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Eno Transportation Weekly

President’s FY20 Budget Cuts DOT Appropriations $4.8 Billion, Meets FAST Act HTF Spending Targets, Keeps $200B Infrastructure Placeholder

March 11, 2019 

President Trump has released a fiscal year 2020 budget request today that calls for $84.1 billion in gross budgetary resources for the U.S. Department of Transportation today, a $3.5 billion decrease from 2019.

Because of the lateness of final fiscal 2019 appropriations action, this is another two-stage rollout. Today, the White House is only releasing the main budget overview document. The rest of the Office of Management and Budget documents will have to wait Monday, March 18. However, federal departments and agencies started releasing some of their own budget details this afternoon – the USDOT highlights document is here. We are constantly updating these at our must-bookmark FY 2020 Transportation Budget and Appropriations Reference Page at www.enotrans.org/fy20 (just keep scrolling down once you get on the page).

ETW will have much deeper analysis to come, but the general overview of the proposed budget for the U.S. Department of Transportation is below.

Top-line totals. 

The moment it was announced that the proposed FY20 budget would be adhering to the existing government-wide non-defense discretionary spending cap of $542.5 billion (down from $597.0 billion in FY 2019), it became clear that massive cuts in discretionary appropriations at most agencies would be necessary. At USDOT, gross appropriations (before amounts are reduced by offsetting collections or rescissions) in the FY20 budget total $21.90 billion, down $4.80 billion (18 percent) from the just-enacted FY 2019 level. However, obligation limitations on mandatory contract authority drawn from trust funds, which represent the bulk of the USDOT budget, follow the increases recommended by the FAST Act of 2015 for its final year (and the hard freeze on airport grants authorized by the recent aviation law), and rise to $61.32 billion, which is $1.33 billion more than last year.

FY 2019 FY 2020
Enacted Request Change
Discretionary Budget Authority (Gross) $26.70 billion $21.90 billion -$4.80 billion
Trust Fund Obligation Limitations $59.99 billion $61.32 billion +$1.33 billion
Mandatory Budget Authority (Gr0ss) $907 million $918 million +$10 million

An 18 percent cut in the gross level of appropriations versus the prior year is an extremely large swing, but it is important to remember just how gigantic the pile of money given to the Appropriations Committees by the February 2018 bipartisan budget deal was. For fiscal 2018 and 2019, the appropriators had so much money they had to invent new programs just to find ways to spend it all. The following table shows the last year at the pre-deal levels (2017), the 2018 and 2019 enacted levels, and the 2020 request, to put it all into perspective.

FY 2017 FY 2018 FY 2019 FY 2020
$19.48 billion $27.41 billion $26.70 billion $21.90 billion

$21.90 billion is still $2.4 billion more than the 2017 level (12.4 percent higher), and over three years that averages out to a 4.1 percent per year annual growth rate, which would be pretty healthy under normal circumstances. (FY 2018 and 2019 were far from normal.)

Major discretionary accounts.

Since 2006, five or six large budget accounts accounted for at least 90 percent of total USDOT discretionary appropriations each year. In 2017, there were five accounts that received discretionary appropriations of $500 million or more (TIGER grants, FAA operations, FAA capital, Amtrak’s national network, and mass transit capital grants). As a result of the extra money added by the 2018 budget deal, there are now 14 USDOT accounts that have received $500 million or more in either the 2018 or 2019 enacted appropriations acts or in the new 2020 budget request.

Compared to previous Trump budgets, this one seems a bit more creative regarding how it distributes the big discretionary dollars. While some things are predictable (politically unrealistic cuts to Amtrak and to mass transit Capital Investment Grants, all of which are certain to be restored by Congress), the budget proposes increases in BUILD grant funding (formerly TIGER), FAA capital programs, and the CRISI rail capital program. The budget does decrease the extra highway and transit formula funding from the levels provided in FY18 and FY19 (last in, first out), but it cuts highways much more than transit, and it proposes to appropriate $1 billion from the general fund to more than double the size of the INFRA discretionary grant program (formerly FASTLANE). And while the budget proposes to kill the federal-state partnership railroad grant program, it proposes a corresponding and massive increase in funding for the rail restoration and enhancement operating assistance grant program.

(Whether or not the MARAD accounts qualify as over $500 million is a strange one – the FY19 appropriations bill split up that account in twain, one for the State Maritime Academies and the other for the rest of MARAD non-security operations, but the FY20 budget proposes to combine them into one account again. So in the table above, FY19 shows two accounts as one.)

Infrastructure initiative.

