Sequestration Impacts on Transportation Funding

On Sept. 14, the Obama administration released a report to Congress providing a first guess at how they will implement $1.2 trillion in automatic budget cuts—called sequestration—slated to begin on Jan. 2, 2013. This sequestration process comes as a result of the debt ceiling deal –enacted under the Budget Control Act of 2011 (BCA) —  in the wake of the failure of the so-called Supercommittee to come up with adequate deficit reduction plan on its own.  Half of the sequestration amount is to come from defense and national security programs, while the other half is to come from all other government programs. According to the report, if Congress and the president cannot reach a deal to avert sequestration after the election, many direct federal construction accounts could see anywhere from a 7.6 to 9.4 percent cut from “budgetary resources” in FY 2013. While the Highway Trust Fund is not included in sequestration, general fund transfers into the trust fund resulting from the recently enacted MAP-21 would be cut by $471 million, hastening the date when the trust fund will once again be unable to support annual funding levels. Transit program new start capital grants, which are supported from general fund revenue would be cut by $156 million. In addition, FHWA emergency relief funds would be cut $136 million (8.2%) and TIGER grants would be reduced by $41 million.