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ARTBA Analysis

BUSH ADMINISTRATION’S FY 2009 BUDGET “NOT AS BAD” AS EXPECTED

The Bush Administration’s FY 2009 budget proposal includes $68.2 billion for federal transportation programs - $2.13 billion less than the total transportation investment in FY 2008. According to the American Transportation Builder’s Association (ARTBA), while there are some positive recommendations in the proposal, the budget could be characterized as not being as bad as many expected.

The deteriorating fiscal outlook for the Highway Trust Fund’s Highway Account has long been a source of concern. Last summer, the Administration estimated revenues into the account would be $4.3 billion below the amount necessary to finance the investement levels guaranteed under the 2005 highway and transit law, the Safe Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The type of shortfall, if unaddressed, could lead to a potential $16 billion cut in FY 2009 highway investment.

While the Administration’s budget does not recommend this type of devastating funding reduction, says ARTBA, it does call for cutting highway investment to $39.4 billion - $1.8 billion less than called for in SAFETEA-LU and provided in FY 2008. This level of investment is supported, in part, by a proposed $3.2 billion transfer from the Highway Trust Fund’s Mass Transit Account to the Highway Account. The budget recommends increasing federal transit investment to $600 million to $10.13 billion, which is still $200 million less than called for by SAFETEA-LU.

The highway and transit program funding levels in the budget proposal are driven less by trust fund revenues than by a statement from the Administration - made for the first time in announcing the budget proposal - that President Bush committed to provide only $286.4 billion when he signed SAFETEA-LU into law in 2005.

As such, the budget is proposing highway and transit investment levels below the amount called for in SAFETEA-LU to compensate for funding provided in excess of the levels guaranteed in the 2005 reauthorization law. SAFETEA-LU, however, requires upward adjustments in highway investment when revenues exceed what was anticipated when the bill was written in 2005 and past Administration budgets adhered to this mandate.