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109th Congress                                             Rept. 109-12
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================
 
             TRANSPORTATION EQUITY ACT: A LEGACY FOR USERS

                                _______
                                

                 March 8, 2005.--Ordered to be printed

                                _______
                                

     Mr. Young of Alaska, from the Committee on Transportation and 
                Infrastructure, submitted the following

                          SUPPLEMENTAL REPORT

                         [To accompany H.R. 3]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 3), 
as reported, which was not included in part 1 of the report 
submitted by the Committee on Transportation and Infrastructure 
on March 7, 2005 (H. Rept. 109-12, pt. 1).

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 8, 2005.
Hon. Don Young,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3, the 
Transportation Equity Act: A Legacy for Users, as reported by 
the House Committee on Transportation and Infrastructure on 
March 7, 2005. Although CBO has not yet completed a cost 
estimate for the entire bill, this cost estimate provides our 
analysis of the bill's major provisions. CBO has not had time 
to estimate the cost of other provisions, which include 
forgiving a loan (with an outstanding balance of about $12 
million) to the state of California, increasing certain 
penalties related to transportation safety, requiring the 
preparation of several studies, and issuing regulations 
concerning a variety of transportation issues.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Lisa Cash 
Driskill and Susanne S. Mehlman.
            Sincerely,
                                     Douglas Holtz-Eakin, Director.
    Enclosure.

H.R. 3--Transportation Equity Act: A Legacy for Users

    Summary: This cost estimate provides our analysis of the 
major provisions of H.R. 3; CBO has not yet completed a cost 
estimate for the entire bill. CBO estimates that implementing 
the major provisions of H.R. 3 would result in new 
discretionary spending of $157 billion over the 2006-2010 
period, assuming appropriation actions consistent with the 
funding levels specified in the bill. For the core programs 
authorized by the bill (primarily, the Federal-Aid Highway 
program and transit programs), H.R. 3 would provide contract 
authority for most of the highway and some transit programs, 
establish obligation limitations for the major highway 
programs, and authorize appropriations for other programs for 
fiscal years 2004 through 2009. The sum of new spending 
authority under the bill for those core programs is 
approximately $284 billion over that six-year period. Funding 
for 2004 and much of 2005 has already been enacted; thus, some 
of the spending from that total has already occurred or will 
occur under current law. Similarly, some of the discretionary 
spending from the new funding will occur after the 2006-2010 
period covered by this cost estimate.
    The amounts of new spending under the bill would add to 
outlays expected from funding previously provided. In total, 
CBO estimates that discretionary outlays would sum to about 
$214 billion over the 2006-2010 period for the affected 
programs (highways, safety, transit, and hazardous materials 
transportation).
    CBO estimates that enacting the major provisions of the 
bill would reduce direct spending by $576 million over the 
2005-2015 period. Enacting the bill also would reduce the 
amount of contract authority (a mandatory form of budget 
authority) below the levels assumed in the CBO baseline for 
major transportation programs by $28.3 billion over this 
period. Finally, the Joint Committee on Taxation (JCT) 
estimates that enacting sections 1601 and 1602 would reduce 
revenues by $138 million over the 2005-2015 period.
    This estimate includes the funding levels specified in the 
bill, and no funding for the Minimum Guarantee program (other 
than the portion exempt from obligation limitations) because 
the bill, as approved by the Committee on Transportation and 
Infrastructure, would not extend authority for this program. 
Section 1125 specifies that most spending for highway programs 
in 2006 would be delayed until nearly the end of that fiscal 
year unless subsequent legislation were enacted to reauthorize 
and amend the Minimum Guarantee program.
    CBO has not had time to estimate the cost of other 
provisions, which include forgiving a loan (with an outstanding 
balance of about $12 million) to the state of California, 
increasing certain penalties related to transportation safety, 
requiring the preparation of several studies, and issuing 
regulations concerning a variety of transportation issues.
    H.R. 3 contains an intergovernmental mandate as defined in 
the Unfunded Mandates Reform Act (UMRA), but CBO estimates that 
there would be no costs to state, local, or tribal governments 
to comply with that mandate. Thus, the threshold established by 
that act ($62 million in 2005, adjusted annually for inflation) 
would not be exceeded.
    CBO has determined that H.R. 3 also contains private-sector 
mandates as defined in UMRA. CBO expects that the aggregate 
cost of private-sector mandates in the bill would exceed the 
annual threshold established in UMRA ($123 million in 2005, 
adjusted annually for inflation).
    Estimated cost to the Government: The estimated budgetary 
impact of H.R. 3 over the 2005-2010 period is shown in Table 1. 
The effects of this legislation fall within budget function 400 
(transportation).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
3 will be enacted by May 31, 2005, when the current authority 
for most of the surface transportation programs expires and 
that future appropriation actions will be consistent with the 
funding levels authorized in the bill. For example, we assume 
that the appropriations already enacted for 2005 will be 
amended by supplemental appropriation actions to bring this 
year's funding in line with the bill's authorized levels.

