Highway Program Equity Guarantee Issues

Order Code RL32409 CRS Report for Congress Received through the CRS Web Highway Program Equity Guarantee Issues Updated June 10, 2005 Robert S. Kirk Specialist in Transportation Resources, Science, and Industry Division Congressional Research Service ˜ The Library of Congress Highway Program Equity Guarantee Issues Summary Since 1982 Congress has included legislative provisions in every surface transportation reauthorization act to remedy concerns about the “equity” of the distribution of federal highway aid to the states. For many years some states have complained that they received significantly less federal highway aid than they paid in federal highway taxes to the highway trust fund. These states, referred to as donor states, have pressed for legislative remedies that would assure them a higher share of federal highway aid, in recent years 95%. Donee states, states that receive more federal highway aid than they pay in federal highway taxes, have not opposed equity provisions per se but have opposed any reduction in their existing shares. Providing equity remedies that keep both donor and donee states reasonably content has been accomplished by giving more money to all states but giving more to donor states to bring their shares up to a designated per cent share, currently 90.5%. Providing equity in this way is very expensive in dollar terms, the minimum guarantee under TEA-21, in fact, became the largest highway program. The current budgetary environment is more constrained than it was under the last reauthorization cycle, making it unlikely that the 95% goal can be achieved under the current equity framework. There are, however, a number of options that could help. The options range in scope from changes that may be seen as fine tuning the existing minimum guarantee (MG) system to options that would eliminate the TEA21 MG framework completely. During the 109th Congress, the House- and Senate-passed surface transportation bills have taken different approaches to the equity issue. Under the dual constraints of limited highway trust fund resources and the Bush Administration threat to veto any six-year reauthorization bill that exceeds $283.9 billion, supporters of a major rate-of-return increase also backed away from their 95% rate-of-return goals. The House-passed reauthorization bill, the Transportation Equity Act: a Legacy for Users (H.R. 3) retained the TEA-21 minimum guarantee structure and rate-of-return (90.5%). The Senate-passed reauthorization bill, the Safe, Accountable, Flexible, and Efficient Transportation Equity Act (H.R. 3, as amended) would achieve a 92% return in the last year of the authorization through an equity bonus mechanism. In a broader sense the debate over equity remedies has implications for a number of overarching issues. An equity guarantee that approaches 95% rate of return could, in the minds of some, leave little room for addressing other or additional transportation needs that are uniquely federal. Another issue is whether the MG should be broadened, as some states have proposed, to include Federal Transit Administration programs. This report will not be updated. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Transportation Equity Act: A Legacy for Users (TEA-LU) (H.R. 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Safe, Accountable, Flexible, and Efficient Transportation Equity Act (SAFETEA) (H.R. 3, as amended) . . . . . . . . . . . . . . . . . . . . . 2 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Legislative History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Surface Transportation Assistance Act of 1982 (STAA) . . . . . . . . . . . . . . . . 6 Surface Transportation and Uniform Relocation Assistance Act of 1987 (STURAA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) . . . . . . 6 Equity Adjustment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 TEA-21 Equity Provision Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Minimum Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Minimum Guarantee Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Resolution of the TEA-21 Donor-Donee Debate . . . . . . . . . . . . . . 9 The Central Dilemma: Raising Shares, Holding Harmless, and Funding Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Equity Guarantee Options in a Constrained Fiscal Environment . . . . . . . . . . . . 10 Ways to Modify the Existing MG Program . . . . . . . . . . . . . . . . . . . . . . . . . 11 Phase in increases in the Share Guarantee . . . . . . . . . . . . . . . . . . . . . . 11 Eliminate or Reduce the District of Columbia’s Role in Projecting Total Highway Program Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Determine Program Size Based on Total Annual Payments to the Highway Account of the HTF . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Eliminate the State Percentages (Base Share) Table . . . . . . . . . . . . . . 12 Restrict the Program Scope of the MG . . . . . . . . . . . . . . . . . . . . . . . . 12 Reduce the Target Minimum Percent Return Below the 95% Level . . 13 The Donor State “SHARE” Proposal for a 95% Guarantee . . . . . . . . . . . . 13 Devolve the Highway Program to the States . . . . . . . . . . . . . . . . . . . . . . . . 14 Integrate the Guaranteed Rate of Return Into All Federal-Aid Highways Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Overarching Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 The Role of the Federal Government Vis-a-Vis the States . . . . . . . . . . . . . 16 Program Purpose and “Scope” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Good for the Gander: a Minimum Guarantee for Transit? . . . . . . . . . . . . . 18 Appendix I: How the TEA-21 Minimum Guarantee is Calculated . . . . . . . . . . . 20 Appendix II: FHWA’s FY2003 MG Calculation Tables . . . . . . . . . . . . . . . . . . . 24 List of Tables Table 1: MG Calculation Step 1 Table 2: MG Calculation Step 2 Table 3: MG Calculation Step 6 Table 4: MG Calculation Step 7 Table 5: MG Calculation Step 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Highway Program Equity Guarantee Issues Introduction Guaranteeing each state a percentage share return of federal highway funding on its highway user’s payments to the highway account of the highway trust fund (HTF) has been the major remedy designed to assuage persistent concerns about the equity of distribution of federal highway funding (often referred to as the donordonee state issue).1 Somewhat differing forms of a Minimum Guarantee (MG) program have been in place for over twenty years. Under the Transportation Equity Act for the 21st Century (TEA-21) (P.L.105-178; P.L. 105-206) the MG provided for a 90.5% guaranteed share return on each states user tax payments to the HTF. During the on-going TEA-21 reauthorization debate a number of proposals for increasing the MG percentage have emerged. At first glance, raising the MG would simply appear to require an amendment changing the percentage specified in Section 105 of title 23 of the U.S.Code. A closer look shows that changing the MG has impacts on the interaction of highway program formulas, the funding of discretionary and formula programs, and the total budgetary resources needed to fund these programs: in short, on the whole Federal-Aid Highway Program (FAHP). Recent Developments The Transportation Equity Act: A Legacy for Users (TEA-LU) (H.R. 3). Although TEA-LU (109th Congress), the House-passed surface transportation reauthorization bill, keeps some of the basic TEA-21 MG framework (the 90.5% rate-of-return, $1 million minimum payment, and the hold harmless table), it also makes a number of important modifications to the MG program structure and calculations. The bill places five new formula programs within the “scope” of the basic MG calculation: Coordinated Border Infrastructure, Highway Safety Improvement, High Risk Rural Road Safety, Freight Intermodal Connectors, and Safe Roads to Schools. It also eliminates the line-item authorizations for many of the allocated (i.e. discretionary) programs, funding them instead as set-asides from the National Highway System (NHS), Surface Transportation Program (STP), and Interstate Maintenance (IM) programs. This change helps broaden the “scope” (i.e. the programs under the auspices of the MG) of the MG program. The bill includes 1 This report focuses on the minimum guarantee remedy. For a more detailed discussion of donor-donee issues see CRS Report RL31735, Federal-Aid Highway Program: “DonorDonee” State Issues, by Robert S. Kirk. Unless otherwise indicated in the text, any occurrence of the HTF refers to the highway account of the HTF. The CRS tracking document for surface transportation reauthorization in the 109th Congress is CRS Issue Brief IB10138, Surface Transportation: Reauthorization of TEA-21, coordinated by John W. Fischer. CRS-2 just over $11.1 billion in High Priority Program (HPP) earmarks within the scope of the MG. This provision caused concerns that the impact of HPP earmarks on the states’ relative shares could lead to some states losing funding. In response to these concerns the bill provides for a second funding overlay, the “equity adjustment,” to assure that no state loses funding because of the HPP earmarks.2 H.R. 3 includes a scope guarantee of 92.6% of the bill’s total contract authority. To achieve the 92.6% scope, the bill includes a second new funding overlay, the “scope adjustment.” The scope adjustment shifts National Corridor Infrastructure Improvement Program funds to STP and recalculates the MG until the scope is 92.6%. Once this is done, funds are restored to the corridor program (which then remains outside the scope). The MG program is funded on a “such sums as necessary” basis and the new equity and scope adjustments add to the cost of the overall bill. According to an FHWA analysis of H.R. 3 as passed, over the life of the bill, the basic minimum guarantee adjustment will cost $44.4 billion, the equity adjustment will cost $9 billion, and the scope adjustment will cost $2.3 billion.3 The House bill also includes a “re-opener” provision that would cut off funding of all non-safety apportioned programs on August 1, 2006, if Congress has failed by then to enact legislation that would increase states’ rate of return to 92% for FY2006, 93% for FY2007, 94% for FY2008, and 95% for FY2009. The Safe, Accountable, Flexible, and Efficient Transportation Equity Act (SAFETEA) (H.R. 3, as amended). In the 109th Congress, the Senate-passed bill included most of the attributes of the Equity Bonus program that was in the reauthorization bill the Senate passed during the last Congress. Because of the less generous overall funding assumptions, however, the Senate-passed bill includes modified language in the equity bonus program provisions. The goal of raising all donor states’ rate of return to 95% by the final year of the reauthorization has been scaled back to 92%. The scope of the equity bonus program would be roughly 92% of total contract authority. The Senate has taken a different approach from the House. The Senate-passed bill would replace the entire MG program with an “Equity Bonus” program (EB). Basically, the individual program formulas would determine the initial apportionment and the equity bonus would be added to these levels. The Senate bill directs the Secretary of Transportation to allocate to the states for each of the fiscal years 2005 through 2009 sufficient funds to ensure that each state receives at least a 92% return (to EB specified programs and subject to certain rules and limitations described below) on its estimated payments to the highway account of the HTF. The Senate 2 The House-passed bill retains the TEA21 “hold harmless” table set forth in 23 U.S.C. 105(b). However, because the table is not referenced in the “equity adjustment” provision, how well donee states fare in obtaining HPP earmarks could have an impact on their states’ total apportionments. 3 House-passed H.R. 3 includes a provision that, in effect, eliminates the District of Colombia’s share from the MG calculation. Under TEA21 DC’s share was the determining factor projecting the total size of the highway program. By removing DC, the bill saves money by lowering the total program size projection. CRS-3 bill would keep nearly all the programs subject to MG under TEA-21 (IM, NHS, STP, Congestion Mitigation and Air Quality Improvement Program (CMAQ), Highway Bridge Replacement and Rehabilitation Program (HBRR), Recreational Trails, Appalachian Development Highway System, and metropolitan planning) subject to the equity provision. The bill protects some states that would lose percent share under the EB’s 92% share. States with a population density of less than 20 people per square mile, a population under one million, a median household income under $35,000, or a fatality rate on Interstate Highways in 2002 of greater than 1.0 per 100 million vehicle miles traveled, would get either the 92% share or their average percent share of apportionments under TEA-21. The EB is also subject to certain rules and limitations which taken together can be seen as placing a floor and a number of ceilings on the program. The special rules provide that, all states are to be allocated enough funds to ensure that each state gets at least 115% of its TEA-21 annual average, no negative adjustment may be made to any state’s apportionment during the EB allocation, and requires that no state may drop below 90.5% in FY2005, below 91% in FY2006-FY2008, or below 92% in FY2009. EB allocations are not, however, to be given to states under certain conditions. If a state’s total apportionments of all the designated EB programs exceeds the state’s average TEA-21 apportionments by the following percentages the state gets no bonus. ! ! ! ! ! FY2005 ceiling: 124% of state’s TEA-21 average FY2006 ceiling: 128% of state’s TEA-21 average FY2007 ceiling: 131% of state’s TEA-21 average FY2008 ceiling: 137% of state’s TEA-21 average FY2009 ceiling: 250% of state’s TEA-21 average This is the main mechanism that phases in the 92% share goal by the final year of the authorization. It also holds down the cost of the EB program. Because, historically, the Environment and Public Works Committee (EPW) has