Analysis of Senate Engrossed
Amendment to H.R.3
as passed by the Senate on
The following is a five-year apportionment analysis (FY 2005
through FY 2009) developed by the FHWA's Office of Legislation and Strategic
Planning based on the Senate's Engrossed Amendment to H.R.3. (This is consistent with Senate Amendment
605, a substitute amendment for S.732 as introduced, which was subsequently
amended and passed by the Senate on 5/17/05).
To avoid confusion with the House version of H.R.3, this bill will be
referenced to as "the Senate Bill" for the remainder of this analysis.
The apportionments used in this analysis were based on a new
set of certified factors making use of the latest data available as of
September 2004 - (Bridge factors as of February 2005), that would
be used to compute actual FY 2005 apportionments upon passage of a multi-year
bill. The results of this analysis are
summarized in the attached "RTA-000-1435A.xls" Excel file.
Equity Bonus Provisions
Senate Bill includes a new "Equity Bonus" program, authorized as "such sums as
are necessary". This Equity Bonus would
replace the current law Minimum Guarantee approach ($1,000,000 minimum; keep
States as close as possible to an initial set of shares while raising States to
a specified percentage of their share of contributions to the Highway Account
of the Highway Trust Fund (HTF)) with a modified approach that would only
provide funding to States as necessary to bring them up to a specified
percentage of their share of HTF contributions, subject to certain floors and
ceilings. The Equity Bonus program
would be calculated iteratively, to ensure that all basic criteria are met even
after funding for some States has been adjusted.
Senate Bill specifies the following fourteen programs would be included in the
Equity Bonus computation: Interstate Maintenance, National Highway System,
Bridge Program, Surface Transportation Program, Congestion Mitigation and Air
Quality, Highway Safety Improvement Program, Appalachian Development Highway
System, Infrastructure Performance and Maintenance, Recreational Trails, Safe
Routes to School, Rail-Highway Crossings, Borders, Metropolitan Planning, and
the Equity Bonus itself.
The Senate Bill sets a target relative rate of return at 92%
for the Equity Bonus. However, a
special provision provides that certain States would receive the greater of 92%
of their share of HTF contributions, or their share of total apportionments
over the 6-year period of TEA-21. This
would include States with a population density of less than 20 persons per
square mile, a total population of less than 1 million, a median household
income of less than $35,000, based on the decennial census; or a fatality rate
on Interstate highways in 2002 of greater than 1.0 per 100 million VMT. Twenty-five States would qualify for this
provision. (AL-Alabama, AK-Alaska,
AZ-Arizona, AR-Arkansas, CO-Colorado, DE-Delaware, DC-District of Columbia,
FL-Florida, ID-Idaho, KY-Kentucky, LA-Louisiana, MS-Mississippi, MO-Missouri,
MT-Montana, NE-Nebraska, NV-Nevada, NM-New Mexico, ND-North Dakota,
OK-Oklahoma, SD-South Dakota, TX-Texas, VT-Vermont, UT-Utah, WV-West Virginia,
special provision in the Senate Bill requires that in any fiscal year 2005 to
2009, no State may receive less than 115% of its average annual TEA-21
apportionments. In addition, a
percentage ceiling relative to average annual TEA-21 apportionments is applied
at a set level for each individual year:
FY 2005-124%, FY 2006-128%, FY 2007-131%, FY-2008-137%,
FY-2009-250%. The annual growth
ceilings were to override all other provisions, except that no State may
receive a negative equity bonus, and no State may receive less than a set
percentage of its relative share of HTF contributions for each individual
fiscal year: 90.5% in FY 2005, 91% in
FY 2006 through FY 2008, 92% in FY 2009.
analysis was based primarily on apportionment factors representing the latest
available data as of September 2004 (Bridge factors as of February 2005)
with the exception of the CMAQ factors, which were projected using the most
recently available data concerning future non-attainment designations. As described below, the Highway Trust Fund
contributions have been modified in the latter years to reflect changes to the
taxation of gasohol and the crediting of gasohol taxes to the Highway
Account. The Senate Bill eliminated the
percentage takedown for administration, while the Metro Planning takedown was
increased to 1.5 percent. Additional
takedowns, mostly stated in the bill as specific dollar amounts, were applied
to individual programs.
The factors used to apportion funds for the Highway Bridge
Program were updated in February 2005 to take into account new information on
State transfers. The Surface
Transportation Extension Act of 2004 allowed unobligated bridge funds (23 USC §
144) to be transferred without penalty.