As in last year’s budget request, the 2020 request includes a one-time “placeholder” amount of $200 billion in mandatory budget authority outside USDOT, in its own line item in the summary tables in the back of the main President’s Budget document, for an infrastructure initiative.  (The outlay effects of the $200 billion are shown in Summary Table S-6 on page 130 of the main budget message and make clear that, at least, the $10 billion revolving fund for GSA real estate purchases is still in there. ) But from what we can see of the documents thus far, there are no details on how that $200 billion is to be spent. Last year’s plan to use the $200 billion in real federal funding to leverage $800+ billion in additional investment from state and local governments and from private sector sources did not go over well on Capitol Hill or with most stakeholder groups, and it remains to be seen how closely the Trump Administration will adhere to last year’s plan in the new Congress.

OMB has released a new two-page fact sheet on the infrastructure initiative. It mentions specific discretionary investments in BUILD and INFRA grants listed below but does not address how the $200 billion in mandatory funding is to be allocated. But it does say that the $200 billion is separate from surface transportation reauthorization, but the surface reauthorization bill’s spending will be counted towards the nominal $1 trillion spending goal. For more on the infrastructure initiative, see this article in this week’s issue.

Versus FAST Act.

As mentioned above, the FY20 budget request strictly adheres to the levels of Highway Trust Fund spending authorized in the FAST Act of 2015. In 2020, this cuts both ways. The budget requests the FAST Act’s $1.332 billion increase in obligation limitations on HTF contract authority  (+$1.096 billion for highways, +$211 million for transit formula grants, and a total of +$25 million for safety agencies). But the FY20 request also leaves in place the $7.569 billion rescission in highway contract authority scheduled to take place on July 1, 2020 (see FAQ here). From a budget scorekeeping perspective, the Administration had little choice – if a spending cut is scheduled by a prior-year law to take place, then a proposal to repeal the cut is no different than a proposal to create new spending in the same amount. And if the proposal to cancel the rescission were proposed to be carried in the DOT appropriations bill, it would be scored as discretionary spending and would nullify all of the cuts proposed to keep total spending under the BCA cap level.

And once again, the budget request “tops off” the contract authority programs with extra general fund money – $500 million for mass transit formula grants, $300 million for highway formula grants, and $1.035 billion for the INFRA grant program that is nominally FHWA but which is administered by the Office of the Secretary. (We are showing it in the table below as a FHWA plus-up even though the actual appropriation was requested to be made to  OST.)

When it comes to the FAST Act authorizations for discretionary appropriations, the budget request is almost $1.5 billion below the aggregate authorization levels, but that is basically all Amtrak and mass transit new starts, which are usually the first things restored by the Appropriations Committees. The three new railroad grant programs created by the FAST Act are an interesting case – collectively, the three grant programs are authorized at a total of $650 million in FY20 and the request totals $880 million, but the request also zeroes out the federal-state SOGR program (authorized at $300 million) and somehow requests $550 million for the rail restoration and enhancement grant program, which was only authorized at $20 million (more on that in the rail section, below).

Modal summary.

Highways. The FY 2020 request maintains the FAST Act’s recommended obligation limitation of $46.365 billion on the federal-aid highway program, supplemented with an additional $300 million from the general fund (down substantially from $3.250 billion in FY19) and the usual $739 million (pre-sequestration) in contract authority exempt from limit. (All of the $300 million in general fund money for the Federal-Aid Highways account appears to be dedicated to the new discretionary rural highway bridge program.) In total, $47.404 billion in gross discretionary resources is requested for 2020, which would be a 3.8 percent decrease from 2019’s $49.258 billion.

This is complicated somewhat because, in the Office of the Secretary, $1.035 billion is requested for replication of the FHWA’s INFRA grant program with general fund dollars. This would more than double the size of INFRA for FY20, but because it is requested for OST, it is discussed under their header, below.

The budget proposes to eliminate the off-system bridge set-aside in the Surface Transportation Block Grant Program. Under the MAP-21 and the FAST Act, states must set aside from their STBGP apportionment an amount not less than 15% of the state’s FY 2009 Highway Bridge Program apportionment for use on bridges not on Federal-aid highways (“off-system bridges”).

The budget proposes a few rescissions of old discretionary FHWA appropriations (not contract authority) – $117 million from “miscellaneous appropriations,” $52 million from “miscellaneous highway trust funds,” and $40 million from old Appalachian Highways balances.

As mentioned above, the budget does not propose to repeal or reduce the $7.569 billion rescission in highway contract authority scheduled to take place on July 1, 2020 per the FAST Act – at least not in the DOT appropriations bill. (This issue is likely to get negotiated in the context of an infrastructure initiative.)

Aviation. The budget proposes a slight (-$70.8 million, or -0.7 of a percent) cut in the big FAA Operations account, to $10.340 billion.  But the FAA Facilities and Equipment account gets a $295 million increase (+10%) to $3.295 billion. Once again, the Administration proposes a major cut in the FAA Research, Engineering and Development account (-$71 million, or -37 percent) without really justifying why that kind of cut is necessary. The USDOT budget highlights document contains on page 29 a chart showing that $1.374 billion of the FAA request, across those three accounts, going towards NextGen, up from $1.100 billion in FY 2019.