not disclosed its high priority project earmarks until conference, the state apportionment and state rate-of-return data available during debate on the floor of the Senate will not reflect the impact of the pending earmarks. The pattern of earmarking within the scope of the equity bonus can change the states’ relative share of apportionments and also the projection of total highway program size. According to FHWA analysis, the five-year cost of the Senate-passed Equity Bonus Program will be $25.4 billion. This report begins with a discussion of the MG concept and the federal highway program framework within which the MG is applied. It then sets forth the legislative history of the MG since 1982, the year a minimum state share provision was first enacted. The current MG (enacted in TEA-21) and how it is calculated is briefly discussed. The report then discusses options for raising the MG share percentage in a constrained fiscal environment. The report examines some of the overarching policy implications of the MG debate. The report appendices provides detailed stepby-step explanations of the calculation of the TEA-21 minimum guarantee. CRS-4 Background There are a number of characteristics of the Federal-Aid Highway Program that need to be kept in mind in a discussion of the donor-donee question. First, the Federal-Aid Highway Program (FAHP) is really an umbrella term for all the highway programs administered by the Federal Highway Administration (FHWA). Most of these programs can be described as being either formula (apportioned) programs, which constitute the vast majority of program funding, or the smaller discretionary (allocated) programs. The formula programs apportion funds to the State Departments of Transportation based on formulas set forth in legislation. The discretionary programs are programs nominally under the control of the FHWA that were designed to provide funds to projects chosen through competition with other projects. In recent years, however, most of the discretionary program funding has been earmarked by Congress. The distinction between formula and discretionary programs becomes especially significant in the process of attempting to make equity adjustments in the funding levels among the states. For example, how can all discretionary programs be constructed to guarantee a designated percent return to states on their payments to the HTF and still remain discretionary? The programs were created to fulfill perceived policy needs. The separate program budget accounts were authorized based at least in part on the amounts of money each program needs to meet its program goals (determined in part by the budget constraints of the time) rather than by some other measure such as basing the distribution on estimates of the revenue paid by highway users in the individual states. Some highway needs, such as roads on federal lands, border crossing infrastructure, trade corridors, and interstate system maintenance, have inherently federal aspects that would likely not be addressed if the Federal-Aid Highway Programs were predicated on a return to all states approaching 100%. Even advocates of “devolution” of much of the Federal-Aid Highway Program to the states have acknowledged some federal needs.4 In addition, donor states themselves have in the past recognized the need for some states to get an increased share of federal-aid funds. During the ISTEA reauthorization debate, for example, donor states agreed that large sparsely populated states and some small states (such as Rhode Island, Vermont, and Delaware) should receive increased shares. Authorizors thought that the sparsely populated “pass-though” states had insufficient state resources to build and maintain their parts of the national highway network, so they were given increased shares. The size of the minimum guarantee/equity adjustment program umbrella (often referred to as “scope”) has varied since the first equity program was introduced in 1982. The major formula programs were always under the MG umbrella but which other programs were included changed under the various surface transportation authorization acts. How many of the total programs are covered by the MG program umbrella is important for a number of reasons. First, under a guaranteed share MG, 4 During the 1990s “devolution” generally referred to the shifting of federal programmatic responsibility and funding resources to the states. CRS-5 the more program dollars left outside the MG program the more likely that at least some donor states will not reach their minimum percentage return relative to the entire Federal-aid highway program. Second, in general, the more inclusive the MG umbrella the more costly the MG program.5 Third, earmarking of programs under the MG umbrella usually provides no new dollars to the state receiving the earmarks. These earmarks simply allow Members of Congress to set project priorities. Earmarks of programs outside the MG umbrella actually provide more money to the state getting the earmark. A number of statistical issues have an impact on the MG. The use of noncurrent data (i.e., revenue estimates from two years prior) may skew the state donordonee ratios and lead to conclusions about donor or donee status that are questionable. Also state-by-state data on payments to the highway account of the HTF are estimates based on extrapolations from state tax data and may not always be completely accurate or up to date. The economic cycle can also have an impact on revenues and the budgetary process that can lead to years when revenues and spending levels differ significantly from each other: this can have an impact on rate of return. The MG and other equity adjustment proposals attempt to achieve a specified “share” return on two year old payments data. Distribution equity, however, is almost always judged by Table FE-221 in the annual FHWA Highway Statistics Report6, which compares estimated dollars paid and apportionments and allocations received for the same fiscal year. This statistical disconnect means that even an effective MG or EB program will face criticism when the same year dollar for dollar return data are released. In addition, the impact of proposed revenue changes on states’ relative shares of payments to the HTF are hard to gauge over the life of the reauthorization. These changes could change some donor states to donee states, or vice versa, over the next few years. It could also impact the calculation of program size under the MG. Legislative History Although the equity debate, it can be argued, goes back at least as far as the creation of the highway trust fund (supported by dedicated highway user taxes), it was the initial publication of Table FE-221 in the 1972 edition of FHWA’s annual Highway Statistics that provided the statistical underpinnings of a growing movement to guarantee each state a “fair share” of federal highway dollars relative to the revenue its highway users paid to the trust fund. The table showed that the receipt of federal aid for each dollar paid to the trust fund varied greatly from state to state. Alaska faired best and South Carolina fared worst at $8.34 and $0.52, respectively. During the 1970s there was still significant construction on the Interstate Highway System. This may, in the minds of some, have provided a 5 This assumes all other attributes of the MG are held constant. This is not always the case. For example, tax changes (such as a change in the tax treatment of ethanol) can have an impact on states’ relative shares which could impact the calculation of total program size which is discussed later in this report. 6 [http://www.fhwa.dot.gov/policy/ohim/hs02/fe221b.htm] CRS-6 reasonable justification for such disparities. By the early 1980s, however, the Interstate Highway System was nearing completion. Surface Transportation Assistance Act of 1982 (STAA) STAA (P.L. 94-424) authorized a significant increase in funding for the FederalAid Highway system for the years FY1983-FY1986 and included a provision designed to mitigate the dissatisfaction of donor states by providing that each state would receive a minimum allocation from the core FHWA programs. Specifically, the bill ordered the FHWA to allocate among the states sufficient funds to assure that each state’s total apportionments from the core highway and safety programs (Interstate Highway Substitution, Primary, Secondary, Interstate, Urban, Bridge Replacement and Rehabilitation, hazard elimination, and rail-highway crossings, and section 203 of the Highway Safety Act of 1973) would not be less than 85% of the percentage of estimated tax payments each state paid into the highway account of the HTF. These “equity adjustment” allocations could be obligated to the core highway programs.7 Surface Transportation and Uniform Relocation Assistance Act of 1987 (STURAA) STURAA (P.L. 100-17) authorized the Federal-Aid Highway Program for FY1987-1991, retaining the 85% minimum allocation, but altered the basis of its calculation. The act revised the calculation to include the allocated (sometimes referred to as discretionary) programs, with the exception of the federal lands highways programs and safety programs. For FY1987 and FY1988 emergency relief funds and interstate construction discretionary funds were not included in the calculation. The act made permanent the minimum allocation provision established by STAA. Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) ISTEA (P.L. 102-240) reauthorized surface transportation programs, including Federal-Aid Highway Programs, for FY1992-FY1997, making major changes in the overall program structure, program formulas, as well as equity provisions. Equity Adjustment Provisions. ISTEA included five provisions, with separate funding, designed to assure a more equitable distribution of federal funds to the states. 7 STAA also established the Mass Transit Account of the HTF but did not make it subject to the minimum guarantee. Although, typically, donee states in the Northeast are more transit dependent, some highway donor states get significant federal transit funding, while some donee states, especially the large “pass-through” Western States get relatively little. Proposals to also subject the Transit Program to a minimum guarantee have surfaced within the context of surface transportation reauthorization. As will be discussed later, this could have an impact on the decision of some highway donor states to support or oppose highway program minimum guarantee changes. CRS-7 The 90% Guarantees. The act raised the minimum allocation to 90% of estimated state contributions to the highway account of the HTF (although narrowing its calculation to the core formula programs, scenic byways, safety belt and motorcycle safety grants). The act also included a new minimum payments guarantee that assured that each state’s apportionments (for the core formula programs) for the fiscal year and allocations (to the discretionary programs) from the previous year would be at least 90% of its estimated state contributions (i.e., calculated from all programs except special projects). Donor State Bonus. For each fiscal year, donor states were identified by comparing projected contributions to the HTF with the apportionments to be received that year by each state. Under the donor state bonus, starting with the state with the lowest return, each state was brought up to the level of the state with the next highest level of return. This was repeated successively for each state until the ISTEA authorized program amount was exhausted. Hold Harmless. This provision set a specific percentage that each state was to receive from the core formula highway programs plus Federal Lands Highway Programs, minimum allocation, donor state bonus, and Interstate Reimbursement. Each state received an addition to its regular apportionments to raise its total to the set percentage. Reimbursement for Interstate Segments. ISTEA authorized $2 billion for FY1996 and FY1997 to reimburse some states for the costs to them of building segments of the interstate system without federal assistance prior to or during the early days of the Interstate Construction Program. Despite these provisions significant gaps remained among states on their share return on contributions to the HTF. As reauthorization of ISTEA approached, dissatisfaction with the effectiveness of the equity provisions led to challenges to the ISTEA program paradigm. TEA-21 Equity Provision Changes The equity changes that were part of the debate and were included in TEA-21 were more limited than many would have expected early in the reauthorization debate. The main reason for this was the large increase (roughly 40%) in overall funding levels. Still, there were equity provisions that were included in the hope that they would further narrow the donor-donee divide.8 For detailed, step-by-step descriptions of the calculation of the FY2003 MG, see Appendices I and II at the end of this report. Minimum Guarantee. components: The TEA-21 minimum guarantee had three Guaranteed Base Share. TEA-21 guarantees each state a percentage share (set forth in tabular form in TEA-21 Section 1104 (a), codified in 23 U.S.C. 105(b)) 8 P.L. 105-178, Sec. 1104. Also 23 U.S.C. Sec. 105. CRS-8 of the total program, defined as all the apportioned programs: Interstate Maintenance Program(IM), National Highway System Program (NHS), Surface Transportation Program (STP), Highway Bridge Replacement and Rehabilitation Program (HBRRP), Congestion Mitigation and Air Quality Program (CMAQ), Metropolitan Planning, Recreational Trails Program, Appalachian Development Highway System Program and Minimum Guarantee, as well as High Priority Projects.9 Minimum 90.5% Share on Contributions. Each state is guaranteed at least 90.5% return (up just 0.5% over ISTEA) on its share of tax contributions to the highway account of the HTF (based on the most recent year for which the data are available — generally from two fiscal years before).10 Using Ohio as an example, of the state’s total FY2001 highway account contributions, Ohio’s percentage share contributions amounted to 3.7578%. Ohio is guaranteed 90.5% of its share of estimated FY2001 contributions and is thus guaranteed a minimum share of 3.4008% of the FY2003 apportionments (i.e., the core formula programs), plus High Priority Projects and the Minimum Guarantee itself. If the above base share is less than a 90.5% return to a state then the share is adjusted upward until the 90.5% share is reached. The money to raise shares to 90.5% is provided by “squeezing” down the percentages (but not the total amounts) of those states that are above the minimum. This process of raising donor state shares and squeezing down donee state shares is repeated until the state share requirements are met and all the state shares total 100%. Minimum State Payment. Each state is guaranteed that as part of the minimum guarantee it will receive at least $1 million in Minimum Guarantee funds. It is important to keep in mind that the TEA-21 Minimum Guarantee was a compromise provision. It is constructed in such a way as to give money to all states in the process of bringing the donor states up to the 90.5% minimum guarantee.11 Each state gets the $1 million minimum. Then, the lowest percent share of any state or the District of Columbia (under TEA-21 it was always the District) is used to extrapolate the total program funding (as defined under Minimum Guarantee) needed for the District to retain its total program percentage (see Appendix I, step 7, for a detailed explanation) To achieve that percentage for the District, a total FY2003 program size of $27.8 billion was needed. Ironically, the degree of the District’s donor status has meant more money for all states (in absolute, not relative terms). To provide money for this adjustment 23 U.S.C. 105 (d) authorizes “such sums as may be necessary” to carry out the MG. The total Minimum Guarantee program funding needed to achieve this total was over $6 billion. 