The chairman of the House Transportation, Housing and Urban Development Appropriations Subcommittee is warning that implementation of last year’s massive bipartisan infrastructure law could be held up if lawmakers don’t reach an agreement on fiscal 2022 spending.
“I think it’s a very serious matter,” Rep. David E. Price, a North Carolina Democrat who chairs the transportation spending subcommittee, said in an interview Tuesday. “People of course are focused on the prospect of a shutdown, but as a matter of fact the continuing resolution is also debilitating and certainly shouldn’t be anything more than a stopgap solution.”
Price’s concerns echo those of Department of Transportation officials who are trying to implement the infrastructure law despite operating under a continuing resolution through Feb. 18.
The stopgap resolution makes federal transportation spending, which already is a complicated puzzle of contract funding and discretionary dollars, even more of a morass. In many cases, the department will be forced to implement the law on a program-by-program basis, with some headed for smooth implementation and others held up until there’s more funding certainty.
Even programs that are paid for by the gas-tax-funded Highway Trust Fund are subject to the continuing resolution. The Federal Highway Administration announced Dec. 15 that while the fiscal 2022 highway allotment is $52.5 billion, well above last year’s level of $47 billion, states can spend no more than $17.9 billion through Feb. 18 because of the restrictions imposed by operating under last year’s spending bill.
Price said operating under a continuing resolution will hobble grant programs as well and said the department acted “prudently by not releasing a great deal of money.”
“The solution is pretty simple,” he said. “We just need to finalize work on these bills and pass them by the deadline.”
The problem is acute enough that at the annual meeting of the Transportation Research Board this week, three DOT administrators — Stephanie Pollack, acting administrator of the Federal Highway Administration; Federal Transit Administrator Nuria Fernandez; and Amit Bose, deputy administrator of the Federal Railroad Administration — acknowledged that the stopgap resolution had hindered their ability to move forward.
“There are some limitations on some of the new programs since we’re operating under a continuing resolution, so we’re focusing on the programs that we have the appropriations as well as the authorizations for,” Pollack said.
Polly Trottenberg, deputy secretary of Transportation, acknowledged in an interview that the temporary funding was “very challenging” for her agency and the federal government writ large.
“We’re trying the best we can to keep as many programs moving” as possible, she said.
While the funding situation complicates spending, it doesn’t bar it altogether: The law includes an appropriations title, meaning that some programs included in the law have funding from general revenue.
A few of the new programs can be funded if the appropriations title includes specific language allowing DOT to use a portion of the money for their administration.
But Price cautioned that without full-year spending legislation, the department “can’t really go full bore in getting these funds out the door.”
“These funds have a lot to do with economic recovery and the needs of the states and communities that are long overdue,” he said. “The delay hurts a great deal.”
Susan Howard, program director for transportation finance at the American Association of State Highway and Transportation Officials, said highways, which are paid for through the Highway Trust Fund, have a stable source of funding. But because of the continuing resolution, that money has been essentially prorated until there’s more funding certainty.
States “know what the allocation is for FY2022, but don’t have the full-year obligation limitation to know what can be drawn down,” she said.
For now, the problem isn’t dire, she said, as there’s still time to reach a funding agreement before the construction season. But “we start getting in trouble if there’s another CR past February,” she said, adding that further delays could jeopardize the implementation of the law.
Beyond frustrating a department eager to implement the most sweeping infrastructure investment in a generation, the temporarily lower levels of funding create a constraint on congressional Democrats eager to demonstrate the results of one of President Joe Biden’s key legislative successes before the November midterm elections.
Shant Boyajian, a partner with Nossman LLP, said presidential administrations have historically preferred to spend discretionary funding by no later than mid-September before a midterm.
But with funding still at last year’s levels, and with the department needing to set up funding guidance for many of the new programs, “I just don’t know the practicality of getting a lot of the [law’s] funds for this year out the door before the midterms,” he said.
“I think the more problematic issue is if it’s just CR after CR,” he said. “If there’s an omnibus or some other deal that gets cut where there’s a higher level of spending and the full amount of obligation limitation, that, I think, would actually help resolve some of the current constraints.
“To some degree, the fate of implementation this year is tied to government funding legislation, unfortunately.”