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March 29, 2018

Omnibus bill sets federal spending levels for Fiscal Year 2018

Mar 29, 2018

Omnibus bill sets federal spending levels for Fiscal Year 2018

On Friday, March 23, the President signed into law an appropriations bill that sets final spending levels for the remainder of federal Fiscal Year (FY) 2018, which ends on September 30, 2018. The omnibus appropriations bill provides for increases in spending across most programs, made possible by a two-year budget deal passed in February that raised Budget Control Act spending caps for FY18 and FY19. Talks are already underway to develop the budget for FY19.

The $1.3 trillion package represents a 20 percent increase over FY17 discretionary spending levels. It is notable both for its funding increases across programs, as well as its rejection of the many cuts originally proposed by the White House in the areas of transportation, housing, economic development, and the environment. The bill provides full funding of the Fixing America’s Surface Transportation (FAST) Act, new general fund money for highway and transit formula programs, a significant increase for the Transportation Investment Generating Economic Recovery (TIGER) program, and other notable increases for transit and rail programs.

Increased funding for FAST Act highway and transit programs. The omnibus fully funds $55.6 billion of previously authorized FY18 spending from the Highway Trust Fund for FAST Act highway and transit programs. It supplements this with an unanticipated new $3.4 billion in general funds, split approximately 75 percent for highways and 25 percent for transit. Nearly $2 billion of the new highway funding will be distributed to states through a formula for construction of highways, bridges, and tunnels. Illinois’ share is estimated at $72 million. The omnibus bill’s new $834 million for transit will be distributed through existing formula and discretionary programs. It also continues funding for Infrastructure for Rebuilding America Grants, which are designed to support major freight investments such as the CREATE program of regional rail improvements.

TIGER program tripled. The TIGER multimodal grant program will triple in size to $1.5 billion. CMAP supports this and other competitive programs based on comprehensive evaluation criteria. The most recent round of awards heavily emphasized rural projects. The bill increases the minimum set aside for projects in rural areas to 30 percent from the current 20 percent, without providing an explanation for this increase. Notably, the legislation prohibits the U.S. Department of Transportation from using the federal share of project costs as a selection criteria in awarding grants, rejecting an idea included in recent proposals from the Administration. The omnibus allows a portion of grant funds for planning and design of projects for the first time since FY14; this may help jurisdictions with limited resources implement more projects, and could be leveraged to encourage planning so that transportation projects address comprehensive transportation, land use, and economic concerns.

Transit grant funds increased. The omnibus provides $2.6 billion in general funds for transit Capital Investment Grants, a 10 percent increase. The Chicago Transit Authority’s Red and Purple Modernization Program will continue to receive its promised funding, which amounts to $100 million for FY18. Capital grants help transit agencies modernize and expand their systems to increase ridership, which reduces road congestion, mitigates air pollution, and provides more transportation options. The bill makes $516 million available for new projects in the Core Capacity program, which targets funds to existing transit systems and is particularly important for regions such as metropolitan Chicago with long-established transit networks.

Large increase for Amtrak. Grants for Amtrak are increased by 30 percent to $1.9 billion. A portion of this money could support continued improvements at Chicago’s Union Station, Amtrak’s busiest station outside the Northeast Corridor, acting as a hub for both long-distance and regional services.

Major expansion of rail programs. Three relatively new rail grant programs authorized by the FAST Act received significant funding increases. Consolidated Rail Infrastructure and Safety Improvements (CRISI) grants are funded at $592 million, with $250 million set aside for positive train control (PTC) deployment grants. Railroads are mandated by the federal government to install PTC, a communication technology designed to prevent train collisions, overspeed derailments, and incursions into employee work zones. The omnibus makes commuter railroads, such as Metra, eligible for CRISI grants to install PTC. Metra estimates full PTC implementation to cost $350-400 million, approximately half of which has been funded to date. The Federal-State Partnership for State of Good Repair program is provided $250 million, with Restoration and Enhancement Grants receiving $20 million. These programs fund a variety of rail safety, efficiency, and reliability improvements, including grade crossing enhancements and PTC deployment. Together, the increase in these programs from FY17-18 is more than eightfold, from just $98 million in FY17 to $862 million in FY18.

Increases for various other programs. The omnibus continues, and in many cases, increases funding for a variety of housing, environment, and economic development programs that support communities and planning efforts in northeastern Illinois. Department of Housing and Urban Development funding is increased by 10 percent, with notable increases for Community Development Block Grants and the HOME Investment Partnerships program. The Environmental Protection Agency’s budget is increased 9.5 percent, with Great Lakes Restoration Initiative funding held steady and significant increases for various water infrastructure loan and credit programs. In the Department of Commerce budget, funds for the Economic Development Administration are increased 9 percent, with the Manufacturing Extension Partnership program up 8 percent. The Federal Emergency Management Agency’s flood hazard mapping program, which replaces outdated flood maps and informs many local planning efforts, received an increase of nearly 50 percent to $263 million. Historic preservation and wildlife refuge programs at the Department of the Interior also received slight increases. All of the above programs had been targeted for cuts or elimination in the White House’s original budget proposal. Additionally, U.S. Census Bureau funding is increased 87 percent to $2.8 billion as the agency ramps up for the 2020 Census.

Looking ahead

Spending levels for FY18 are now finalized, though the six-month delay in passing full-year appropriations means that preparations for next year’s budget are already underway. Two previous CMAP Policy Updates examined the White House’s FY19 budget proposal for its potential impacts on the region. However, the two-year budget deal passed last month sets overall FY19 spending caps higher than the FY18 caps, meaning many of the cuts that the White House has proposed for FY19 are unlikely to be enacted.

The omnibus contains increased spending for many programs important to the CMAP region, demonstrating needed federal leadership on funding in the areas of transportation, housing, the environment, and economic development. Increased funding underscores a commitment to transit and rejects the notion that the federal government should reduce its role in funding transit capital improvements. However, even with full funding for the FAST Act and supplemental increases, the resulting level of spending is still inadequate to bring the nation’s transportation network to a state of good repair and modernize the system. While the additional funds are needed, the bill does not address the long-term sustainability of surface transportation funding. To advance performance-based programming of federal transportation dollars, more work is needed to ensure funds are invested strategically in supporting national and regional economic success and mobility. 

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