9 For example, according to this provision of law, the base share of total national allocations for these programs is 1.5581% for Arizona, 0.3956% for the District of Columbia, and 4.9887% for Pennsylvania. The base shares for all states are set forth in Appendix II, step 2, column 1, of this report. 10 Although this percentage increase was small, supporters of this level argued that under the TEA-21 framework, as opposed to the ISTEA MGs, states would actually receive a return much closer to the percentage goal on a dollar-in/dollar-out basis. 11 TEA-21 authorizes such sums as may be necessary for FY1998-FY2003 for MG. CRS-9 Minimum Guarantee Distribution. Each year, the first $2.8 billion of Minimum Guarantee funds are administered as Surface Transportation Program funds, except that set-asides for Transportation Enhancements, Safety Construction, and certain population-based sub-state allocations do not benefit from this distribution. Any Minimum Guarantee funds above $2.8 billion are distributed to the five core programs: Interstate Maintenance (IM); Highway Bridge Replacement and Rehabilitation Program (HBRRP); National Highway System (NHS); Congestion Mitigation and Air Quality Improvement (CMAQ), and again the STP. The distributions to the states are based on the ratio of each core program’s apportionment to the total apportionment of all five programs for each state.12 The Resolution of the TEA-21 Donor-Donee Debate. In the end, what many observers had predicted would be a major battle over TEA-21’s equity provisions was resolved relatively amicably.13 This occurred despite the donor states only being able to achieve a 0.5% increase in the minimum guarantee percentage and formula changes which some predicted would have little impact on donor state returns on the tax revenues these states payed to the highway account of the HTF. Some even argued that donor states would have been better off if TEA-21 had retained the ISTEA formulas. In the case of TEA-21 what alleviated the concerns of the STEP-21 (a coalition of donor states) and other donor state advocates was the amount of money available during TEA-21’s lifetime. By shifting revenues generated by the 4.3 cent deficit reduction gas tax to the HTF in 1997, Congress was able to provide for large increases in highway funding for all states. The extra money in turn made the donor-donee debate less urgent to the donor states. The Central Dilemma: Raising Shares, Holding Harmless, and Funding Programs The tension between the goal of donor states for a 95% return and the hold harmless goal of donee states has been heightened in the current surface transportation reauthorization debate by the absence of an HTF revenue base sufficient to easily fund both goals. In contrast to the current reauthorization situation, under TEA-21, the existence of large and growing revenues allowed for a more than 40% increase in the federal highway spending and an increase in the MG percentage (from 90% to 90.5%). Recent Congressional Budget Office (CBO) baseline spending and revenue forecasts for the highway account of the HTF (based on current law adjusted for inflation) forecasts that the unexpended balance in the HTF will decline from a roughly $10.8 billion beginning-of-year for FY2005 to $6.5 billion. The HTF is required to retain a balance sufficient to assure that unexpended highway contract authority may not exceed the end of year balance plus the anticipated revenues for the next two years, the so-called “Byrd Rule.”14 The CBO winter 2005 highway account trust fund receipt projections for FY2005 through 12 23 U.S.C. 105 (c) (1). 13 See Once and Future ISTEA, by Geoff Earle, Governing Magazine, Feb. 1998. STEP-21 Coalition Claims Victory, National Journal: Congress Daily, Oct. 3, 1997. 14 U.S. Internal Revenue Code, Title I, Section 9503(d). CRS-10 FY2009 of roughly $182.5 billion. This is substantially less than the highway spending obligations of $196.6 billion under TEA-LU (H.R. 3) as passed or of $205.4 billion obligations under SAFETEA as passed (SAFETEA’s revenue provisions would raise the revenue total to $189.4 billion). Even coming this close required both the House and Senate bills to lower their rate-of-return targets to 90.5% and 92%, respectively. In addition, assuming revenues cannot be increased significantly, because MG funds are authorized on a “such sums as may be necessary” basis, the only ways to fund the MG programs growing needs as they rise to a 95% guaranteed share are to either dip into the Treasury general fund or to push down the total apportionments of all the formula programs to free up revenues for the MG distribution. The difficulty of providing for an increase in guaranteed share while holding most donee states harmless in the absence of large amounts of new revenue, however, has not stopped some advocates of changes in the MG program from pressing for change.15 Equity Guarantee Options in a Constrained Fiscal Environment Despite the fiscal constraints that impede the donor state desire for a 95% return on payments to the HTF, there are a number of options that by themselves or in combination with others could mitigate some of the difficulties that authorizors face in producing a surface transportation reauthorization bill with equity provisions acceptable to both houses of Congress. The options range in scope from changes that may be seen as fine tuning the existing MG system to options that would eliminate the TEA-21 MG framework completely. Some of these options have already been included in the major TEA-21 reauthorization bills being actively considered by Congress, some have had a place in the debate but have not yet been selected for inclusion in active legislation, and finally some have been left out of the debate thus far. The following discussion does not include revenue proposals championed earlier in the reauthorization debate and the major revenue raising proposals in SAFETEA and H.R. 3971 are only discussed within the context of their impact on the possible program options being discussed.16 Statistical analysis of the MG and MG proposals can be problematic. As mentioned earlier, the process of calculating shares and projecting the federal highway program size can lead to results that appear counterintuitive.17 In addition, 15 This report is not a legislative tracking document for minimum guarantee provisions in surface transportation reauthorization legislation. See CRS Issue Brief IB10138, Surface Transportation: Reauthorization of TEA-21, coordinated by John W. Fischer. 16 For a discussion of these provisions see the Highway and Transit Finance chapter in CRS Report RL32226. 17 For instance, revenue increases from changes in the tax treatment of gasohol could, under some circumstances, restructure state shares relative to each other in a way that reduces the (continued...) CRS-11 because most supporting statistics set forth by proponents or opponents of change in the MG are based on analysis of previous years revenue and funding data, while reauthorization legislation is for future years, the analysis is limited. Because of uncertainty in future revenue and funding allocations, there is a significant degree of uncertainty in the impact of changes in the MG. This is especially true prior to release of the reauthorization conference report. Even then, the statistics of the stateby-state tax contributions used in the first step of the MG calculation to the HTF would not be known for the last four years of a six year authorization. Only the Federal Highway Administration (FHWA) has the data bases and expertise to project the impact of these options on equity guarantee calculations in detail and even FHWA must base future projections on assumptions that may not come to pass. Ways to Modify the Existing MG Program Assuming that the TEA-21 MG framework survives, it could be modified. This section examines possible modifications to the TEA-21 framework. Phase in increases in the Share Guarantee. This is perhaps the simplest money saving option. SAFETEA as passed, phases in the increase to 92% over the life of the authorization. Although this tactic saves money, it has drawbacks. First, it will not save enough by itself to lift the rate-of-return greatly. Second, some of the large donor states will be unhappy with the phase-in proposal, believing equity delayed is equity denied. Eliminate or Reduce the District of Columbia’s Role in Projecting Total Highway Program Size. As shown in the earlier description of the TEA-21 MG calculation, achieving DC’s adjusted share determined the total highway program size.18 Some argue that a way of reducing the size of the MG distribution needed to achieve a guaranteed share percentage would be to provide DC with a generous dollar amount for its road needs but eliminate it or a portion of its funding from the MG calculation. The House-passed TEA-LU (H.R. 3) included this change.19 Determine Program Size Based on Total Annual Payments to the Highway Account of the HTF. The uncertainties of projecting total program size based on share has led to some discussion of eliminating this TEA-21 process (see step 7 in the earlier section on the MG calculation) and simply using the total annual payments to the highway account of the HTF to determine the program size for each fiscal year. Proponents argue that this change would not only simplify the MG calculation process but would also reduce the unexpected outcomes of tax or other 17 (...continued) size of the projected total program target (i.e., a revenue increase could reduce the size of the program). 18 For a detailed discussion of this process see the detailed explanations of step 7 of the calculation set forth in Appendix I and Appendix II. 19 Although this saved money, TEA-LU’s “equity adjustment” absorbed the savings. CRS-12 revenue changes.20 Having total annual payments to the highway account set the total highway program size, according to supporters, would also more effectively align state payments with their allocations. There are a number of possible disadvantages to using total annual payments to the HTF to determine the total program size. As mentioned earlier, the data on contributions are not, generally available until early in the second fiscal year after the contributions are made, so the program size would be set according to old data. Also, this method would, in effect, set a ceiling on each year’s spending (i.e., there is no need for the “such sums as may be necessary” for the MG). This could force a reduction in core program authorizations to make room for the MG distributions necessary to meet the requirements of the MG. Finally, revenues to the HTF can decline (as they did in FY2001). This could put Congress in the uncomfortable position of having to either draw monies from the general fund, draw down the unexpended balance of the HTF (if there is anything left to draw down), or allow spending to drop for the year. Eliminate the State Percentages (Base Share) Table. The heart of TEA-21’s hold harmless provisions is the State Percentages table codified in 23 U.S.C. 105 (b). One option which could save money would be to replace the percentage table with a simple dollar amount base guarantee for each state. These state amounts would be adjusted where necessary to bring states up to their dollar amount base guarantee. The 95% guaranteed return would then be accomplished by bringing up the apportionment of states whose base dollar guarantees are less than 95% of their estimated payments to the HTF. By guaranteeing a dollar figure rather than a share percentage that cannot be reduced, this could require a smaller program size to achieve the guaranteed return. Most donee states would probably resist giving up their base share guarantees in exchange for a dollar amount guarantee unless the dollar levels were generous. The savings could be significantly reduced depending on how generous the dollar base levels would need to be to pass the bill. Restrict the Program Scope of the MG. One way to reduce the cost of the MG is to reduce the number of programs covered by the guarantee (assuming that other attributes are held constant). The states’ percent share return on payments to the HTF could be applied to as small a number of the federal-aid highway programs as needed to stay within budget. Under TEA-21, the scope of the guarantee was in the 93-94% range. In the 109th Congress, SAFETEA and TEA-LU, as passed have a scope of roughly 92-93%. To an extent, TEA-LU as introduced in the 108th