After 13 hours of deliberation on Thursday, the House Budget Committee cleared the $2.1 trillion FY 2003 budget resolution on a 23-18 party-line vote. The bill closely mirrors the Bush Administration's budget proposal, and provides $759 billion in discretionary funding. The $393 billion proposed for the Department of Defense, a 13 percent increase over FY 2002, is the largest increase for the department ever, reflecting the need to fund the war on terrorism. The remaining non-defense discretionary programs are funded at $366 billion, a 1.1 percent increase over last year.

The budget resolution provides room to fund the highway program at $27.7 billion, the level authorized in the Transportation Equity Act for the 21st Century (TEA-21). The administration, citing lower revenues into the Highway Trust Fund, had proposed to fund highways at $23.3 billion, some $8.6 billion less than the $31.8 billion FY 2002 level. The House budget resolution allows for $1.18 billion in outlays in FY 2003, which is sufficient to restore the $4.4 billion cut in obligation limitation that would have resulted from the application of the revenue-aligned budget authority (RABA) provision. (Due to the fact that highway projects are built over time, only 27 percent of highway obligation is actually spent in the first fiscal year.)

During debate on the resolution Budget Committee Democrat Bob Clement (D-TN) failed in his attempt to offer an amendment that would have tacked on an additional $1.3 billion above the $4.4 billion. The resolution is set for debate before the full House on March 20, before the Congressional recess, and alternatives to the current draft may be offered at that time.

Budget, Authorizers in Agreement

The partial restoration of highway funding in the budget resolution stems from an agreement reached between the Republican leadership of the House Transportation and Infrastructure Committee and the Budget Committee. During a press conference on Thursday, Transportation and Infrastructure Committee Chairman Don Young (R-AK) and Budget Committee Chairman James Nussle (R-IA) acknowledged that the agreement was "historic," given the traditional conflict between the two committees.

During the press conference, Young thanked House Speaker Dennis Hastert and Republican leadership, Nussle, the transportation industry and labor for restoring funding to the levels authorized in TEA-21. Young said the agreement reached beyond addressing the highway funding cut in FY 2003, in that the two committees reached long-term agreements to extend the concepts of the "firewalls" to annually guarantee funding for highways.

"We have a good working relationship going into the reauthorization of TEA-21," Nussle said.

Rep. Tom Petri, Chairman of the Highways and Transit Subcommittee, said that the agreement is an "important first step" setting a floor for highway funding. He added that it is important to determine now what level of funding the Highway Trust Fund can sustain.

Budget Proposal Latest "Fix"

The language in the budget resolution is the latest proposal in the House to address the potential highway-funding shortfall. The House Transportation and Infrastructure bill (H.R. 3694), which has 308 co-sponsors, authorizes additional funding at "no less than" the $27.7 billion authorized in TEA-21. The bill recently introduced by House appropriators (H.R. 3900) makes the application of the RABA provision null and void in FY 2003 and would restore the funding to the TEA-21 authorized level. It currently has 76 co-sponsors.

The budget resolution language takes a different direction from the other bills, in that it allows the Appropriations Committee to provide additional obligation limitation above $23.3 billion but no more than $27.7 billion. This funding, which will be contained in a reserve fund, can then be conditionally released by Budget Committee Chairman Jim Nussle (R-IA), if he agrees that it is distributed consistent with the formula in TEA-21. A point of order can be raised if the funding is earmarked.

In the meantime, Secretary of Transportation Norman Mineta indicated that the Bush Administration was working on its own proposal to address the cut in highway funding, according to the CQ Daily Monitor. Mineta reportedly told the Senate Banking, Housing and Urban Development Committee this week that the Department of Transportation is working with the Office of Management and Budget to mitigate the impact of the $8.6 billion reduction. He said the administration's proposal would be ready within a week.

Senate Budget Committee to Act Next Week

Transportation advocates hope to see higher highway funding levels emerge from the Senate budget resolution, which is scheduled for markup on March 20-21. In hearings held in February, Committee Chairman Kent Conrad (D-ND) said the $8.6 billion cut in highway funding was unacceptable. While he indicated that spending would not be restored to the FY 2002 $31.8 billion level, he has requested that the Congressional Budget Office assess what level of funding could be sustained. There is currently a cash balance in the Trust Fund that exceeds $19 billion.

