Sources Anticipate 20% Cuts in FY 2004 Highway Spending -- California Capitol Hill Bulletin -- Volume 10, Bulletin 2 -- January 30, 2003

On February 3, 2003 the President is expected to cut fiscal 2004 highway aid spending by 20 percent when he releases his new budget package to Congress. Transportation advocates and Congressional sources say that the Bush Administration will propose a $25 billion funding level for highway programs next week, a $6.8 billion reduction from FY 2002 levels.

Congress is expected to resolve FY 2003 highway appropriations upon Conference committee action on the Omnibus Appropriations bill, H.J. Res. 2, a legislative vehicle combining all eleven remaining FY 2003 spending bills into one measure. Last week, the Senate Omnibus bill appropriated $31.8 billion (although that figure could be reduced by a pending 2.9 percent across-the-board cut) in highway spending, a more generous figure than what House appropriators set for highway programs ($27.7 billion). The President proposed a much lower level of $23.2 billion in his FY 2003 budget request, citing the $8 billion shortfall as necessary due to lower than expected highway-user revenue or negative Revenue Aligned Budget Authority (RABA), a mechanism in transportation law linking highway user tax receipts to highway funding. The House voted to proceed to conference on H.J. Res. 2 on January 29.

In other news, new Senate Environment and Public Works Committee Chair James M. Inhofe (OK) announced plans on January 28 to introduce a proposal that would reward Highway Trust Fund (HTF) donor states with a higher portion of annual highway funds. Chair Inhofe plans to raise the minimum guarantee percentage; the figure that governs a state's rate of return for each HTF dollar invested, from 90.5 percent to 95.5 percent. California is currently a highway system donor state. In a statement, Senator Inhofe also said he plans to find ways to finance the country's transportation needs "without raising the federal gas tax".

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