The aviation authorization law enacted last October continued to flat-line contract authority for the Airport Improvement Program at $3.350 billion pear year for the umpteenth year in a row, and the budget requests an obligation limitation on that contract authority in an equal amount. While the 2018 and 2019 appropriations bills “topped off” that $3.350 billion per year with extra money from the general fund ($1.0 billion in 2018 and $500 million in 2019), the budget request proposes to end that practice.

Having learned the lessons of the past (that proposing to kill Essential Air Service subsidies, a program that only goes to rural America, as they did in FY18 raises the ire of Trump’s reddest-of-red-state allies), the budget proposes to continue the discretionary part of the EAS program at $125 million in FY 2020 (a $50 million cut from FY19 and a $25 million cut from FY18). The mandatory portion of the EAS program, funded by airline overflight fees, is anticipated to increase by $10.3 million, to $150.5 million, mitigating the proposed cut somewhat.

Mass transit. The FY 2020 request maintains the FAST Act’s recommended obligation limitation of $10.150 billion on the Transit Formula Grant account and supplements that with a $500 million slug of general fund money (down from $700 million in FY19). The $500 million is to be split 50-50 between the State of Good Repair formula grant program and the Bus and Bus Facility discretionary grant program. The budget proposes a slight haircut in the Administrative Expenses appropriation (-$2.6 million) and the elimination of the $5 million Technical Assistance and Training appropriation. But the request does assume $150 million for the Washington DC transit system, even though the statutory authorization for the funding (which was $1.5 billion over 10 years, per the 2008 PRIIA act) has now expired.

Like in previous years, the budget proposes to cut the Capital Investment Grants program. But while the previous two budgets proposed to take the funding level down to the minimum level necessary to maintain ongoing projects (meaning zero new projects, ever), the FY20 request is for $1.505 billion, which the budget says would be enough for $500 million in new projects. (A $2.552 billion appropriation was made in FY19.)

Of the $1.505 billion, $795 million is for new starts with signed grant agreement, $200 million is for the two core capacity projects that have signed grant agreements, and $495 million is for other projects that may become ready for §5309 CIG funding or the FAST 3005(b) pilot program during FY 2020, as shown in the table below.

The FY 2020 Budget Request for FTA Capital Investment Grants (49 U.S.C. §5309)

Million $$
Existing Signed §5309(d) New Starts Full Funding Grant Agreements
CA Los Angeles Regional Connector $104.90
CA Los Angeles Westside Purple Line Extension Section 1 $100.00
CA Los Angeles Westside Purple Line Extension Section 2 $100.00
CA San Diego Mid-Coast Corridor Transit Project $100.00
MA Boston Green Line Extension $150.00
MD National Capital Area Purple Line LRT $120.00
TX Fort Worth TEX Light Rail $20.39
WA Seattle Lynnwood Link $100.00
Subtotal, §5309(d) New Starts Existing Signed FFGAs $795.29
Existing Signed 5309(e) Core Capacity Full Funding Grant Agreements
CA Caltrain Peninsula Corridor Electrification $100.00
IL Chicago Red and Purple Line Modernization, Phase 1 $100.00
Subtotal, §5309(e) Core Capacity Existing Signed FFGAs $200.00
Other §5309 or Sec. 3005(b) Projects That May Become Ready in FY20 $494.85
Statutory 1% Oversight Set-Aside $15.05
TOTAL CAPITAL INVESTMENT GRANTS APPROPRIATION $1,505.19

Rail. The FY20 request is a mix of predictable and odd. Given the Trump Administration’s track record (and the overall constrained budget situation), it was predictable that the Administration would, once again, propose large cuts to Amtrak grants – cuts of 50 percent in the Northeast Corridor account (-$325 million) and of 53 percent in National Network grants (-$681 million). And, given the White House’s entrenched opposition to funding the Gateway Program of rail projects in New Jersey and New York, it was also predictable that they would propose to zero out funding for the Federal-State Partnership for State of Good Repair discretionary grant program, which is the FRA grant program that is the best fit for paying for Gateway projects.

