from state and local transportation officials. Discontent over the restructuring plan, which was released two weeks ago, continues to mount as New York Department of Transportation Commissioner Joseph Boardman, Chairman of the American Association of State Highway and Transportation Officials (AASHTO) Standing Committee on Rail, said that “states are confronting fiscal difficulties of historic proportions and are not in a position to increase their current level of contributions for intercity passenger rail services” (see below). Meanwhile, the Federal Highway Administration (FHWA) released a memorandum warning that without corrective legislation before the current TEA-21 authorization expires on September 30th, the agency will not be able to continue program delivery (see below).

The White House Amtrak Plan. The plan would eliminate direct federal subsidies to Amtrak and instead institute a 50 percent matching grant program for states that want rail service. It would eventually break Amtrak into three separate entities, each of which could be privatized in whole or in part: a company that would operate trains under contract to states; a company that would maintain and operate the infrastructure on the Northeast Corridor under contract to a compact composed of every state in the corridor; and a corporation that would retain Amtrak’s current right to use freight railroad tracks and Amtrak’s name and would be able to sell these rights to private companies.

Boardman’s Statement. Boardman’s statement was in a much lower key than the reactions of others in Congress and elsewhere who have labeled the White House plan “dead on arrival,” but the case he makes is no less disparaging. In a written statement, Boardman said “Based on our initial review, the states have expressed concerns about provisions of the proposal, including the level and certainty of funding, the federal-state matching shares, the termination of federal funding for long distance routes, access to freight right-of-way and labor protections for Amtrak employees.” The New York DOT head called for a “moratorium on increases in state payments to Amtrak for at least two years or until a long-term policy on intercity passenger rail is developed.” In the near-term, he said, it is essential that Amtrak be provided the funding needed for stability in the passenger rail service and to ensure that vital commuter-rail operations are not interrupted.

States Face Budget Shortfalls. Boardman said that it is also necessary to acknowledge that states are facing financial difficulties of historic proportions and are not in a position to increase their current level of contributions for intercity passenger rail service. Nationwide this year, governors have wrestled with projected revenue shortfalls totaling $60 billion. The National Governors Association’s (NGA) Fiscal Survey of the States showed that 37 states had to cut already-enacted budgets by nearly $14.5 billion — the largest spending cut in the survey’s 27-year history. Governors in 29 states recommended tax and fee increases in fiscal 2004, resulting in a net increase of $17.5 billion - the largest since 1979. Furthermore, state spending growth was cut to only 0.3 percent in fiscal 2003 and is expected to decline to 0.1 percent in fiscal 2004.

A number of states, including Maryland, Virginia, Michigan, Minnesota, Oregon and Illinois, have cut transportation projects to cover their budgetary shortfalls. A budget for the Oregon Department of Transportation (ODOT) that passed the Oregon House by a slim margin last week does not include a $10 million subsidy for Amtrak’s Cascade Passenger Rail Service between Portland and Eugene. This is significant because the administration’s Amtrak proposal was partly based on the Cascade model, which was praised as one of the railroad’s most successful state-run routes outside the Northeast Corridor. Eliminating the two state-sponsored trains could also mean the end of Amtrak’s thruway buses, which fill in the gaps between trains in the Willamette Valley. June ridership on the trains was up 15 percent to 23 percent overall from the year before, according to ODOT. These figures don’t include riders on Amtrak’s regular Coast Starlight run between Los Angeles and Seattle. Oregon doesn’t underwrite this long-distance run, which would continue regardless of the state’s budget crisis.

Conclusion. Boardman commended leaders both in the House Transportation & Infrastructure Committee and the Senate Commerce Committee “for bills that would authorize sufficient funds to meet the ’04 needs of Amtrak and offer financing plans for long-term passenger rail investment.” He expressed the hope that lawmakers will be able to appropriate the funds needed for the coming year without “shortchanging the other transportation modes.” DOT officials are scheduled to meet with AASHTO’s Rail Committee at its meeting in mid-September, where the details of the administration’s proposal are sure to be discussed. The talks could be the opening round of a decisive struggle over how to reauthorize the cash-strapped railroad, unless Congress, as before, punts the issue into next year or beyond with another round of stopgap funding. With all the backlogged annual spending measures and both TEA-21’s and AIR-21’s successors due on the president’s desk before October 1st, don’t expect any substantive action to occur this year on reauthorizing Amtrak.

