April 6, 2018

The final, omnibus appropriations law for fiscal year 2018 provided a record $2.6 billion for the Capital Investment Grants account at the Federal Transit Administration – the account for construction aid for new subways, light rail, bus rapid transit, and streetcar projects.

Once the FY 2018 installments of multi-year projects that already have signed full funding grant agreements (FFGAs) and the reserve pool for one-off “small starts” and the oversight set-aside are removed, FTA will be left with $399 million in unallocated FY 2018 money for new systems or new system extensions, and $515.7 million in unallocated funding for “core capacity” projects (upgrades to existing systems that will increase capacity by at least 10 percent).

How far will this money go, compared to the pool of future projects that want to claim it? And how will the Trump Administration run the program?

The Trump Administration has twice proposed budgets that would zero out the CIG program, provision only enough money to pay off the FFGAs that have already been signed. And Transportation Secretary Elaine Chao has had some testy exchanges with Members of Congress at various hearings during which she defended the Administration’s budget proposal and criticized certain proposed projects that are applying for CIG funding.

The CIG program works via a multi-step process laid down in statute (49 U.S.C. §5309). Sponsors of potential projects apply to enter the “project development” phase and then, once the environmental permitting is complete, if the Secretary determines the project is justified, it advances to the “engineering” phase. During that phase, the career staff at FTA rates the project on a 5-point scale, and if the project is rated at least medium (3 out of 5), the Secretary is allowed to sign a FFGA for the project – if the Secretary chooses to. Then Congress appropriates annual installments of the funding promised by the FFGA.

(Occasionally, Congress will appropriate money for a particular project in advance of a FFGA being signed. This was particularly a big deal for the Maryland Purple Line.)

First of all, in FY 2019 and future years, FTA must eventually pay out the remaining money for the eleven projects with signed FFGAs that are still ongoing. These projects total $4.2 billion in future appropriations ($3.6 billion for the nine ongoing new start projects and $566 million for the two ongoing core capacity projects). Everyone, from the post passionate transit advocate to the most anti-transit critic – realizes that the ongoing commitments have first priority.

Every year, at the same time the President submits the annual budget, FTA submits an annual report giving updates on all the projects in the project development and engineering phases. The FY 2019 report submitted two months ago lists a total of 20 projects in either the project development or engineering phases, and the sponsors of those projects want a total of $18.7 billion from the CIG program. (The $915 million in unallocated funding provided by the just-enacted FY18 appropriations act could possibly be applied against this total.)

Over half of the $18.7 billion in future CIG funding requests is for the four projects in the New York City area (the sponsors of the Hudson River Tunnel want $6.7 billion in CIG funding just for that project).

In the past, Secretary Chao has told Congress that her objections to the CIG program in principle stem from the idea of signing contracts pledging money that has not yet been appropriated. In this vein, there is no reason for the Secretary not to sign the NYC Canarsie Line FFGA when it is ready, since all the federal share for the project has already been appropriated. Likewise, the Santa Ana, CA streetcar project and the Dallas DART core capacity project could easily be funded in their entirety out of the unallocated FY 2018 money. All three of the projects are anticipated to be ready to have FFGAs signed sometime this year.

Beyond that, things get murky. If the Administration gives the full $99 million to the Santa Ana streetcar, there would be $300 million left over in unallocated funding for other new starts, which would not go very far against the $4 billion in CIG funding that the four other projects in the engineering phase want.

The remaining $500 million in funding for future core capacity projects would have to wait longer, since there are only two projects in the engineering phase (both listed above). If New Jersey can get the situation for the bonds for the Portal North bridge straightened out, they can get FTA to re-rate the project (currently at medium-l0w) and possibly get back to the medium-high rating it had in the FY 2018 report before the Garden State changed the source of its bonding. But since Portal North is part of the Gateway program, which Secretary Chao has said she won’t be bullied into supporting,

The omnibus 2018 appropriations act takes several steps to try and encourage Secretary Chao to move projects along through the CIG process and sign new full funding grant agreements.

1. The text of the law orders the Secretary to “continue to administer the capital investment grant program in accordance with the procedural and substantive requirements of section 5309.”
2. In previous years, each annual appropriations act has made the funding for the CIG program “available until expended.” But the FY18 act provides that the money must be obligated by September 30, 2021 or else it will lapse. This was done by Congress to gain the leverage of the Impoundment Control Act of 1974, which requires the executive branch to make all appropriations available for the purposes for which they were appropriated. Practically speaking, when an appropriation is available until expended, it is harder to prove that the Administration is impounding the money – the agency can just say they haven’t made it available yet. Putting a “use it or lose it” clock on the money forces the Administration to use the money for the purpose for which it was appropriated.
3. In addition the Impoundment Control Act leverage, the text of the appropriations act also provides that “of the amounts made available under this heading, $2,252,508,586 shall be obligated by December 31, 2019.”

The $915 million left over, unallocated, for the CIG program in the FY18 omnibus is indeed a lot of money, but it must be compared to the $22.8 billion in future claims on the account ($4.2 billion in payments for ongoing projects and $18.7 billion in potential future projects). Even if Congress is able to maintain $2.2 billion per year for multi-year funding commitments indefinitely (the amount in the FY18 act, after the $400 million for one-off small starts is deducted), every dime of the program for the next ten years is already spoken for by the projects currently ongoing or in the engineering or project development phases.