The President signed the Department of Transportation and Related AgenciesAct, 2000 ( P.L. 106-69 ), hereafter referred to as the FY2000 Act, on October 9,1999. The Act provided $50.2 billion for the Department of Transportation (DOT).However, the FY2000 Consolidated Appropriations Act ( P.L. 106-113 ), mandatesa government wide rescission equal to 0.38% of discretionary budget authorityprovided (or obligation limits imposed) for all government departments.Approximately $179 million will be cut from the DOT funding levels provided for in P.L. 106-69 . The largest reductions are faced by the Federal HighwayAdministration (-$105.3 million), the Airport Improvement Program (-$54.4 million),the Federal Transit Administration (-$17.6 million), and the Coast Guard (-$1.6million). Even accounting for the rescission, the final funding level represents nearlya 6% increase over the appropriations level of the FY1999 Act. Transportation is Function 400 in the annual unified congressional budget. Itis also considered part of the discretionary budget. Funding for the DOT budget isderived from a number of sources. The majority of funding comes from dedicatedtransportation trust funds. The remainder of DOT funding is from Federal Treasurygeneral funds. The transportation trust funds include: the highway trust fund, thetransit account of the highway trust fund, the airport and airway trust fund, and theinland waterways' trust fund. All of these accounts derive their respective fundingfrom specific excise and other taxes. Together, highway and transit funding constitutes the largest component of DOT appropriations, and can account for 60% to 70% of total federal transportationspending in any given year. Most highway, and the majority of transit, programs arefunded with contract authority derived by the link to the highway trust fund. This isvery significant from a budgeting standpoint. Contract authority is tantamount to, butdoes not actually involve, entering into a contract to pay for a project at some futuredate. Under this arrangement, specified in Title 23 U.S.C., authorized funds areautomatically made available at the beginning of each fiscal year and may beobligated without appropriations legislation. Appropriations are required to makeoutlays at some future date to cover these obligations. Where most federal programs require new budget authority as part of the annual appropriations process, transportation appropriators are faced with the oppositesituation. That is, the authority to spend for the largest programs under their controlalready exists and the mechanism to obligate funds for these programs is also inplace. Prior to the FY1999 Appropriations Act changes in spending in the annual transportation budget component had been achieved in the appropriations process bycombining changes in budget/contract authority and placing limitations onobligations. The principal function of the limitation on obligations is to controloutlays in a manner that corresponds to congressional budget agreements. The authority to set a limitation on obligations for contract authority programs gave appropriators considerable leeway in allocating funds between the variousfederal transportation activities in function 400, which includes agencies such as theCoast Guard and the Federal Aviation Administration. In addition, the inclusion ofthe highway and transit programs and their trust fund generated revenue streams inthe discretionary budget provided appropriators with additional flexibility as part ofthe annual process by which available funds were allocated amongst the 13 standingappropriations subcommittees in the House and the Senate. TEA-21 changed this budgetary procedure in two ways. First, it created new budget categories and second, it set statutory limitations on obligations. The Actamends the Balanced Budget and Emergency Deficit Control Act of 1985 to createtwo new budget categories: highway and mass transit. The Act further amends thebudget process by creating a statutory level for the limitation on obligations in eachfiscal year from FY1999 to FY2003. In addition, TEA-21 provides a mechanismto adjust these amounts in the highway account, but not the transit account, tocorrespond with increased or decreased receipts in the highway generated revenues(see revenue aligned budget authority - RABA- under key policy issues). The net effect of the creation of these budget categories is a predetermined level of funding for core highway and transit programs, referred to in TEA-21 as adiscretionary spending guarantee. These categories are separated from the rest of thediscretionary budget in a way that prevents the use of funds assigned to thesecategories for any other purpose. These so called "firewalls" are viewed, in theTEA-21 context, as guaranteed and/or minimum levels of funding for highway andtransit programs. Additional funds above the firewall level can be made available forhighway and transit programs through the annual appropriations process. TEA-21 changes the role of the House and Senate appropriations and budget committees in determining annual spending levels for highway and transit programs. The appropriations committees are precluded