Federal-aid Highway - PowerPoint Presentation

Federal-aid Highway 101 Todd Kohr Office of Policy and Governmental Affairs September 2016

Overview of the Federal-aid Highway Program (FAHP) 2

In a Nutshell Federally-assisted, State-administered Each State must have a highway agency Funding tied to specific categories of roads States pay for maintenance Matching requirements (“Federal share”)Contract authority 3

The Federal Role Review and approve State proposals Develop regulations and guidance Promulgate standards Provide technical assistance Distribute “line of credit” (budget authority)Pay States for their eligible expenses 4

The State and Local Role Conceive, plan, design, initiate and construct projects Maintain and operate highways 5

Increasing mobility Increasing access Freeway Other principal arterial Minor arterial Major collector Minor collector Local street Functional Classification 6 “Federal-aid highway”: Any functional class of roadway other than a rural minor collector or [functionally] local street

~25% of U.S. Road Miles Are Eligible for Federal Assistance Other Federal-aid highways (19%) Interstate (subset of NHS) (1.0%) Other National Highway System (NHS) (4.0%) Other public roads (76%) “ Federal-aid highways ”; generally eligible Generally ineligible (exceptions for bridges and safety projects) 7

Total U.S. Highway Spending, 2012 Total Highway Spending Capital Outlay $221.3 B $105.2 B 8

What is Contract Authority (CA)? Budget authority that may be obligated w/o appropriations act Treasury doesn’t pay until appropriation of liquidating cashSince 1974, only available to trust-funded programs(with receipts from taxes related to the programs)Almost all FHWA program have CAFAHP is largest CA program (by far) government-wide 9

How Does Legislation Impact FHWA Programs? 10

Lifecycle of Federal-aid Highway $ Congress authorizes funding FHWA distributes funding Congress limits obligation of funding FHWA obligates funding (at States’ request) The U.S. Treasury pays States 1. Authorize 2. Distribute 4. Obligate 3. Limit 5. Outlay 11

Authorization vs. Appropriations Act Authorization Multi-year (usually) Authorizes programs; sets rules Provides $ for CA programs “Extension” Appropriations Each fiscal year May set temporary rules Sets obligation limit; provides $ for General Fund programs; appropriates liquidating cash “Continuing resolution” When? Rules? Funding? Partial-year? 12

5. Outlay 2. Distribute 1. Authorize 3. Limit 4. Obligate Authorization Act Contract authority Step Legislation Mechanism Formulas, other Authorization Act Authorizes and Funds… 13

4. Obligate Step Legislation Mechanism 5. Outlay Liquidating cash 2. Distribute Formulas, other 1. Authorize Authorization Act Contract authority 3. Limit Appropriations Act Obligation limit …and Appropriations Act Limits Obligations 14

5. Outlay 2. Distribute 1. Authorize 3. Limit 4. Obligate Contract authority (CA) Two Types of Budget Authority 5. Outlay 2. Appropriate 1. Authorize 3. Distribute 4. Obligate Appropriated budget authority (ABA) 15

How Does the Highway Trust Fund (HTF) Work? 16

In a Nutshell User tax-based mechanism to fund most Federal surface transportation programs Revenues from variety of sources, but primarily fuel taxes (18.4¢/gallon gasoline, 24.4¢/gallon diesel) Most $ to Highway Account (some to Mass Transit Account)In recent years outlays > incomeCongress has ensured solvency via General Fund transfers 17

Federal Taxes on Gas & Diesel Fuel 0.1 ¢ L.U.S.T. Trust Fund 15.44 ¢ (21.44 ¢ on diesel) Highway Account 2.86 ¢ Mass Transit Account Effective October 1, 1997 18.4 ¢ / gallon (24.4 ¢ on diesel) 18

…plus Federal Truck User Taxes Item Tax Truck sales 12% of retail price for trucks over 33,000 lbs. or trailers over 26,000 lbs. gross vehicle weight rating Truck use Tires 9.45 cents for each 10 lbs. exceeding 3500 lbs. maximum rated load capacity (4.725 cents for bias-ply or super single tire) Up to 55,000 lbs. No tax Over 55,000 lbs. $100+$22/1000 lbs. ($550 max.) 19

20 Revenue Infusions ($ Billions) Fiscal Year Authorization Period To Highway Account To Mass Transit Account 2008-2010 SAFETEA-LU & extensions 29.7 4.8 2012-2015 MAP-21 & extensions 1/ 32.8 6.0 2016 FAST Act 52.0 18.1 2017 FAST Act 2/ 0.1 2018 FAST Act 2/ 0.1 Total114.728.9 1/ After sequester 2/ Scheduled for 10/1/16 and 10/1/17, respectively

How Does FHWA Distribute Highway Funding? 21

In a Nutshell 92% of $ go to States by statutory formula (“apportionment ”) Other $ for “allocated programs” ( Federal lands, ferries, R&D, etc.)Allocated (8%) Apportioned (92%) 22