Congress, took this approach. The bill provided for a 95% guaranteed return on contributions to the HTF by the last year of the authorization, but the MG only covered programs that together accounted for about 80% of the bill’s total funding (i.e. making the MG 95% of 80%). TEA- 20 During early discussions of redirecting the 2.5 cent ethanol tax to the highway account and compensating the account for the ethanol subsidy, FHWA confirmed that, to the surprise of most observers, that because of the role of DC (which uses virtually no gasohol) in determining total program size, the increase in revenues would actually lead to a drop in total program size. CRS-13 LU’s categorization of programs under or not under the MG umbrella was controversial and is believed by some observers to create problems for the functioning of the MG. Donor states in particular were concerned that having such a large number of programs outside the MG would undermine the MG program’s ability to actually achieve the 95% return-on-payments target. Donor states were also concerned that they will have to successfully compete for earmarks in the allocated (non-MG programs) to achieve this level. The large donor states, in particular, would probably see this process as, in effect, taking away with one hand what has been given with the other. Reduce the Target Minimum Percent Return Below the 95% Level. Some have begun making the case that, under the current fiscal constraints, a 95% return is an unrealistic goal for this reauthorization cycle. During TEA-21 reauthorization there was also a major effort to increase the minimum return to 95%. In the end, as discussed previously, only a 0.5% increase was enacted. The large increase in HTF revenue that was available to assuage donor states in 1998 may be what is needed to provide for an increased guaranteed return. Such revenues are not expected to be available in the FY2004-FY2009 period. In the current fiscal environment the TEA-21 MG cannot provide a 95% return. Unless the TEA-21 MG framework is replaced or altered, the minimum rate of return guarantee can only be maintained or modestly increased. The Donor State “SHARE” Proposal for a 95% Guarantee The Highway Funding Equity Act of 2003 (H.R. 2208, S. 1090) is a proposal supported by States’ Highway Alliance for Real Equity (SHARE) that would replace the existing MG with a 95% share guarantee.21 Both the House and Senate versions include a basic minimum guarantee of a 95% share return on state payments to the HTF. The House version of the bill also includes a 95% discretionary program guarantee which covers nearly all remaining program spending. This means that there are two MG program umbrellas that expand the “scope” of the MG to all programs except Federal Lands Highways, research, and the administrative takedown. The bill includes some other significant attributes. It holds harmless states with fewer than 50 people per square mile. These states are guaranteed their TEA-21 base share from the table in 23 U.S.C.(b). The bill also requires that the Secretary of DOT shall “allocate among the States amounts sufficient to ensure that the percentage for each State of the total apportionment for the fiscal year equals or exceeds” the 95% minimum or the sparsely populated state percentage mentioned above. In addition, for the 95% share discretionary guarantee, in the House version, the Secretary is to allocate among the states amounts sufficient to ensure that when all of the allocations for the fiscal year have been identified each state’s percentage will equal or exceed the percentage that is equal to 95% of the tax payments ratio (state estimated tax 21 This discussion is based on H.R. 2208. S. 1090 is similar except that it does not include a discretionary 95% guarantee. CRS-14 payments/all states’ estimated tax payments). The bill authorizes “such sums as are necessary” to carry out the provision.22 The strength of the SHARE proposal for donor states is that it most fully addresses their preeminent desire for a 95% rate of return that covers the broadest scope of programs possible. For the unprotected donee states, its main weakness is their loss of share. Some observers might also argue that under SHARE the guaranteed rate of return is so high and all encompassing that it calls into question the rational for having a federal program and strengthens the arguments for “devolution” of the programs to the states. Devolve the Highway Program to the States One approach to the MG and donor-donee controversy that attracted attention during the debate prior to passage of TEA-21, but that has not garnered much interest in the current reauthorization debate, would be to simply devolve most of the federal highway program role to the states.23 The Transportation Empowerment Act (H.R. 1470 and S. 1907, 105th Congress), sponsored by Senator Connie Mack of Florida and Representative John Kasich of Ohio, would have devolved much of the federal highway program role to the states.24 Only a program for maintaining the Interstate System, federal lands highways, National Security Highways, Emergency Relief, and a proposed Infrastructure Special Assistance Fund would have remained federal. A four year phase out of 12 cents of the federal gas tax would have corresponded with the declining federal role. States would have had the option of replacing the declining federal taxes with gas tax increases of their own. States would then have had the freedom to spend, or not spend, on their own roads as they saw fit. Although this proposal garnered some support from advocates of a reduced federal role in transportation, it did not obtain broad support from many governors, state legislatures, or State Departments of Transportation, many of whom were wary of the political implications of pushing large replacement gas tax increases through 22 Intuitively, because the bill does not hold all donee states’ shares harmless, one would expect the SHARE proposal to be less costly than TEA-LU (as reported) or SAFETEA (as passed), however this may or may not be the case. First, all other attributes held steady, the broader the programmatic scope of the MG the more costly its implementation. The SHARE proposal has a broader scope than either of the active legislative proposals. Second, the bill appears to still require a projection of total program size similar to that in TEA-21. This, combined with the ethanol tax revenue changes could, as with TEA-LU, lead to a larger or smaller program size than expected. The place it clearly saves money, however, in the unprotected donee state shares which are not held harmless. Although it appears that, under SHARE, donee states’ dollar amounts would not drop below their TEA-21 levels, their shares would. 23 As mentioned previously, “devolution,” during the 1990s, generally referred to the shifting of federal programmatic responsibility and funding resources to the states. 24 Rep. Jeff Flake introduced a bill with similar attributes, H.R. 3113, the Transportation Empowerment Act, on September 17, 2003. The bill was referred to the House Subcommittee on Highways, Transit, and Pipelines on September 18, 2003. There has been no further action on the bill. CRS-15 their state legislatures, and at the same time keeping these funds dedicated to transportation. Despite the failure of devolution proposals to be enacted, some would make the case that the closer the MG gets to 100% the more sense devolution to the states makes. They would argue that as the guaranteed rate of return increases the FHWA’s simply becomes more like a tax collector for the states. The need for and efficiency of the federal government as middleman comes into question. At this time, however, there appears to be little interest at the state or federal level for any radical change in the federal role in the highway program. Integrate the Guaranteed Rate of Return Into All Federal-Aid Highways Programs If the assumption that the penultimate goal of federal-aid highway programs is to guarantee each state, say a 95% share rate of return, then one way to accomplish this would be to eliminate all other formula criteria and weight all the programs within the scope of the MG to provide each state with the percentage share of the program funds that would provide a 95% return on its share contributions to the HTF. Congress would still authorize each program’s dollar amount and the old core formula programs could still retain their program goals and requirements but the apportionment of program funds to the states would be strictly determined by each state’s percent share of contributions to the HTF. Funding for allocated (discretionary) programs within the scope of MG could also be divided among the states based on 95% share of their shares of contributions to the HTF. In such a case, however, these funds would only be available for funding within each state’s aggregate program allocations. The remaining 5% of revenues could be used to fund program administration, the Federal Lands Highways Program, Emergency Relief, and other small programs that do not lend themselves to a strict rate of return distribution. This approach has advantages and disadvantages. The main advantage is that it would achieve the goal of a guaranteed percentage share return to the states without requiring an expensive MG program. There would be no separate MG program funding per se, since the rate of return minimum would be integrated into the individual programs. It would also have the advantage of simplicity over the existing MG program. Congress could set the size of the various programs without having to consider the impact on the core programs of the MG distributions. On the other hand, such an option could limit the ability of the federal government to fund federal policy priorities. The program formulas that include such demographic and infrastructure characteristic factors as lane miles, vehicle miles traveled, diesel fuel used, cost to repair or replace deficient bridges, or weighted nonattainment and maintenance area population, are, at least in part, an attempt to direct federal funding where it is needed to fulfill the formulas’ program goals. Some would also argue that basing federal funding distribution overwhelmingly on rate of return on payments to the HTF will lead to inefficiencies where states, for example, with relatively few deficient bridges could receive more bridge program funds than states with relatively more or states with no air quality non-attainment areas could get more CMAQ funding than some states with non-attainment areas. Perhaps the main disadvantage of basing all programs on a guaranteed rate of return is that it would CRS-16 doubtless be opposed by donee states who could not only see their shares reduced, but would, in some cases, actually see a reduction in dollars received under the federal programs. Overarching Issues for Congress Although much of the reauthorization debate has focused on the state by state estimates of funding flows under the various bills and amendment proposals, there are broad policy implications of the MG proposals, including the appropriate federal role vis-a-vis the states, program purpose, and possible implications for mass transit. The Role of the Federal Government Vis-a-Vis the States The federal-state partnership in surface transportation has been a fundamental element of federal highway policy since the passage of the Federal-Aid Road Act of 1916 (39 Stat. 355) although the nature and extent has changed over time.25 Under the act funding was apportioned by formula to the state highway departments which were responsible for the construction and maintenance of the federal aid highways. The state and federal governments were seen as equal partners and this was, in part, the rationale for the 50% federal match for highway construction projects. With the passage of the Federal Highway and Revenue Acts of 1956 (70 Stat. 374 and 70 Stat 387), authorizations for the Interstate Highway System were greatly increased over a 13 year authorization. It also established the federal match for Interstate construction of 90%. The revenue title of the act established the HTF and raised the gas and other transportation taxes to support it. These taxes were to revert back to their original rates in FY1973, the estimated completion date for the interstate system.26 However, although the obligations for the Interstate System as a percent of total trust funded obligations began to decline after 1967, increasing obligations for non-interstate highway programs more than made up for the difference. In addition, with the encouragement of the states as well as construction and other interest groups, the federal match for the major non-interstate programs was increased to 70% in 1970, to 75% in 1978, and to 80% in 1992. Over time the financial commitment has shifted away from the states and toward the federal government.27 25 See Highway Assistance Programs: a Historical Perspective, by Porter K. Wheeler. Washington, Congressional Budget Office. 1978. 86 p. See also archived CRS Report 9112 E, Matching Federal Aid for Highways: Rationale from Post Roads to Interstates, by J.F. Hornbeck. 23 p. 26 The fuel taxes were 2 cents per gallon prior to passage of the Federal Highway Revenue Act of 1956. The act raised the tax to 3 cents effective July 1, 1956. The tax was again raised in 1959 to 4 cents effective October 1, 1959. 