In a meeting with West Virginia Secretary of Transportation Fred VanKirk and AASHTO Executive Director John Horsley on Thursday, Senate Appropriations Committee Chairman Robert Byrd (D-WV) expressed concern about the impact of the proposed highway cuts on transportation programs in West Virginia and throughout the nation. Byrd, who also serves on the Senate Budget Committee, said he would work to restore highway funding to as high a level as possible. He urged state officials to work with other members of the Budget Committee to seek a remedy for the impending highway cuts.

DOT Inspector General Kenneth Mead testified before the House Transportation Appropriations Subcommittee this week on the FY 2003 budget proposal for the Federal Aviation Administration. The $14 billion request would be difficult to fund, Mead said, given that revenues from the airline ticket tax and passenger facility charges dropped significantly in 2001.

Mead stated that Airport and Airway Trust Fund revenues dropped from the estimated $12.9 billion prior to Sept. 11 to about $10.3 billion. That equates to a $3.7 billion shortfall from the $14 billion overall FAA budget request. Mead said as a result, a greater contribution from the General Fund to FAA may be needed. Dipping into the $4 billion positive balance in the Aviation Trust Fund may also be an option.

Under the provisions of the Aviation Investment and Reform Act for the 21st Century (AIR-21), money in the Trust Fund is to be used first to fund capital projects under the Airport Improvement Program (AIP) and the Facilities and Equipment Program (F&E) at the levels authorized in the act, which are proposed at $3.4 billion and $3.0 billion in FY 2003, respectively. The remaining funding can be used for FAA's operating budget.

"If Congress follows AIR-21 requirements and funds FAA's AIP and F&E accounts at the authorized levels, there will be significantly less revenue left to fund FAA's operations," Mead said.

Concerns Raised Over Security Costs

Mead also raised concerns over costs associated with altering terminal facilities to meet new security requirements. While the Transportation Security Administration will fund new screening equipment, no funding has been budgeted for making modifications to terminals. The FAA has estimated that such costs could reach $2.3 billion.

The renewable-fuels agreement announced Friday is the work of months of negotiations by industry, agriculture, and other interests. It was unveiled at a press conference featuring Secretary of Energy Spencer Abraham, Senate Majority Leader Tom Daschle, a bipartisan group of senators, and industry representatives. The agreement worked out by the parties would:

• Set a goal of using 5 billion gallons of renewable fuels, including ethanol and biodiesel, by the year 2012;
• End the current federal requirement that reformulated gasoline, mandated in the nation's most polluted cities, contain 2 percent oxygen; and
• Phase out the use of the additive MTBE in U.S. gasoline over a period of four years.

Signing onto the agreement are the American Petroleum Institute, the National Corn Growers Association, the Renewable Fuels Association, the American Farm Bureau Federation, and the National Farmers' Union.

Provisions of the agreement are included in S. 517, the energy bill now being debated on the Senate floor. How they may actually be implemented is still to be determined.

Impact on Highway Trust Fund of Concern

If the provisions are enacted, they would effectively boost ethanol production from the current 1.7-billion-gallon level to 5 billion gallons.

Currently, the 5.3-cents-per-gallon tax subsidy for gasohol results in nearly $1 billion in lost revenues to Highway Trust Fund, and the American Highway Users Alliance has indicated that figure could rise to $2.5 billion under Daschle's proposal. Under current law, gasohol containing 10 percent ethanol is taxed at 13 cents per gallon, compared to 18.4 cents per gallon for gasoline. Of that tax, 2.5 cents is deposited into the General Fund, rather than the Highway Trust Fund. A provision of the energy bill initiated by Senator Max Baucus (D-MT) would transfer the revenue from the 2.5 cents to the Highway Trust Fund, a move that would restore about $400 million per year at the current production level.

"Big Four" Urge Ethanol Tax Changes

The potential losses of revenue to the Highway Trust Fund were highlighted in a letter to House Speaker Dennis Hastert on March 6 by House Transportation and Infrastructure Committee Chairman Don Young (R-AK), Ranking Minority Member James Oberstar (R-MN), Highways and Transit Subcommittee Chairman Thomas Petri (R-WI) and Ranking Subcommittee Member Robert A. Borski (D-PA).

