Last COVID Bill of 2020 Gives An Additional $45 Billion to Transportation

Last COVID Bill of 2020 Gives An Additional $45 Billion to Transportation

December 22, 2020  | Jeff Davis

The final major legislation to be passed by Congress in 2020 contained another $0.9 trillion in COVID-related fiscal relief spread across two divisions of a 32-division omnibus bill. $45 billion of that is dedicated fiscal aid for transportation – air carriers, mass transit providers, state DOTs, airports, and Amtrak. When combined with the $68 billion these entities received in the CARES Act of March 2020, the total transportation-specific COVID relief provided will be $113 billion.

Proposals for a follow-up to the CARES Act varied widely – the House passed a mammoth $3.4 trillion wish list (the “Heroes Act”) in May, including another $31 billion in transportation-specific funding. Senate Majority Leader Mitch McConnell (R-KY) countered with a $0.9 trillion plan in July that had no transportation funding, and that didn’t go anywhere. House Democrats regrouped and passed a downsized $2.4 trillion version of Heroes in October, that saw the transportation portion bumped up to $76 billion. Then, in November, moderate Senators from both parties began drafting their own bill, which was released on December 1 and had a $908 billion total, of which $45 billion was for transportation.

The final bill generally resembles the bipartisan bill in both structure and overall price. (And McConnell is getting a lot of mileage crowing about how much the final bill resembles his July proposal that Democrats dismissed out of hand as being inadequate to the task.) But it seems that the $45 billion total for transportation aid used in the bipartisan bill acted as a limiting factor for the final bill – the relative priorities for aid to transportation modes changed, but it all still had to add up to $45 billion and no more, so there were winners and losers in the final negotiations. In billions of dollars:

March May July Oct. Early Dec. Late Dec.
CARES Heroes McConnell Heroes Bipartisan Final
Act Bill #1 Bill Bill #2 Bill Bill
Air Carriers/Contractors 32.0 0.0 0.0 28.3 17.0 16.0
Airports 10.0 0.0 0.0 13.5 4.0 2.0
Amtrak 1.0 0.0 0.0 2.4 1.0 1.0
Mass Transit Providers 25.0 15.8 0.0 32.0 15.0 14.0
Over-the-Road Bus Companies 0.0 0.0 0.0 0.0 8.0 2.0
State DOTs/Highways 0.0 15.0 0.0 0.0 0.0 10.0
Total Grants for Transportation 68.0 30.8 0.0 76.2 45.0 45.0

The final bill does not contain any additional general-purpose fiscal relief for state and local governments beyond the $160 billion provided in the CARES Act, and the latest Census information on actual state and local tax receipts seems to indicate that the need for additional municipal fiscal relief is not as great as it appeared when the House was considering its earlier bills.

The final bill was almost blown up late in the process by a demand by Sen. Pat Toomey (R-PA) that the temporary Treasury-Federal Reserve lending programs, including the program that has loaned money to the New York City transit authority, be wound down by December 31. Toomey’s demand (which wasn’t anything new from him) was backed by Republicans, even when it threatened to kill the bill because Democrats perceived it as an attempt to prevent Joe Biden from being able to respond to this and future recessions.

Toomey said he was responding to reports that Democrats wanted to make these emergency lending programs permanent so that they could make the Fed a “lender of first resort” to municipal governments instead of a lender of last resort, potentially giving them endless credit at below-market interest rates. And behind the scenes, there was a push from Team AOC to use the emergency lending facilities created by CARES to fund a massive federal infrastructure initiative without ever having to go to Congress for permission (spelled out in this article in The Nation by AOC’s former CoS).  Toomey and Democrats eventually met halfway – funding provided by CARES to support the Treasury side of these programs was repealed, as were the specific programs themselves, but nothing in the final bill curtails the Fed’s preexisting authority under section 13(3) of the Federal Reserve Act to create new lending facilities much like them in exigent circumstances.

Appropriations through USDOT. The new bill (in Division M of H.R. 133, called the Coronavirus Response and Relief Supplemental Appropriations Act, or CRRSA, which doesn’t roll off the tongue like “CARES”) appropriates an additional $27 billion for the U.S. Department of Transportation for grants to transportation entities, in addition to $36 billion in appropriations from the CARES Act. Total transportation-specific relief via appropriations to DOT is $63 billion.