27 This is not to say that there is no cost to the states in participating in the Federal-Aid highway program. Federal administrative, labor, and environmental requirements add significant costs to federal highway projects in some states. CRS-17 While the federal financial role was increasing, states were pressing for increased flexibility to move their formula program apportionments among the other formula programs or to transit, thereby, significantly increasing state control over their spending choices under the Federal-Aid Highway programs (FAHP). The case can be made that by the enactment of TEA-21, while the federal financial role had increased significantly, through higher spending and increased federal share, the state control over spending decisions was also increasing. In addition, the MG distribution itself, which averaged roughly $6 billion per year during TEA-21, dilutes the impact of the program apportionment formula factors which were originally designed, at least in part, to help achieve federal program goals. These trends, the enhanced federal financial role, increased state authority over spending decisions, as well as calls during the current reauthorization debate for a 95% MG rate of return on a wide scope of FAHP programs, raises policy questions. At what point does the federal role become so limited that converting the FAHP to a revenue sharing or block grant programs makes sense? Federal administrative, labor, and environmental requirements do add to most states’ project costs. On the other hand, some would argue that despite state complaints concerning the costs of complying with the federal highway program requirements and donor state displeasure with their rates of return, the existing federal highway programs are still seen by many as serving a national purpose and continue to be very popular with most state departments of transportation. Program Purpose and “Scope” An issue which may be seen as being corollary to the federal role issue is whether a high rate of return percentage, such as 95%, coupled with a similarly broad program scope could constrain a federal programmatic response to federal needs as they arise. Some federal programs, such as the Federal Lands Highways programs, are accepted as being federal in nature and not lending themselves to equal distribution across 50 states. For some programs there is less of a consensus.28 Having a 95% guaranteed rate of return and a similar percentage scope would leave little room for targeted federal programs outside the MG. Given the combination of the impact of the MG distribution on apportionments and program flexibility that allows states to flex much of their core program funding among these programs or to transit, the case can be made that programs that are directed toward 28 The issue of scope came up during the TEA-LU floor debate on the unsuccessful Isakson amendment concerning the impact of including the proposed Projects of National and Regional Significance program within the scope of the MG. Also referred to as “Mega,” this program would fund very large projects costing over $500 million or the equivalent of 75% of a state’s annual total program apportionment to address transportation problem areas that would lead to regional or national transportation improvements. The Amendment, by including the Mega projects within the scope of the MG, would in effect have reduced the MG apportionments of the state which received the Mega project funding. This would reduce the attractiveness of such targeted federal programs to the states as well as diluting the impact of the program. By leaving it out of the scope of the MG, the state or states getting the grant would receive it as additional funding. See Congressional Record. V. 150, April 2, 2004. P. H2070-H2080. CRS-18 transportation infrastructure needs that are inherently federal in nature should be outside the scope of the MG. Perhaps an option would be to redefine scope in a way that only programs that serve what are clearly federal purposes could be outside the scope of the MG. These programs could be designated in law as being inherently federal. Any other programs whether formula or discretionary would be retained within the scope of the MG. The MG debate would then be focused on a more clearly defined concept of scope. Doing this would require a broad consensus among both donor and donee state Members of Congress. Donor states advocates would probably be concerned that programs defined as being federal in nature could add up over time to the detriment of donor state rates of return. The issue is whether the need for equity is greater than needs that are inherently federal. Good for the Gander: a Minimum Guarantee for Transit? Although the minimum guarantee/equity remedy debate during the current surface transportation reauthorization debate in Congress has focused exclusively on a guaranteed rate of return on payments to the highway account, some have argued that a similar guarantee should be applied to payments to the mass transit account of the HTF.29 The mass transit account is credited with the revenues from 2.86 cents of federal fuel taxes. Roughly 80% of the Federal Transit Administration’s funding comes from the mass transit account, the remaining funding is provided by treasury general funds. The distribution of nearly all of these funds is by formula and by earmark from the federal government to the individual transit authorities (i.e., it differs from the highway programs which are funded through the state DOTs). From a state perspective, the program set up tends to favor states that have large cities with existing fixed guideway type transit systems (heavy rail, light rail, dedicated bus lanes). Rural states and states with bus dependent transit tend to get less. The top five states receiving federal transit funding (as of FY2002), California, New York, New Jersey, Illinois, and Texas, received over 49% of total transit obligations. Some transit donor states see their tax payments as subsidizing the urbanized states and argue that they have transit needs themselves that are unmet. They also argue that FTA programs unfairly underfund bus-only transit systems and that the need for public transportation in rural areas is mostly ignored by the current funding distribution. Supporters of the FTA programs can make a number of arguments in defense of the uneven geographic distribution of transit funding. The main argument is one of program national purpose. Under the statement of policies, findings, and purposes in 49 U.S.C. 1501, the focus is clearly on urban mass transportation with a goal to “efficiently maximize mobility of individuals and goods in and through urbanized 29 For an example of state support of a 95% share guarantee for transit, see [http://www.michigan.gov/documents/ReauthorizationBasicsWashington3_7_59563_7.ppt] The State Highway Alliance for Real Equity (SHARE) has distanced itself from advocates of a transit guarantee and has a policy statement on its website [http://www.sharestates.org]: “The SHARE Coalition and its predecessors have been organized over the last twenty years in an effort to improve their rate of return in the highway program funds. SHARE specifically focuses on the highway program and has made a deliberate decision not to address transit equity issues.” CRS-19 areas and minimize transportation-related fuel consumption and air pollution.” For transit systems to be efficient they need to serve areas of concentrated population. A mass transit 95% guaranteed rate of return would shift large amounts of funding to less densely populated areas where the number of people served would be low and the costs per passenger mile would be high (i.e. would lead to inefficiencies). Some would also argue that the support for a transit minimum guarantee is really based on the assumption by states that they could flex a significant portion of their transit funding to highway programs. Transit donee states may argue that a transit guaranteed rate of return would punish the urban areas that have taken the initiative to build, in some cases before significant federal funding was available, transit systems that are in line with federal policy goals of enhancing urban mobility, reducing fuel consumption, and improving air quality. Finally, transit interests argue that the role of cities as economic centers means that urban mobility benefits not just the cities but the nation as a whole. The transit minimum guarantee debate has not garnered wide-spread public support during the current reauthorization cycle but, especially should a 95% guarantee for highway programs be enacted , it would not be surprising for some form of transit equity provision to be at issue in the next reauthorization cycle. The big losers would be California and New York. Interestingly, some states that are highway program donor states are major beneficiaries of the transit program. For example, should California and New Jersey support the 95% return on payments to the highway account of the HTF, they could be in the position of having to oppose a transit minimum guarantee or risk a loss of much more transit funding than they gained through the highway program guarantee. In addition, such a major shift in funding would probably require a major rewriting of the federal transit programs for the programs to make sense as a whole. It would also overturn what many see as the great compromise of 1982 under which the transit account of the HTF was created and funded with 1 cent of the fuel tax increase in the bill. Transit dependent states supported an expanded highway program in return. CRS-20 Appendix I: How the TEA-21 Minimum Guarantee is Calculated The TEA-21 MG is calculated using a multi-step process. The program guarantees that each state’s share of the sum of the apportionments of the programs under the MG umbrella will be at least 90.5% of its share of payments to the highway account of the HTF. This requirement, however, must be met while at the same time fulfilling the two other parts of the guarantee, the guaranteed base share and the $1 million minimum state payment. TEA-21 required that the guaranteed return on contributions to the HTF be based on data estimated for the most recent fiscal year for which state-by state payment data are available. For the FY2003 MG calculation, the most recent year for which data was available was FY2001. The following discussion describes these steps and provides the step by step results for three “states,” Arizona, the District of Columbia (DC), and Pennsylvania. The full FHWA calculation tables for FY2003 are reproduced in Appendix II.30 An understanding of the process and peculiarities of the calculation process are key to understanding some of the MG policy options discussed in this report. Each step is begun with a summary sentence or paragraph followed by a more detailed technical description. Step 1: Determine the minimum State Share of Apportionments Each State Must Receive to meet the 90.5% guaranteed return on its payments to the HTF. The estimated state payments for each state are divided by the contributions (i.e. payments to the HTF) made by all states to produce each state’s percent share of total contributions. These state shares of total contributions are then multiplied by 90.5% to determine each state’s minimum percentage share of apportionments and high priority project allocations it must receive. Table 1: MG Calculation Step 1 State Arizona Dist. of Columbia Pennsylvania Total for all states 30 FY2001 Highway Account Contributions ($000) (1) State Share of Total Contributions 90.5% of State Share of Contributions (2) (3) 505,219 1.8770% 1.6987% 30,960 0.1150% 0.1041% 1,084,084 4.0277% 3.6451% 26,915,773 100% 90.5% This discussion is based on FY2003 MG calculation tables produced by FHWA. These tables are used for instructional purposes by FHWA and are reproduced in Appendix II of this report. No adjustment has been made for the 0.65% across-the-board rescission imposed in P.L. 108-7. CRS-21 Step 2: Compare base share from table in Sec. 1104 of TEA-21 to 90.5% of state share calculated in step 1 to determine if adjustment is needed. If the TEA21 base share from the table in 23 U.S.C. 105(b) is lower than the share (calculated in step 1) required to guarantee a 90.5% return, Table 2 identifies which states’ shares must be increased to assure each state’s return on their contributions.31 Table 2: MG Calculation Step 2 State Base Shares Specified in TEA-21 (Sec. 1104) (1) 90.5% of State Share of Total Contributions (2) Is Increase Needed to Provide at Least a 90.5% Return (3) Arizona 1.5581% 1.6978% Yes Dist. of Columbia 0.3956% 0.1041 No 4.9887 3.6451 No 100% 90.5% (9 of 50 states) Yes Pennsylvania Total for all states Steps 3-5: raise adjustments to sec. 1104 base shares where necessary to guarantee a 90.5% return and squeeze down other state base shares so total equals 100%. For FY2003 a sequence of three adjustments were required to bring all states base shares up to 90.5%, to squeeze down the other state shares, and to obtain a 100% total for all state shares (for detail, see Appendix II steps 3 through 5). Table 3 (Step 6) sets forth the revised state shares. Step 6: check results of previous adjustment rounds and display final return on highway account contributions for each state. This step verifies that the repeated process of raising low shares up to 90.5% and the squeezing down of other state shares is complete (column (1) showing the sec. 1104 base shares has been added for comparison). As set forth in the Table 3, column 2, the “Revised Shares for all States” are the shares that will be used to calculate the MG. Column 3 shows the percent share necessary to guarantee 90.5%. Column 5 computes the final return on HTF contributions by dividing the revised share from column 2 by the state share of total contributions from step 1 column 2. 