Sequestration Week: Will Congress Find a Solution By Friday? Does It Matter?

Welcome to Sequestration Week. Congress has until Friday to strike a deal that would avoid a set of dreaded automatic budget cuts.

Transit expansions, like this BRT project currently underway in Grand Rapids, Michigan with FTA funds, could be undermined if the sequester goes through on Friday. Photo: ##http://www.mlive.com/news/grand-rapids/index.ssf/2012/10/for_grand_rapids_a_40m_bus_rap.html##MLive##

The president is blaming the crisis on House Republicans, who are in turn laying blame on Senate Democrats. Unlike any number of previous budget crises, no one really thinks that Washington can pull a last-minute solution out of a hat this time. These cuts probably will take effect, at least for a while.

Transportation Secretary Ray LaHood was the administration’s spokesperson this weekend, tasked with publicizing some of the cuts that will hit hard. More than $600 million of the $1 billion DOT will need to cut is set to come out of the Federal Aviation Administration, which LaHood said will lead to furloughs for the vast majority of FAA personnel, who will lose one or even two days per pay period. That will mean delays for travelers and probably canceled flights, since air traffic controllers will only allow the amount of traffic they can manage safely.

The cuts to air travel are certainly the most dramatic, but surface transportation will suffer some wounds as well. As we reported last month, the Federal Transit Administration is facing painful cuts to an already bare-bones staff. Amtrak funding and New Starts grants for transit expansion will also get a 6 percent slice taken out of them. (Note: Before the year-end fiscal cliff deal, the cut would have been 8 percent, but some fancy maneuvering lowered it.) The popular TIGER grant program for innovation transportation projects will also be cut.

Programs funded according to formulas aren’t safe, either, even though the money come from a “protected” account, the Highway Trust Fund, which is generally not subject to the sequester. The reason is that general fund money propped up the HTF under the MAP-21 transportation bill, so the portion of the account that doesn’t come from fuel taxes is subject to the sequester.

No general fund money buoyed the HTF transit account for 2013, since the transit account is still solvent, according to Nick Donohue of Transportation for America. The $6.2 billion in general funds that went to the HTF for this year went exclusively into the highway account, so that will be subject to the 6 percent sequester. That $6.2 billion accounts for about 15 percent of total Federal Highway Administration spending, so a 6 percent cut amounts to less than a 1 percent cut to highway spending.

A bigger threat to transit comes in 2014, when $2.2 billion of general fund revenue is currently set aside for transit. That $2.2 billion will be subject to the 6 percent cut. (The highway account will be more vulnerable, since it is set to receive a $10.4 billion infusion of general fund revenue.)

This year’s cuts will still hit transit harder than highways, since so many transit programs are funded outside of the HTF — including all Federal Transit Administration staffing. Unlike most highway funding, these programs are subject to the full 6 percent cut, as opposed to having just a small piece of the budget at risk.

The sequester isn’t just unpopular with highway and transit officials. No one likes it. (Well, almost no one.) But it’s possible that the “meat cleaver” approach to budget trimming is saving transportation from even worse cuts.

Despite the White House’s current focus on the FAA, transportation doesn’t have the kind of constituency fighting for it tooth and nail that some other programs have – say, defense, or Medicare. So if a new round of cuts – made with a scalpel, not a cleaver – protected those programs, it’s possible transportation could get hit even harder to make up the difference.

Jack Schenendorf, a former Congressional transportation staffer now working for the corporate law firm Covington & Burling, said it’s impossible to say which would be worse. But the current White House offensive does give some clues that a negotiated deal could work out better for transportation than the sequester’s slate of reductions.

“The administration is making a big deal out of the air traffic controllers and the like,” Schenendorf said. “They’ve made it such a high-profile issue, a higher profile issue than the impact on some social programs, so it would be very hard for the administration to then turn around and agree to a budget plan that would have more cuts for transportation.”

Schenendorf said that, though he doesn’t advocate for it, Congress often makes “gimmicky cuts” that don’t have a real impact but are scored by the Congressional Budget Office as reducing the deficit. So, a more targeted approach could also find some of these victimless “cuts.” He said that when previous sequesters were avoided by making more targeted cuts, “transportation wasn’t unduly hurt by those.” None of those sequesters involved cuts as massive as what’s being contemplated now.

Alan Simpson and Erskine Bowles are back with a new series of recommendations [PDF] for cutting the deficit and averting the sequester, but they’re far less specific and less bold than their initial plan from 2010, which involved raising the federal gas tax by 15 cents a gallon. This time, all they’ll get behind is a requirement to “bring transportation spending and revenues in line” – but they won’t say whether that involves raising revenues or cutting spending.

  • Bruce Nourish

    Perhaps someone with more knowledge about how the FTA works can help me out here. My understanding was that once an FFGA is signed, the FTA contribution for the project was guaranteed. Is this correct? If so, is the Grand Rapids project proceeding without an FFGA?

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