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1There is actually no firewall amount for FY 1998. The amounts shown reflect the amounts made available either as contract authority or appropriated budget authority.

Guaranteed Funding

New budget categories are established for highway and transit discretionary spending, effectively establishing a budgetary "firewall" between each of those programs and all other domestic discretionary programs. Previously the highway and transit discretionary programs competed for annual budgetary resources with most other domestic programs. [8101]

The new categories are still subject to budget constraints, but reductions in highway or transit spending will not allow increased spending in other programs. This removes the principal incentive to limit highway or transit spending.

The highway firewall "protects" the obligation limitation for Federal-aid Highways plus the motor carrier and other highway safety programs (highway safety grants and NHTSA operations and research) that have contract authority. [8101(c)]

The firewall amount for highways is keyed to the projected receipts to the Highway Account of the Highway Trust Fund and will be adjusted as new receipt projections and actual receipts become available. The adjustment will be determined each year, beginning with FY 2000, during the development of the President’s Budget. [8101(d)] When the firewall amount is adjusted, equal adjustments are made to the Federal-aid Highway obligation limitation [1102(h)] and authorizations. (See revenue aligned budget authority below)

The guaranteed amount for highways has two components: the amount behind the highway budgetary firewall and the authorizations for programs exempt from obligation limitation—Emergency Relief and a portion ($639M per year) of the Minimum Guarantee. [8103(a), 1102(b)]

The guaranteed funding for transit programs has a single component—the firewall amount—which is not keyed to Trust Fund receipts. There is no provision for adjusting the transit firewall amount. [8103(b)]

Beyond Guaranteed Funding - the Red Zone

Authorizations in TEA-21 for 1998-2003 exceed the guaranteed funding levels by $5B for transit programs and $15B for highway and all other programs.

The authorizations in excess of the guaranteed levels are in the budgetary "red zone" and remain part of the general discretionary budget category. Red zone funds may be made available through the annualbudget and appropriations process and must compete with other budget priorities for their place in the budget each year. [8101(c)]

Revenue Aligned Budget Authority (RABA)

Beginning in FY 2000, authorizations for Federal-aid highway and highway safety construction programs funded from the Highway Account of the Highway Trust Fund will be adjusted (increased or decreased) whenever the highway firewall amount is adjusted to reflect changed estimates of Highway Account revenue, that is, the budget authority will be aligned with the revenue. [1105]

In the case of an increase, a portion of the increase in authorizations is reserved for the Federal-aid highway and highway safety construction programs allocated by the Secretary of Transportation—programs that are not apportioned by statutory formula. The amount reserved is determined by calculating the ratio of the authorizations for the allocated programs to total authorizations from the Highway Account for Federal-aid highway and highway safety construction programs and applying this ratio to the additional authorizations. The resulting amount is divided among the various allocated programs in the same proportion that those programs receive authorizations exclusive of RABA. [1105]

The remainder of the increased funding is distributed to the States proportional to their shares of Federal-aid highway and highway safety construction apportionments from the Highway Account. Each State’s share is then divided proportionally among the following programs: Interstate Maintenance, National Highway System, Bridge Replacement and Rehabilitation, Surface Transportation Program, and Congestion Mitigation and Air Quality Improvement. [1105]

Should a decrease be necessary, the reductions in authorizations would be made in the succeeding fiscal year and applied proportionally to all Highway Account authorizations for Federal-aid highway and highway safety construction programs except Emergency Relief. [TRA 9002(e)]

September 14, 1998

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