31 TEA-21 sec. 1104 also limited the initial base share adjustment to states that received a 90.5% return in 1998. This has been left out of this discussion for simplicity’s sake and because later adjustments prevent these states from being penalized by the provision. CRS-22 Table 3: MG Calculation Step 6 State Original Sec. 1104 Base Share (1) Revised Share for All States (used to calculate MG) (2) 90.5% of State Share of Contributions Any States Revised Shares Below 90.5% (3) (4) Final Return on Highway Account Contributions (5) Arizona 1.5581% 1.6987% 1.6987% No 90.5% Dist. Of Columbia 0.3956% 0.3860% 0.1041% No 335.5% Pennsylvania 4.9887% 4.8671% 3.6451% No 120.8% Total for all States 100% 100% 90.5% As Table 3 shows, Arizona’s base share has increased to assure that its final return on HTF contributions meets the 90.5% share minimum guarantee. At the same time DC and Pennsylvania’s shares have been squeezed down but still maintain a return of well over 100%. Keep in mind that, at this point in the process, no dollar amounts have been introduced since step 1. All the adjusting has been the adjusting of share percentages, not dollars. Step 7: Determine the Program Level. Step 7 may be the most confusing of all the steps. In simple terms, because no money apportioned may be taken back, the only way to meet all states guaranteed apportionment shares (determined in step 6) is to increase the national total for all programs under the MG umbrella. The required program size to meet each states percent share is projected and the largest amount needed to meet any state’s share becomes the total program level. In more detail, the MG, as mentioned earlier, requires that the states’ share of apportionments of the total apportionments for the programs listed in Sec. 1104 (IM, NHS, STP, HBRR, CMAQ, ADHS, Recreational Trails, Metropolitan Planning, HPP, and the MG itself) will be the final revised share, set forth in step 6. It also provides that no state shall receive less than $1 million annually. Step 7 begins, in column 1 (see Table 4 below), with the state-by-state formula driven program apportionment totals plus HPP funding. Each state is then given the $1 million minimum amount (column 2). These total dollar amounts (column 3) may not be taken away from any state. This means that the only way to achieve the percent share set forth in column 4 is to set the national total based on the state that would need the largest downward share adjustment. Under TEA-21 this “state” has been DC. DC’s total program level in column 3, $107,154,552, is 0.4965% of the column’s national total of $21,592,143,690. DC’s MG percent share is supposed to be 0.3860%. In other words, DC’s share must be reduced from 0.4965% to 0.3860% without taking any money away from DC. The only way to do this is to expand the total program to the level that will reduce DC’s share to 0.3860%. FHWA calculates that for FY2003 the program needs to be $27.763 billion. CRS-23 Table 4: MG Calculation Step 7 (4) Program Size (including MG needed to provide state shares) (Col. 3/Col. 4) (5) 317,379,875 1.6987% 18,683,489,297 1,000,000 107,154,552 0.3860% 27,763,290,761 1,171,973,757 1,000,000 1,172,973,757 4.8671% 24,100,025,780 21,541,143,690 51,000,000 21,592,143,690 100.000% Percent Share Total Sum of All Apportionments (before MG) and High Priority Projects (1) Add Minimum MG Amount of $1 Million (Add first and second columns) (2) (3) Arizona 316,379,875 1,000,000 Dist. Of Columbia 106,154,552 State Pennsylvania Total for all States Note: totals may not compute due to rounding. Step 8: Calculate MG Apportionments to Reach National and State Program Size Targets. Basically, this step uses the final percent share for each state determined in step six to calculate each state’s dollar share of the $27.763 billion national program. From these state dollar totals the sum of each state’s total apportionments and HPP funds (column 1 in step 7) is subtracted. The result is the MG apportionment for each state and for the MG program as a whole. Table 5: MG Calculation Step 8 State Percent Share from Step 6 State Share of Target Program Size Sum of all previous Apportionments and HPP (1) (2) (3) Minimum Guarantee Apportionment Col 2 - Col 3 (4) Arizona 1.6987% 471,620,135 316,379,875 155,240,260 District of Columbia 0.3860% 107,154,552 106,154,552 1,000,000 Pennsylvania 4.8671% 1,351,268,739 1,171,973,757 179,294,982 Total 100.0000% 27,763,290,761 21,541,143,690 6,222,147,071 Note: MG apportionment totals do not reflect the 0.65% across the board reduction required by P.L. 108-7. Further steps reduce the MG apportionment by 2% for state planning and research as well as determining the base and “remainder” distribution amounts. Totals may not calculate due to rounding. The complexity of the MG calculations is a result of FHWA’s successful attempt to meet the requirements of the MG statute. The process reconciles two requirements of the law that are, at face value, seemingly contradictory: that donor states should get increased shares while donee state shares, for the most part, are to be held harmless. Under TEA-21 these seemingly contradictory requirements were resolved by the process of increasing the total program size. This worked under TEA-21 because there was, as mentioned earlier, an increase in available gas tax revenues supporting the HTF. This is not the situation in the current reauthorization environment making it probable that the TEA-21 MG structure will need to be significantly altered or replaced, if the guaranteed rate of return is to be increased. CRS-24 Appendix II: FHWA’s FY2003 MG Calculation Tables Step 1 - Determine share needed to provide guaranteed return on contributions. FY2001 State 90.5 % Highway Share of of State State Account Total Share of Contributions Contributions Contributions ($000) (col. (2) x 90.5%) -1-2-3The MG provision guarantees that each State’s Alabama 530,211 1.9699% 1.7828% Interstate Maintenance, National Highway System, Alaska 55,149 0.2049% 0.1854% Surface Transportation Program, Highway Bridge Arizona 505,219 1.8770% 1.6987% Rehabilitation and Replacement, Congestion Mitigation Arkansas 358,046 1.3302% 1.2039% and Air Quality Improvement, Recreational Trails, California 2,774,089 10.3066% 9.3274% Appalachian Development Highway System, Metro Colorado 381,643 1.4179% 1.2832% Planning, and the Minimum Guarantee itself, along with Connecticut 279,414 1.0381% 0.9395% high priority projects (excluding #1818-1849) Delaware 69,877 0.2596% 0.2350% will be at least 90.5% of its share of Highway Dist. of Col. 30,960 0.1150% 0.1041% Account contributions (hereafter referred to as the Florida 1,420,379 5.2771% 4.7758% 90.5% return). In this step we determine Georgia 1,051,012 3.9048% 3.5339% the minimum share of the apportionments (including Hawaii 65,214 0.2423% 0.2193% MG) and high priority projects that a State must receive Idaho 150,304 0.5584% 0.5054% to meet the guaranteed 90.5% return on its Highway Illinois 954,519 3.5463% 3.2094% Account contributions. Indiana 678,256 2.5199% 2.2805% Iowa 298,853 1.1103% 1.0048% a. This computation is based on estimated contributions Kansas 287,634 1.0686% 0.9671% for the latest fiscal for which data are available. For the Kentucky 516,121 1.9175% 1.7354% FY2003 Minimum Guarantee calculations, FY2001 Louisiana 471,684 1.7524% 1.5860% Highway Account contributions are used. The FY2001 Maine 145,885 0.5420% 0.4905% contributions are shown in column (1). Maryland 483,282 1.7955% 1.6250% Massachusetts 506,099 1.8803% 1.7017% b. In column (2) we determine what share of the total Michigan 908,223 3.3743% 3.0538% Highway Account contributions came from each State Minnesota 403,413 1.4988% 1.3564% by dividing each State’s contributions by the national Mississippi 360,319 1.3387% 1.2115% total. Missouri 677,349 2.5166% 2.2775% Montana 119,374 0.4435% 0.4014% c. Since the guarantee promises only a 90.5% return Nebraska 199,332 0.7406% 0.6702% on each State’s share of Highway Account contributions, Nevada 194,606 0.7230% 0.6543% we multiply the share of contributions in column (2) by New Hampshire 123,203 0.4577% 0.4143% 90.5%. The result is shown in column (3). New Jersey 784,934 2.9163% 2.6392% New Mexico 240,784 0.8946% 0.8096% No State will receive less than the percentage New York 1,085,665 4.0336% 3.6504% shown in column (3) of the specified North Carolina 832,487 3.0929% 2.7991% apportionments (including MG) and high priority North Dakota 84,669 0.3146% 0.2847% project allocations. Ohio 1,011,436 3.7578% 3.4008% Oklahoma 451,040 1.6757% 1.5166% Oregon 323,878 1.2033% 1.0890% Pennsylvania 1,084,084 4.0277% 3.6451% Rhode Island 72,226 0.2683% 0.2428% South Carolina 489,539 1.8188% 1.6460% South Dakota 86,785 0.3224% 0.2918% Tennessee 658,017 2.4447% 2.2125% Texas 2,328,273 8.6502% 7.8284% Utah 223,770 0.8314% 0.7524% Vermont 65,479 0.2433% 0.2202% Virginia 746,594 2.7738% 2.5103% Washington 513,692 1.9085% 1.7272% West Virginia 187,696 0.6973% 0.6311% Wisconsin 508,343 1.8886% 1.7092% Wyoming 136,713 0.5079% 0.4597% Total 26,915,773 100.0000% 90.5000% CRS-25 Step 2 - Compare share provided in § 1104 to minimum share needed to guarantee 90.5% return and determine if initial adjustment is needed. 90.5 % Is Increased Is State Base of State Share Needed Eligible for Shares Share of to Provide Initial State Specified Contributions at Least Adjustment? in § 1104 (Step 1, 90.5% Return? (1998 Return col. (3)) (col. (1) < col. (2)) = 90.5%) Section 1104 provides base State shares, but requires that they -1-2-3-4be adjusted to ensure that Alabama 2.0269% 1.7828% each State receives the 90.5% return on its Alaska 1.1915% 0.1854% share of Highway Account contributions. In this Arizona 1.5581% 1.6987% Yes Yes step, we identify which need their starting shares Arkansas 1.3214% 1.2039% from §1104 increased to ensure their return on California 9.1962% 9.3274% Yes Yes their contributions. Colorado 1.1673% 1.2832% Yes Connecticut 1.5186% 0.9395% a. Column (1) shows the base State shares Delaware 0.4424% 0.2350% from §1104, Dist. of Col. 0.3956% 0.1041% Florida 4.6176% 4.7758% Yes Yes b. Column (2) shows the minimum share Georgia 3.5104% 3.5339% Yes Yes required for each State to meet the guarantee Hawaii 0.5177% 0.2193% of a 90.5% return. These are the result of Idaho 0.7718% 0.5054% Step 1 and are the percentages shown in Illinois 3.3819% 3.2094% column (3) on the previous page. Indiana 2.3588% 2.2805% Yes Iowa 1.2020% 1.0048% c. Column (3) identifies States that need an Kansas 1.1717% 0.9671% increase in the base share from §1104 to Kentucky 1.7365% 1.7354% Yes receive the guaranteed 90.5% return. Louisiana 1.5900% 1.5860% A State needs an increase if its percentage Maine 0.5263% 0.4905% from §1104 column (1) is less than the share Maryland 1.5087% 1.6250% Yes Yes determined in Step 1 (shown in column (2)). Massachusetts 1.8638% 1.7017% Michigan 3.1535% 3.0538% Yes d. Under a provision in TEA-21 § 1104, Minnesota 1.4993% 1.3564% States are eligible for an initial increase Mississippi 1.2186% 1.2115% to their base share to provide the 90.5% return Missouri 2.3615% 2.2775% only if they received the minimum return Montana 0.9929% 0.4014% for FY1998. Column (4) shows the States Nebraska 0.7768% 0.6702% that received a 90.5 percent return for FY1998. Nevada 0.7248% 0.6543% States not eligible in the initial round of adjustNew Hampshire 0.5163% 0.4143% ments are NOT penalized by this provision. New Jersey 2.5816% 2.6392% Yes Watch the subsequent steps for Colorado New Mexico 0.9884% 0.8096% to see how this plays out. New York 5.1628% 3.6504% North Carolina 2.8298% 2.7991% Yes States with a “Yes” in both columns (3) and (4) North Dakota 0.6553% 0.2847% will have their base shares increased to ensure Ohio 3.4257% 3.4008% Yes the guaranteed 90.5% return on their share Oklahoma 1.5419% 1.5166% of Highway Account contributions. Seven Oregon 1.2183% 1.0890% States will be adjusted. Pennsylvania 4.9887% 3.6451% Rhode Island 0.5958% 0.2428% South Carolina 1.5910% 1.6460% Yes Yes South Dakota 0.7149% 0.2918% Tennessee 2.2646% 2.2125% Yes Texas 7.2131% 7.8284% Yes Yes Utah 0.7831% 0.7524% Vermont 0.4573% 0.2202% Virginia 2.5627% 2.5103% Yes Washington 1.7875% 1.7272% West Virginia 1.1319% 0.6311% Wisconsin 1.9916% 1.7092% Wyoming 0.6951% 0.4597% Total 100.00% 90.5000% 9 14 CRS-26 Step 3 - Make initial adjustments, as needed, to base shares from §1104 to guarantee 90.5% return and adjust shares of other States so total remains 100%. 90.5 % Initial Revised Shares Base of State Raise share Unadjusted Reduced Revised State Shares Share of to 90.5% Base Base Shares Shares in §1104 Contributions Level Shares for on Other for (Step 1, for Eligible Remaining States to All States col. (3)) States States Keep Total (from cols. (3) (from col. (2)) at 100% & (5)) -1-2-3-4-5-6States whose base shares from §1104 do not yield the 90.5% guaranteed return AND Alabama 2.0269% 1.7828% 2.0269% 1.9914% 1.9914% which are eligible for the initial adjustment, Alaska 1.1915% 0.1854% 1.1915% 1.1706% 1.1706% that is, States with a Yes in columns (3) and Arizona 1.5581% 1.6987% 1.6987% 1.6987% (4) in Step 2, will receive the necessary Arkansas 1.3214% 1.2039% 1.3214% 1.2983% 1.2983% increase to their base shares. The base California 9.1962% 9.3274% 9.3274% 9.3274% shares of all remaining States will be Colorado 1.1673% 1.2832% 1.1673% 1.1469% 1.1469% adjusted proportionately downward so that Connecticut 1.5186% 0.9395% 1.5186% 1.4920% 1.4920% the total of the adjusted shares is 100%. Delaware 0.4424% 0.2350% 0.4424% 0.4347% 0.4347% Dist. of Col. 0.3956% 0.1041% 0.3956% 0.3887% 0.3887% a. Column (3) shows each State needing Florida 4.6176% 4.7758% 4.7758% 4.7758% and eligible for an increase receiving the Georgia 3.5104% 3.5339% 3.5339% 3.5339% minimum share necessary to guarantee the Hawaii 0.5177% 0.2193% 0.5177% 0.5086% 0.5086% 90.5% return. These are the shares Idaho 0.7718% 0.5054% 0.7718% 0.7583% 0.7583% developed in Step 1 and are shown in Illinois 3.3819% 3.2094% 3.3819% 3.3227% 3.3227% column (2) for convenience. The sum of the Indiana 2.3588% 2.2805% 2.3588% 2.3175% 2.3175% shares in column (3) is 30.4352% Iowa 1.2020% 1.0048% 1.2020% 1.1809% 1.1809% Kansas 1.1717% 0.9671% 1.1717% 1.1512% 1.1512% b. Column (4) shows the remainder of the Kentucky 1.7365% 1.7354% 1.7365% 1.7061% 1.7061% States receiving the base shares from §1104. Louisiana 1.5900% 1.5860% 1.5900% 1.5622% 1.5622% Just under the table is shown the sum of Maine 0.5263% 0.4905% 0.5263% 0.5171% 0.5171% columns (3) and (4). As expected, the Maryland 1.5087% 1.6250% 1.6250% 1.6250% percentages now add to more than 100%. Massachusetts 1.8638% 1.7017% 1.8638% 1.8312% 1.8312% Michigan 3.1535% 3.0538% 3.1535% 3.0983% 3.0983% c. Column (5) shows the shares for the Minnesota 1.4993% 1.3564% 1.4993% 1.4730% 1.4730% remaining States after their base shares have Mississippi 1.2186% 1.2115% 1.2186% 1.1973% 1.1973% been adjusted so the sum of the revised Missouri 2.3615% 2.2775% 2.3615% 2.3201% 2.3201% shares is 100%. The shares have been Montana 0.9929% 0.4014% 0.9929% 0.9755% 0.9755% proportionally reduced so that the sum of the Nebraska 0.7768% 0.6702% 0.7768% 0.7632% 0.7632% shares for these States is reduced to Nevada 0.7248% 0.6543% 0.7248% 0.7121% 0.7121% 69.5648% — the difference between 100% New Hampshire 0.5163% 0.4143% 0.5163% 0.5073% 0.5073% and the amount reserved for the increases New Jersey 2.5816% 2.6392% 2.5816% 2.5364% 2.5364% to the States shown in column (3). New Mexico 0.9884% 0.8096% 0.9884% 0.9711% 0.9711% New York 5.1628% 3.6504% 5.1628% 5.0724% 5.0724% d. Column (6) shows the revised shares for North Carolina 2.8298% 2.7991% 2.8298% 2.7802% 2.7802% all States. The entries come from column (3) North Dakota 0.6553% 0.2847% 0.6553% 0.6438% 0.6438% for the 7 States that received adjustments to Ohio 3.4257% 3.4008% 3.4257% 3.3657% 3.3657% get the 90.5% return and from column (5) for Oklahoma 1.5419% 1.5166% 1.5419% 1.5149% 1.5149% the remaining States. Oregon 1.2183% 1.0890% 1.2183% 1.1970% 1.1970% Pennsylvania 4.9887% 3.6451% 4.9887% 4.9013% 4.9013% Rhode Island 0.5958% 0.2428% 0.5958% 0.5854% 0.5854% South Carolina 1.5910% 1.6460% 1.6460% 1.6460% South Dakota 0.7149% 0.2918% 0.7149% 0.7024% 0.7024% Tennessee 2.2646% 2.2125% 2.2646% 2.2249% 2.2249% Texas 7.2131% 7.8284% 7.8284% 7.8284% Utah 0.7831% 0.7524% 0.7831% 0.7694% 0.7694% Vermont 0.4573% 0.2202% 0.4573% 0.4493% 0.4493% Virginia 2.5627% 2.5103% 2.5627% 2.5178% 2.5178% Washington 1.7875% 1.7272% 1.7875% 1.7562% 1.7562% West Virginia 1.1319% 0.6311% 1.1319% 1.1121% 1.1121% Wisconsin 1.9916% 1.7092% 1.9916% 1.9567% 1.9567% Wyoming 0.6951% 0.4597% 0.6951% 0.6829% 0.6829% Total 100.00% 90.5000% 30.4352% 70.8049% 69.5648% 100.0000% Sum of col.