Chris on the Hill: Rescission – On the Horizon
There is not a typo in the title of this week’s Chris on the Hill article, I am talking about an upcoming rescission not a recession in the American economy. I will leave the topic of a pending recession to TIA’s economist Noel Perry to comment on. Our nation’s critical infrastructure and transportation projects could, unfortunately, see a major rescission or revocation of invaluable funds on July 1, 2020, if Congressional action is not taken.
The Fixing America’s Surface Transportation Reauthorization Act or the FAST Act contains a provision (Section 1438) on page 122 of the bill text that states that on July 1, 2020, $7.6 billion of the unobligated balances of funds apportioned among the States will be permanently rescinded. There are a few exemptions from the rescission like funds sub-allocated by population to metropolitan areas, safety programs, and the $639 million per year National Highway Performance Program funding.
The FAST Act rescission applies to all States and the District of Columbia based on that State’s share of the unobligated balances. What does that mean in layman’s terms? Essentially, the rescission rewards States that can efficiently and swiftly spend the money they are allocated. Because of State regulations and bureaucratic red tape, spending money quickly is not easily done.
In a nation that desperately needs dollars to fix and improve our crumbling infrastructure and transportation projects, why would Congress include this provision into a Highway Reauthorization Bill? The answer is somewhat simple, it was a ploy by Congressional leaders to keep the overall price tag of the legislation down and try and make this legislation budget neutral. It helped in that aspect to a degree, but at the determinant of our nation’s projects.
Now that the pending rescission is on the horizon, Congressional leaders are scrambling because reality is coming to fruition and States are feeling the pinch and the pending threat is hampering their ability to plan for future projects because extreme uncertainty in budgeting. Recently, Chairman Barrasso (R-WIY) and Ranking Member Carper (D-DE) of the Senate Environment and Public Works Committee who has jurisdiction over construction and maintenance of our highways, wrote a leader to Senate Majority Leader McConnell (R-KY) and Minority Leader Schumer (D-NY) stressing the need for Congress to repeal this misplaced provision as soon as possible.
There has also been legislation introduced in the House and the Senate to repeal Section 1438 of the FAST Act, but this would likely need to move through a highway reauthorization bill or a funding bill. This seems to be a bi-partisan effort and for the good of the nation, I expect this to eventually get repealed, but as with most things, time is of the essence to ensure that States have the appropriate planning time to get these projects mapped out and completed.
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