                       TABLE 1.--ESTIMATED BUDGETARY IMPACT OF MAJOR PROVISIONS OF H.R. 3
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2005       2006       2007       2008       2009       2010
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated authorization level.................        603      1,736      1,853      1,932      2,063          0
Estimated outlays.............................          0      2,739     23,829     47,533     47,541     35,292

                                           CHANGES IN DIRECT SPENDING

Estimated budget authority....................     -4,856     -5,113     -4,031     -2,725     -1,650     -1,650
Estimated outlays.............................          0        -86       -173       -115        -86        -69

                                             CHANGES IN REVENUES \1\

Estimated revenues............................          *         -4         -7        -11        -14       -17
----------------------------------------------------------------------------------------------------------------
\1\ Revenue estimates provided by the Joint Committee on Taxation.
Note.--* = revenue loss of less than $500,000.

Contract authority

    H.R. 3 would extend the authority for the surface 
transportation programs administered by the Federal Highway 
Administration (FHWA), the National Highway Traffic Safety 
Administration (NHTSA), the Federal Motor Carrier Safety 
Administration (FMCSA), and the Federal Transit Administration 
(FTA) through 2009. Under current law, most budget authority 
for surface transportation programs is provided as contract 
authority, a mandatory form of budget authority. Outlays from 
those programs, however, are subject to obligation limitations 
contained in appropriation acts and are therefore 
discretionary. For this estimate, CBO assumes that obligation 
limitations will continue to control most spending from those 
programs.
    H.R. 3 includes obligation limitations for the Federal-Aid 
Highway program. Those obligation limitations total $221 
billion over the 2004-2009 period ($153 billion of that total 
is for the 2006-2009 period). The bill does not include 
obligation limitations for the use of the contract authority 
that would be provided for transit and safety programs. For 
this estimate, CBO assumes that appropriation acts would 
include obligation limitations equal to the contract authority 
levels for those programs.
    For the surface transportation programs, H.R. 3 would 
provide a total of $200.2 billion of contract authority over 
the 2005-2009 period.\1\ This level does not include any 
contract authority for the Minimum Guarantee program, a part of 
the Federal-Aid Highway program (other than $639 million 
provided each year that is exempt from obligation limitations). 
In previous years the Minimum Guarantee program provided 
additional contract authority to ensure that each state 
received a share of the total level of contract authority 
provided to all states for certain programs, equal to 90.5 
percent of the state's share of tax receipts to the highway 
trust fund. For example, in 2004 the Minimum Guarantee program 
provided contract authority of about $10 billion (including 
portions exempt from obligation limitations).
---------------------------------------------------------------------------
    \1\ H.R. 3 also provides contract authority for fiscal year 2004.
---------------------------------------------------------------------------
    Under section 1125, most spending for highway programs in 
fiscal year 2006 could not begin until August 2, 2006, unless 
subsequent legislation were enacted to boost the Minimum 
Guarantee to specified levels above 90.5 percent. For this 
estimate, CBO does not assume enactment of such subsequent 
legislation, and consequently the estimated level of highway 
spending in 2006 under the bill is significantly less than 
would otherwise be expected without section 1125. That is, 
outlays from the 2006 funding would occur later under the bill 
than they would in the absence of the obligation delay under 
section 1125. The levels of contract authority and obligation 
limitations authorized by H.R. 3 for each year, however, are 
not affected by this provision.
    The Balanced Budget and Emergency Deficit Control Act 
specifies that an expiring mandatory program with current-year 
outlays in excess of $50 million be assumed to continue at the 
program level in place when it is scheduled to expire. 
Following this assumption, under H.R. 3, CBO projects $42.3 
billion in contract authority for the major surface 
transportation programs each year beginning in 2010.