(3) and col. (4)==> 101.2401% CRS-27 Step 4 - Check results of initial adjustment process (Step 3). If any States are receiving less than the 90.5% guarantee, increase their shares to the 90.5% return level and adjust shares of other States so total remains 100%. Revised 90.5 % Any Second Round of Share Adjustments Shares of State States Unadjusted Reduced Revised State for Share of Below Shares Shares for Shares Shares All States Contributions 90.5% Raised Remaining on Other Round 2 (Step 3, (Step 1, Level? to 90.5% States States to (col. (1) col. (6)) col. (3)) < Level Keep Total (from cols. col. (2)) at 100% (4) & (6)) -1-2-3-4-5-6-7There are two reasons that a State might be below the 90.5% return level Alabama 1.9914% 1.7828% 1.9914% 1.9780% 1.9780% after the initial adjustments. (1) Some Alaska 1.1706% 0.1854% 1.1706% 1.1627% 1.1627% States, Colorado for example, Arizona 1.6987% 1.6987% 1.6987% 1.6987% needed an adjustment from the Arkansas 1.2983% 1.2039% 1.2983% 1.2895% 1.2895% beginning of the process but were not California 9.3274% 9.3274% 9.3274% 9.3274% eligible for the initial adjustment Colorado 1.1469% 1.2832% Yes 1.2832% 1.2832% because their 1998 return was Connecticut 1.4920% 0.9395% 1.4920% 1.4820% 1.4820% above 90.5%. (2) The downward Delaware 0.4347% 0.2350% 0.4347% 0.4317% 0.4317% adjustments made in Step 3 to bring the Dist. of Col. 0.3887% 0.1041% 0.3887% 0.3861% 0.3861% total shares back to 100% may have Florida 4.7758% 4.7758% 4.7758% 4.7758% reduced the share of a State whose Georgia 3.5339% 3.5339% 3.5339% 3.5339% initial base share from §1104 had been Hawaii 0.5086% 0.2193% 0.5086% 0.5052% 0.5052% high enough to an amount below the Idaho 0.7583% 0.5054% 0.7583% 0.7532% 0.7532% 90.5% return level. Kentucky is an Illinois 3.3227% 3.2094% 3.3227% 3.3003% 3.3003% example of this situation. Indiana 2.3175% 2.2805% 2.3175% 2.3019% 2.3019% Iowa 1.1809% 1.0048% 1.1809% 1.1730% 1.1730% a. Column (1) shows the initial revised Kansas 1.1512% 0.9671% 1.1512% 1.1434% 1.1434% shares from Step 3. Kentucky 1.7061% 1.7354% Yes 1.7354% 1.7354% Louisiana 1.5622% 1.5860% Yes 1.5860% 1.5860% b. Column (2) shows the share Maine 0.5171% 0.4905% 0.5171% 0.5136% 0.5136% (determined in Step 1) necessary to Maryland 1.6250% 1.6250% 1.6250% 1.6250% provide the guaranteed 90.5% return. Massachusetts 1.8312% 1.7017% 1.8312% 1.8188% 1.8188% Michigan 3.0983% 3.0538% 3.0983% 3.0774% 3.0774% c. Column (3) identifies the States Minnesota 1.4730% 1.3564% 1.4730% 1.4631% 1.4631% whose shares are below the minimum. Mississippi 1.1973% 1.2115% Yes 1.2115% 1.2115% Kentucky’s, Louisiana’s, Mississippi’s, Missouri 2.3201% 2.2775% 2.3201% 2.3045% 2.3045% North Carolina’s, Ohio’s, and Oklahoma’s Montana 0.9755% 0.4014% 0.9755% 0.9689% 0.9689% returns at the beginning of the Nebraska 0.7632% 0.6702% 0.7632% 0.7581% 0.7581% adjustment process were above the Nevada 0.7121% 0.6543% 0.7121% 0.7073% 0.7073% minimum, but dropped below the New Hampshire 0.5073% 0.4143% 0.5073% 0.5038% 0.5038% minimum during the adjustment. The New Jersey 2.5364% 2.6392% Yes 2.6392% 2.6392% other two States, Colorado and New Mexico 0.9711% 0.8096% 0.9711% 0.9645% 0.9645% New Jersey were already New York 5.0724% 3.6504% 5.0724% 5.0382% 5.0382% below the minimum at the beginning. North Carolina 2.7802% 2.7991% Yes 2.7991% 2.7991% They were prevented from getting North Dakota 0.6438% 0.2847% 0.6438% 0.6395% 0.6395% adjustments in the initial round by the Ohio 3.3657% 3.4008% Yes 3.4008% 3.4008% requirement that initial adjustments Oklahoma 1.5149% 1.5166% Yes 1.5166% 1.5166% go only to States whose FY1998 returns Oregon 1.1970% 1.0890% 1.1970% 1.1889% 1.1889% were at the 90.5% minimum level. Pennsylvania 4.9013% 3.6451% 4.9013% 4.8683% 4.8683% Rhode Island 0.5854% 0.2428% 0.5854% 0.5814% 0.5814% d. Column (4) shows the shares raised for South Carolina 1.6460% 1.6460% 1.6460% 1.6460% for the 8 States that were below the South Dakota 0.7024% 0.2918% 0.7024% 0.6976% 0.6976% minimum after the initial round of Tennessee 2.2249% 2.2125% 2.2249% 2.2099% 2.2099% adjustments. It also shows, in italics, the Texas 7.8284% 7.8284% 7.8284% 7.8284% shares for the States whose shares were Utah 0.7694% 0.7524% 0.7694% 0.7642% 0.7642% raised in the initial round. These States Vermont 0.4493% 0.2202% 0.4493% 0.4463% 0.4463% must have their shares held constant or Virginia 2.5178% 2.5103% 2.5178% 2.5009% 2.5009% they will fall below the 90.5% return they Washington 1.7562% 1.7272% 1.7562% 1.7444% 1.7444% achieved in the initial round. West Virginia 1.1121% 0.6311% 1.1121% 1.1046% 1.1046% Wisconsin 1.9567% 1.7092% 1.9567% 1.9435% 1.9435% e. Columns (5) and (6) show the Wyoming 0.6829% 0.4597% 0.6829% 0.6783% 0.6783% adjustment of the shares of the remaining Total 100.00% 90.5000% 8 46.6069% 53.7552% 53.3931% 100.0000% States so that the sum of the shares will Sum of col. (4) and Col. (5) = 100.3622% be 100%, CRS-28 Step 5 - Check results of second adjustment process (Step 4). If any States are receiving less than the 90.5% guarantee, increase their shares to the 90.5% return level and adjust shares of other States so total remains 100%. Revised 90.5 % Any Third Round of Share Adjustments Shares of State States Unadjusted Reduced Revised State for Share of Below Shares Shares for Shares Shares Contribution All States s 90.5% Raised Remaining on Other Round 3 (Step 4, (Step 1, Level? to 90.5% States States to (col. (1) col. (7)) col. (3)) < Level Keep Total (from cols. col. (2)) at 100% (4) & (6)) (1) (2) (3) (4) (5) (6) (7) The downward adjustments to States in the second round brought two States — Tennessee and Virginia — below the Alabama 1.9780% 1.7828% 1.9780% 1.9775% 1.9775% minimum 90.5% return. The share for these States must Alaska 1.1627% 0.1854% 1.1627% 1.1625% 1.1625% be Arizona 1.6987% 1.6987% 1.6987% 1.6987% increased to meet to minimum 90.5% return Arkansas 1.2895% 1.2039% 1.2895% 1.2892% 1.2892% and the shares of other States must be California 9.3274% 9.3274% 9.3274% 9.3274% reduced so that the sum of all the shares Colorado 1.2832% 1.2832% 1.2832% 1.2832% remains at 100%. This is exactly the Connecticut 1.4820% 0.9395% 1.4820% 1.4816% 1.4816% same process as the previous step. The Delaware 0.4317% 0.2350% 0.4317% 0.4316% 0.4316% process is repeated until no State receives Dist. of Col. 0.3861% 0.1041% 0.3861% 0.3860% 0.3860% less than the 90.5% return. Florida 4.7758% 4.7758% 4.7758% 4.7758% Georgia 3.5339% 3.5339% 3.5339% 3.5339% Hawaii 0.5052% 0.2193% 0.5052% 0.5051% 0.5051% a. Column (1) shows the revised shares Idaho 0.7532% 0.5054% 0.7532% 0.7530% 0.7530% from Step 4 — the second round of Illinois 3.3003% 3.2094% 3.3003% 3.2995% 3.2995% adjustments. Indiana 2.3019% 2.2805% 2.3019% 2.3013% 2.3013% Iowa 1.1730% 1.0048% 1.1730% 1.1727% 1.1727% b. Column (2) shows the share (determined Kansas 1.1434% 0.9671% 1.1434% 1.1431% 1.1431% in Step 1) necessary to provide a guaranteed Kentucky 1.7354% 1.7354% 1.7354% 1.7354% 90.5% return. Louisiana 1.5860% 1.5860% 1.5860% 1.5860% Maine 0.5136% 0.4905% 0.5136% 0.5135% 0.5135% c. Column (3) identifies the States whose Maryland 1.6250% 1.6250% 1.6250% 1.6250% shares are below the minimum. Massachusetts 1.8188% 1.7017% 1.8188% 1.8184% 1.8184% Michigan 3.0774% 3.0538% 3.0774% 3.0766% 3.0766% d. Column (4) shows the shares raised for the Minnesota 1.4631% 1.3564% 1.4631% 1.4628% 1.4628% two States that were below the minimum after Mississippi 1.2115% 1.2115% 1.2115% 1.2115% the second round of adjustments. It also Missouri 2.3045% 2.2775% 2.3045% 2.3039% 2.3039% shows, in italics, the shares for the States Montana 0.9689% 0.4014% 0.9689% 0.9687% 0.9687% whose shares were raised in the initial and Nebraska 0.7581% 0.6702% 0.7581% 0.7579% 0.7579% and second rounds. These States must have Nevada 0.7073% 0.6543% 0.7073% 0.7071% 0.7071% their shares held constant or they will fall New Hampshire 0.5038% 0.4143% 0.5038% 0.5037% 0.5037% below the 90.5% return level in the previous New Jersey 2.6392% 2.6392% 2.6392% 2.6392% rounds of adjustments. New Mexico 0.9645% 0.8096% 0.9645% 0.9643% 0.9643% New York 5.0382% 3.6504% 5.0382% 5.0370% 5.0370% e. Columns (5) and (6) show the adjustment North Carolina 2.7991% 2.7991% 2.7991% 2.7991% of the shares of the remaining States so that North Dakota 0.6395% 0.2847% 0.6395% 0.6393% 0.6393% the sum of the shares will be 100%. Ohio 3.4008% 3.4008% 3.4008% 3.4008% Oklahoma 1.5166% 1.5166% 1.5166% 1.5166% Oregon 1.1889% 1.0890% 1.1889% 1.1886% 1.1886% Pennsylvania 4.8683% 3.6451% 4.8683% 4.8671% 4.8671% Rhode Island 0.5814% 0.2428% 0.5814% 0.5813% 0.5813% South Carolina 1.6460% 1.6460% 1.6460% 1.6460% South Dakota 0.6976% 0.2918% 0.6976% 0.6975% 0.6975% Tennessee 2.2099% 2.2125% Yes 2.2125% 2.2125% Texas 7.8284% 7.8284% 7.8284% 7.8284% Utah 0.7642% 0.7524% 0.7642% 0.7640% 0.7640% Vermont 0.4463% 0.2202% 0.4463% 0.4462% 0.4462% Virginia 2.5009% 2.5103% Yes 2.5103% 2.5103% Washington 1.7444% 1.7272% 1.7444% 1.7439% 1.7439% West Virginia 1.1046% 0.6311% 1.1046% 1.1043% 1.1043% Wisconsin 1.9435% 1.7092% 1.9435% 1.9431% 1.9431% Wyoming 0.6783% 0.4597% 0.6783% 0.6782% 0.6782% Total 100.00% 90.5000% 2 51.3297% 48.6823% 48.6703% 100.0000% Sum of col. (4) and col. (5) == 100.0120% CRS-29 Step 6 - Check results of third adjustment process (Step 5). If any States are receiving less than the 90.5% guarantee, increase their shares to the 90.5% return level and adjust shares of other States sototal remains 100%. Revised 90.5 % Any Shares of State States Final State for Share of Below Return on All States Contributions 90.5% Highway (Step 5, (Step 1, Level? Account col. (7)) col. (3)) (col. (1) < Contributions col. (2)) (1) (2) (3) (4) No further adjustments are needed. The shares determined in Step 5 — Alabama 1.9775% 1.7828% No 100.4% the third round of adjustments Alaska 1.1625% 0.1854% No 567.3% brought all States up to the minimum Arizona 1.6987% 1.6987% No 90.5% return of 90.5% Arkansas 1.2892% 1.2039% No 96.9% California 9.3274% 9.3274% No 90.5% a. Column (1) shows the revised shares Colorado 1.2832% 1.2832% No 90.5% from Step 5 — the third round of Connecticut 1.4816% 0.9395% No 142.7% adjustments. Delaware 0.4316% 0.2350% No 166.3% Dist. of Col. 0.3860% 0.1041% No 335.5% b. Column (2) shows the share (determined Florida 4.7758% 4.7758% No 90.5% in Step 1) necessary to provide the guaranteed Georgia 3.5339% 3.5339% No 90.5% 90.5% return. Hawaii 0.5051% 0.2193% No 208.5% Idaho 0.7530% 0.5054% No 134.8% c. Column (3) identifies the States whose Illinois 3.2995% 3.2094% No 93.0% shares are below the minimum — none. Indiana 2.3013% 2.2805% No 91.3% The shares determined in the third round Iowa 1.1727% 1.0048% No 105.6% (and shown in column (1)) will be used Kansas 1.1431% 0.9671% No 107.0% to calculate the Minimum Guarantee. Kentucky 1.7354% 1.7354% No 90.5% Louisiana 1.5860% 1.5860% No 90.5% d. Column (4) shows each State’s percentage Maine 0.5135% 0.4905% No 94.7% return on its Highway Account contributions. Maryland 1.6250% 1.6250% No 90.5% This is computed as the final share of apportionMassachusetts 1.8184% 1.7017% No 96.7% ments from column (1) divided by the share Michigan 3.0766% 3.0538% No 91.2% of contributions from step 1, column (2). Minnesota 1.4628% 1.3564% No 97.6% Mississippi 1.2115% 1.2115% No 90.5% Missouri 2.3039% 2.2775% No 91.6% Montana 0.9687% 0.4014% No 218.4% Nebraska 0.7579% 0.6702% No 102.3% Nevada 0.7071% 0.6543% No 97.8% New Hampshire 0.5037% 0.4143% No 110.0% New Jersey 2.6392% 2.6392% No 90.5% New Mexico 0.9643% 0.8096% No 107.8% New York 5.0370% 3.6504% No 124.9% North Carolina 2.7991% 2.7991% No 90.5% North Dakota 0.6393% 0.2847% No 203.2% Ohio 3.4008% 3.4008% No 90.5% Oklahoma 1.5166% 1.5166% No 90.5% Oregon 1.1886% 1.0890% No 98.8% Pennsylvania 4.8671% 3.6451% No 120.8% Rhode Island 0.5813% 0.2428% No 216.6% South Carolina 1.6460% 1.6460% No 90.5% South Dakota 0.6975% 0.2918% No 216.3% Tennessee 2.2125% 2.2125% No 90.5% Texas 7.8284% 7.8284% No 90.5% Utah 0.7640% 0.7524% No 91.9% Vermont 0.4462% 0.2202% No 183.4% Virginia 2.5103% 2.5103% No 90.5% Washington 1.7439% 1.7272% No 91.4% West Virginia 1.1043% 0.6311% No 158.4% Wisconsin 1.9431% 1.7092% No 102.9% Wyoming 0.6782% 0.4597% No 133.5% Total 100.00% 90.5000% CRS-30 Step 7 - Determine program level. Sum of All State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Dist. of Col. Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Total Program Size Add Apportionments Minimum (before MG) MG Amount and High of $1 Million Priority Projects -1-2434,899,917 104,850,848 316,379,875 275,422,209 2,122,252,227 287,120,698 260,760,855 93,207,279 106,154,552 801,003,084 656,550,732 108,828,704 148,416,893 799,808,637 446,645,810 293,005,587 287,795,475 398,709,329 355,391,164 117,790,671 371,422,987 444,548,594 649,935,628 356,028,578 281,474,126 543,360,712 161,209,884 189,636,202 141,042,575 111,255,615 617,498,072 201,512,015 1,121,902,959 559,902,845 144,250,490 760,051,996 379,448,085 278,974,651 1,171,973,757 128,447,434 317,128,305 152,517,716 500,816,813 1,487,004,971 189,084,550 106,112,094 522,853,208 425,887,052 276,059,371 371,530,304 163,277,555 21,541,143,690 (including MG) Necessary to Provide State Shares (col. (1) + (2)) (from Step 6) (col. (3) / col. (4)) -3-4-5Total 1,000,000 435,899,917 1,000,000 105,850,848 1,000,000 317,379,875 1,000,000 276,422,209 1,000,000 2,123,252,227 1,000,000 288,120,698 1,000,000 261,760,855 1,000,000 94,207,279 1,000,000 107,154,552 1,000,000 802,003,084 1,000,000 657,550,732 1,000,000 109,828,704 1,000,000 149,416,893 1,000,000 800,808,637 1,000,000 447,645,810 1,000,000 294,005,587 1,000,000 288,795,475 1,000,000 399,709,329 1,000,000 356,391,164 1,000,000 118,790,671 1,000,000 372,422,987 1,000,000 445,548,594 1,000,000 650,935,628 1,000,000 357,028,578 1,000,000 282,474,126 1,000,000 544,360,712 1,000,000 162,209,884 1,000,000 190,636,202 1,000,000 142,042,575 1,000,000 112,255,615 1,000,000 618,498,072 1,000,000 202,512,015 1,000,000 1,122,902,959 1,000,000 560,902,845 1,000,000 145,250,490 1,000,000 761,051,996 1,000,000 380,448,085 1,000,000 279,974,651 1,000,000 1,172,973,757 1,000,000 129,447,434 1,000,000 318,128,305 1,000,000 153,517,716 1,000,000 501,816,813 1,000,000 1,488,004,971 1,000,000 190,084,550 1,000,000 107,112,094 1,000,000 523,853,208 1,000,000 426,887,052 1,000,000 277,059,371 1,000,000 372,530,304 1,000,000 164,277,555 51,000,000 21,592,143,690 Percent Share 1.9775% 1.1625% 1.6987% 1.2892% 9.3274% 1.2832% 1.4816% 0.4316% 0.3860% 4.7758% 3.5339% 0.5051% 0.7530% 3.2995% 2.3013% 1.1727% 1.1431% 1.7354% 1.5860% 0.5135% 1.6250% 1.8184% 3.0766% 1.4628% 1.2115% 2.3039% 0.9687% 0.7579% 0.7071% 0.5037% 2.6392% 0.9643% 5.0370% 2.7991% 0.6393% 3.4008% 1.5166% 1.1886% 4.8671% 0.5813% 1.6460% 0.6975% 2.2125% 7.8284% 0.7640% 0.4462% 2.5103% 1.7439% 1.1043% 1.9431% 0.6782% 100.0000% 22,043,018,395 9,105,774,570 18,683,489,297 21,441,503,252 22,763,522,956 22,453,054,726 17,667,614,088 21,826,592,553 27,763,290,761 16,793,069,034 18,607,150,427 21,744,743,711 19,843,191,635 24,270,827,647 19,451,809,342 25,070,772,454 25,263,327,596 23,033,027,825 22,471,603,377 23,134,790,173 22,918,919,371 24,502,611,242 21,157,376,124 24,407,935,031 23,315,771,354 23,627,372,212 16,745,125,333 25,154,330,318 20,087,086,582 22,285,508,493 23,434,920,610 21,000,742,875 22,293,257,085 20,038,650,017 22,719,252,466 22,378,666,264 25,086,416,106 23,554,889,281 24,100,025,780 22,269,452,838 19,327,393,680 22,010,494,655 22,681,217,948 19,007,664,509 24,879,760,448 24,007,885,311 20,868,123,109 24,478,428,408 25,088,886,306 19,172,382,669 24,224,093,907 The Minimum Guarantee provision ensures that each State’s share of apportionments for the IM, NHS, STP, Bridge, CMAQ, ADHS, Recreational Trails, Metro Planning, and Minimum Guarantee, plus their funding for High Priority Projects (excluding #1818-1849) will be the share determined in Step 6 AND that no State receives less than $1 million annually. a. Column (1) shows the sum of the above funding at the start of the calculation. At this point the Minimum Guarantee amount is $0. b. Columns (2) and (3) shown the addition of the $1 million minimum amount of MG funding to each State. c. Column (4) shows the percentage share determined in Step 6. d. Column (5) shows how large the overall program (sum of the apportionments already made, the Minimum Guarantee, and the High Priority Projects) would have to be to deliver the percentage for that State considered by itself. For example, going into the determination of the target program size, the District of Columbia (DC) has 0.496% of the total program counting its original apportionments, its High Priority Projects, and the $1 million of Minimum Guarantee that each State must receive. In Step 6, we determined that DC should get only 0.386 percent of the total program. In other words, DC has too big a share. None of the funding that DC has already received may be taken back. The only way to change the ratio of DC funding to the national total funding is to change the national total. The amount shown for DC in column (5) shows the level to which the national program would have to be increased to reduce DC’s share of the national program to 0.386%. This computation is performed for each State. The maximum required program size, in this case for the District of Columbia, will be the target program size in the Minimum Guarantee calculation. CRS-31 Step 8 - Calculate Minimum Guarantee apportionment to reach target program size. Percent State Share Sum of All Minimum State Share of Target Previous Guarantee from Step 6 Program Apportionments Apportionment Size and High Priority Projects (col. (2) - col. (3)) (1) (2) (3) (4) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Dist. of Col. Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Total 1.9775% 1.1625% 1.6987% 1.2892% 9.3274% 1.2832% 1.4816% 0.4316% 0.3860% 4.7758% 3.5339% 0.5051% 0.7530% 3.2995% 2.3013% 1.1727% 1.1431% 1.7354% 1.5860% 0.5135% 1.6250% 1.8184% 3.0766% 1.4628% 1.2115% 2.3039% 0.9687% 0.7579% 0.7071% 0.5037% 2.6392% 0.9643% 5.0370% 2.7991% 0.6393% 3.4008% 1.5166% 1.1886% 4.8671% 0.5813% 1.6460% 0.6975% 2.2125% 7.8284% 0.7640% 0.4462% 2.5103% 1.7439% 1.1043% 1.9431% 0.6782% 100.0000% 549,018,103 322,736,726 471,620,135 357,922,207 2,589,602,192 356,262,380 411,336,963 119,831,075 107,154,552 1,325,918,733 981,115,955 140,227,279 209,054,305 916,041,404 638,918,497 325,580,818 317,373,581 481,797,113 440,315,332 142,556,726 451,142,024 504,839,874 854,175,631 406,109,251 336,356,502 639,649,835 268,942,757 210,408,635 196,323,608 139,848,067 732,733,091 267,723,860 1,398,426,494 777,123,647 177,498,428 944,171,900 421,044,232 329,995,932 1,351,268,739 161,381,906 456,982,911 193,642,035 614,256,524 2,173,434,545 212,115,090 123,866,978 696,942,837 484,172,805 306,593,118 539,456,536 188,278,891 27,763,290,761 434,899,917 104,850,848 316,379,875 275,422,209 2,122,252,227 287,120,698 260,760,855 93,207,279 106,154,552 801,003,084 656,550,732 108,828,704 148,416,893 799,808,637 446,645,810 293,005,587 287,795,475 398,709,329 355,391,164 117,790,671 371,422,987 444,548,594 649,935,628 356,028,578 281,474,126 543,360,712 161,209,884 189,636,202 141,042,575 111,255,615 617,498,072 201,512,015 1,121,902,959 559,902,845 144,250,490 760,051,996 379,448,085 278,974,651 1,171,973,757 128,447,434 317,128,305 152,517,716 500,816,813 1,487,004,971 189,084,550 106,112,094 522,853,208 425,887,052 276,059,371 371,530,304 163,277,555 21,541,143,690 113,452,596 216,615,066 154,334,827 82,018,820 464,624,163 68,738,416 149,697,878 26,468,515 994,168 521,854,097 322,672,208 31,215,444 60,283,746 115,554,843 191,151,263 32,385,237 29,405,593 82,603,177 84,428,851 24,621,608 79,254,078 59,939,633 203,048,780 49,788,579 54,562,276 95,727,520 107,104,525 20,651,278 54,958,608 28,425,688 114,562,915 65,825,667 274,910,721 215,953,869 33,054,021 183,046,031 41,353,539 50,723,701 178,249,251 32,742,383 139,038,909 40,884,463 112,778,078 682,425,997 22,896,215 17,651,329 173,074,257 57,945,803 30,355,660 166,946,808 24,855,517 6,185,856,616 In this step, we determine each State’s share of the target program size identified in Step 7. The amount computed will be the TOTAL of the State’s apportionments for IM, NHS, STP, Bridge, CMAQ, ADHS, Rec. Trails, Metro Planning, and Minimum Guarantee, plus its High Priority Project funding. a. Column (1) shows the adjusted State shares from Step 6. b. Column (2) shows the application of the State shares in column (1) to the national total program size. In Step 7, we determined that the national level program size would be $27,763,290,761 — the highest value in Step 7, column (5). c. Column (3) shows the sum of all apportionments and High Priority Project funding each State had BEFORE the Minimum Guarantee calculation began. d. Column (4) shows the Minimum Guarantee apportionment. It is the amount that each State must receive in addition to the amounts shown in column (3) so that all provisions of of the Minimum Guarantee are met. The amount shown has been reduced to comply with the 0.65% across-the-board cut required by section 601 of P.L. 108-7. The $639 million of the Minimum Guarantee that is exempt from the obligation limitation is also exempt from the cut as well. CRS-32 Step 9A - Subdivision of Minimum Guarantee. Minimum Set Aside 2% State Guarantee for State Apportionment Planning (from Step 8) & Research (col. (1) * 2%) (1) (2) Alabama 113,452,596 2,269,052 Alaska 216,615,066 4,332,301 Arizona 154,334,827 3,086,697 Arkansas 82,018,820 1,640,376 California 464,624,163 9,292,483 Colorado 68,738,416 1,374,768 Connecticut 149,697,878 2,993,958 Delaware 26,468,515 529,370 Dist. of Col. 994,168 19,883 Florida 521,854,097 10,437,082 Georgia 322,672,208 6,453,444 Hawaii 31,215,444 624,309 Idaho 60,283,746 1,205,675 Illinois 115,554,843 2,311,097 Indiana 191,151,263 3,823,025 Iowa 32,385,237 647,705 Kansas 29,405,593 588,112 Kentucky 82,603,177 1,652,064 Louisiana 84,428,851 1,688,577 Maine 24,621,608 492,432 Maryland 79,254,078 1,585,082 Massachusetts 59,939,633 1,198,793 Michigan 203,048,780 4,060,976 Minnesota 49,788,579 995,772 Mississippi 54,562,276 1,091,246 Missouri 95,727,520 1,914,550 Montana 107,104,525 2,142,091 Nebraska 20,651,278 413,026 Nevada 54,958,608 1,099,172 New Hampshire 28,425,688 568,514 New Jersey 114,562,915 2,291,258 New Mexico 65,825,667 1,316,513 New York 274,910,721 5,498,214 North Carolina 215,953,869 4,319,077 North Dakota 33,054,021 661,080 Ohio 183,046,031 3,660,921 Oklahoma 41,353,539 827,071 Oregon 50,723,701 1,014,474 Pennsylvania 178,249,251 3,564,985 Rhode Island 32,742,383 654,848 South Carolina 139,038,909 2,780,778 South Dakota 40,884,463 817,689 Tennessee 112,778,078 2,255,562 Texas 682,425,997 13,648,520 Utah 22,896,215 457,924 Vermont 17,651,329 353,027 Virginia 173,074,257 3,461,485 Washington 57,945,803 1,158,916 West Virginia 30,355,660 607,113 Wisconsin 166,946,808 3,338,936 Wyoming 24,855,517 497,110 Total 6,185,856,616 123,717,133 Remainder after SPR Setaside (3) 111,183,544 212,282,765 151,248,130 80,378,444 455,331,680 67,363,648 146,703,920 25,939,145 974,285 511,417,015 316,218,764 30,591,135 59,078,071 113,243,746 187,328,238 31,737,532 28,817,481 80,951,113 82,740,274 24,129,176 77,668,996 58,740,840 198,987,804 48,792,807 53,471,030 93,812,970 104,962,434 20,238,252 53,859,436 27,857,174 112,271,657 64,509,154 269,412,507 211,634,792 32,392,941 179,385,110 40,526,468 49,709,227 174,684,266 32,087,535 136,258,131 40,066,774 110,522,516 668,777,477 22,438,291 17,298,302 169,612,772 56,786,887 29,748,547 163,607,872 24,358,407 6,062,139,483 In this step, subdivide each State’s minimum guarantee apportionment. a. Column (1) shows the minimum guarantee amount for each State from step 8. b. The first subdivision of the MG apportionment is the setaside of 2% of the MG apportionment for State Planning and Research. (This same setaside is made from the IM, NHS, STP, Bridge, and CMAQ programs.) Column (2) shows the SPR setaside from MG and is equal to 2% of column (1). c. Column (3) shows the amount remaining in the MG “pot” after the SPR setaside. CRS-33 Step 9B - Subdivision of Minimum Guarantee. Remainder Base State after Minimum SPR Guarantee Setaside $2.8 Billion (Step 9A) (col. (1) * 0.4619) (1) (2) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Dist. of Col. Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Total 111,183,544 212,282,765 151,248,130 80,378,444 455,331,680 67,363,648 146,703,920 25,939,145 974,285 511,417,015 316,218,764 30,591,135 59,078,071 113,243,746 187,328,238 31,737,532 28,817,481 80,951,113 82,740,274 24,129,176 77,668,996 58,740,840 198,987,804 48,792,807 53,471,030 93,812,970 104,962,434 20,238,252 53,859,436 27,857,174 112,271,657 64,509,154 269,412,507 211,634,792 32,392,941 179,385,110 40,526,468 49,709,227 174,684,266 32,087,535 136,258,131 40,066,774 110,522,516 668,777,477 22,438,291 17,298,302 169,612,772 56,786,887 29,748,547 163,607,872 24,358,407 6,062,139,483 51,353,804 98,049,830 69,858,962 37,125,448 210,310,025 31,114,133 67,760,067 11,980,854 450,006 236,214,895 146,056,115 14,129,529 27,287,165 52,305,377 86,523,754 14,659,031 13,310,308 37,389,955 38,216,338 11,144,859 35,874,000 27,131,403 91,909,111 22,536,575 24,697,367 43,330,629 48,480,379 9,347,707 24,876,765 12,866,758 51,856,384 29,795,691 124,437,094 97,750,542 14,961,753 82,854,957 18,718,492 22,959,854 80,683,717 14,820,691 62,935,332 18,506,167 51,048,487 308,897,039 10,363,867 7,989,793 78,341,279 26,228,905 13,740,352 75,567,717 11,250,738 2,800,000,000 Remainder after SPR and Base MG col. (1) - col. (2) (3) 59,829,740 114,232,935 81,389,168 43,252,996 245,021,655 36,249,515 78,943,853 13,958,291 524,279 275,202,120 170,162,649 16,461,606 31,790,906 60,938,369 100,804,484 17,078,501 15,507,173 43,561,158 44,523,936 12,984,317 41,794,996 31,609,437 107,078,693 26,256,232 28,773,663 50,482,341 56,482,055 10,890,545 28,982,671 14,990,416 60,415,273 34,713,463 144,975,413 113,884,250 17,431,188 96,530,153 21,807,976 26,749,373 94,000,549 17,266,844 73,322,799 21,560,607 59,474,029 359,880,438 12,074,424 9,308,509 91,271,493 30,557,982 16,008,195 88,040,155 13,107,669 3,262,139,483 TEA-21 requires that $2.8 billion of the national total of MG have the same eligibilities as STP funds, but that the $2.8 billion is not subject to the setaside and suballocation requirements of the STP program. (Setasides for safety and transportation enhancements and suballocation for various sub-State areas) The remainder of the MG funds are redistributed to the 5 core programs: IM, NHS, STP, Bridge, and CMAQ. a. Column (1) shows the amount of MG left after setting aside 2% for the SPR program in step 9A. This totals $6.062 billion. b. Column (2) shows the calculation of the portion of the $2.8 billion for each State. It is calculated by multiplying the remaining funds after the SPR setaside (col. 1) by 0.4618831 — the ratio of the $2.8 billion to $6.062 billion. c. Column (3) shows the remainder after the SPR setaside and the determination of the base MG amount. This remainder is distributed to the five core programs — IM, NHS, STP, Bridge, and CMAQ in the same proportions that those programs make up of the State’s core program total.