The transportation leaders expressed their concern that the Senate energy bill "would provide a significant mandate on the level of ethanol blended into gasoline." The letter states that while they "understand the advantages of promoting the use of a domestically produced fuel additive," the current ethanol mandate "costs states in excess of $1 billion annually in highway funding." In fiscal year 2009, the new mandate is expected to increase the highway revenue losses to more than $3 billion annually. States with high ethanol use are particularly hard-hit, the letter notes, because federal funding is based upon contributions to the Highway Trust Fund.

The action came during debate on S. 517, the comprehensive energy bill now before the Senate. The Senate voted 62 to 38 to approve an amendment to the bill that would allow the Department of Transportation 15 months to complete a rulemaking on new corporate average fuel economy (CAFE) standards for light trucks, and two years to complete a rule on passenger vehicles.

Fuel-economy standards were initially enacted by Congress during the oil crisis of the 1970s, and currently mandate an average passenger vehicle mileage standard of 27.5 miles per gallon for cars and 20.5 miles per gallon for light trucks. The increased popularity of sports utility vehicles and minivans, classified as light trucks, have resulted in the first decline in fuel economy since 1980, fueling the drive for tighter standards. Proponents of the increased standards argue that they are necessary to reduce reliance on foreign oil. Opponents contend that smaller vehicles are less safe in event of accidents, and also maintain that the federal government should not attempt to dictate to Americans what vehicles they may purchase.

The 62-38 vote by the Senate to pass the amendment authored by Senators Carl Levin (D-MI) and Christopher Bond (R-MO), prompted other senators to drop an amendment that would have raised CAFE standards for both cars and light trucks to 36 mpg by 2015. Senators John Kerry (D-MA) and John McCain ( R-AZ) say they may instead attempt to attach an amendment setting some performance standards for light trucks and cars.

Debate May Stretch into April

Noting recent threats to the financial survival of Amtrak, the nation's passenger-rail system, Committee Chairman Senator Fritz Hollings (D-SC) said, "This is just not a Northeast Corridor problem, this is a national problem ... We've got to have a national rail system." The National Defense Rail Act (S. 1991) which authorizes $4.6 billion a year for Amtrak, was introduced by Hollings March 6. It would retain Amtrak as the operator of all national passenger service.

Senator John McCain (R-AZ), ranking Republican on the committee, complained that the Hollings measure would require no significant reform or restructuring of Amtrak. McCain earlier introduced a competing measure to address national passenger-rail needs. Under the Hollings proposal, McCain said, "Amtrak would be even less accountable to Congress and the American taxpayer because the legislation would repeal the directive that Amtrak achieve operational self-sufficiency."

Sen. Kay Bailey Hutchison (R-TX) said to truly have a national passenger-rail system, funding needs to be adequate to provide that scope of service. Having a working rail system to carry people as well as freight is important to homeland security, she said.

Sen. Ron Wyden (D-OR) complained, "This is a system of the Northeast, for the Northeast, by the Northeast." The Boston-Washington corridor is Amtrak's most heavily used route.

"If you don't have a rail system that gets people from here to there, comfortably, and rapidly and as a legitimate alternative to other systems they are not going to take it and it'll never make a profit," said Senator John Kerry (D-MA)

"I thought we were a federal system, I thought we made up for each other's needs, " said Sen.. Joseph Biden (D-DE). "Maybe I should stop voting for farm bills, maybe I should stop voting for water projects, maybe I should stop voting for anything that doesn't directly benefit Delawareans."

While Deputy Secretary of Transportation Michael P. Jackson took heat from Hollings and McCain about the administration's lack of legislative proposals for Amtrak's future, Amtrak President George Warrington defended his statement that Amtrak is better positioned to meet the country's needs than it was 5 years ago.

"Funding stability has been one of the most important features of TEA-21, as states and local communities have relied upon these assurances and increased their own funding levels to match the commitments made in TEA-21," Mineta told the Senate Banking, Housing and Urban Affairs Committee.

