On December 18, 2001, President Bush signed the FY2002 Department of Transportation andRelated Agencies conference agreement ( H.Rept. 107-308 ; P.L. 107-87 ) appropriating a total of$59.588 billion (a 2.5% increase above the FY2001 enacted level). The enacted bill provides $507million more than in the House bill and $391 million less than the Senate bill. At $32.895 billion,the Federal Highway Administration (FHWA) receives slightly less than in FY 2001. The FederalRailroad Administration (FRA) is funded at $734 million, $21 million less than enacted in FY2001. The other major agencies all get increases. The Federal Aviation Administration (FAA) budgetincreases roughly 6% to $13.295 billion; the Federal Transit Administration (FTA) budget increases8% to $6.747 billion; and the Coast Guard budget receives an increase of 12% to $5.031 billion. The September 11, 2001, simultaneous hijacking of four airliners from three different airports and the enormous loss of life that resulted from the terrorists' suicide-bomber tactics had a quickimpact on transportation appropriations. Congress responded to the terrorist attacks by passingthe 2001 Emergency Supplemental Appropriations Act for Recovery from and Response to TerroristAttacks on the United States ( P.L. 107-38 ). The bill provides $40 billion to pay the costs of a varietyof responses including "providing increased transportation security." The funds may be transferredto any authorized federal activity to meet the purposes of the act. As of this writing, roughly $1.9billion has been approved for transfer to the Department of Transportation (DOT). The length ofavailability of these funds varies depending on the purpose of the spending. Transportation is function 400 in the annual unified congressional budget. It is also consideredpart of the discretionary budget. Funding for the DOT budget is derived from a number of sources.The majority of funding comes from dedicated transportation trust funds. The remainder of DOTfunding is from federal Treasury general funds. The transportation trust funds include: the highwaytrust fund, the transit account of the highway trust fund, the airport and airway trust fund, and theinland waterways trust fund. All of these accounts derive their respective funding from specificexcise and other taxes. In FY2002 trust funds accounted for well over two-thirds of total federal transportation spending. Together, highway and transit funding constitute the largest component of DOTappropriations. Most highway and the majority of transit programs are funded with contract authorityderived by the link to the highway trust fund. This is very significant from a budgeting standpoint. Contract authority is tantamount to, but does not actually involve, entering into a contract to pay fora project at some future date. Under this arrangement, specified in Title 23 U.S.C., authorized fundsare automatically made available at the beginning of each fiscal year and may be obligated withoutappropriations legislation; although appropriations are required to make outlays at some future dateto cover these obligations. Where most federal programs require new budget authority as part of the annual appropriations process, transportation appropriators are faced with the opposite situation. That is, the authority tospend for the largest programs under their control already exists, and the mechanism to obligatefunds for these programs also is in place. Prior to the FY1999 DOT Appropriations Act, changes in spending in the annual transportation budget component had been achieved in the appropriations process by combining changes inbudget/contract authority and by placing limitations on obligations. The principal function of thelimitation on obligations is to control outlays in a manner that corresponds to congressional budgetagreements. Beginning in 1999, TEA21 changed the transportation budgetary process in two ways. First, it created new budget categories; and, second, it set statutory limitations on obligations. TEA21amends the Balanced Budget and Emergency Deficit Control Act of 1985 to create two new budgetcategories: highway and mass transit. TEA21 further amends the budget process by creating astatutory level for the limitation on obligations in each fiscal year from FY1999 to FY2003. The net effect of the creation of these new budget categories is a predetermined minimum level of funding for core highway and transit programs, referred to in TEA21 as a "discretionary spendingguarantee." The highway and mass transit categories are separated from the rest of the discretionarybudget in a way that prevents the funds assigned to these categories from being used for any otherpurpose. These so called "firewalls" are viewed, in the TEA21 context, as guaranteed and/orminimum levels of funding. Additional funds above the firewall level can be made available forhighway and transit programs through the annual appropriations process. In addition, TEA21 provides a mechanism to adjust the amounts in the highway account (but not the transit account) to correspond