/ Corporate / The Fast Act Authorizes Five-year Funding for Highway, Transit and Rail Programs

The Fast Act Authorizes Five-year Funding for Highway, Transit and Rail Programs

Matt Ball on December 7, 2015 - in Corporate, Transportation

For the first time since 2005, Congress has passed a long-term surface transportation bill that gives state departments of transportation and transit agencies years of certainty to develop their infrastructure projects.

The five-year, $305 billion bill – called the Fixing America’s Surface Transportation Act, or FAST Act – also includes intercity rail programs to cover all the surface travel modes in one piece of legislation.

“It’s a momentous occasion,” said Bud Wright, executive director of the American Association of State Highway and Transportation Officials. “States are now going to have some stability in funding” from the federal programs they rely on, he said. “But not just stability – this bill actually offers some growth in funding levels.”

The prior long-term bill expired in 2009, and Congress passed a series of short-term extensions before lawmakers produced a two-year bill in 2012 that has also been extended several times since it initially expired.

As a result, some states removed planned projects from their bid lists over the past year while others put off planning longer-term improvements until they could see certainty and funding levels from the Highway Trust Fund.

The FAST Act emerged quickly from a House-Senate conference committee that negotiated differences between separate bills passed in each chamber. The House passed it Dec. 3 in a 359-65 vote. The Senate followed with an 83-16 approval vote later the same day that sent it to President Obama to sign into law.

Seeing the bipartisan conference bill move to final passage, said Wright, “is a good capstone to a year in which not only the AASHTO staff but also many of our members [who lead state DOTs] have worked very hard to influence this legislation.”

 Wright: “It’s a momentous occasion.”

He said many state DOT members “have worked hard with their congressional delegations to make the important point about why transportation investment makes a difference.”

Paul Trombino, AASHTO’s 2015-16 president and director of the Iowa DOT, said: “It is a tremendous relief to know that with the FAST Act, state departments of transportation will have some reasonable long-term certainty regarding the levels of federal investments for surface transportation. We have long said that states, which are the primary implementers of the federal program, need a long-term federal commitment in order to plan for and invest in the kind of transportation projects the nation needs.”

In the FAST Act, lawmakers authorized about $226 billion in federal-aid highway spending through fiscal 2020, which includes nearly $11 billion for two new freight-focused programs, plus $8 billion for highway safety programs at the National Highway Traffic Safety Administration and the Federal Motor Carrier Safety Administration, more than $61 billion for transit and $10 billion for Amtrak and federal rail programs.

AASHTO’s chief operating officer, Jim Tymon, said an important feature of the bill is that it continues to allocate about 93 percent of federal-aid highway dollars through the pre-set formulas that help give states control of their project funding stream.

“This is important because it reinforces that traditional federal-state partnership that has really been the driver for the federal highway program for over a hundred years.” In addition, “states will still have the ability to decide which projects they want to fund with that money.”

Tymon said the FAST Act provides a first-year funding increase of about 5 percent in overall highway programs for state DOTs.

After the first year, most highway programs increase by 2-3 percent a year. However the bill cuts funding to cover the risk premium of the USDOT’s lending pool known as TIFIA, which the department says can leverage about $10 of financing for every dollar of that subsidy cost. The bill cuts the annual TIFIA support from $1 billion in 2015 to $275 million in 2016, and allows it to rise in stages to $300 million, so the program that offers low-interest, 35-year infrastructure loans will shrink.

It provides a sharper first-year increase of about 16 percent for transit spending, and pushes passenger rail spending about 9 percent higher in 2016. After that first year, though, authorized transit and rail spending will rise roughly at projected inflation levels.

More details are available at this special AASHTO website, including an AASHTO staff “first look” analysis, committee documents about the bill, state-by-state highway and transit allocations.

One of the two freight programs apportions money to states by the same formula that applies to their other federal highway funding.

The other is a discretionary grant pool for highway and freight projects of national and regional significance. That is similar in some ways to the USDOT’s TIGER grant pool, but this one would be protected within the Highway Trust Fund and outside the reach of annual appropriations debates, and Congress has built in a review period to accept or reject projects listed for the freight grants.

White House Press Secretary Josh Earnest told reporters at midweek that while the president looked forward to signing the FAST Act, the Obama administration had proposed a “substantially larger” surface transportation bill.

“So we would actually view this legislation as a step in the right direction, but only a first step,” Earnest said, “because we believe that there are more infrastructure projects that are worthy of funding that would create jobs in the short term and lay a long-term foundation for our ongoing economic strength over the long term. So we’ll see what Congress chooses to do from here.”

Wright and Tymon both told AASHTO’s Transportation TV that one disappointment with the bill was that lawmakers used a series of unrelated revenue provisions to fund it for five years, while most of the transportation industry would like to see Congress shore up the Highway Trust Fund for a much longer period through some user fee model.

“We’ve often talked about a sustainable, long-term source of revenue to fund transportation, and we didn’t get that in this bill,” Wright said. Without such a long-term revenue source, he said, transportation investment advocates and lawmakers will in just a few more years face the same questions of how to pay for the federal programs.

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