from their former role of setting anannual level of obligations. In addition, it appears that the House appropriationscommittee is precluded, at least in part, from exercising what some Members viewas their traditional option of changing spending levels for any program or project. The TEA-21 firewalls appear to diminish the flexibility of the committees on appropriations to meet the goals of the annual budget process, because they can onlyadjust the DOT agency/program budgets outside the firewalls. Hence, any reductionin spending for Function 400 must be allocated to these agencies/programs. This hasraised special concern for supporters of the FAA, the Coast Guard, and Amtrak,which are the largest DOT functions without firewall protection. See the key policyissues section for further amplification. On June 15, 1999, the House completed action on H.R. 1000 , the Aviation Investment and Reform Act for the 21st Century (AIR21). H.R. 1000 contains provisions that take the aviation trust fund off budget. Off budgetdiffers from firewalls and would give the trust fund status similar to the SocialSecurity trust fund as far as the annual budget debate is concerned. TheSenate-passed version of H.R. 1000 contains no changes in thebudgetary treatment of the aviation trust fund. A conference version of the bill failedto emerge from conference before the end of the first session of the 106th Congress. However, the conference remains open and action could occur in the second session. The budget treatment of the aviation trust fund has become a particular issue in the 106th Congress. The aviation trust fund is expected to have large unobligatedbalances in the years ahead unless spending from the fund is increased or the fund'stax revenues are decreased. This situation, combined with the belief in some quartersthat protected spending within the TEA-21 firewalls constrains FAA spending in theannual appropriations process, has heightened interest in providing some sort ofbudgetary protection for aviation. Supporters of the Coast Guard are also concerned about the new transportation appropriations environment. The Coast Guard is not funded by a trust fund, andhence cannot claim a user-fee base to support an argument for its own budgetfirewalls. The Coast Guard has a unique status within the transportation budgetcategory because of its wartime role in national defense. It is not unusual for theCoast Guard to receive some funds from military appropriations during the annualappropriations process. It is possible that the Coast Guard will seek additionalfunding from the military side of the budget in the years ahead if additional funds from transportation appropriations do not become available. Amtrak does not havea similar option. Table 1. Status of Department of Transportation Appropriations for FY2000 The debate over FY2000 DOT appropriations included the major issues of: (1)allocating funds among competing DOT programs and (2) seeking a compromisebetween the concept of a unified budget versus specifically earmarked, "off budget"activities. Competition for funds stems from various transportation interests andfrom the modal administrations themselves. Monies have been allocated for adiverse array of purposes, for example, to pay for the expenses of the U.S. CoastGuard, to improve safety throughout the various modes of transportation, and to helpfinance various infrastructure needs. In the DOT and Related AgenciesAppropriations Act, monies are also provided to support the National TransportationSafety Board (NTSB), the Surface Transportation Board (STB), and several othertransportation-related independent agencies. (1) The perennial question of priorities surrounds the appropriations process. Throughout its budget request, the DOT continues to emphasize several prioritiesincluding: safety, infrastructure, innovative financing, environmental enhancement,technology, and national security. Much of the appropriations process must take place within the framework created by the Transportation Equity Act for the 21st Century (TEA-21), signed intolaw on June 9, 1998 ( P.L. 105-178 , H.R. 2400 ). The Act authorizedappropriations for key surface transportation programs through fiscal year 2003. Thegeneral sense of Congress appears to be that, although transportation trust funds arenot sacrosanct, proceeds from the Federal fuels taxes must be targeted toward thecapital and recurring needs of the vast U.S. highway and transit network and notviewed as a source of general revenue. Although attempts to move highway andtransit programs off budget prior to the 106th Congress were unsuccessful, Congressdid insert language within TEA-21 to protect specific funding by creating firewallsaround selected programs. The firewalls effectively created minimum funding levelsfor the selected programs. However, their creation has caused a congressional debatebetween the authorizers and appropriators over who should exercise ultimateauthority for spending levels. Firewalls established by authorizing committeesguarantee minimum funding for selected programs, but in the process, are seen bysome as reducing the funding that might have been allocated to other (unprotected)programs.