In an ostensible housekeeping task that could also serve to refocus lawmakers’ attention on completing a six-year highway and transit reauthorization bill after the summer recess, the FHWA has circulated a memorandum indicating that the agency may have no alternative to shutting down October 1st, or shortly thereafter, unless a new surface transportation reauthorization bill is in place. Under a provision of the 1998 TEA-21, the federal-aid highway program, and the FHWA itself, cannot simply keep operating on trust fund balances when their current authorizations runs out, as could after the ISTEA expired in 1997. This is because TEA-21 amended Title 26, of the U.S. Code, to prohibit expenditures from the highway trust fund for liquidation of obligations made after September 30th. Any commitment to new spending, including obligations of carryover contract authority by states for projects, or even by FHWA for administrative expenses, after September 30th would violate this provision. In addition, FHWA’s carryover balances would only be sufficient for about three weeks of operations without new contract authority.

Without action of some sort by Congress to renew the program or undo the automatic cutoff of new spending, there’s no way to avoid a virtual shutdown. If expenditures are made in violation of the provision, the Department of the Treasury is required to cease depositing highway excise taxes into the highway trust fund. Thus, FHWA would be in violation of the Antideficiency Act by approving or incurring any obligations against the highway trust fund after September 30th. Such a violation of the Antideficiency Act would occur both for new obligations incurred by a state and for expenses incurred by FHWA in the processing of payments on existing obligations. After September 30th, FHWA would not be able to approve new projects or allow the states to incur new obligations of contract authority. FHWA would not be able to carry on operations to reimburse states for expenses incurred against existing obligations because FHWA itself could not obligate carryover contract authority for administrative expenses after September 30th.

In addition, unlike previous years, the FHWA itself will have only $13 million of carryover administrative contract authority on October 1st. “This amount will only cover about three weeks of basic administrative expenses, meaning payroll but not contract services or rent,” the memorandum states. The carryover administrative contract authority can’t be used until after September 30th unless lawmakers specifically approve the required amendment to Title 26. The memorandum stated that three legislative remedies are needed by September 30th. First, FHWA must be allowed to make payments of existing obligations and continue operations. Also, Title 26 must be amended or a revenue bill enacted to allow expenditures from the highway trust fund for liquidation of new obligations by states and by FHWA incurred after September 30, 2003. Finally, new amounts of sufficient contract authority or budget authority must be provided for administrative expenses to allow the FHWA to continue to administer the federal aid program, and an appropriations act or continuing resolution would be required to make liquidating cash available from the highway trust fund.

FHWA said that states can’t continue their programs by using such mechanisms as Advance Construction (AC). That is because AC procedures still require FHWA approval. However, states could proceed with advance projects at their own risk. It is important for states to remember that problems associated with ’04 contract authority and budget authority do not change the situation regarding the ’03 obligation ceilings. A state’s current program will remain capped by the ’03 ceilings. Any obligation ceiling that is not used by September 30 will lapse.

However, many doubt that the above scenario concerning categories will ever occur. The TEA-21 shutdown provision may, in fact, have been intended to head off any delays in reauthorization, long-term or short-term, on the assumption that Congress would never allow such a drastic program shutdown to occur. That’s a dangerous assumption, which creates the opportunity for a small group of lawmakers or a single powerful chairman to hold the entire program hostage to their own priorities, whether or not they have anything to do with highways. It also opens the door to legislators using a must-have highway extension as a vehicle for other amendments, the so-called “Christmas treeing” that can also stall a measure short of enactment. At the very least, the lawmakers may have to perform fiscal contortions to escape the trap they set for themselves in 1998. When faced with a similar problem in the past, lawmakers enacted temporary authorizing legislation, which gave states the flexibility to transfer funds temporarily among categories. In the last instance, payback to the categories borrowed from was required upon passage of the new highway and transit reauthorization bill. Environment and Public Works Committee (EPW) staff said they are aware of the potential problem and have indicated that if a six-year highway and transit reauthorization bill in not in place by October 1st, these issues will be addressed in whatever short-term legislation is pursued. The Washington Letter confirmed last week that the House Transportation & Infrastructure Committee (T&I) staff is crafting a short-term reauthorization bill that will address these same issues. However, the T&I Committee staff failed to define what short-term means. Some on Capitol Hill define a short-term extension as being six-months, while others characterize it as one or two years.

