US states face $9bn in transporation funding cuts

A rescission measure in the US' current transportation spending programme due to expire 30 September will require states to forego $8.7bn of unspent contract authority. States are urging Congress to repeal the measure, which they say could 'nullify' the effects of the economic stimulus money.

States are urging Congress to repeal a law that threatens to deprive them of nearly $9 billion of spending authority under the US’ current transportation spending programme.

The programme, a $244.1 billion transportation authorization bill known as SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users), was enacted in August 2005 with a provision to take away from states money that they do not spend by the time the bill expires on 30 September, 2009.

US road projects:
threatened by rescission

The provision, known as a rescission, is a common measure used to capture unused budget authority in bills. Former Federal Highway Administration deputy chief counsel Edward Kussy, now a partner at law firm Nossaman, said the rescission was worked into the bill as a way to get the bill to “score”, or cost less. The bill’s sponsor, Republican Alaska Representative Don Young, wanted a higher score, while the Bush administration wanted a lower score, Kussy recalls.

By requesting that $8.7 billion in unspent contract authority be given back, the rescission allowed the bill to score lower and get the president’s approval. “So both sides got what they wanted. Well, now it’s come time to pay the piper,” Kussy said.

With just two days left until the SAFETEA-LU authorisation expires, states are scrambling to figure out the impact the rescission would have on their budgets and urging Congress to repeal the measure. The rescission would not take money away from projects they’ve already contracted out, Kussy explains, but it would crimp their ability to obligate further projects.

According to the American Association of State Highway Transportation Officials (AASHTO), an industry group, the rescission could take away nearly $800 million from California, almost $750 million from Texas and more than $400 million from New York’s transportation budgets.

The cuts would come at a time when Congress has just passed a massive $787 billion economic stimulus package that was loaded with $27 billion of funds for highway improvements. AASHTO president John Horsley said in a statement that the rescission would “result in real program cuts for all the states” and “essentially nullify the benefits from the economic recovery efforts”.

The National Association of Governors has also urged Congressional leaders to repeal the rescission measure within SAFETEA-LU before the cuts take effect on 30 September.

The cuts also coincide with heated debate over the reauthorisation of the US’ transportation spending programme. Last week, the House passed an interim reauthorisation that will extend states’ contract authority under SAFETEA-LU for 3 months. Other members of Congress are pushing for an 18-month extension of SAFETEA-LU, while Jim Oberstar, the Democratic chairman of the House of Representatives Transportation and Infrastructure Committee, wishes to pursue a new six-year, $500 billion transportation spending programme.

Kussy said the extensions do not address the rescission, which he believes was meant as an “inducement to make Congress pass the next [transportation reauthorisation] bill on time”.

The previous reauthorisation bill, the Transportation Equity Act for the 21st Century (TEA21), was extended 12 times at various lengths between 2003 and 2005, when Congress passed SAFETEA-LU.

“During that time there was a plus balance in the Highway Trust Fund, so the extensions didn’t need extra money,” Kussy said. This time, though, the trust fund, the main source of funding for the US' highways, is in the red and has already required two emergency appropriations, complicating ongoing extensions.

Kussy said he favours an 18-month extension of SAFETEA-LU to give Congress more time to debate how to raise money for the measures in Chairman Oberstar’s bill.