Public-works programs keep the construction market going at the federal, state, county, and municipal levels. In February, the Bush administration presented a $2.4 trillion FY2005 budget. This includes winning the war on terrorism, protecting the homeland, and strengthening the economy. Defense spending under the plan will increase by 7 percent and homeland security spending by 10 percent to $28.3 million. The budget calls for $1.2 trillion in tax cuts over the next 10 years, which includes making permanent the 2001 and 2003 tax cuts beyond their scheduled expiration dates between 2005 and 2011.
The president's FY05 budget request proposes spending $58.7 billion for programs administered by the U.S. Department of Transportation, $4.4 billion more than last year's request. Of that total, $14 billion is specifically designated for transportation safety, a priority for the administration. The budget request, however, provides no additional funding for the Federal Highway Administration and Federal Transit Administration, cutting FHWA from this year's $34.7 billion down to $34.5 billion in FY05 and holding FTA funding at this year's enacted level of $7.3 billion.
For the Research and Special Programs Administration, which includes funding for pipeline safety and hazardous materials transportation, the administration requested $137 million, $11 million more than the $126 million enacted this year. The administration intends to reorganize research programs, hazardous materials and pipeline oversight within the department during the year.
For other U.S. DOT programs, the FY05 budget requests:
- $14 billion for the Federal Aviation Administration, up from $13.9 billion enacted this year (includes airport grant funding of $3.5 billion, $100 million more than enacted this year).
- $689 million for the National Highway Traffic Safety Administration, up from $299 million enacted this year.
- $455 million for the Federal Motor Carrier Safety Administration, up from $364 million enacted this year.
- $1.1 billion for the Federal Railroad Administration, down from $1.4 billion enacted this year.
- $900 million for Amtrak, down from $1.2 billion enacted this year (the request includes the possibility for an increase to $1.4 billion each year from 2006–2009, if certain financial and management reforms are enacted).
The industry continues to face indecision and uncertainty over the reauthorization of the highway trust fund. When the six-year bill was instituted some years back, the industry thought that perhaps the seasonal battle over highway funding had been put to rest. The controversy continues and a bill that should have been passed more than a year and a half ago still hangs in suspension.
The budget request also includes a modest increase in proposed funding for the administration's SAFETEA (Safe, Accountable, Flexible and Efficient Transportation Equity Act) proposal, from $247 billion to $256 billion over six years. The administration released its plan to reauthorize the Transportation Equity Act for the 21st Century, TEA-21, in May 2003.
The House of Representatives passed legislation on March 10, and the Senate followed on May 17. The bill was sent to the conference committee, which will reconcile the differences. Early word is that this process will not be a quick or easy one.
The American Road and Transportation Builders Association did a comparison of the two TEA-21 reauthorization bills.
A number of sources have distributed charts attempting to describe the total and state-specific funding increases that would be possible under the TEA-21 reauthorization legislation approved by the House of Representatives and the Senate Environment and Public Works (EPW) and Banking committees. These analyses contain fundamental flaws that make them irrelevant for the purposes of business forecasting.
To date, the charts comparing the House and Senate bills and attempting to quantify resulting state-specific apportionments have only examined the measures' contract authority, or authorizations. It is critical to understand the difference between contract authority and guaranteed funding. Contract authority is largely a "bookkeeping" device. Guaranteed funding is the cash amount that Congress actually allows states to spend. The additional contract authority gives state DOTs some flexibility to match funds to projects, but it is guaranteed funding that creates jobs, builds transportation projects and provides market opportunities for our industry.
The House-passed bill includes $284 billion in contract authority and $284 billion in guaranteed funding. On the other hand, the Senate bill includes $295 billion in contract authority and $295 billion in guaranteed funding. As such, any state-by-state comparison of the two measures looking only at contract authority will naturally make the House bill appear more generous. There is no state-by-state comparison of the guaranteed funding each of these measures would provide available at this time.
