Cost of Last Year’s Transportation-HUD Policies Rises by $16 Billion

The Federal Highway Administration this morning released a funding notice inviting cities, counties, and tribal governments – as well as state governments – to apply for $848 million in competitive grants for projects to increase the resiliency of surface transportation projects to extreme weather. Applications are due by midnight on August 18, 2023.

“Climate change threatens not just our lives and livelihoods, but the infrastructure we rely on every day,” said U.S. Transportation Secretary Pete Buttigieg. “With these grants, we will help ensure that our roads, bridges, and highways are resilient enough to withstand extreme weather, and will create good-paying jobs along the way.”

The new funding is part of the PROTECT program (“Promoting Resilient Operations for Transformative, Efficient, and Cost-Saving Transportation”) which was created by the November 2021 bipartisan infrastructure law (and codified in 23 U.S.C. §176) but which was basically written in July 2019 by the Senate Environment and Public Works Committee in their original highway reauthorization proposal.

The PROTECT program has two parts – a formula-based component that distributes over $1.4 billion per year to the 50 states and the District of Columbia, and the competitive component announced this week. The competitive component receives dedicated funding each year from the Highway Trust Fund but also has received additional appropriations from general revenues in both fiscal 2022 and 2023, as follows:

FY22 FY23 Total
HTF Contract Authority (Gross) 250.0 250.0 500.0
Minus Ob Limit Lop-Off -21.8 -30.5 -52.3
HTF Contract Authority (Net) 228.3 219.5 447.8
Plus GF Appropriation +250.0 +150.0 +400.0
Equals Total for First NOFO 478.3 369.5 847.8

Eligible applicants. Just about any level of government can apply: States (including D.C. and Puerto Rico) and political subdivisions of states, MPOs, units of local government, port authorities and other special purpose districts or public authorities with transportation functions, Indian tribes, federal land management agencies applying jointly with states, and multi-state or multi-jurisdictional groups of the above. For At-Risk Coastal Infrastructure grants, only coastal states, and entities located in those states, may apply.

Planning grants. On the formula side, each state has to set aside 2 percent of its annual formula apportionment for planning activities. On the competitive side, 5.3 precent of the $848 million ($44.8 million) is set aside for planning grants at a 100 percent federal share. In addition, recipients of capital grants may spend up to 10 percent of those grants on planning activities, albeit at the lower 80 percent federal cost share.

Capital grants. The law breaks capital grants down into three types, listed below along with their shares of the $848 million from this NOFO:

  • Resilience improvement grants ($638.4 million): “may be used to improve the ability of an existing surface transportation asset to withstand one or more elements of a weather event or natural disaster, or to increase the resilience of surface transportation infrastructure from the impacts of changing conditions, such as sea level rise, flooding, wildfires, extreme weather events, and other natural disasters.”
  • Community resilience and evacuation route grants ($119.8 million): “may be used for activities that strengthen and protect evacuation routes that are essential for providing and supporting evacuations caused by emergency events including activities that will improve evacuation routes, provide safe passage during an evacuation, and reduce the risk of damage to evacuation routes as a result of future emergency events. For routes that inadequately facilitate evacuations, including the transportation of emergency responders and recovery resources, activities include expanding capacity through installation of communication and intelligent transportation system equipment and infrastructure, counterflow measures, or shoulders, in addition to constructing new or redundant evacuation routes, acquiring evacuation route or traffic incident management equipment or signage, or ensuring access or service to critical destinations, including hospitals and other medical or emergency services facilities, major employers, critical manufacturing centers, ports and intermodal facilities, utilities, and Federal facilities.”
  • At-risk coastal infrastructure grants ($44.8 million): “may be used for activities to strengthen, stabilize, harden, elevate, relocate or otherwise enhance the resilience of highway and non-rail infrastructure, including: bridges, roads, pedestrian walkways, and bicycle lanes, and associated infrastructure, such as culverts and tide gates to protect highways that are subject to, or face increased long-term future risks of, a weather event, a natural disaster, or changing conditions, including coastal flooding, coastal erosion, wave action, storm surge, or sea level rise, in order to improve transportation and public safety and to reduce costs by avoiding larger future maintenance or rebuilding costs.”

The calculations of those dollar amounts are below.

This kind of financial pressure gives the Appropriations Committees a massive incentive to use scorekeeping gimmicks (like the emergency designation used last year). In years past, the appropriators used to balance their books with large rescissions of highway contract authority balances held by state DOTs. This violated House and Senate rules (legislation on an appropriations bill), but getting permission to violate the rules was easier than cutting programs by billions of dollars.

But even if they were so inclined, it would be difficult for the appropriators to rescind highway contract authority this year. Not only would it hobble parts of the President’s signature bipartisan infrastructure law, but the amount of unobligated contract authority that is out there subject to rescission has dropped (and may drop by another $3.5 billion in FHWA can’t reconcile their two different computer systems).

Other funding from the bipartisan infrastructure law (the advance appropriations from the general fund) may be saved on a technicality – Congress can’t rescind appropriations that were designated an emergency (like the IIJA advances) and use the savings to pay for new non-emergency appropriations. (They could, however, decide to keep funding $3.6 billion of HUD money in 2024 as an emergency and pay for that with a rescission of $3.6 billion in IIJA advance appropriations.)

And there aren’t a whole lot of places to find massive amounts of savings in the discretionary DOT budget. Here is how the FY 2023 discretionary funding for USDOT was allocated in the final bill:

Billion $ Pct.
FAA Operations 11.9 41%
FAA Capital 3.5 12%
Amtrak 2.5 9%
Mass Transit CIG 2.6 9%
Earmarks 2.6 9%
Highways/Bridges 1.6 5%
MARAD 0.9 3%
RAISE Grants 0.8 3%
FRA Rail Grants 0.6 2%
Other Mass Transit 0.3 1%
Other USDOT 1.4 5%
Total, USDOT 28.7 100%

Once you rule out cutting FAA Operations and decide not to cut earmarks, that’s fully half of the DOT discretionary budget that cannot be cut. Taking a few billion dollars out of the other half will not be pleasant for anyone involved.

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