Senate Field Hearing. Meanwhile, Senate EPW Committee Chairman James Inhofe (R-OK) and Sen. John Cornyn (R-TX) hosted a field hearing last Monday in Brownsville, TX to address critical transportation needs in the Rio Grande Valley. Inhofe, as reported by the Associated Press, said he is ready to fast-track legislation calling for $225 billion in spending for SAFETEA, a 40 percent increase over what was passed in 1998. Inhofe, whose state, like Texas, counts itself as a highway trust fund donor state, added that Texas would get a 35 percent increase in its share of funding compared with TEA-21, bringing the state’s return more in line with its contributions in federal fuel taxes. State Transportation Commissioner John Johnson, who testified at the hearing, said the current formula has cost Texas as much as $2 billion in funding since it was implemented in 1999. Echoing the argument of other fast-growing donor states, Cornyn said, “Texas has been growing by leaps and bounds over the last 10 to 20 years. Unfortunately, our transportation infrastructure, particularly our roads, have not kept up.”

The EPW Committee leaders plan to mark up the highway portion of the reauthorization bill in the first week of September. Inhofe has informed Senate Majority Leader Bill Frist (R-TN) of his plan and has asked him to set aside time during the second and third weeks of September for floor debate (see August 4, 2003 issue). EPW ranking member James Jeffords (I-VT) told National Journal that “My understanding is that we are about 95 percent done in writing this legislation,” predicting that “Once we find a mechanism for paying for the bill, it will move quickly through the Senate.” That’s easier said than done, and even if the EPW Committee does meet this ambitious goal, the Senate floor debate can not occur on the measure until the Banking and Finance Committees iron out their differences over how to fund the transit program, and neither committee has announced a markup date. The Senate Commerce, Science, and Transportation Committee, which is in charge of the safety portions of the reauthorization bill, approved its piece of the puzzle on June 26th.

Representative Edward Markey (D-MA) blasted the Bush administration last week for opposing his proposal to screen commercial cargo on passenger planes, saying the opposition amounts to another in a “disturbing pattern of missteps and misplaced priorities” in beefing up homeland defenses. In an August 8th letter sent to Department of Homeland Security (DHS) Secretary Tom Ridge, Markey questioned why no security measures whatsoever are applied to mail or cargo weighing less than 16 ounces that is carried by commercial airliners. This is the second time since June that Markey has written Ridge expressing concerns about the nation’s air cargo security. Markey said the lack of screening “is an unacceptable national security risk that must be immediately remedied.” He pointed out that the shoe bomb worn by Richard Reid, which experts believe could have blown a hole in the fuselage of the Boeing 767 he was flying in, reportedly contained 10 ounces of plastic explosives.

Transportation Security Administration (TSA) spokesman Brian Turmail told the Washington Times that small U.S. mail packages are not screened because federal studies have concluded that less than a pound of explosives in the cargo area “is not going to bring an aircraft down or threaten passengers.” However, a year ago TSA said that the chance of a bombing on a passenger airliner was between 35 percent and 65 percent and cargo is likely to become, or already is, the primary aviation target for terrorists in the short term. Markey wasn’t persuaded by TSA’s reasoning, saying, “It is stunning that DHS continues to expose airplane passengers to known and preventable risks by allowing all mail and packages that weigh less than 16 ounces to be transported on passenger without going through any screening or security measures.” He added that such packages are not even subject to what Markey views as the flawed “known shipper” program that DHS “unwisely” relies upon for packages that are heavier than 16 ounces. Markey called the TSA position “unacceptable.”

Markey, a senior member of the Select Committee on Homeland Security, is the author of an amendment added to the ’04 House Homeland Security Appropriations spending measure (HR 2555) requiring the screening of commercial cargo before it is loaded aboard passenger aircraft, which passed by a 278-146 vote. However, the Senate failed to include a similar provision in its homeland security spending bill, which is being conferenced with the House measure. Since the beginning of May the TSA has cut its baggage screening force by 3,000 and will complete a second round of 3,000 cuts by September 30th. Markey said the cuts are coming even as new warning are issued by the administration regarding new ways terrorist are looking to target airplanes using cell phones, cameras and other everyday items that are difficult to search.

Union Files Suit Over Baggage Screening Cuts. The Bush administration fought for and won increased authority over the workforce of the newly created homeland security agency, and is now using its increased flexibility in personnel matters in ways that unions and other opponents had warned about. The American Federation of Government Employees (AFGE) last week charged the TSA with violating veterans’ preference laws and other employee rights in the agency’s push to downsize its screener workforce. In a class action suit, AFGE charges TSA with violating the Aviation and Transportation Security Act, the Veterans’ Preference Act, the Administrative Procedures Act and the Age Discrimination in Employment Act, as well as the First and Fifth Amendments of the constitution. AFGE points out in its complaint that TSA is ignoring veterans’ preference in its reduction-in-force (RIF) decisions, RIFing older employees and union activists many with spotless performance records. Retention registers have not been established, re-employment rights have been denied to employees who have been let go and no consideration is being given to employees’ length of federal service.

