USDOT Outlays Drop 1.2% in FY18; TIFIA Estimates, Airport Grant Displacement, High-Speed Rail to Blame

October 17, 2018

The books have closed on fiscal year 2018, which ended on September 30, and this week, the Treasury Department began reporting year-end summary spending summaries.

The information released so far is in terms of cash flow – dollars coming into the Treasury, versus dollars leaving the Treasury in the form of outlays. The decisions made by Congress, and to a lesser degree by the Administration, usually take place a year or more before their effects on receipts and outlays are fully felt.

The Monthly Treasury Statement for September 2018 reveals that the U.S. Department of Transportation had cash outlays totaling $78.5 billion in fiscal 2018. While this is a huge amount of money, it is actually $946 million, or 1.2 percent, less than USDOT’s outlays in fiscal 2017.

How can this be, in a time when the FAST Act provides steady increases in Highway Trust Fund spending for several years and last year’s budget deal flooded the department with billions of extra discretionary dollars?

We can’t be quite sure until we get account-level data in a few weeks, but here is what we can tell from the more limited data in the MTS:

Credit instrument re-scoring masked an extra $734 million this year. Towards the bottom of the DOT section of the MTS outlay detail, there is a line called “Proprietary receipts from the public” as a budgetary offset, which jumped from $324 million in FY17 to $1.01 billion in FY18. A separate Treasury document makes clear that the bulk of this relates to the annual credit re-estimate of past loans and loan guarantees made by USDOT – TIFIA surface transportation loans, RRIF railroad loans, and title XI shipbuilding loans. Under the Federal Credit Reform Act of 1990 (FCRA), agencies must make annual re-estimates of the lifetime net cost to the federal government of all outstanding loan guarantees, and those changes – upwards or downwards – are then applied to the federal budget.

For further explanation, here is how GAO summarized it a few years ago:

The data used for budgetary subsidy cost estimates are generally updated—or reestimated—annually after the end of the fiscal year to reflect actual loan performance and to incorporate any changes in assumptions about future loan performance. Reestimates that increase subsidy costs are referred to as upward reestimates (an agency would need additional funds), while reestimates that decrease subsidy costs are referred to as downward reestimates (an agency would return funds). Regardless of whether the credit programs are discretionary or mandatory, agencies do not need to request additional appropriations to cover upward reestimates because FCRA provides permanent indefinite budget authority for this purpose. Accordingly, an upward reestimate does not use up room under any discretionary spending caps and a downward reestimate does not “free up” room under such caps.

While these re-estimates don’t help or hinder agencies in terms of budget enforcement, they are applied to the year-end totals of net agency spending. And this year, the calculations for these loan programs offset $934 million in total USDOT outlays, which was $734 million more than the $199 million that was offset by this re-scoring last year.

Downward Credit Subsidy Re-Estimates FY18 FY17
TIFIA 726.0 127.2
Title XI Shipbuilding 140.3 42.8
RRIF 67.0 8.2
Negative Subsidies
TIFIA 0.1 20.8

The FY09 stimulus money for California high-speed rail was finally spent. The totals in the MTS show that total outlays for the Federal Railroad Administration dropped by almost 50 percent in 2018 – from $4.6 billion in FY17 to $2.5 billion in FY18. However, that decrease was entirely due to the California High Speed Rail Authority finally spending its FY 2009 funding under the ARRA stimulus law, which was going to vanish in a puff of smoke at midnight on September 30, 2017 unless every dime of it was spent by that point. The FY17 high speed rail funding totaled $2.448 billion. When you set that aside, outlays for all other FRA programs increased by 13.7 percent, from FY17’s $2.15 billion to FY18’s $2.45 billion. (The bulk of FRA funding each year is grants to Amtrak, and these usually outlay very quickly because, technically, Amtrak is not an on-budget entity.)

Was “displacement” at work? Two months ago, the Congressional Budget Office released a study of economic analyses of whether or not federal funding for infrastructure simply displaced investments that state or local governments were going to perform anyway using their own funds. That study cites other recent studies that showed the extent to which the general fund appropriations for highway and transit programs under the 2009 ARRA stimulus law displaced regular federal-aid highway and mass transit funding from the contract authority programs.