CARES New Total
Act Bill Aid
Grants-in-aid to Airports 10,000.0 2,000.0 12,000.0
Primary airports 9,900.0 1,750.0 11,650.0
GA/non-primary airports 100.0 45.0 145.0
Concessionaires 0.0 200.0 200.0
Small Community Air Serv. 0.0 5.0 5.0
Highway Infrastructure Programs 0.0 10,000.0 10,000.0
Formula funding (§133(b)) 0.0 9,840.1 9,840.1
Tribal roads 0.0 114.6 114.6
Puerto Rico highways 0.0 35.8 35.8
Territorial highways 0.0 9.5 9.5
Amtrak Northeast Corridor Grants 492.0 655.4 1,147.4
Coronavirus response 492.0 545.6 1,037.6
Replace commuter rail payments 0.0 109.8 109.8
Amtrak National Network Grants 526.0 344.6 870.6
Coronavirus response 287.0 169.7 456.7
Replace payments from States 239.0 174.9 413.9
Transit Infrastructure Grants 25,000.0 14,000.0 39,000.0
Urbanized Area (§5307/§5337) 22,764.6 13,271.3 36,035.9
Elderly-Disabled ($5310) 0.0 50.0 50.0
Rural Areas ($5311) 2,235.4 678.7 2,914.1
Total USDOT Grant Appropriations 36,018.0 27,000.0 63,018.0
  • Highways/state DOTs. The final bill appropriates $10 billion for “highway infrastructure programs,” $9.8 billion of which is to be apportioned to states and D.C. in the same ratio as the obligation limitation on the highway program for fiscal 2021 is distributed (so we will have those shares in early January, once the THUD appropriations bill is implemented). Funding must be apportioned within 30 days of enactment and the same percentage of funding must be suballocated based on population as was suballocated in the combined 2020-2021 period. Funds may be used for any purpose under 23 U.S.C. §133(b) or may be used for “costs related to preventive maintenance, routine maintenance, operations, personnel, including salaries of employees (including those employees who have been placed on administrative leave) or contractors, debt service payments, availability payments, and coverage for other revenue losses.” Crucially, a state may transfer some of its money to a “State, multi-state, international, or local public tolling agencies that own or operate a tolled facility that is a public road, bridge, or tunnel, or a ferry system that provides a public transportation benefit” for the same uses. The fact that the money is being distributed via the overly-political funding formula means that it has little do with COVID-related costs actually incurred, or to actual losses of revenue by states and municipalities. (More on that in the coming weeks.)
  • Mass transit. The final bill appropriates another $14 billion for grants to mass transit providers (in addition to the $25 billion appropriated in March in the CARES Act). This is about far more than lost revenue – total farebox revenues for all transit agencies in the country only add up to $16 billion per year (pre-COVID), per APTA, so  the $39 billion provided to date for COVID-related aid in transit represents almost two-and-a-half years of complete farebox revenue replacement. And looked at in comparison to operating expenses, $39 billion is almost 80 percent of one year’s operating expenses for every transit provider in the country. The problem is that the CARES money, like the highway money, was given out via a pre-existing formula that had little to do with operating expenses and nothing at all to do with revenue loss or increased operating expenses due to COVID. This created inequities where lots of small providers got much more money than they needed while many big providers used all of their CARES money in a few short months. The new bill tries to rectify that – $13.3 of the $14 billion is to be apportioned to urban areas via the pre-existing formula, but then the money gets redistributed – if any urbanized area stands to get a combined apportionment from CARES and the new bill that exceeds 75 percent of their 2018 operating costs, their excess over 75 percent gets redistributed over and over until everyone gets to 75 percent or until the money runs out. There is a special rule that would only apply to the NYC MTA that limits total grants to any provider to $4 billion until they obligate 75 percent of their combined apportionment, but the MTA already obligated and spent 100 percent of its previous $4 billion appropriation and it would not take the long to spend the rest of the money they get from the new bill. (TransitCenter has good estimates of how this money will be distributed.) In addition, $50 million goes to elderly/disabled formula grants and $679 million goes to rural transit providers, but not if their state’s combined apportionment from CARES and the new bill tops 125 percent of their 2018 rural operating costs.
  • Airports. The final bill appropriates another $2 billion for grants to airports. Again, the formula used to give out the $10 billion in the CARES Act was not well thought-out and created some massive inequities, so the new bill provides that no airport can receive money from the new bill if it was one of the airports that got more than four years of operating expenses out of CARES. Of the $2 billion, $1.75 billion is for primary airports for “costs related to operations, personnel, cleaning, sanitization, janitorial services, combating the spread of pathogens at the airport, and debt service payments,” to be distributed via the AIP formula, except that any money left over after initial distribution goes out in proportion to annual enplanements. $45 million goes to general aviation and non-primary commercial airports. And $200 million goes “to sponsors of primary airports to provide relief from rent and minimum annual guarantees to on-airport car rental, on-airport parking, and in-terminal airport concessions” (to be apportioned to airports strictly on a share-of-enplanements basis), but only if the concessionnaire has not received a second PPP draw.
  • Amtrak. The nation’s passenger railroad receives another $1 billion from the final bill, but over half of that money ($524 million) is actually a back-door bailout of state and local governments by letting Amtrak forgive those governments for their share of the operating costs of state-sponsored Amtrak routes, or local commuter rail use of the Northeast Corridor. A general proviso in the bill requires that Amtrak use its grants to “prevent further reductions to the frequency of rail service on any long-distance route (as defined in section 24102 of title 49, United States Code) except in an emergency or during maintenance or construction outages impacting such routes: Provided further, That the coronavirus shall not qualify as an emergency in the preceding proviso.”