Spending subject to appropriation

    In addition to providing contract authority, H.R. 3 would 
authorize the appropriation of about $8.2 billion over the 
2005-2009 period for the major surface transportation programs 
and for improving the transportation of hazardous materials. 
Assuming appropriation action consistent with the authorization 
and obligation levels specified in the bill, CBO estimates that 
implementing the major provisions of H.R. 3 would cost about 
$157 billion over the 2006-2010 period (see Table 2). The 
amounts of new spending under the bill would add to outlays 
expected from funding previously provided. In total, CBO 
estimates that discretionary outlays would sum to about $214 
billion over the 2006-2010 period for the affected programs 
(highways, safety, transit, and hazardous materials 
transportation).

        TABLE 2.--ESTIMATED CHANGES IN SPENDING SUBJECT TO APPROPRIATION FOR MAJOR PROGRAMS UNDER H.R.3 2
----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                          ------------------------------------------------------
                                                              2006       2007       2008       2009       2010
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Federal-Aid Highway Program:
    Estimated Authorization Level 2.........           0           0          0          0          0          0
    Estimated Outlays.......................           0         855     18,708     40,426     38,724     27,230
Highway Traffic and Motor Carrier Safety
 Programs:
    Authorization Level 2...................           0           0          0          0          0          0
    Estimated Outlays.......................           0         502      1,012      1,115      1,210        607
Transit Programs:
    Authorization Level 2...................         576       1,707      1,823      1,932      2,063          0
    Estimated Outlays.......................           0       1,359      4,074      5,970      7,600      7,454
Hazmat Safety Program:
    Authorization Level.....................          27          29         30          0          0          0
    Estimated Outlays.......................           0          23         36         22          6          0
    Total Changes:
        Estimated Authorization Level.......         603       1,736      1,853      1,932      2,063          0
        Estimated Outlays...................           0       2,739     23,829     47,533     47,541    35,292
----------------------------------------------------------------------------------------------------------------
\1\ This estimate only includes the cost of major provisions of H.R. 3.
\2\ Under current law, most budget authority for the Federal-Aid Highway program, highway traffic and motor
  carrier safety programs, and some transit programs is provided as contract authority, a mandatory form of
  budget authority. Outlays from those programs, however, are subject to obligation limitations contained in
  appropriation acts and are therefore discretionary. H.R. 3 would provide contract authority for each of those
  programs and also would authorize the appropriation of discretionary funds for those programs as well. For
  this estimate, CBO assumes that obligation limitations will continue to control most spending from those
  programs.

Direct spending

    H.R. 3 would affect direct spending by providing new 
contract authority for surface transportation programs (see 
Table 3). Expenditures for most of those programs are 
controlled by annual appropriation action. The bill would 
provide lower amounts of contract authority for the Federal-Aid 
Highway program than the amounts assumed in CBO's baseline 
(which assumes a continuation of funding of about $37 billion a 
year).
    In contrast, H.R. 3 would provide increases above the 
baseline in contract authority for transit programs and for the 
highway traffic and motor carrier safety programs. But on 
balance, the bill would provide contract authority amounts that 
fall below the baseline projections. Over the 2005-2015 period, 
that reduction from baseline levels sums to $28.3 billion. If 
the authorization for the Minimum Guarantee program were 
extended, however, that program would add to the contract 
authority provided by H.R. 3.
    Section 3034 would reduce the amount of contract authority 
available to transit programs in 2005 by $576 million. CBO 
estimates that reduction would lower spending by $576 million 
over the 2006-2011 period by eliminating a portion of the 
resources available and assumed to be spent under current law. 
To replace that contract authority, the bill would authorize 
the appropriation of an additional $576 million for transit 
programs in 2005. Spending from that authorization of 
appropriations is included in Table 2, so that the reduction 
recorded as direct spending savings--included in Table 3--would 
be exactly offset by an increase in spending subject to 
appropriation.

Revenues

    H.R. 3 would expand the State Infrastructure Banks and 
Transportation Infrastructure Finance and Renovation Act 
(TIFIA) programs, and JCT estimates that those provisions would 
lower revenues by $138 million over the 2005-2015 period (see 
Table 3). Under current law, five states can use grants from 
the Federal-Aid Highway program to fund a state infrastructure 
bank. States use infrastructure banks to finance transportation 
projects by providing loans to local governments or repaying 
bonds. H.R. 3 would extend that authority to all states. JCT 
estimates that this provision would increase the use of tax-
exempt bonds and therefore decrease federal revenues.
    For a project to receive credit assistance under the TIFIA 
program, current law requires the project's total cost to equal 
or exceed the lower of the following two amounts: $100 million 
or 50 percent of the state's grants from certain highway 
programs in the previous fiscal year. States can cover a 
portion of the remaining cost with tax-exempt bonds. H.R. 3 
would change the first threshold to $50 million. JCT estimates 
that enacting H.R. 3 would increase the number of projects that 
receive credit assistance under TIFIA and therefore increase 
the use of tax-exempt bonds, reducing revenue collections.

