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How will the federal fiscal cliff affect transportation?
The term “fiscal cliff” has become shorthand for the combination of the imminent expiration of the tax cuts enacted by Congress during the Bush Administration and the automatic cuts to federal programs that are set to go into effect on January 2nd, 2013 under the terms of the debt reduction deal passed in the summer of 2011.  While Congress is working on potential solutions to the fiscal cliff, observers are anxiously awaiting word of what will happen to various federal programs.
But even if the federal government falls off the fiscal cliff, transportation won’t have far to fall.  Due to a quirk in the law, the federal highway, transit and safety programs funded from the Highway Trust Fund are generally immune to the automatic budget cuts of about eight percent, known as “sequestration.”  While that means that transportation will evade the worst impacts of sequestration, it doesn’t mean that it would escape completely unscathed.  A number of programs—generally those funded from the general fund— would be impacted if Congress does not forestall the impacts of the fiscal cliff.
  • Highway Trust Fund:  To avoid deep cuts in federal surface transportation funding, MAP-21 transfers $6.2 billion into the Highway Trust Fund in 2013.  While most funding flowing out of the trust fund is exempt from sequestration, this transfer of funding into the trust fund will get hit.  Though it wouldn’t automatically reduce spending from the Highway Trust Fund, this reduced transfer would shave about $500 million off the trust fund’s balances, raising questions about whether it will make it to the end of MAP-21 before running short on cash.
  • TIGER:  The Transportation Investments Generating Economic Recovery (TIGER) Program, which provides grants for surface transportation projects across any mode, would be subject to sequestration.  If Congress chooses to fund the TIGER program in 2013 at the 2012 level of $500 million, sequestration would shave $41 million off the program’s funding.  However, the point would be moot if Congress chooses not to fund TIGER, which is up in the air: the Senate included TIGER funding in its transportation budget, but the House did not.
  • Federal Transit Administration:  A number of FTA programs—including the New Starts program for transit capital projects, research, and administrative expenses—are subject to sequestration because they’re funded from the federal general fund rather than the Highway Trust Fund.  New Starts would see its funding reduced by about $150 million, but this isn’t expected to cause any long-term issues for Oregon projects in the New Starts funding process, including Portland-Milwaukie Light Rail and the Interstate 5 bridge replacement.
  • Amtrak:  Amtrak’s appropriations for both train operations and capital expenditures would be subject to sequestration.  What impacts that would have on the Northwest’s passenger rail service, including the Cascades trains that travel between Eugene and Vancouver, British Columbia and the Coast Starlight between Seattle and Los Angeles, are not clear. Oregon and Washington largely cover the costs for the Cascades trains, so the direct impacts to that service may not be substantial.