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Federal Highway Funding Under the Surface Transportation Extension Act of 2004, Part V

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The Surface Transportation Extension Act of 2004, Part V (STEA04-V) completes the authorization process for FY 2004 and provides an 8-month extension of the Federal-aid Highway Program for FY 2005.

Finishing Out FY 2004

Previous extensions fell short of releasing all of the obligation limitation provided by the Consolidated Appropriations Act, 2004.  STEA04-V releases the remaining obligation limitation and also provides additional FY 2004 contract authority.

Contract Authority

STEA04-V authorizes such sums as necessary for a “Supplemental Minimum Guarantee” for FY 2004.  This will be calculated in the same manner as Minimum Guarantee under TEA-21.  This will result in an additional $2.7 billion in contract authority for FY 2004.  FY 2004 highway contract authority, except for the portion of Minimum Guarantee that is exempt from the obligation limitation, is subject to a 0.59 percent across-the-board reduction found in the Consolidated Appropriations Act, 2004.

Obligation Limitation

The Surface Transportation Extension Act of 2004, Part IV (STEA04-IV) prevented the distribution of the full obligation limitation in the Consolidated Appropriations Act, 2004.  STEA04-V allows the distribution of the full amount.  The remaining obligation limitation ($1,952,480,770 less the 0.59 percent across the board cut) will be distributed. 

  • The distribution will “fill in the holes” for the programs that received their obligation at the 49/52nds level under STEA04-IV.  These programs are environmental streamlining, the Pennsylvania Avenue project, Amber Alert, NHTSA Operations and Research, a number of FMCSA programs, and projects funded under section 115 of the Consolidated Appropriations Act, 2004. 
  • The rest of the obligation limitation will be formula limitation, distributed in the usual manner.
  • The additional obligation limitation will be available through the end of FY 2005, except when other provisions provide for longer availability.

STEA04-V also paves the way for the distribution of the additional obligation limitation provided by the FY 2005 Department of Defense Appropriations Act in accordance with that Act.

Trust Fund Provisions

STEA04-V waives the Byrd Test for FY 2004.  This will allow the restoration of amounts previously withheld from FY 2004 apportionments and the distribution of the full amount of the Supplemental Minimum Guarantee authorized in STEA04-IV.

For FY 2004 only, STEA04-Part V redirects to the Highway Account of the Highway Trust Fund the 2.5 cents per gallon of the gasohol tax that is retained by the General Fund.  This will add over $800 million in receipts to the Highway Account for FY 2004. 

Extension for FY 2005

STEA04-Part V continues the components of the Federal-aid Highway Program for 8 months, until May 31, 2005.

Contract Authority

STEA04-V authorizes contract authority for FY 2005 for FHWA programs. The amounts for authorized for each program are shown in the attached table.

Formula Programs.—Contract authority is authorized for FHWA’s formula programs.  A separate authorization is provided for metropolitan planning, but a single lump sum of contract authority is authorized for all other highway formula programs.  This lump sum will be apportioned among the states based on each State’s share of the FY 2004 formula obligation limitation, except that those shares will be adjusted up or down in the same manner as program shares are adjusted under 23 USC 105 (the Minimum Guarantee provision).  The amount for each State will then be programmatically distributed among the formula programs, including the Minimum Guarantee, based on the amounts the State received for each program for FY 2004.  The apportionments will be subject to the various penalty provisions.  The Metropolitan Planning funds will be distributed under the usual formula. 

Allocated Programs.—Amounts are also authorized for individual allocated programs.  In most cases, the amounts authorized are 8/12ths of the amount authorized for FY 2003.  Programs normally funded by deductions off the top of the authorizations for apportioned programs, such as FHWA administrative expenses and the Bridge Discretionary Program, are authorized separately under STEA04-V.

Administrative Funding.—Instead of a takedown on apportioned programs, a fixed sum is authorized for FHWA’s administrative expenses.  This is to cover FHWA operating expenses, and the amounts for the Appalachian Regional Commission and to reimburse the Inspector General for audit costs.

Obligation Limitation

The Department of Transportation, Treasury, and General Government Appropriations, 2005 has not yet been enacted.  Until it is, FHWA’s obligation limitation will be as provided in accordance with an act providing continuing appropriations, often referred to as a continuing resolution.  Under House Joint Resolution 107 [P.L. 108-309. Signed 9/30/2004], which extends government operations through November 20, 2004, FHWA will have obligation authority equal to 51/365ths of the obligation limitation enacted for FY 2004.  Further guidance on operating under the continuing resolution will be available from the Office of Budget and Finance.

Upon enactment of the FY 2005 DOT Appropriations Act, STEA04-V directs the Secretary to distribute 8/12ths of obligation limitation set in the appropriations act.  Based on Congressional action to date, the obligation limitation for 2005 is expected to be $34.6 to $34.9 billion for the full year.  Obligations during the period October 1, 2004 through May 31, 2005 will be limited to 8/12ths of this amount plus the use of funds exempt from limitation or having multi-year or no-year limitation from prior years.  No Federal-aid highway program obligations may be made after May 31, 2005.

Special Transfer Provisions under the STEA04-V

Apportioned funds subject to the obligation limitation may be transferred among programs and suballocations. States were allowed to transfer apportioned funds from the following programs: NHS, IM, Bridge, and STP, except that STP funds set aside for safety, transportation enhancements and for urbanized areas over 200,000 population may not be transferred.  However, transfers made under similar provisions during FY 2004, must be repaid as soon as practical after enactment of STEA04-V.


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