September 14, 2018

House and Senate negotiators on a package of four fiscal 2019 appropriations bills, including the Transportation-HUD bill, met yesterday but were unable to complete negotiations, citing numerous policy provisions still in disagreement. It now appears likely that Department of Transportation programs will be funded starting October 1 by a short-term continuing resolution (introduced yesterday), at least for a while.

The legislation in question (H.R. 6147) is a “minibus” package containing the FY19 Agriculture, Financial Services and General Government, Interior and Environment, and Transportation-HUD bills.

Although House Appropriations chairman Rodney Frelinghuysen (R-NJ) and Senate Appropriations chairman Richard Shelby (R-AL) both praised the work done by the negotiators, House ranking minority member Nita Lowey (D-NY) said that House Republicans were unwilling to drop their insistence on “poison pill riders.” And she cited one funding amount that will be a major stumbling block between now and the elections – the refusal of Republicans to provide additional money for election security grants (the Federal Election Commission is funded in the FSGG bill, which makes it the logical place for such appropriations).

Transportation-HUD. With regards to the Transportation-HUD bill, the House and Senate negotiators have apparently settled all of the disagreements over dollar amounts in the bill, but still have not settled several of the policy provisions in disagreement. House subcommittee chairman Mario Diaz-Balart (R-FL) said that the final bill “doubles down” on the increases in general fund discretionary appropriations for infrastructure in last year’s bill, and his Senate counterpart Susan Collins (R-ME) said that she was convinced that her bill, at least, could be finalized and sent to the White House by September 30. But Senate subcommittee ranking member Jack Reed (D-RI) said that legislators should “focus on bridges, roads and transit for infrastructure riders, instead of riders on the bill.”

The statements made by the legislators at the meeting revealed a few details of what has already been agreed to:

• The net discretionary funding total for the conference agreement on the THUD bill is $71.1 billion, which is smaller than either the House ($71.8 billion) or Senate ($71.4 billion).
• The amount of supplemental highway and bridge funding in the final bill out of discretionary general fund money is $3.25 billion, less than the House’s $4.2 billion and slightly less than the Senate’s $3.3 billion.
• The conference agreement contains nearly $300 million for a new port infrastructure grant program that was not in either the House or Senate versions of the bill.
• The conference agreement contains an exemption from the new electronic logging device (ELD) rule for certain trucks used to transport livestock.
• The conference agreement contains language that “holds DOT accountable” in its implementation of the BUILD grant program and the mass transit Capital Investment Grant program.

Continuing resolution. There were two separate appropriations conference meetings yesterday. The conference on the four-bill minibus was preceded by a conference on the two-bill minibus featuring the mammoth Defense and Labor-HHS-Education bills, and the latter went much better. A $1.7 trillion conference report was filed late yesterday afternoon (legislative text is here and the joint explanatory statement is here), and that conference report also contains a continuing resolution (CR) that will fund the federal government at pro-rated 2018 enacted levels through December 7, 2018 in the absence of enacted full-year appropriations for 2019.

President Trump had been giving out mixed signals (to say the least) about whether or not he was willing to sign a stopgap CR in the absence of significant funding for a US-Mexico border wall. By packaging the CR with the Defense bill, Congressional leaders have forced the President to either accept the CR or shut down large swaths of the Pentagon on October 1. The House is not in session next week but the conference report containing the CR is expected to pass both chambers easily in the final week of September.

The CR is Division C of the conference report, and it is a “clean” CR that does not make any major policy or funding changes. It contains the usual boilerplate language prohibiting agencies from making a lot of grants under a CR that would “impinge on final funding prerogatives” (section 108) and directing agencies that, while operating under the CR, “only the most limited funding action of that permitted in the Act shall be taken in order to provide for continuation of projects and activities” (section 109).

The CR does not contain any extension of the Airport and Airway Trust Fund, so taxes and spending authority for that fund will expire at midnight on September 30 unless a separate extension is enacted.

Like every CR, this one contains a few account-level “anomalies” – carve-outs for programs that would not be able to function normally under a clean CR. Almost all of these were requested by the Office of Management and Budget, and one of those relates to the Railroad Rehabilitation and Improvement Financing (RRIF) loan program.

Section 135 of the CR fixes a problem caused by a provision in the fiscal 2018 omnibus appropriations act. The omnibus appropriated $25 million for the Federal Railroad Administration (FRA) to use to pay for the credit risk premium on new RRIF loans (instead of having the borrower pay the risk premium, which often makes RRIF loans unattractive financially). The omnibus also directed DOT to redefine a “cohort” of RRIF loans on an annual basis – loans made in each fiscal year would make up a different loan cohort and thus have different risk premiums.

The Office of Management and Budget determined that this was problematic, for two reasons. First, because there have been so few RRIF loans (only 35 loans were made between 2002 and 2015), they really can’t be broken down into yearly cohorts. But also, OMB determined that this provision would be a modification of the loans (not a simple credit re-estimate) and would cause DOT to have to spend the $25 million appropriated by Congress to repay risk premiums of old RRIF loans instead of subsidize new RRIF loans as Congress intended.

The language in the 2019 CR amends the 2018 omnibus to allow for multi-year loan cohorts.

Reminder: Every budget document, bill, hearing, report, debate and agreement on the fiscal year 2019 federal transportation and infrastructure budget can be found at www.enotrans.org/fy19