The FY 2018 omnibus appropriations bills added billions of dollars of general fund money to the federal highway, mass transit, and airport programs that otherwise run on excise tax-supported trust fund money. This money may – emphasize the uncertainty there – have displaced some of the regular program funding. The effect is most pronounced in the Airport Improvement Program. The regular AIP program has been receiving a constant $3.35 billion dollars per year from the Airport and Airway Trust Fund every year for a decade. But the outlays from that Trust Fund money dropped from $3.3 billion in FY 2017 to $2.2 billion in FY 2018. Perhaps not coincidentally, outlays from the general fund supplement to the program are recorded in the MTS as totaling $1 billion in FY18, compared to zero in FY17. Total airport investment stayed around a constant $3.3 billion in both years.

(Sept. 19 addition: Apparently, there is no way that the FAA actually put anywhere close to the full $1 billion FY18 general fund appropriation out the door in the form of real outlays by September 30. And another year-end Treasury Document, the September 2018 Combined Statement of all federal offsetting receipts and collections, for some reason shows the $1.0 billion general fund appropriation for AIP grants as an intragovernmental transfer of liquidating cash to the Airport and Airway Trust Fund, just like the $93 million transfer of money from the LUST Trust Fund to the Highway Trust Fund. But the general fund appropriations for highway and mass transit programs were not recorded this way. And the year-end Treasury report for the AATF itself shows $15.0 billion in Trust Fund transfers to the FAA in FY18 while the MTS only shows $14.0 billion. A mystery!!)

The highway program is bigger and is subject to a lot more seasonal fluctuations weather-related slowdowns, etc., than is the airport program. But even though highway funding has been increasing by about $1 billion per year for three years under the FAST Act, outlays from the Trust Fund only increased by $116 million in FY18 – three-tenths of one percent. Funding from the general fund for FHWA (some of which was the supplement for highway formula money and some of which is for current and past emergencies, and we don’t how much of each yet) went from $570 million in FY17 to $1.24 billion in FY18.

Setting aside the substitution effect, if one simply removed the TIFIA re-estiamtes and the FY17 California high-speed rail spending, the remainder of USDOT’s net outlays would have been $79.2 billion in FY 2018, an increase of $2.0 billion over FY 2017 – an increase of 2.6 percent, as opposed to a decrease of 1.2 percent.

FY18 FY17 Increase
Office of the Secretary 926 745 +181 +24.3%
Federal Aviation Administration
Operations 10,077 9,989 +88 +0.9%
Facilities and Equipment 2,564 2,530 +34 +1.3%
Research, Eng. & Develop. 151 161 -10 -6.2%
Airport Grants (AATF) 2,189 3,282 -1,093 -33.3%
Airport Grants/Other (GF) 1,048 -39 +1,087 -2787.2%
Offsetting Receipts -29 -57 +28 -49.1%
Total, FAA 15,999 15,866 +133 +0.8%
Federal Highway Administration
Federal-Aid Highways (HTF) 43,714 43,598 +116 0.3%
FY09 Recovery Act (GF) 111 0 +111 n/a
Other (GF) 1,240 570 +670 117.5%
Total, FHWA 45,064 44,167 +897 2.0%
Federal Motor Carrier Safety Adm. 581 562 -19 +3.4%
National Highway Traffic Safety Admin. 1,013 947 +66 +7.0%
Federal Railroad Administration
FY09 Recovery Act 0 2,448 -2,448 -100.0%
Other FRA 2,450 2,154 +296 +13.7%
Total, FRA 2,450 4,602 -2,152 -46.8%
Federal Transit Administration
Formula Grants (HTF) 10,121 9,479 +642 +6.8%
Capital Investment Grants 1,868 1,922 -54 -2.8%
Other 794 861 -67 -7.8%
Total, FTA 12,783 12,263 +520 +4.2%
Maritime Administration 509 467 +42 +9.0%
Other USDOT (Net) 428 381 +47 +12.3%
Proprietary Receipts from Public -1,010 -324 -686 +211.7%
PHMSA Fees -137 -136 -1 +0.7%
Other -111 -100 -11 +11.0%
NET TOTAL OUTLAYS, USDOT 78,494 79,440 -946 -1.2%

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