Congress is in session only three short weeks before breaking for the conventions and traditional August recess. When Congress recesses on July 23 it will not return to work until after Labor Day. At that point there will only be another three short weeks before the October 1 start of the new fiscal year, FY’05.

TEA 21 Reauthorization

The TEA 21 conferees met again on July 7, 2004 for the third time, but little progress was made. In a short 45 minute session, the conferees approved without debate a list of 31 minor provisions. The Senate had asked the House to come to the session prepared to respond to a Senate motion to have the House accept the Senate’s funding level of $318B over six years. However, House T&I Committee Chairman Don Young (R-AK) indicated he was not able to respond at this time. While Young and other T&I Committee conferees do support the higher Senate level, they are under intense pressure from House Majority Leader Tom DeLay (R-TX) and other House leaders not to support any bill higher than the $256B level proposed by the White House.

The ensuing debate got quite heated at times with House and Senate conferees criticizing each other over the size of the bill, the appropriate role of the Administration, and whether the Senate bill raided the General Fund. Senators Inhofe (R-OK), Bond (R-MO) and Reid (D-NV) continued to argue quite strenuously for the $318B level, while House leaders, such as Ways & Means Committee Chairman Bill Thomas (R-CA), insisted that the Administration had to be a part of the discussion and that the Senate bill violates the Administration’s funding principles.

The conferees agreed to meet again on Tuesday, July 13, but it is unclear what they will be able to accomplish between now and then until the stalemate over the funding level is resolved. Several conferees said they remain optimistic about ultimate passage of a six-year bill this year, but others, such as Senator Reid (D-NV), expressed great reservations, saying it was $318B or nothing.

Confusion reigned once again on July 15, 2004 when a TEA 21 conference session was tentatively scheduled and then cancelled at the last minute. There is no next session of the conference scheduled, the expectation is the conferees will meet before the start of the July 23 recess. The current problem is that various factions have come up with various “compromise” funding levels, but there is still no one proposal which all sides can agree on. Last week House Republicans had informally proposed $295B total/$285B guaranteed which was tentatively bumped up this week to $301B total/$295B guaranteed. However, Senate Democrats appear to be holding tough at $318B, while Senate Republicans, led by EPW Committee Chair Jim Inhofe (R-OK), may be willing to compromise and House Ways & Means Committee chairman Bill Thomas (R-CA) continues to have serious objections about various revenue sources used to fund the Senate bill.

At the same time the White House has not endorsed any of these tentative proposals and still does not appear to be engaged in the process. In addition to the overall funding level, factors such as the minimum guarantee issue, the range of programs falling under the guarantee i.e., earmarks, and the funding split between the highway and transit programs which is currently 80/20, must still be resolved.

The most immediate TEA 21 issue which must be resolved shortly is the need for an additional extension of the short-term authorization. The current extension expires on July 30 and there is clearly no way a six-year bill can be completed by then, so an additional extension will need to be passed before Congress adjourns on July 23. Most likely a new extension will be through September 30, but there is talk of a possible extension through December 30 or into next year. Passage of a 5th short-term extension will mean that the federal highway and transit programs have existed a full fiscal year on short-term authorizations.

FY’05 Appropriations:

The partisan politics holding up the TEA 21 bill are also severely affecting the FY’05 appropriations process. Although the House has passed many of its 13 federal agency funding bills, at least through subcommittee, the Senate has completed action on only one bill, the FY’05 DOD appropriations bill. Efforts to have five or six bills move through committee this week in the Senate have been dashed by the inability of Republican and Democrat leaders to agree on terms for expedited floor consideration. Therefore the likelihood of all or many of the bills being lumped together into an omnibus bill is growing day by day.

It is possible Congress may even have to hold a “lame duck” session after the election to pass the appropriations bills. That could be good news for the TEA 21 bill because it would provide one last opportunity in 2004 to pass a six-year bill, but the possibility that the Democrats could win the presidency or take control over the Senate will limit their willingness to agree to let the Republicans to have one last say over key bills.

The FY’05 DOT appropriations bill is caught up in the whole process. In the House, it is one of only two bills that have not yet been approved at the subcommittee level. In the Senate, potential subcommittee action this week has been postponed. Complicating matters even further, there is talk that neither the House nor Senate DOT bills will include any project earmarks for highway or transit projects. This would leave state DOTs and transit agencies hanging until at least mid-September without any sense of how much funding or even a range of funding they might expect in a final bill for specific projects.

On July 15, 2004, the House DOT/Treasury Appropriations Subcommittee met and marked up the FY’05 DOT/Treasury spending bill. Chairman Istook (R-OK) convened a subcommittee mark-up and approved an $89.9B DOT/Treasury FY’05 bill. Given the reduced allocation the subcommittee was allotted, some of the program cuts are not surprising, but still disappointing. Federal-aid highway funding was set at $34.6B which is the same as the level in the House-passed TEA 21 bill. It is approximately $1B over the current FY’04 level; however it is considerably lower than the $37.9B in the Senate-approved TEA 21 bill.

Transit took a big hit, receiving only $7.249B which is $17M less than the current FY’04 level and considerably less than the President’s budget request of $7.72B and the House and Senate approved TEA 21 levels of $7.75B and $8.65B respectively. The New Start program in particular did not fare well. The program was cut almost $300M from the current level and only those 23 projects with current Full Funding Grant Agreements and the three projects (NYC, Las Vegas and Phoenix) which are expected to sign FFGAs in the near future received any earmarked funding. Although the official committee report has not yet been filed, it is believed that the current and pending FFGAs each received the full amount requested by the President. The best hope for the transit program may be in the Senate where Subcommittee chairman Richard Shelby (R-AL), who is also the chair of the Banking Committee which wrote the transit title of the TEA 21 reauthorization bill, is expected to support additional funding for transit.

As expected, Amtrak funding was cut. Although Amtrak had requested $1.8B, the Administration’s budget request was only $900M which is less than the current level of $1.225B. The House Subcommittee approved only the $900M level. Once again, the hope is that the number will be increased in the Senate as has happened in past years. The House bill also requires Amtrak to pay back a $100M federal loan which had been repeatedly extended in previous bills.

The FAA’s Airport Improvement Program (AIP) was funded at the guaranteed level of $3.5B, up from the current $3.38B.

In addition to controversy over low funding levels, another concern for the ultimate passage of the DOT appropriations bill is an amendment included in the Treasury title of the bill which would bar privatization of many government jobs. A similar provision in the bill last year brought veto threats from the Administration and held up bill passage for many months. Another controversial provision which would allow banks into the real estate business is also expected to prove contentious.

The full House Appropriations Committee is not scheduled to act on the DOT/Treasury bill until July 23, which is the last day of the session before the start of the lengthy summer recess. Floor action therefore won’t take place until after Labor Day when the DOT bill is likely to be rolled up into a multi-bill omnibus. At this point it does not appear likely the Senate will act on its version of the bill until after Labor Day.