On Thursday, November 5, 2015, the U.S. House of Representatives passed the Surface Transportation Reform and Reauthorization Act (STRRA), its long-term transportation reauthorization bill, by a vote of 363 in favor and 64 opposed.  STRRA is now in conference committee with the U.S. Senate's Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, which had been passed by that chamber at the end of July.  Current federal authorization for transportation is set to expire on Friday, November 20.

As described in previous Policy Updates, both the DRIVE Act and STRRA would establish first-ever funding sources for freight improvements, a key reauthorization principle for CMAP.  Otherwise, the two bills would largely continue major programmatic and policy changes to the federal program made by the current bill, MAP-21.  This Policy Update reviews some of the significant non-freight policy changes made in the two new bills.

Funding levels and offsets

Both STRRA and the DRIVE Act would authorize federal transportation programs for a six-year period, covering FY 2016-21.  DRIVE would authorize about $340 billion over this period, 5 percent more than STRRA's $325 billion.  These funding levels are above the revenues anticipated to accrue to the Highway Trust Fund, requiring transfers from the General Fund.  Both bills include sufficient funding to cover the first three years of spending called for, requiring additional action -- either explicitly (STRRA) or implicitly (DRIVE) -- from Congress at a later date to fund the remainder. 

Looking at highway funding, Illinois is estimated to receive an average of $1.55 billion each year under DRIVE, about 6 percent more than the annual average of $1.46 billion under STRRA.  Both DRIVE and STRRA would provide an increase over recent funding levels, which have been roughly $1.37 billion each year for Illinois under MAP-21.

For transit funding, Illinois is estimated to receive an annual average of $612 million under DRIVE, about 12 percent more than the $546 million under STRRA.  The transit funding levels in the House bill would represent a net loss for Illinois; transit funding statewide was about $565 million in FY2015, about 3.5 percent more than the proposed funding levels for STRRA.
 

Comparison of estimated funding levels, DRIVE Act and STRRA (formula funding only)

DRIVE Act

Source: CMAP analysis of Eno Transportation Weekly data.
Note: Data are rounded

STRRA

Source: CMAP analysis of U.S. DOT data.
Note: Data are rounded.

Per House rules, transfers from the General Fund into the Highway Trust Fund must be offset with new revenues or spending reductions elsewhere in the federal budget.  As described by the Transportation for America coalition, DRIVE includes about $46 billion in funding offsets drawn from a variety of sources, including tax compliance measures, modifications to the financial services industry, and the sale of supplies from the Strategic Petroleum Reserve. 

STRRA had included many of the same funding offsets as DRIVE until a last-minute amendment struck a few minor offsets and included a substantial new offset: elimination of the Federal Reserve's surplus fund.  These changes would generate an estimated $40 billion in new offsets, with a substantial but unknown impact.  The final use of these funds will be determined in conference committee between the House and Senate but could be used to increase annual funding levels, adjust the length of the reauthorization bill, or eliminate the need for other funding offsets.

Suballocated funds

MAP-21 currently includes three programs that are suballocated from state Departments of Transportation (DOTs) directly to Metropolitan Planning Organizations (MPOs) such as CMAP, in addition to other local recipients.  These programs, or their predecessors, are longstanding and of particular interest to metropolitan areas.  DRIVE and STRRA would continue these three programs with relatively modest changes.

• Surface Transportation Program (STP).  The Surface Transportation Program is a flexible program with broad funding eligibility.  Under MAP-21, STP is split evenly between state DOTs and MPOs.  DRIVE would increase the share suballocated directly to MPOs from 50 percent to 55 percent.  It would also increase MAP-21's set aside for bridge projects, including eligibility for bridges not on the National Highway System (NHS).  Similarly, STRRA would increase the suballocated share to 55 percent, although it would do so incrementally over a four-year period.  In contrast to DRIVE, STRRA would take the bridge set-aside from the National Highway Performance Program, rather than STP.  In Illinois, a longstanding agreement results in a funding formula in which 18.92 percent of the total of core federal programs, after various adjustments, is suballocated throughout the state.  As a result, the region currently receives more in STP funding than the MAP-21 formulas would suggest.  Assuming that Illinois will follow the new federal distribution formula, STRRA or DRIVE would need to increase its STP suballocation to 57 percent to maintain the current STP funding levels for the CMAP region.
   
