Because the 2005 transportation authorizing law known as "SAFETEA-LU" expired Wednesday (the end of federal Fiscal Year 2009) without an extension or repeal of an $8.7 billion rescission of contract authority, federal highway contract authority has been cut by $1 billion for the month of October compared to the comparable period in FY 2009. The bill provides for an obligation limitation equivalent to one month’s worth of the FY 2009 highway obligation level of $40.7 billion.

The Senate acted Wednesday to approve a continuing resolution extending funding for most federal agencies including the U.S. Department of Transportation by one month to Oct. 31. The resolution also included a one-month continuation of the federal highway and transit programs' authorization. The resolution was attached to the conference agreement on the legislative branch appropriations bill, HR 2918.

Senators voted 62-38 to approve the package after overcoming several Republican points of order against the bill, raised in part because the CR was not part of either chamber's original legislative branch appropriations bill. The House had approved the conference agreement last Friday by a vote of 217-190 (see Sept. 25 AASHTO Journal story)

Obama signed the measure Thursday (Public Law 111-68). The final text of the law included a technical correction approved by the House and Senate that allows new contract authority to be apportioned from the Highway Trust Fund.

Because Congress did not pass a separate bill (HR 3617) providing for a three-month authorization extension or take action to repeal an $8.7 billion rescission of highway contract authority that took effect Wednesday (see related story), the language contained in the CR will govern federal transportation authorization and appropriations for the month of October. Congress will have to act again by Oct. 31 to further appropriate money to U.S. DOT and to further extend program authority for highways, mass transit, and traffic safety.

The CR extends FY 2009 spending into October but at a reduced level for the highway program. Appropriators had to adhere to a spending level that was reduced by a $3.15 billion rescission included in a prior appropriations bill and by the $8.7 billion rescission included in the SAFETEA-LU legislation by authorizers, for a combined reduction of some $12 billion below the FY 2009 level. As a result, when calculating the October federal funding for highways, the bill provides about $1 billion less in contract authority than the state DOTs had received last October.

State DOTs are now unable to plan for major projects beyond this month due to the uncertainty of what federal funding levels will be made available for the remainder of the new fiscal year.

If no agreement on an extension is reached by February 2010, the baseline for the highway program will be reduced from $42 billion to $30 billion. Enactment of an authorization extension could prevent this cutback.

"AASHTO urges the House and Senate to quickly reach agreement on the needed extension. This will make it possible to restore the $1 billion being lost in October and prevent further losses in the months to come," said John Horsley, executive director of the American Association of State Highway and Transportation Officials. "Certainty is a necessity when you are a state department of transportation. States will be reluctant to enter into long-term contracts to design replacement of a bridge or improve a highway. Uncertainty will bring much of that work to a halt. We are also extremely disappointed that the $8.7 billion rescission in now being implemented."

Next Steps Up in the Air

The House has favored completing a full six-year authorization worth some $500 billion. However, the inability to reach a consensus on revenue options to fund the bill forced House Transportation and Infrastructure Committee Chairman James Oberstar, D-MN, last week to support a three-month extension of authorization in order to allow Congress time to continue working on a six-year measure.

Senate leaders have for months supported the Obama administration's request to extend SAFETEA-LU for 18 months, until March 2011. Leaders of the Senate Environment and Public Works committee came to agreement early this week to support the House's request for a three-month extension rather than moving forward with their 18-month version. Chairwoman Barbara Boxer, D-CA, and Sen. James Inhofe, R-OK, attempted to call up the House extension bill on the Senate floor late Wednesday evening, just hours before the midnight expiration of SAFETEA-LU. The move required the unanimous consent of all senators and three registered objections, prohibiting debate or a vote on the matter.

Following this week's action, the path forward for transportation authorization is unclear. But Congress will have to act again this month to further extend the authority beyond Oct. 31.

Appropriations for U.S. DOT for the remainder of FY 2010 have a simpler path to completion. Both the House and Senate have passed their versions of the annual spending bill for DOT and the Department of Housing and Urban Development. A conference committee is expected to reconcile the different versions this month and bring the bill back to each chamber for final passage before current funding runs out Oct. 31 under the terms of the continuing resolution enacted Thursday.