“The bottom line is TSA management is using its staff reduction to remove employees they don’t like, despite their performance record,” said AFGE National President Bobby Harnage, Sr. “It’s not what you know, but who you know that lands you a job with TSA and the same criteria is being used to determine who goes and who stays.” AFGE is asking the U.S. District Court for the District of Columbia to enjoin TSA Administrator James Loy from hiring new security screeners who have not previously been laid off and from laying off further security screeners. There is “a clear public interest in having a security screening force that can focus itself on maintaining aviation security and is not distracted by concerns of a future RIF that is not in accordance with law,” AFGE states in its suit. Harnage said AFGE intends to continue filing lawsuits until TSA realizes that the laws of our nation apply to all citizens-even TSA screeners.

House and Senate Democratic opponents of air traffic control privatization pledged anew last week to defeat a $60 billion Federal Aviation Administration (FAA) reauthorization bill when lawmakers return from their summer recess in September. Sen. Frank Lautenberg (D-NJ) and House Transportation and Infrastructure ranking member James Oberstar (D-MN) criticized the administration for placing air travelers at further risk, as they characterized it, by trying to privatize the nation’s air traffic controller system. The legislation would allow the FAA to privately contract for air traffic controllers at 69 airports across the country. Lautenberg and Oberstar pledged a forceful assault to reverse the outcome of the FAA reauthorization conference report, which removed language that would have protected air traffic controllers from privatization.

Background. In mid-June, the Senate passed Lautenberg’s amendment to the FAA reauthorization bill to block any attempt to privatize the air traffic control system by a vote of 56-41, with 11 Republicans supporting the amendment. The House included similar language in its FAA reauthorization bill, and under generally observed rules, a provision that is in both House and Senate bills is automatically included in the final House-Senate conference product. But in conference, the White House threatened to veto the bill if it rejected its privatization plan. Republicans on the conference agreed to gut the air traffic control provisions and allow the administration privatization plan to move forward. No Democrats signed the conference report. The conference report is currently awaiting floor action in both houses of Congress.

Organized Labor Reacts. The union representing the tower controllers, the National Air Traffic Controllers Association (NATCA), has been supporting congressional Democrats’ efforts to defeat the bill. Despite repeated denials that the administration wants to privatize air traffic control, the conference committee report does exactly that, NATCA President John Carr alleged. Darrell Mounts, a regional director in Denver for the National Association of Air Traffic Specialists that represents the fight service station controllers, told the New York Times that at a recent meeting of private pilots, his group had collected more than 1,000 signatures for a petition opposing privatization. Not even the chairman of the conference committee, Rep. Don Young, (R-AK), favors privatization. He exempted the air traffic control towers in his own state from privatization. “Should it only be safe to fly in Alaska?” Carr asked.

Counterpoint. Supporters of the legislation argue the number of jobs to be contracted out is small. “The unions that oppose this conference report are using the old Washington trick of dressing up a sheep in wolf’s clothing and selling a fear of wolves,” said Charles Barclay, president of the American Association of Airport Executives. Air Transport Association President and CEO Jim May said that many elements in the FAA reauthorization legislation are important to the nation’s airlines. He said it is regrettable that a union is pressing members of Congress to defeat the measure, which he referred to as a must-pass bill. Steve Van Beek, senior vice president of the Airports Council International-North America, stated that the infrastructure development provisions in the legislation will provide an economic stimulus to communities. Van Beek added that, “Projects are ready to go as soon as we get the money.”

Outlook. Both Lautenberg and Oberstar said they hope the House and Senate will be able to reach a new FAA reauthorization agreement that includes protections against air traffic control privatization and pass the revised legislation before this session of Congress ends. However, even if lawmakers reach agreement on this issue, Sen. Mark Dayton (D-MN) has pledged to hold up the conference report until a Northwest Airlines-backed clause restricting noise-abatement efforts near the Twin Cities airport is dropped from the legislation. It’s unclear how lawmakers are going to resolve this sticky issue.

With the current FAA authorization set to expire September 30th, if Congress fails to have a new aviation bill in place by then, lawmakers could simply extend the current FAA authorization bill for six months or a year, while the parties try to work out their differences. While less than a perfect scenario, Lautenberg and Oberstar would undoubtedly claim this as a short-term victory at least.