                             TABLE 3. ESTIMATED EFFECTS ON DIRECT SPENDING AND REVENUES FOR MAJOR PROGRAMS UNDER H.R. 3 \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                    2005       2006       2007       2008       2009       2010       2011       2012       2013       2014       2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Baseline Spending for Surface
 Transportation and Hazmat
 Safety Programs:
    Estimated Budget Authority.     42,606     43,981     43,981     43,981     43,981     43,981     43,981     43,981     43,981     43,981     43,981
    Estimated Outlays..........        947        918        880        794        777        766        758        752        748        746        744
Proposed Changes:
Federal-Aid Highway Program:
    Estimated Budget Authority.     -4,177     -5,607     -5,008     -4,221     -3,688     -3,688     -3,688     -3,688     -3,688     -3,688     -3,688
    Estimated Outlays..........          0          0          0          0          0          0          0          0          0          0          0
Highway Traffic and Motor
 Carrier Safety Programs:
    Estimated Budget Authority.       -103        410        449        480        515        515        515        515        515        515        515
    Estimated Outlays..........          0          0          0          0          0          0          0          0          0          0          0
Transit Programs:
    Estimated Budget Authority.       -576         84        528      1,016      1,523      1,523      1,523      1,523      1,523      1,523      1,523
    Estimated Outlays..........          0        -86       -173       -115        -86        -69        -46          0          0          0          0
Total Changes:
    Estimated Budget Authority.     -4,856     -5,113    -4,0.31     -2,725     -1,650     -1,650     -1,650     -1,650     -1,650     -1,650     -1,650
    Estimated Outlays..........          0        -86       -173       -115        -86        -69        -46          0          0          0          0
   Surface Transportation and
  Hazmat Safety Programs Under
            H.R. 3:
    Estimated Budget Authority.     37,750     38,868     39,950     41,256     42,331     42,331     42,331     42,331     42,331     42,331     42,331
    Estimated Outlays..........        947        832        707        679        691        697        712        752        748        746        744

                                                                   CHANGES IN REVENUES

        Estimated Revenues \2\.          *         -4         -7        -11        -14        -17        -17        -17        -17        -17        -17
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes direct spending estimates for major provisions of the bill.
\2\ Estimate provided by the Joint Committee on Taxation.
Note.--* = revenue loss of less than $500,000.

    Estimated impact on State, local, and tribal governments: 
Section 4131 of H.R. 3 contains an intergovernmental mandate as 
defined in UMRA because it would preempt certain state laws 
restricting the use of utility service vehicles. CBO estimates 
that this mandate would impose no costs on state, local, or 
tribal governments, and so the threshold established by that 
act ($62 million in 2005, adjusted annually for inflation) 
would not be exceeded.
    Section 4117 of H.R. 3 would eliminate an existing mandate 
by repealing the single state registration system, which limits 
how states may regulate interstate motor carriers. At this 
time, CBO cannot estimate the impact of this change on the 
administrative burden or revenue of state transportation 
agencies.
    Estimated impact on the private sector: CBO has reviewed 
H.R. 3 for private-sector mandates and determined that the bill 
contains mandates as defined in UMRA. CBO expects that the 
aggregate cost of private-sector mandates in the bill would 
exceed the annual threshold established by UMRA ($123 million 
in 2005, adjusted annually for inflation). That conclusion is 
based upon our analysis of the provision that would extend the 
federal motor carrier safety regulations (other than 
regulations relating to commercial driver's license and drug 
and alcohol-testing requirements) to additional commercial 
motor carriers. Under the bill, those safety requirements would 
apply to owners and operators of motor vehicles used to 
transport between nine and 15 passengers (including the driver) 
in interstate commerce, regardless of the distance traveled. 
According to representatives at the Federal Motor Carrier 
Safety Administration, the new regulations could cost 12,000 
carriers nearly $13,000 each in the first year that the 
regulations are in effect and slightly less in the following 
years.
    Estimate prepared by: Federal Costs: Lisa Cash Driskill and 
Susanne S. Mehlman; Impact on State, Local, and Tribal 
Governments: Marjorie Miller; and Impact on the Private Sector: 
Jean Talarico.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.