The Act goes on to say that the funds must be restored as soon as
practicable upon enactment of a new highway bill. If any State does not restore these funds, then 23 U.S.C. § 144
would require that when the next National Bridge Inventory is completed and all
needs have been assessed, the total needs figure for those States will be
reduced by the amount which was transferred, which would affect the
apportionment factors for the Highway Bridge Program. Several States did transfer bridge funds to other categories, but
had not indicated as of September 30 whether the transfers were intended to be
permanent or would be restored to their bridge accounts upon enactment of a new
bill. All of these States have now
clarified their intentions in this regard, and the apportionment factors have
been revised accordingly.
The Surface Transportation Extension Act of 2004, Part V and
the American Jobs Creation Act of 2004 [Public Law 108-357; 118 Stat. 1418]
included provisions that would change the amount of revenue deposited into the
Highway Account of the Highway Trust Fund per gallon of gasohol. The 2.5 cents per gallon of the gasohol tax
previously retained by the General Fund was redirected to the Highway Account
of the Highway Trust Fund retroactively, beginning October 1, 2003. Also, gasohol's partial exemption from the
gas tax was eliminated effective January 1, 2005. Since Highway Account contributions are calculated based on
revenue and gallonage data from prior years, there would normally be a lag
between the timing of these tax changes and when they would begin to be
reflected in the apportionment factors.
The redirection of the 2.5 cent increment would begin to affect the
apportionments starting in FY 2006, while the elimination of the partial
exemption would begin to affect the apportionments starting in FY 2007. The HTF factors for FY 2008 and FY 2009 have
also been modified to attribute combined gasoline/gasohol revenue using
combined gasoline/gasohol gallonage, as tax revenue data for these different
types of fuels will no longer be tracked separately once they are taxed at the
Bill adds a new Highway Safety Improvement program, to be distributed among the
States using the same formula as used for STP.
Two of the takedowns applied to this program, for the Safe Routes to
Schools program and the Protective Devices at Rail-Highway Crossings program,
are also apportioned to States using this same STP formula. The bill also adds a new discretionary
program for Infrastructure Performance and Maintenance (IPAM), but authorized
its funding level at $0 and provided no distribution formula. The State-by-State distribution of IPAM
funding was to factor into the computation of the Equity Bonus; however, absent
of funding and a distribution formula, the IPAM program did not factor into the
State-by-State apportionments shown nor the computation of the Equity Bonus.
The Senate Bill adds a Border
Planning, Operations, Technology, and Capacity Program, to be
apportioned based on average annual weight of all cargo entering the border
State by commercial vehicle across the international border with Canada or
Mexico, the average trade value of all cargo imported into the border State and
all cargo exported from the border State by commercial vehicle across the
international border with Canada or Mexico, the number of commercial vehicles
annually entering the border State across the international border with Canada
or Mexico, and the number of passenger vehicles annually entering the border
State across the international border with Canada or Mexico.
Guide to Tables
The attached Excel file contains 10 tables. (The following list is based on the names on
the tabs in the Excel spreadsheet, rather than the titles on the printed
The "Return Summary" page compares 5-year funding for each
State under this scenario with that under TEA-21. This table also includes each State's relative rate of return on
their contributions to the Highway Trust fund.
(This later computation is used in the rate of return floors and target
level, used in the Equity Bonus computation).
The "Aggregate" page
contains the 5-year total apportionments by program and State. This is followed by the "Average" page,
which shows average annual values, and the "2005", 2006", "2007", "2008" and
"2009" pages, which show the same information for individual years.
The "Share Comp" page shows each State's percentage of the
total apportionments for each individual year under TEA-21, and under the
The "Annual Comp" page shows each State's total
apportionments by year, and compares them with their average annual
apportionment under TEA-21. (This
latter computation is used in the percentage floors relative to TEA-21 in the
Equity Bonus computation).
Based on the latest available data as of September 2004
(Bridge Data - February 2005), and the assumptions listed above, the estimated
required five-year cost of the Equity Bonus under the Senate Bill would be
| Equity Bonus Summary
Relative to TEA-21
|| Ceiling Relative
|| Rate of
|| Rate of
Rate of Return
|| $ 4.9 bil.
|| $ 4.8 bil.
|| $ 5.1 bil.
|| $ 5.0 bil.
|| $ 5.6 bil.
|| $25.4 bil.
The Total Federal-aid Highway Program
contract authority is estimated to be $198.5 billion under the Senate
Bill. Of this total, approximately $182.5
billion (91.9%) would be apportioned to States.
While the target for the relative
rate of return on HTF contributions is 92%, the annual percentage ceilings
relative to TEA-21 prevent some States from reaching that level in FY 2005
through FY 2008, and some States' relative rates of return on HTF contributions
remain at the minimum level allowed of 90.5% in FY 2005 and 91% in FY 2006
through FY 2008.
The twenty-five States
(identified above) that are eligible for the greater of a 92.0% relative rate
of return on their HTF contributions or their share of total apportionments
under TEA-21 can also affected by the annual percentage ceilings relative to
TEA-21, but that was not found to be the case in this analysis.