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FY12 Federal Transit Funding

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FY12 Federal Transportation Spending Bill - Highlights

In mid-November 2011 Congress passed and President Obama signed an extension of existing federal transportation programs through the end of the fiscal year on September 30, 2012. This extension is a stopgap measure until a new multiyear federal transportation spending bill can be developed, which will hopefully happen next year. The transit highlights of the bill are as follows:

  • The Federal Transit Administration will receive $10.6 billion for all of its' programs, which is about $311 million more than last year.
  • The New Starts and Small Starts programs in particular will receive $1.9 billion, which is slightly more than last year. The House had originally proposed defunding this program.
  • The TIGER program will get $500 million. The House had originally proposed defunding this program.
  • The National Infrastructure Bank will receive no funding (recall that one proposal to fund Los Angeles's America Fast Forward plan was this bank). President Obama wanted to give this bank $1 billion.
  • Amtrak will get $1.1 billion, which is $336 million less than last year, despite record ridership.
  • High Speed Rail will also receive no funding, which is certainly a blow to all the proposed high speed rail projects out there. President Obama had originally proposed giving it $850 million.

How to Pay for the Bill - Still Up In The Air

For the past several years gasoline, diesel, and other federal taxes and revenues were insufficient to cover the expenditures of the Highway Trust Fund. Because of this deficiency, general fund revenues had to be diverted to transportation spending. While Republicans concerned with the deficit do not want to continue to do this, they have come up with no definitive additional funding sources. Raising the gas tax continues to be off the table, even though the federal gas tax has not been raised since 1993. Republicans have proposed to pay for this bill with royalties from increased oil and gas drilling, although it is unclear whether Democrats will go along with this. While the transit industry is safe for this fiscal year, unless a new funding source can be agreed upon for FY13 there is a significant risk that federal transportation funding will be slashed. This risk is increased when one considers that the automatic spending cuts in FY13 that resulted from the failure of the deficit reduction committee to reach consensus include significant cuts to transportation programs.

Many analysts expect the spring of 2012 to bring the highest gasoline prices ever recorded. While these high prices will certainly bring pain to the nation's car commuters unfortunate to live and work in areas with poor transit service, the silver lining may be that the high prices will drum up support for public transit at exactly the time when a long-term transportation bill will be considered by Congress. If this situation comes to pass then it will definitely be a case of short-term pain for long-term gain.

Commentary

Unfortunately, with absolutely no funding for high speed rail in this current fiscal year the prospects for any projects ever being built looks dim. While California has enough money to build their initial 130 mile line in the Central Valley, there is no money to extend it further - and therefore no money to make it somewhat useful. All other track improvements in the United States proceeding under the guise of "high speed rail" offer speed improvements to at most 110 mph, and in some cases only to 79 mph.

Fortunately, the New Starts program, which was threatened with elimination by the Republican Party, has weathered the storm and continues intact. Perhaps part of the reason it has not been affected by Republican cost-cutting is the fact that of the nineteen projects at some point in the Full Funding Grant Agreement stage six are in the solidly Republican states of Utah and Texas alone.

Of course, one major problem is that funding for rehabilitation of existing rail lines lags far behind New Starts funding. One visit to Chicago, New York, Philadelphia, or Boston reveals that America's legacy heavy rail systems have fallen into a truly decrepit state of disrepair. While politicians obviously prefer to be associated with new versus renovated infrastructure, at some point you would hope they would be able to overcome the cliché and adopt the same "fix it first" mentality to transit that many have adopted for roads.

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