Congress and President Obama Address Fiscal Issues, New Speaker and Action on Long-Term Surface Transportation Bill

A change in leadership consumed the House this month as John Boehner (R-OH) made the decision to resign as Speaker. The House elected a new Speaker on October 29th after arduous negotiations cleared the way for Paul Ryan (R-WI) to gain the necessary support. Easing Ryan's transition into the top job are agreements that will pave the way for action on other controversial issues including raising the federal debt limit and a deal on the budget, which avoids another high-profile showdown over a potential government shutdown. On Wednesday, October 28, the House completed action on a two-year budget deal. The measure is expected to pass the Senate and be signed by President Obama as the White House was deeply involved in the negotiations.

While Congress wrestled with leadership and fiscal challenges, it also faced the looming deadline of October 29th to extend the federal surface transportation program. Faced with the inability to provide the necessary revenue to finance a long term transportation bill, this past July Congress passed what was the 34th program extension since 2009, a three-month short term fix expiring on October 29th. With no long-term bill in place yet, Congress approved a 35th extension that continues the program through November 20, 2015. Both the House and Senate are hopeful that they can finalize a long-term bill by the November 20th deadline. If not, they will be forced to pass another extension.

As for the long-term bill, progress was made on October 22nd as the House Transportation and Infrastructure Committee approved its bill. While the legislation is a six-year authorization, it is really only a three-year bill as the House Ways and Means Committee will only provide enough offsets to pay for three years of funding. The funding provisions and specific offsets will be added when the legislation is brought to the House floor the week of November 2nd. It is important to note that the Senate passed surface transportation legislation is similar – a six-year bill with only three years’ worth of offsets. The expectation is that the House bill will ultimately include the same offsets as the Senate bill, but that could change if there is strong enough opposition to require either new offsets or a reduction in the overall amount of offsets and therefore the bill would fund the program for closer to two years.

After the House passes the legislation, the House and Senate will work to reach a compromise between the House and Senate passed versions. The goal will be to produce this compromise legislation, called a conference agreement, prior to November 20th so Congress can send it to President Obama to sign the bill into law.

The funding levels of the long-term bill are expected to be very close to the current levels, which underscores the fiscal realities currently faced by Congress. The bill provides $261 billion for highways, $55 billion for transit, and $9 billion for various safety programs. Assuming Congress can reach agreement on the bill, it will provide certainty to the states for the next three years. While three years will pass quickly, it is certainly better than the endless string of extensions that has left State DOTs wondering what their budget situation will be every quarter.