with increased or decreased receipts in highway-generatedrevenues. This Revenue Aligned Budget Authority (RABA) redistributes to the various states, forobligational TEA21 highway programs (also known as core programs), the trust fund revenues thatare in excess of projected receipts. These additional revenues are allocated to the states using theformulas spelled out in the law. However, the FY2000, FY2001, and FY2002 Administrationrequests proposed redirection of RABA funds from highway programs to other DOT initiatives. Inthe end, the FY2000 and FY2001 DOT appropriations acts did not adopt the proposed redirectionof RABA funds. In FY2002, however, the Administration request is honored in part. Moreimportantly, the FY2002 Act makes major redistributions of RABA funding outside of the coreprograms. These distributions will be discussed in the Federal Highway Administration (FHWA)section of this report. TEA21 changes the role of the House and Senate appropriations and budget committees in determining annual spending levels for highway and transit programs. The appropriationscommittees are precluded from their former role of setting an annual level of obligations. In addition,it appears that the TEA21 precludes, at least in part, the House and Senate appropriations committeesfrom exercising what some Members view as their traditional option of changing spending levelsfor specific programs or projects. In the FY2000 appropriations act, the appropriators took sometentative steps to regain some of their discretion over highway spending. The FY2000 Act called forthe redistribution of some funds among programs and added two significant spending projects. Inthe FY2001 appropriations act, the appropriators continued in this vein by adding funds for largenumbers of earmarked projects. Further, the FY2001 Act called for redirection of a limited amountof funding between programs and includes significant additional funding for some TEA21 programs. This trend continues, and even accelerates, in the FY2002 Act as appropriators have made majorredistributions of RABA funds and, in some instances, have transferred RABA funds to agencies thatwould not be eligible for RABA funding from TEA21. As suggested earlier, the TEA21 firewalls appear to diminish the flexibility of the committees on appropriations to meet the goals of the annual budget process, because the committees can onlyadjust the DOT agency or program budgets outside the firewalls. Hence, any reduction in spendingfor function 400 must be allocated to agencies or programs other than highways or transit and, as willbe discussed in the next section, most aviation programs. FAIR21 ( P.L. 106-181 , signed April 5, 2000) provides a so-called "guarantee" for FAA program spending. The guarantee for aviation spending, however, is significantly different from thatprovided by TEA21 to highway and transit programs. Instead of creating new budget categories, theFAIR21 guarantee rests on adoption of two point-of-order rules for the House and the Senate. Thefirst point-of-order rule prevents Congress from considering any appropriations legislation foraviation purposes that does not spend all of the "total budget resources." As defined by FAIR21, totalbudget resources are essentially the revenues and interest accruing to the aviation trust fund. Thesecond point-of-order prevents any spending for Federal Aviation Administration (FAA) operationsand maintenance (O&M) or for research, engineering and development (RE&D), unless the AirportImprovement Program (AIP) and the facilities and equipment (F&E) portions of the FAA accountare funded at their fully authorized levels. Almost all observers view the FAIR21 guarantees as being somewhat weaker than those provided by TEA21 for highway and transit programs because Congress can, and sometimes does,waive points-of-order during consideration of legislation. In addition, there is a sense thatappropriators might still have some latitude to make significant changes to FAA O&M funding,which is dependent on both trust-fund and general-fund contributions. For FY2001 and FY2002,however, no point-of-order waivers were considered. Supporters of FAIR21 believe the Act requires significant new spending on aviation programs. And, for at least the FY2001 appropriations cycle, this has been the case. Enactment of FAIR21means that transportation appropriators have total control over spending for only the Coast Guard;the Federal Railroad Administration (FRA), which includes Amtrak; and a number of smaller DOTagencies. All of these agencies were concerned about their funding prospects. However, the FY2001Act provided budget increases for all major DOT agencies, except for the FRA budget. Supporters of the Coast Guard are especially concerned about this new transportation appropriations environment. The Coast Guard is not funded by a trust fund and cannot claim auser-fee base to support an argument for its own budget firewalls. The Coast Guard has a uniquestatus within the transportation budget category because of its wartime role in national defense.