It was less predictable that, in a year of massive funding cuts, the Administration would propose to increase funding for the CRISI rail grant program by 29 percent (+$75 million). And it was completely unexpected that the Administration would pick the runt of the FAST Act rail grant programs – the Rail Restoration and Enhancement Grant program, which only got a $5 million appropriation last year (and is only authorized at $20 million in FY20), and propose to give it $550 million in 2020. This is particularly odd given that the statutory purpose of this program, in 49 U.S.C. §22908, is to provide “operating assistance grants to applicants, on a competitive basis, for the purpose of initiating, restoring, or enhancing intercity rail passenger transportation.” Conservatives hate operating subsidies. Opposition to operating subsidies is usually the justification used by Administrations that propose massive cuts in the Amtrak National Network, yet here comes a massive program of new operating subsidies. The difference is that, by statute, R&E grants can cover no more than 80 percent of net operating costs in year one, 60 percent in year two, and 40 percent in year three.

The key word is “transitional.” The Administration says that it wants to phase out passenger rail operating subsidies. And under §22908, Amtrak is an eligible recipient of R&E funding, so the budget is apparently making R&E somewhat fungible with the actual direct Amtrak appropriation. Here is the summary section from the President’s Budget Message that emphasizes the $550 million for R&E grants as an integral part of the Administration’s Amtrak strategy:

The Administration believes that restructuring the Amtrak system can result in better service (at a lower cost) by focusing trains on shorter distance (less than 750 miles) routes, while providing robust intercity bus service to currently underserved rural areas via a partnership between Amtrak and bus operators. To accomplish this transformation, the Budget provides $550 million in transitional grants as States and Amtrak begin the process to restructure the network and States prepare to incrementally take financial responsibility for the newly created State-supported routes. The Budget also provides $936 million in direct grants to Amtrak, to support investment on the Northeast Corridor and existing State-supported lines, and to assist Amtrak in this transition.

The budget proposes an $8.6 million cut in Federal Railroad Administration Safety and Operations and a $21.6 million cut (53 percent) in FRA Railroad R&D. Once again, the Administration proposes to offset $50 million of the FRA operational account with new rail safety user fees, which the railroad lobby has successfully opposed every previous time it was proposed. The budget also proposes a couple of minor rescissions of past year funding, including a $53.4 million rescission from the FY 2010 high-speed rail account (if the Administration is successful in withholding the $929 million of FY10 money promised by the Obama Administration for California high-speed rail, the $53.4 million could be combined with the $929 million for new intercity passenger rail grants elsewhere).

The budget does not propose to continue appropriations for magnetic levitation grants ($10 million in FY19) or for RRIF loan credit subsidy funding ($17 million in FY19).

Office of the Secretary. Somewhat unexpectedly, the budget proposes an increase in BUILD grant funding (formerly TIGER) of $100 million, from FY19’s $900 million to an even $1.0 billion once again. This is combined with a new request for a $1.035 billion discretionary appropriation for the INFRA grant program (formerly FASTLANE), which would slightly exceed the $1.000 billion in HTF contract authority dedicated to the program in FY20 (and that latter number will be decreased by close to ten percent because of the application of the obligation limitation).

Regarding INFRA, the USDOT Budget-in-Brief says that “While the FAST Act authorized program focuses the bulk of its resources on the national highways, the supplemental $1 billion proposed in the FY 2020 Budget will have increased flexibility to address multimodal freight projects, including freight rail, port, and inland waterway surface transportation projects which enhance the Nation’s supply chains and economic competitiveness.” This presumably means that the cap on non-highway INFRA grants in 23 U.S.C. §117(d)(2) will not apply to the general fund money.

Elsewhere in OST, the Essential Air Service program has been discussed under the aviation header above. A slight increase in salary expenses for OST is matched by a request for $22 million for the Research and Technology office, more than doubling the FY19 appropriation of $8.5 million.

Safety. The HTF contract authority accounts at the Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration receive their FAST Act funding in the request without change. The general fund appropriation for NHTSA vehicle safety activities is decreased from $190 million in FY19 to $151 million in the FY20 request.

Maritime. The flood of money into the hands of the appropriators starting in FY18 led to a long-needed initiative to build new training ships for the five State Maritime Academies. In FY18, $300 million to buy the first ship was included in the appropriation for Maritime Administration Operations and Training, which more than doubled the size of the account, from $176 million in FY17 to $514 million in FY18. Then, last year, the appropriations act split this up into two different accounts – $149.4 million for Ops and Training, and $300 million for SMAs. The FY20 budget recombines those two accounts into one, at $377.5 million, but budget documents show that $135 million is for the traditional Ops and Training role, while $242 million is for the SMAs. Of that latter amount, the highlights document says that $205 million is for a third training ship (MARAD is replacing the ships in the order of the size of the state academy, and after the two big ones, the academies (and the ships) get smaller.

The Maritime Security Program is once again at $300 million, but the budget does propose rescinding $25 million in prior year balances. The budget also proposes killing the Aid to Small Shipyards program and skipping a year of new funding for the title XI shipbuilding loan program, but both of those are top priorities for the Senate Appropriations Committee and will certainly be restored.

 

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