Apportionments (NHPP, STBG, etc.) Distributed by formula specified in law Distributed on October 1 st Withdrawn only by law All States are recipients 23

Allocations (Everything Else) No formula specified by law Distributed throughout the year Discretionary grants may be withdrawn by administrative action Only some States are recipients 24

Apportionment Under FAST Act Authorize lump sum for all apportioned programs Calculate each State’s total apportionment Adjust as needed to ensure 95% rate-of-return Distribute State’s “lump sum” among programs 25

Distribution Among Programs Natl. Highway Freight Program (NHFP) National total for program x State’s share of total formula $ …minus set-aside for Metro Planning National Highway Performance Program (NHPP) 63.7% of remainder, plus any “supplemental NHPP” Surface Transportation Block Grant Program (STBG) 29.3% of remainder, plus any “supplemental STBG ” Highway Safety Improvement Program (HSIP) 7.0% of remainder, minus set-aside for railway-highway Congestion Mitigation & Air Quality Improvement Program (CMAQ) State lump sum (net of NHFP) x FY09 CMAQ as share of State’s FY09 total Metro Planning State lump sum (net of NHFP) x FY09 Metro Planning as share of State’s FY09 total …plus funds set aside under NHFP 1. 2 . 3. 4 . 26

Set-asides from State Apportionments Program State Planning & Research Rail-Hwy Crossing Off-System Bridges Transportation Alternatives (TA) NHPP 2% STBG 2% * $835-850M nationally HSIP 2% $230-350 M nationally CMAQ 2% NHFP 2% *Amount equal to 15% of State’s FY 2009 Highway Bridge Apportionment 27

Transfers Between Programs Any Apportioned (Formula) Program Any Other Apportioned Program Up to 50% …Except, No Transfers Any Apportioned (Formula) Program Rail-Highway Grade Crossing $ Metro Planning $ STBG & TA $ sub-allocated based on population 28

Most Funds Available for 4 Years FY16 FY17 FY18 FY19 Good Through: 16 17 18 19 17 18 19 20 18 19 20 21 19 20 21 22 Funds lapse if not obligated within their period of availability Funds For : 29

Federal Funds are Not Upfront Cash Contractor does work Contractor bills State State submits voucher to FHWA FHWA reviews voucher and sends payment request to Treasury Treasury pays State 30

What is an Obligation Limitation(and How Does it Work)? 31

In a Nutshell Annual ceiling Congress sets on ability to obligate Fed-aid $ Applies to almost all programs and funding Each State receives single pool to use with its formula $FHWA redistributes among States any limitation that wouldn’t be used by end of year 32

Key Characteristics Good for 1 year Applies to total FAHP State-by-State “formula” limit Oct 1, 2015 – Sep 30, 2016 33

“Formula” Limitation is Like a Fisherman’s Catch Limit 34

Add Stock to the Pond on October 1 35

…and Then Set the Catch Limit 36

Catch any Fish, but Only 18 7 NHPP 5 STBG 3 CMAQ 3 HSIP OR……. any other combination that equals 18 + + + = 18 Left for Next FY 37

Which Programs ArePart of the FAHP? 38

Fixing America’s Surface Transportation (FAST) Act Signed into law Dec. 4, 2015 (P.L. 114-94) Highways, highway safety, transit, research, and railroads 5-year legislation – FY 2016-2020 $305 B in total authorizations $226 B authorized for FAHP $70 B in transfers to keep HTF solvent Federal-aid Highways (74%) Transit (20%) Motor carrier safety (1%) Highway safety (1.5%) Rail (3%) 39

Apportioned Programs Under FAST Average annual highway apportionments, FY 2016-2020 ($ billions) 40

[Most] Allocated Programs under FAST Emergency Relief Program Federal Lands Transportation Program Federal Lands Access Program Tribal Transportation Program Highway R&D ProgramsTerritorial and Puerto Rico HighwaysOn-the-Job Training Supportive Services Disadvantaged Business Enterprise Supportive Services Ferry Boats and Terminal Facilities TIFIA (credit program) 41

[Most] Discret. Programs under FAST Nationally Significant Federal lands and tribal projects (Subject to appropriation) FASTLANE (Natl. Significant Freight and Highway Projects) (Project selection administered by new Bureau) Adv. Transportation & Congestion Mgmt. Tech. DeploymentSurface Transportation System Funding Alternatives Tribal Highway Safety Highway Use Tax Evasion Work Zone Safety Grants 42

So to Wrap Things Up… 43

Lifecycle of Federal-aid Highway $ Step Legislation Mechanism 5. Outlay 2. Distribute 1. Authorize 3. Limit 4. Obligate Authorization Act Contract authority Formulas, other Appropriations Act Obligation limit Liquidating cash 44