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What Does the Sequester Mean for Transportation?


With the budget sequester big news last week, many are wondering how those cuts will impact transportation. The American Road & Transportation Builders Association (ARTBA) has analyzed the impact.

The 2011 negotiations between President Obama and congressional leaders to raise the federal debt limit produced the Budget Control Act (BCA) that averted a U.S. government default on its obligations. Part of the act was the creation of a bipartisan, bicameral “Joint Select Committee on Deficit Reduction” that was charged with identifying steps to reduce the deficit by $1.2 trillion over 10 years.

The failure of that Committee to reach an agreement by its November 2011 deadline triggered a “sequestration” process that will lead to $1.2 trillion in deficit reduction by 2021. This process requires across-the-board spending cuts in discretionary programs (applied equally to defense and non-defense programs) of approximately eight percent.

The BCA builds on legislative efforts to reduce the federal deficit dating back to 1985. One of the effects of the BCA and its predecessors is that certain classes of programs are specifically exempt or partially exempt from sequestration. The federal transportation programs are considered “hybrid programs” in this process with some exempt and some not largely because of their trust fund/dedicated revenue structure.

The White House Office of Management and Budget (OMB) March 1 released a document providing details on the cuts required by the sequestration process. Below is a summary of how OMB indicated sequestration will impact the federal transportation programs.

Program                                               FY 2013 Investment Level         FY 2013 Sequestration

Airport Improvement Program                $3.515 billion                             Exempt

Core Highway Program                          $39.7 billion                              Exempt

Highway Emergency Relief*                   $2.0 billion                                $101 million

Payments to Highway Trust Fund           $6.2 billion                                $316 million

Highway Exempt CA                              $739 million                               $38 million

Transit Formula Programs                      $8.5 billion                                Exempt

Transit Capital Programs                        $1.9 billion                                $96 million

It is worth noting that the reduction in the transfer to the HTF indicated above will not impact core highway investment in FY 2013. It will, however, reduce the HTF balance going forward. The most recent Congressional Budget Office data show the fund’s Highway Account ending FY 2014 with a $4 billion surplus and the Transit Account ending with a $500 million balance.

* Mainly for Hurricane Sandy repairs. The $10.9 billion appropriated for transit repairs will be cut by $545 million.