Secondly, characterizations to date of the increased funding the two bills would provide are dramatically overstated. These analyses have compared the aggregate six-year funding level in each proposal to the past six-year total under TEA-21. This results in seemingly impressive investment increases (ranging from 22 to 42 percent). Such a historical analysis, however, is of little, if any, value to a business or public agency. To assess the future market impact and job-creation potential of each proposal, the most relevant comparison is future investments adjusted for projected inflation compared to the FY 2004 investment level.
According to the Office of Management and Budget's economic forecast in the FY2006 budget, consumer prices are expected to increase by 12.4 percent by 2009 — meaning a six-year investment of $269.3 billion would be required just to maintain the real purchasing power of the federal highway and transit investment at the FY 2004 level. (Of course, prices specific to transportation construction — steel, oil, cement — have been rising greater than the Consumer Price Index.) It is the real investment increases above the FY2004 level that will create jobs and provide additional market opportunities for the transportation construction industry. A six-year reauthorization bill containing $284 billion in guaranteed funding would be a 5.4-percent inflation-adjusted increase over the 2004 federal highway and transit investment levels. This same methodology should be used in discerning a state-by-state increase in investment.
The reauthorization debate is far from over. Even though the bill's in conference, it is imperative that you continue to make the case to your congressional representatives that a six-year investment greater than $284 billion is necessary to meet the goals of all states. Ask them to produce a reauthorization bill that can pass both the House and Senate.
The president's proposed FY2005 budget for the Environmental Protection Agency provides $7.76 billion, an increase of $133 million and includes:
- $25 million for the Targeted Watersheds program, a $10-million or 67-percent increase over the FY04 funding level. The program is a competitive grant program to communities to implemented watershed protection and restoration plans. The program funds a $10-million regional pilot program to help publicly owned treatment works implement source projects to comply with nutrient discharge into the Chesapeake Bay.
- $20 million for a new water-quality monitoring initiative to provide $17 million in grants and $3 million in technical assistance to help states and tribes develop and implement statistically representative water-quality monitoring programs.
- $850 million for the Clean Water State Revolving Loan Fund, the same request as FY04 but down $492 million from the FY04 omnibus appropriation of $1.34 billion. The FY05 request is about $360 million less than the FY03 request.
- $850 million for Drinking Water State Revolving Loan Fund, the same request as FY03.
- $10 million to support the Water Information Sharing and Analysis Center and State Grants to Develop Emergency Planning Measures. The ISAC is a secure web-based, password-protected database that provides information on threats or alerts to drinking water and wastewater utilities.
- $222 million for TMDL monitoring for Clean Water Act Section 106 grants, a $22-million increase from the FY04 omnibus package.
- $210 million for Clean Water Act Section 319 nonpoint source grants, a decrease from FY04's request of $238 million.
- $210 million for brownfields cleanup, a $40-million or 24-percent increase over the FY04 funding level. The program includes an increase for grants and loans to fund cleanup of lightly contaminated sites.
- $1.4 billion for Superfund, a $124 million or 10-percent increase over the FY04 funding level. This program will target Superfund sites that are eligible for construction.
- $4.4 billion for research and enforcement activities, a $33-million or 1-percent increase over the FY04 funding level.
- $1.25 billion for EPA state grants, an $84-million or 7-percent increase over the FY04 funding level. The president has introduced a new program in this category — $23 million for a State and Tribal Performance Fund, which will award competitive grants for projects that can demonstrate environmental and public-health outcomes. Eligible projects will include activities such as air-quality assessments, wetlands restoration and hazardous-waste management.
|Public Works Resource List|
|American Public Works Association (APWA), www.apwa.net, (202) 408-9541||American Road & Transportation Builders Association (ARTBA), www.artba.org, (202) 289-4434|
|National Utility Contractors of America (NUCA), www.nuca.com, (703) 358-9300|
|Greg Sitek is national editorial director for Reed Construction Data's Associated Construction Publications, sibling publications of Construction Equipment.|