-speed rail money, or whatever in the reconciliation bill is a violation of the terms that they negotiated with President Biden, all it takes is one Democratic member of the negotiating group to back them, and that money gets stricken from the reconciliation bill. Supposedly, these complaints about items in reconciliation that might be seen as re-opening the bipartisan infrastructure bill are being handled by the White House, who will then take them up with Congressional Democratic committee chairmen.