$1.5 Billion to be Cut from Roads, Transit and Rail in 2013 Unless Congress Acts

Trust-fund transportation programs will be exempt from the cuts while sequestration would cut non-exempt programs by 7.6% to 8.2%

Preliminary estimates released by the White House last Friday indicate funding for highways, transit and rail programs in 2013 will be cut by about $1.5 billion on January 2 if automatic budget cuts take place as scheduled. Shrinking or preventing those cuts requires Congress and the White House to strike a budget deal. But Congress certainly won't come up with a fix before the election, and there's widespread pessimism about reaching an agreement by January 2.

The automatic cuts, known as "sequestration" in DC lingo, are a result of the inability of the White House and Congress to reach a budget deal back in 2011. Sequestration was included as an incentive to reach a budget deal; sequestration was so distasteful to both parties that it was expected to force a deal. It didn't, and now time is running out to prevent the cuts.

The report, required by Congress, details spending cuts in all areas of government. It is 224 pages and can be downloaded from the White House here. The transportation sections begin on page 144.

The report was highly anticipated by transportation stakeholders. Highway programs were expected to be mostly protected from the cuts, because the relevant law exempted programs funded through trust funds. While the Administration was given no leeway in determining which programs would be cut, or by how much, some people believed a quirk in the law allowed the White House to apply the cuts to transportation programs, if it would so decide.

The report was expected to confirm whether the White House's interpretation of sequestration would include or exclude the exempted transportation programs. It would also detail more precisely, down to sub-program level, how the cuts would be administered.

Now we know: the trust-fund transportation programs will be exempted from the cuts. The non-exempt transportation programs will be subjected to a 7.6 to 8.2% cut, depending on the program.

However the general fund transfer that supplements the highway trust fund is subject to the automatic cuts, as is a portion of highway contract authority. Also note the cuts would occur when the fiscal year is already a quarter over. Implementing a 7% to 8% cut that deep into the budget year will make things even more difficult.

Here are the White House's preliminary estimates for funding reductions, but note this is all subject to change, whether or not Congress acts before January 2.

To read the entire article, click here.

Source: Transportation Issues Daily