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A limitation is placed on Federal-aid highway and highway safety construction program obligations to act as a ceiling on the obligation of contract authority that can be made within a specified time period, usually a fiscal year, regardless of the year in which the funds were apportioned. These limits are imposed in order to control the highway program spending in response to economic and budgetary conditions.

Continuing Provisions

The majority of the limitation is distributed among the States based on each State’s relative share of the total of apportioned funds subject to the limitation to all States for the fiscal year. [1102(c)(6)]

Prior to distribution, a portion of the limitation is set aside for administrative expenses, the Highway Use Tax Evasion program, the Bureau of Transportation Statistics, and other programs funded from the administrative takedown at 100 percent of the funding available for these programs. [1102(c)(1)]

Certain Federal-aid highway programs—Emergency Relief, a portion of the Minimum Guarantee program ($639 million per year), demonstration projects authorized prior to TEA-21, and balances from the old Minimum Allocation program—are exempt from the obligation ceiling. [1102(b)]

The law provides for a redistribution in August of each year of the obligation ceiling from those States or programs unable to obligate their share of the ceiling to other States or programs that are able to obligate more than their initial share of the ceiling. [1102(d)]

Key Modifications

Several programs that received limitation under ISTEA equal to 100 percent of their available funding—such as National Recreational Trails, Ferry Boats, and research and Intelligent Transportation System programs—now receive limitation on the same basis as other Federal-aid highway programs; that is, in the ratio of the overall limitation for the fiscal year to the new contract authority for the fiscal year subject to the limitation. [1102(c)(5)]

Limitation set aside for selected programs—the Appalachian Highway Development System, High Priority Projects, Woodrow Wilson Memorial Bridge, and a portion of the Minimum Guarantee program ($2 billion per year)—is available for more than 1 fiscal year. This "no-year" limitation carries over and is available until it is obligated, therefore these programs will not be part of the August redistribution of obligation limitation described above. [1102(c)(4), 1102(g)]

Limitation set aside for research programs is also multi-year, but may be carried over for only 3 years. [1102(e), TRA 9002(b)(2)]

Within the overall Federal-aid highway program obligation ceiling, individual ceilings are set for administrative expenses [1102(I)] and research programs authorized under section 5001(a) of TEA-21. [5002]

TEA-21 establishes a mechanism where funding is shifted from certain programs and redistributed to the States to use as STP funds. Programs affected by this provision are those which are subject to the obligation limitation but are not apportioned to the States. Under this provision, any funds authorized for the fiscal year for these programs which are not available for obligation due to the imposition of a limitation are pulled back and redistributed to the States by formula. [1102(f)]

As part of the new budgetary treatment of highway and transit programs, funding levels for highways are keyed to the projected tax receipts to the Highway Account of the Highway Trust Fund and will be adjusted as new receipt projections and actual receipts become available. If the authorizations for theFederal-aid highway program are adjusted as a result of this provision, the obligation ceiling will be adjusted by an equal amount. [1102(h) and section 251(b)(1)(B)(I)(cc) of the Balanced Budget and Emergency Deficit Control Act of 1985 as amended]

September 14, 1998

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