The Latest on Capitol Hill

In early September, President Trump signed a "continuing resolution" that will fund the government generally until December 11. Included in this resolution was an extension of current surface transportation authority which governs all highways and transit funding, which would have otherwise expired on September 30. That extension was necessary because Congress is nowhere close to completing a new surface transportation bill (often called “reauthorization”) to replace the transit and highway sections of the Biden-era infrastructure bill (the IIJA). Yes, the House Transportation and Infrastructure Committee passed a reauthorization bill in May with a resounding 62-2 bipartisan vote, but it has not been considered or passed by the full House. Meanwhile, none of the three key committees in the Senate (Banking, EPW, and Commerce) have publicly released any legislative text.

One confusing piece of both the short-term December extension and the House’s BUILD America 250 Act – at least for those who aren’t immersed in the details of federal funding policy – is the treatment of transit funding. You may have seen people explain how the BUILD America 250 Act increases transit formula funding, while others have decried the short-term December extension and the House’s bill for cutting transit funding. If this wasn’t all esoteric enough, at the heart of much of the funding conversation is some real DC jargon: “advance appropriations.” Well, we’re here to break it down for you and talk about what comes next.

To borrow from Schoolhouse Rock! or an all-time classic track from De La Soul, when it comes to understanding how the IIJA has funded transit, “three is the magic number.” Keep in mind that because this isn’t confusing enough, many programs get funding from more than one of the three sources below:

• Highway Trust Fund contract authority: ~$70 billion guaranteed over 5 years. This is sometimes referred to as just the “Trust Fund” or “contract authority,” and the federal gas tax provides the money here. The part of the Trust Fund that funds public transit is called the “Mass Transit Account.” This is far and away the most significant federal funding source for public transit (as well as highways) and once Congress agrees to fund a program with it, that funding is effectively guaranteed. In other words, unlike almost every other federal program which has a two-step process – i.e., Congress first authorizes a program and then later appropriates money to it – these funds are not subject to the annual appropriations process.

• Completely Funds Certain Formula Programs: it fully funds several key transit formula programs including those for urban transit (§5307) and rural transit (§5311).
• Partially Funds Some Other Formula Programs: it provides most of the funding for other formula programs like State of Good Repair (§5337) and Enhanced Mobility of Seniors and Individuals with Disabilities (§5310).

• Funds Some Competitive Grants: finally, it provides some of the funding for certain competitive grants, including Bus & Bus Facilities, Low-No, and Rail Vehicle Replacement (and one grant program - Tribal Transit - has received all of its funding from contract authority).
• Appropriations: ~$17 billion authorized (not guaranteed): Congress also does include some programs that do require funding from the annual appropriations process (or that require it to reach maximum funding levels). These follow the typical way Congress operates in which it first authorizes programs and then later has to fund them for implementation. And that funding comes from the Treasury Department’s “General Fund,” which is financed by income taxes and other federal revenues.

What requires annual appropriations? The clearest example is the Capital Investment Grants (CIG) program. The IIJA authorized many billions of dollars for this program, much of which requires Congress to allocate funding as part of the appropriations process each year.

• Advance Appropriations: ~$21 billion guaranteed over 5 years: This was a new category of funding in the IIJA that had not existed in prior surface transportation bills. It essentially guaranteed future appropriations from the General Fund, skipping over decisions as part of the annual appropriations process. Some refer to it as “Division J funding,” or “supplemental funding” since it’s guaranteed money that is on top of the standard guaranteed funding of contract authority.

• What programs benefited from this legislatively innovative source? The vast majority of the $21 billion has gone to a mix of formula and competitive programs focused on large capital/infrastructure projects, like CIG and State of Good Repair. It also has funded part of the Low-No vehicle program, station accessibility, ferry service, and a small percentage of the §5310 mobility program for seniors and individuals with disabilities.

Some of this is like trying to figure out how everyone is related in the first episode of Game of Thrones (or was that just me?). For example, Bus and Bus Facilities includes both formula and competitive grant programs, and draws funding from contract authority and appropriations. Meanwhile, Low-No (which often gets grouped together with Bus and Bus Facilities) has received funding from all three sources!

Why does this all matter? In short, the part missing from Congress’s recent actions is the guaranteed funding through advance appropriations that was in the IIJA. The short-term extension until December 11 excluded advance appropriations while continuing other funding levels. The House’s BUILD America 250 Act would remove advance appropriations and return to the pre-IIJA days of relevant transit programs being subject to annual spending by Congress (it would also cut out the IIJA’s significant guaranteed funding for passenger rail). Importantly, however, the BUILD America 250 Act also significantly increases guaranteed contract authority funds which would rise from the IIJA’s $69.9 billion over five years to $87.6 billion. In addition to increasing funding for the urban and rural transit formula programs, the proposed bill in effect shifts some of the IIJA’s advance appropriations funding (though not nearly all) for large transit infrastructure projects to contract authority.

And of course, elections and politics loom large here. Should the Democrats win back the House, will they stick with the BUILD America 250 Act bill which was voted out 62-2 in Committee or look to make big changes? Whatever happens with the Senate, will committees there use the House bill to significantly inform their legislation, or start anew? And will any of this get sorted during the lame duck session between election day and the January 3 swearing-in of a new Congress?

For now, I’ll stick with my earlier prediction of “Congress doing one or two extensions and then finalizing new transportation legislation sometime in 2027.”