"Equally important is funding flexibility," Mineta added. The flexibility concepts begun under the Intermodal Surface Transportation Efficiency Act, or ISTEA, the transportation funding bill that preceded TEA-21, have allowed the transfer of nearly $8 billion from highway-oriented programs to public transportation, Mineta said.

Millar told the Senate panel, which has jurisdiction over transit in that chamber, that ridership on public transportation is at record levels - making it essential that increased investment, funding guarantees started under TEA-21 and steps to streamline program delivery continue. Preliminary figures show that transit ridership is up 23 percent since 1995, Millar said.

TEA-21's increased investment in public transportation has benefitted not only urban areas where trains, subways and light rail serve the public, but also rural areas that have seen increased bus service. In many states, firms providing the hardware for such systems boost local economies, Millar said. Further, the ability of reliable transit to get people out of their individual cars and into buses or trains helps achieve clean-air goals, he said.

APTA's priorities in TEA-21 reauthorization will be increasing program investment, maintaining funding guarantees, and streamlining delivery of the transit program, Millar said.

Comments from interested parties will be taken on the system for 45 days, and 90 days after that period closes a final plan will be submitted to the President by Ashcroft and Tom Ridge, Director of the Federal Office of Homeland Security.

The proposed system - which federal agencies must adopt and state and local governments and other potential responders are encouraged to adopt or make compatible with their own systems - is based on a green alert (low risk of terrorist attack), a blue alert (general risk of terrorist attack), a yellow alert (significant risk), an orange alert (high risk) and a red alert (severe risk). Each phase has specific steps to be taken by respondents regarding communications, coordination, surveillance, and implementation of contingency or emergency-response plans.

In a news release by the office of the White House press secretary, the system was described as being based on a variety of threat-assessment factors, including the credibility, corroboration, specificity, imminence and potential graveness of a potential threat. "State and local officials will be informed in advance of national threat advisories when possible," the White House announced.

Traffic incidents account for about half of traffic delays in urban areas, and almost all rural delays.

AASHTO Executive Director John Horsley noted that over 80 percent of state patrol officers' highway fatalities are related to traffic incidents, while almost a fifth of fatalities on urban freeways chain from incidents caused, in a domino effect, by other incidents' disturbances in traffic flows.

Conference participants included members of police ,fire and emergency-service agencies, equipment suppliers, consultants and U.S. DOT staff. Actions recommended included a clearinghouse to share information; standards and guidelines for performance data; addressing incident management from a regional perspective; tying incident management into planning and design, and directing more money to incident-management programs.

Tony Kane, AASHTO's Director of Engineering and Technical Services, committed to developing a national coalition with public-safety agencies, emphasizing the importance of incident management with several of AASHTO's committees and its CEOs. He also emphasized the importance of expediting the development of technical communications standards with the other standards-development agencies. Kane also advocated enhanced research on incident management through the Future Strategic Highway Research Program (F-SHRP).

The Associated Press reported that the FAA said the number of passengers on U.S. airlines is expected to decline in the current budget year, compared with a year ago. Passenger counts may return to earlier levels in the last quarter of this year, the agency reported.

"Clearly we are counting on no further terrorist events," said John Rodgers, FAA's director of aviation policy and plans.

While air travel had already been on the decline, the September 11 attacks kept millions of additional passenger on the ground. The number of passengers, which peaked at 695.3 million in the 12 months ending September 30, 2000, is expected to drop to 600.3 million in the fiscal year ending this September. However during the following 12 months, the number of passengers is expected to grow by 14 percent to 684.3 million, and grow by an average of 4.2 percent a year, reaching 1 billion by 2013.

"We are going to return to normal rates of growth," said David Swierenga, chief economist for the Air Transport Association. "Air travel is ingrained in the way Americans live and do business." In its own report, the ATA said the industry lost $7 billion in 2001, even with $5 billion in federal aid following the terrorist attacks. The association said the industry won't become profitable again until 2003.

"We've got to be seriously concerned about modernizing our air traffic control system, about expanding our airports," said Swierenga. "If we don't do these things and do them right now, we will be very quickly back in the kind of delay problems we had in 1999 and 2000."