Ohio Governor Unveils New Transportation Initiative. Ohio Governor Bob Taft (R-OH) has unveiled a Jobs and Progress Plan, the state’s largest transportation initiative since the original creation of Ohio’s interstate system. The plan will generate more than 4,000 highway construction jobs, ease freeway congestion, improve road safety and connect rural regions, according to Ohio officials. Taft’s transportation initiative is a $5 billion, 10-year construction program to address the state’s most pressing needs. Taft said that while the majority of funds to implement the plan are already in place, the key to fully implementing the strategy is reauthorization of the TEA-21 and the enactment of a new federal energy bill. These measures, said Taft, will have a direct bearing on Ohio’s federal transportation revenue and how much additional transportation funding the state will receive. Taft vowed to “work closely,” political talk that in this case means exercising his clout, with Ohio’s Congressional delegation to secure additional federal funding.

“Our system is aging, it’s stressed by overcapacity and congestion. It’s sorely in need of additional investment to ensure safety and a stronger economy,” said Taft. Currently, the Ohio Department of Transportation (ODOT) gets $250 million annually from state motor fuels taxes. Under the plan, ODOT wants to double that income, but not all at the expense of state motorists. One way, backed by Ohio’s Congressional delegation, is for Ohio to boost the rate of return on its share of federal gas tax dollars from 89 cents on the dollar from the federal government to 95 cents on the dollar.

Illinois Governor Signs Legislation To Boost Use Of Ethanol. In an effort to boost the use of Illinois-grown corn and soybeans as renewable energy sources, Illinois Gov. Rod Blagojevich (D) signed legislation that extends the state sales tax exemption for ethanol, creates a new tax credit for biodiesel fuels and sets up a new grant program to encourage construction of renewable fuel production and research and development facilities. “Biofuels are good for our cars, good for the environment and good for America,” Blagojevich said at a bill signing ceremony. The legislation establishes the Illinois Renewable Fuels Development Program that would provide up to $15 million a year in grants for financial assistance for the construction, modification, alteration or retrofitting of plants in Illinois that have a production capacity of at least 30 million gallons of renewable fuel per year.

Illinois is at the opposite end of the ethanol issue from California, where officials are worried that an ethanol mandate will leave the state hostage to future supply and distribution shortages (see August 11 issue). Environmental groups have charged that ethanol production represents a net energy loss and its favored tax treatment is an unjustified benefit to dominant refiner Archer-Daniels Midland and corn-producing states. Five ethanol plants are operating in Illinois with a combined annual capacity of 766 million gallons, the most of any state, and a dozen other production facilities are planned. More than 300 million bushels of Illinois corn are used annually to make ethanol. Despite misgivings elsewhere, the governor noted that the future of ethanol appears bright, with the federal government currently considering a standard that gasoline contain at least 10 percent ethanol. Ethanol now makes up only 1 percent of fuel sold at gas stations and adoption of the new federal requirement could increase ethanol demand four-fold in the next few years. With the expected increased demand for corn-based fuel, Blagojevich said Illinois is positioning itself to maintain its competitive edge in the market through the new grant program. Funding for the grant program is to be realized by changing the sales tax exemption on ethanol from 70 percent to 80 percent of the state’s 6.25 percent sales tax.

60-Day Cooling Off Period Requested In Los Angeles Transit Dispute. Last Tuesday, in a letter sent to California Attorney General Bill Lockyer, Governor Gray Davis (D-CA) requested that the Attorney General seek a court-ordered, 60-day “cooling off period” to prevent any work stoppage or lockout arising from the labor dispute between the Los Angeles County Metropolitan Transportation Authority (MTA) and the Amalgamated Transit Union (ATU). At the Governor’s request, a 60-day cooling-off period was granted by the Los Angeles Superior court on July 21 in the dispute between MTA and the United Transportation Union (UTU), representing 4,000 train and bus operators. “I am seeking a second cooling off period in MTA’s labor dispute to protect residents from a major disruption in public transportation services,” said Davis. “Public transportation is too important to Southern California to allow this dispute to intensify.” On August 1st, Davis convened a three-member board of investigation to examine the causes of the pending labor dispute between the ATU and the MTA. The board’s report found that a strike or lockout “will significantly disrupt public transportation services and endanger the public’s health, safety, and welfare.” About 2,000 MTA mechanics represented by the ATU have been working without a contract since January. The union says talks have reached an impasse on wages and medical benefits.