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Fact Sheets on Highway Provisions
FEDERAL-AID HIGHWAYS OBLIGATION LIMITATION
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 are authorized. These limits are imposed in order to control the highway program spending in response to economic and budgetary conditions.
SAFETEA-LU Section(s): 1102, 1105, 8002
Other: 23 USC 110(a)(2), 251b)(1)(B) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended.
Distribution of Limitation
The majority of the limitation available for a single fiscal year and 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)]
Exempt Programs.—Certain Federal-aid highway programs—Emergency Relief, a portion of the new Equity Bonus ($639 million per year), demonstration projects authorized prior to TEA-21, and balances from a portion of the old Minimum Guarantee ($639 million per year) and the old Minimum Allocation program—are exempt from the obligation limitation. [1102(b)]
100% Programs.—Prior to distribution, limitation is set aside for administrative expenses, the Highway Use Tax Evasion program, and the Bureau of Transportation Statistics at 100 percent of the funding available for these programs. Limitation is also setaside for the funds carried over from the prior year for allocated program [1102(c)(1)-(2)]
Calculation of Ratio.—After making the setasides for the 100% programs described above, the ratio is calculated of the remaining obligation limitation to the remaining contract authority subject to the limitation for which limitation has not yet been set aside.
Special Limitation.—Continues the practice of providing special "no year" limitation that is available until used for certain programs and expands the list of such programs. The Appalachian Development Highway System, the High Priority Projects program, Projects of National and Regional Significance, National Corridor Infrastructure Improvement program, Transportation Projects, and designated Bridge Projects (and in 2005, programs funded by section 117 of division H of the Consolidated Appropriations Act, 2005) receive limitation equal to the amount authorized for the program multiplied by the ratio. A portion of the Equity Bonus ($2 billion per year) also receives special limitation. Special limitation is not subject to the August Redistribution described below. [1102(c)(4) & (g)]
Allocated Programs.—As in TEA-21, allocated programs for which limitation has not been setaside in earlier steps of the distribution each receive limitation equal to the amount authorized for the program times the ratio. Contract authority in excess of the limitation provided is withdrawn (lopped off) from the program and combined with the amounts withdrawn from other allocated programs to be distributed to States by formula to be used like Surface Transportation Program funds. [1102(c)(5) & (f)]
Formula Limitation.—The remaining obligation 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)]
August Redistribution.—The law provides for a redistribution in August of each year of the obligation limitation from those States or programs unable to obligate their shares of the limitation to States or programs that are able to obligate more than their initial shares of the limitation.
Research Programs.—Obligation limitation for research programs authorized under section 5101(a) of SAFETEA-LU is available for 3 years.
High Priority Projects.—The treatment of obligation limitation for High Priority Projects is modified with obligation limitation assigned individually to High Priority Projects numbered 1-3676 and in aggregate to each State for projects numbered 3677-5173.
Flexibility for FY 2005.—For fiscal year 2005 only, obligation limitation set aside for the High Priority Projects program, Projects of National and Regional Significance, National Corridor Infrastructure Improvement program, and Transportation Projects may be used as formula limitation. Limitation so used is to be restored to its original purpose when the FY 2006 obligation limitation is distributed.
Adjustment of the Obligation Limitation
The special budgetary treatment accorded the highway program continues with funding levels based on estimated receipts to the Highway Account of the Highway Trust Fund. The levels will be adjusted as new receipt projections and actual receipts become available. Negative adjustments are possible, but will not be made in any year when, on October 1 of that year, the balance in the Highway Account of the Highway Trust Fund exceeds $6 billion. [1102(h), 1105, 8002]