Direct funding through Treasury. In addition to the aid appropriated through the Department of Transportation, the new bill (in title IV of Division N) makes available another $18 billion in direct funding to the Treasury Department to carry out transportation-specific grant programs, on top of $32 billion provided by the CARES Act for similar purposes.

CARES New Total
Act Bill Aid
Payroll Support Program Grants 32,000.0 16,000.0 48,000.0
Passenger air carriers 25,000.0 15,000.0 40,000.0
Cargo air carriers 4,000.0 0.0 4,000.0
Contractors 3,000.0 1,000.0 4,000.0
Over-the-Road Buses, etc. 0.0 2,000.0 2,000.0
Total Grants through Treasury Dept. 32,000.0 18,000.0 50,000.0
  • Airlines. The original payroll support program (PSP) for air carriers and contractors from the CARES Act was handled through Treasury, so the follow-up money, again based on CARES language, is at Treasury as well. A further $16 billion is provided that “shall exclusively be used for the continuation of payment of employee wages, salaries, and benefits” of passenger air carriers ($15 billion) and their contractors ($1 billion). If an airline got PSP money under CARES, their award under the new bill is $15 million times the carrier’s share of the CARES’ $25 billion. (There are more complicated justification procedures for any carriers that did not apply for PSP money the first time.) In exchange for the money, companies are again prohibited from doing stock buybacks through March 31. They are also required to recall to work any employees laid off since PSP expired, and to do so within 72 hours of getting their grant, and are then prohibited form furloughing or firing them again through March 31, 2021. Returning employees are to be compensated for lost pay and benefits between December 1 and the time of a carrier’s new grant agreement. The original CARES restrictions on executive compensation are reinstated, as are the requirements of CARES that authorize DOT to require air carriers to maintain some level of service to any destination they served before March 1, 2020.
  • National security businesses. The CARES Act provided $17 billion in emergency loan authority for “businesses critical to maintaining national security,” which was understood on Capitol Hill at the time to be Boeing. That company decided not to apply for a federal loan, and the Trump Administration has used that program to make loans to other business, including a big loan to a trucking company. The new bill fixes that by defining businesses critical to national security as those that “manufacture or produce aerospace-related products, civil or defense, including those that design, integrate, assemble, supply, maintain, and repair such products, and other businesses involved in aerospace-related manufacturing or production.”
  • Over-the-road buses. The final bill provides $2 billion (down from $10 billion in the bipartisan bill) to make emergency COVID relief grants to transportation entities that were left out of the CARES Act entirely. These are bus companies (not just the big over-the-road bus companies like Greyhound and Megabus, but also the thousands of smaller charter and tour bus companies, and school bus companies) but also companies that operate passenger vessels smaller than 2,400 passengers, and “any other passenger transportation service company subject to regulation by the Department of Transportation as the [Treasury] Secretary, in consultation with the Secretary of Transportation, determines to be appropriate.” Applicants must demonstrate that they have lost at least 25 percent of their revenues due to COVID (which should not be difficult for bus companies). There is no formula for giving out the money. Instead, the Treasury Secretary must “take into consideration information provided by the provider of transportation services, including— (i) the amount of debt owed by the provider of transportation services on major equipment, if any; (ii) other sources of Federal assistance provided to the provider of transportation services, if any; and (iii) such other information as the Secretary may require.” Awards under this section, combined with other COVID-related federal aid, cannot exceed a recipient’s total revenue earned by providing transportation during 2019. In exchange for the money, recipients must maintain payroll to the extent possible, refrain from furloughs and recall furloughed employees (taking into account seasonal shifts particularly in tour transportation).
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