Fact Sheets on Highway Provisions

GUARANTEED FUNDING

Purpose

SAFETEA-LU extends the practice of establishing separate budget categories for highway and mass transit discretionary spending, establishing a budgetary "firewall" between each of those programs and all other discretionary programs.

Statutory References

SAFETEA-LU Section(s): 8001-8005, 1102, 1105

Other: Sections 250-251 of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended; 23 USC 110

Features

The highway category firewall includes the Federal-aid highway program obligation limitation and the contract authority for Highway Safety and Motor Carrier Safety in Titles II and IV of SAFETEA‑LU. [8001, 250(c)(4)(B) of BBEDCA]

The mass transit category firewall includes both the programs funded from the Mass Transit Account of the Highway Trust Fund and those funded from the General Fund. [8001, 250(c)(4)(C) of BBEDCA)

If overall discretionary budget caps were in place (not so at the time of enactment of SAFETEA-LU), the highway and mass transit firewalls would protect the highway, highway safety, and transit programs that were within the firewalls from having to compete with other discretionary programs for room within those caps. Highway or transit program funding could still be reduced, but the reductions would not allow increases in other discretionary programs. This removes one of the principal motivations to restrict highway and transit spending in the budget /appropriations process.

Funding for the programs is also protected by the Rules of the House of Representatives which specify that, "It shall not be in order to consider a bill, joint resolution, amendment, or conference report that would cause obligation limitations to be below the level for any fiscal year set forth in section 8003 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, as adjusted, for the highway category or the mass transit category, as applicable." [8004, House Rule XXI, clause 3].

The highway category firewall is established based on assumptions about future receipts to the Highway Account of the Highway Trust Fund. Beginning with FY 2007, when newer projections of receipts and actual receipts become available, the highway category firewall is adjusted accordingly. To smooth out the effects of any adjustments, the calculated adjustment will be split over two years. When the firewall is adjusted, equal adjustments are made to highway contract authority (called Revenue Aligned Budget Authority) and the Federal-aid highway obligation limitation. While the adjustment can be either positive or negative, no negative adjustment will be made in fiscal year if, as of October 1 of that year, the balance in the Highway Account is more than $6 billion. [8002, 251(b)(1) of BBEDCA 1105(b), 1102(h)]

The guaranteed amount for highways has two components: the amount within the highway category budgetary firewall, adjusted as described above, and the authorizations for programs exempt from the obligation limitation—Emergency Relief and a portion ($639 million per year) of the Equity Bonus. [8003(a) and 1102(b)]

The guaranteed amount for mass transit has a single component—the firewall amount. There is no provision for adjusting the mass transit category firewall. [8003(b)]

Revenue Aligned Budget Authority (RABA)

Beginning in FY 2007, authorizations for Federal-aid highway and highway safety construction programs funded from the Highway Account of the Highway Trust Fund and the Motor Carrier Safety Assistance Program (MCSAP) will be adjusted whenever the highway firewall amount is adjusted to reflect changed estimates of Highway Account receipts. The additional authorizations are called RABA because they serve to align budget authority with the revised revenue. The adjustments to authorizations will be made in the same amounts and in the same years as the adjustments to the firewalls (see the Guaranteed Funding fact sheet). [1105, 23 USC 110]

If the adjustment is 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—and to the Motor Carrier Safety Assistance Program. The amount reserved is determined by calculating the ratio of the authorizations for these programs to total authorizations from the Highway Account for Federal-aid highway and highway safety construction programs and MCSAP 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, 23 USC 110(a)]

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, Highway Safety Improvement Program, and Congestion Mitigation and Air Quality Improvement. [1105, 23 USC 110(a)(2)]

A negative adjustment (reduction) is possible, but no reduction will be made in fiscal year if, as of October 1 of that year, the balance in the Highway Account is more than $6 billion. When a reduction is made, it is applied proportionally to all Highway Account authorizations for Federal-aid highway and highway safety construction programs (except Emergency Relief) and to the MCSAP. [1105(b)]

Special rule for RABA in 2007.—If the RABA is positive for 2007, the first call on the additional funds will be to increase States' return on contributions to the Highway Account of the Highway Trust Fund to 92%. If any RABA remains after bringing the minimum rate of return up to 92% for all States, such funds would be distributed under the usual RABA procedures described above. If the amount of RABA is not sufficient to bring States up to a 92% return, all States with a return less than 92% (excluding RABA) are to receive a proportional share of the RABA. [1105(f)]