• Transportation Alternatives Program (TAP).  TAP supports non-motorized transportation projects, and for the past few years CMAP has devoted those resources to projects identified in the Regional Greenways and Trails Plan.  MAP-21 funded the first year of the TAP program at about $800 million and suballocates half the program to locals.  CMAP currently receives just under $9 million in TAP funds annually.  DRIVE would fund TAP at a flat $850 million annually and suballocate the entire program.  As a result, the amount of TAP funding to the CMAP region would likely double.  DRIVE would also allow MPOs to further suballocate TAP funds within their region, so long as they use a competitive process to do so.  STRRA would rename the TAP program the "STP Set-Aside" program, fund it at a flat $820 million per year, and allow large MPOs to flex up to half of their TAP funds to support any STP-eligible purpose. 
   
• Congestion Mitigation and Air Quality Improvement Program (CMAQ).  Neither bill would make significant changes to the CMAQ program.  DRIVE would allow CMAQ funds to be used for not only the attainment but also the maintenance of national air quality standards.  It would make port-related projects eligible for CMAQ funding and exempt certain low-population-density states from a requirement to set aside funds for projects to reduce emissions of fine particulate matter.  STRRA would make vehicle-to-infrastructure projects eligible for CMAQ funding.  It would also include provisions to clarify the priority given to fine particulate matter emissions and to exempt some low-population density states from those requirements.

Transit provisions

In the DRIVE Act, transit funding grows at a faster rate than highway funding, including a 6.9 percent jump in FY2016 compared to FY2015 (it's only 3.3 percent for highways over the same period).  DRIVE includes relatively few transit policy changes, with a few exceptions.  For one, DRIVE would allow certain large, economically distressed metropolitan areas to temporarily use their urbanized area formula capital funds for transit operations. 

DRIVE would also prioritize public-private partnerships for discretionary funding from the New Starts program and allow projects that serve both public transportation and intercity passenger rail to be eligible for New Starts funding.  The latter is particularly relevant to the Chicago region, as several CREATE rail projects, such as the one at Grand Crossing, would improve both Metra and Amtrak operations.

STRRA would provide significantly less funding for transit over the same time period and would also make significant policy changes.  For one, the level of federal participation in New Starts projects would be reduced to 50 percent (however, the 80 percent federal participation would be retained for the Small Starts and Core Capacity programs). 

Additionally, STRRA would restrict the use of other federal funding sources to provide a project's local funding match, instead requiring the local match to come from sources such as transit agency revenues, advertising, concessions, and other ancillary sources of funds.  This provision may make it difficult for transit agencies to fund significant capital improvements because transit agencies routinely use multiple sources of public funding to provide the local match for New Starts projects.  Further, fares and ancillary revenues are typically used for transit operations, not major capital improvements. 

Other provisions

In the area of innovative finance, both DRIVE and STRRA would reduce the size of the TIFIA federal credit assistance program; MAP-21 had increased TIFIA funding to $1 billion annually, but DRIVE would provide $675 million each year, and STRRA would provide only $200 million each year.  Among other changes to the TIFIA program, DRIVE would allow small transit oriented development (TOD) projects to be eligible for credit assistance.

In the area of tolling, both DRIVE and STRRA include language clarifying states' ability to toll new highway capacity, as well as new language for the Interstate Highway Reconstruction and Rehabilitation Pilot Program, providing a mechanism to free up the pilot program's three slots if projects fail to advance.  STRRA also requires state legislative approval for participation in the pilot program.  Additionally, a provision in STRRA would allow public transit and over-the-road buses access to tolled highway-occupancy vehicle lanes.      

Both bills include numerous provisions aimed at streamlining the project review and permitting process.  These provisions build off MAP-21 and include strategies such as the expanded use of categorical exclusions and programmatic agreements, enhanced coordination and transparency among reviewing agencies, and closer integration of environmental review planning.

Looking ahead

The CMAP Board adopted five transportation reauthorization principles in June 2014, calling for robust funding levels, performance-based funding, a greater role for MPOs, a robust freight program, and streamlined project review processes.  Viewed in this light, DRIVE and STRRA deliver a mixed bag.  DRIVE would provide a higher level of funding, particularly for transit and freight, and both it and STRRA would provide long-term funding certainty for planning purposes.  However, even DRIVE's higher funding levels represent only a modest increase above inflation, and both DRIVE and STRRA rely on a host of non-transportation user fees to offset their funding levels.  As such, neither bill advances a robust, sustainable approach to transportation funding. 

Nevertheless, the bills make some progress on policy provisions of interest to northeastern Illinois.  Both bills would make relatively modest changes to suballocated programs and metropolitan planning, including a larger suballocation for STP.  Both bills would include freight programs -- although DRIVE would provide more funding for freight improvements -- and include new ways to expedite the project review and permitting process. 

CMAP will continue to advocate for the region's reauthorization principles as the House and Senate conferees, including Senator Durbin and Representative Lipinski from Illinois, negotiate final legislative language.