January 18, 2019

As Reuters first reported, high-level meetings were held at the White House this week to discuss infrastructure, and at those meetings, the idea of reauthorizing surface transportation programs for a decade or more as part of an infrastructure initiative was discussed.

The impetus for this week’s meetings was to decide what infrastructure messages to put in the upcoming State of the Union address and what to put in the fiscal 2020 budget proposal. The State of the Union address was scheduled for January 29 but is now in flux as the Speaker has requested that the President reconsider the use of the House chamber during a government shutdown, and the budget is, by law, due on the first Monday in February (Feb. 4) but since most of the people at the Office of Management and Budget and the departments and agencies whose job it is to assemble the budget have been furloughed since December 21, that deadline isn’t going to be met either.

But ETW has been hearing for some time that a reauthorization proposal of ten or more years duration was under serious discussion, and it’s not hard to see why. Ever since the 2016 campaign, discussions of an infrastructure package have been hung up on One Big Number, usually a trillion dollars. The One Big Number is invariably reached by multiplying annual spending times number of years. Increasing either variable works.

To put it in perspective, let’s stretch out the amount of money that the federal government is already spending. The Congressional Budget Office’s most recent baseline (which, granted, was almost a year ago) took the actual appropriated funding levels for every budget account for fiscal 2018 and extrapolated them forward, with annual inflation increases for discretionary programs, for every fiscal year through 2028. To go farther than that, we simply kept increasing the discretionary numbers by 2.0 percent per year after that.

Here are total Highway Trust Fund obligation levels (obligation limitations plus exempt contract authority) from that CBO baseline for fiscal 2021 (the first year of any new reauthorization proposal) through 2030 (again, FY29 and FY30 are just 2.0 percent increases over CBO’s FY28 numbers), in billions of dollars:

Add those ten numbers together and you get $657 billion, which puts you well on the way to $1 trillion without increasing spending above baseline levels. The Reuters article added an interesting twist and said that a reauthorization of 13 years was under consideration, which was also the number of years of Interstate construction contract authority provided in the 1956 highway law. Extrapolating 2031 through 2033 with the same 2 percent per year bump, you get a FY 2021-2033 13-year baseline spending total of about $880 billion, which is within sight of a trillion.

(This is why we have six-year surface transportation bills in the first place. What became the 1991 ISTEA law came out of committee as a five-year bill providing $153 billion but was predicated on a gas tax increase. When the gas tax hike fell apart at the last minute, the committee added a sixth year to the bill to keep the One Big Number over $150 billion and disguise the fact that the annual spending levels had been cut significantly.)

There is, of course, the small problem of the fact that baseline spending levels are unsustainable by current revenue rates. CBO also estimated that those baseline spending levels would require about $160 billion in revenue increases or additional transfers from the general fund for the first eight years after the FAST Act expires (fiscal 2021-2028). In that last year of 2028, the Trust Fund is projected to run a consolidated cash flow deficit of $26 billion. One can extrapolate that the ten-year baseline revenue shortfall would be somewhere in the $215-220 billion range. Add three more years and the revenue shortfall for a 13-year reauthorization at baseline spending levels would be around $300 billion.