Federal Funding Flexibility: Use of Federal-Aid Highway Fund Transfers by State DOTs (2022)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

32 Funding Transfer from FHWA to FTA This chapter focuses on fund transfers from FHWA to FTA. Forty-seven states transferred funds to FTA during the study period. 5.1 Historical Trends of Funding Transfer During the study period (FFY2013 to FFY2020), a total of $14.6 billion was transferred out of FHWA programs, and of that amount, 91 percent ($13.3 billion) of those transfers were to FTA. As shown in Figure 5-1, the amount transferred from FHWA to FTA was relatively stable from FFY2013 to FFY2018, with $1.2 billion to $1.5 billion transferred each year. These transfers increased sharply in FFY2019 when close to $1.7 billion was transferred to FTA and dropped in FFY2020 when less than $1.3 billion was transferred to FTA. Figure 5-2 shows the annual flexible funding transfers as a percentage of total FHWA funding, and the amounts transferred each year. The infusion of FAHP funds to FTA programs is significant, with over $13.3 billion transferred over 8 years, an average of $1.66 billion annually. In most states, this is less than 4 percent of the total FHWA apportionments between FFY2013 and FFY2020. As Figure 5-3 shows, only two states (California and New Jersey) transferred 10 percent or more of their funds to FTA, and Oregon and Maryland transferred about 9 percent of funds to FTA. Only nine states transferred more than 4 percent of their overall apportionment. Two states and the District of Columbia did not transfer any funds to FTA during this period. Among the FAHP program categories, funds are not transferred to FTA proportional to their size. The most significant amounts of funds being transferred to FTA are CMAQ funds. The other significant sources of fund transfers include STBG, NHPP, and TA. As shown in Figure 5-4, between FFY2013 and FFY2020, over $6 billion of CMAQ funds and over $3 billion of STBG were transferred to FTA. As shown in Table 5-1, almost 34 percent of the CMAQ apportionment was transferred to FTA between FFY2013 and FFY2020. In comparison, no other FAHP category has more than 5 percent of its apportionment transferred in the same period. Historically, a significant portion of CMAQ funds has been transferred each year to FTA programs. Most projects eligible for FTA funds demonstrate reduced emissions and, therefore, the CMAQ program transfers to transit make it easier to obligate and spend all the CMAQ C H A P T E R 5

Funding Transfer from FHWA to FTA 33   $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Bi lli on s 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% $- $200,000,000 $400,000,000 $600,000,000 $800,000,000 $1,000,000,000 $1,200,000,000 $1,400,000,000 $1,600,000,000 $1,800,000,000 2013 2014 2015 2016 2017 2018 2019 2020 Amount Transferred Percentage Figure 5-1. Annual flexible funding transfers among highway program categories from FFY2013 to FFY2020. Figure 5-2. Annual flexible funding transfers to FTA for transit projects as a percentage of total FHWA funding from FFY2013 to FFY2020. apportioned funds. Figure 5-5 shows the percentage of CMAQ apportionment transferred to FTA by state between FFY2013 and FFY2020. STBG is the second largest source of federal highway funding transfers to FTA, both in terms of the dollar amount and the percentage. Figure 5-6 shows the percentage of STBG apportion- ment transferred to FTA by state between FFY2013 and FFY2020. TA is another FAHP category from which states have transferred significant funds to FTA. Figure 5-7 shows the percentage of TA apportionment transferred to FTA by state between FFY2013 and FFY2020. A few states also transferred funds from NHPP and HSIP to FTA, but these transfers were not typical and the transferred amounts are much smaller compared to transfers from CMAQ,

34 Federal Funding Flexibility: Use of Federal-Aid Highway Fund Transfers by State DOTs $0 $2 $4 $6 $8 NATIONAL HIGHWAY PERFORMANCE PROGRAM SURFACE TRANSPORTATION BLOCK GRANT HIGHWAY SAFETY IMPROVEMENT PROGRAM CONGESTION MITIGATION AND AIR QUALITY NATIONAL HIGHWAY FREIGHT PROGRAM TRANSPORTATION ALTERNATIVES Billions Federal-Aid Highway Program Category Amount Transferred Percentage of FAHP Apportionment National Highway Performance Program $225,750,199 0.13% Surface Transportation Block Grant $3,496,139,895 4.26% Highway Safety Improvement Program $7,632,381 0.04% Congestion Mitigation and Air Quality $6,259,206,699 33.98% National Highway Freight Program $0 0.00% Transportation Alternatives $108,140,712 1.80% All Categories $10,096,869,886 3.33% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% N EW JE RS EY CA LI FO RN IA M AR YL AN D O RE G O N VE RM O N T N EW Y O RK AR IZ O N A W AS H IN G TO N N EV AD A M IN N ES O TA VI RG IN IA O HI O HA W AI I RH O DE IS LA N D M AS SA CH U SE TT S IL LI N O IS PE N N SY LV AN IA N EW H AM PS H IR E CO N N EC TI CU T IO W A CO LO RA DO TE XA S M IC HI G AN G EO RG IA FL O RI DA U TA H N EW M EX IC O TE N N ES SE E KA N SA S N O RT H C AR O LI N A W IS CO N SI N M AI N E M IS SO U RI IN DI AN A AL AS KA LO U IS IA N A KE N TU CK Y ID AH O AR KA N SA S AL AB AM A W YO M IN G N EB RA SK A N O RT H D AK O TA SO U TH C AR O LI N A W ES T VI RG IN IA M O N TA N A DE LA W AR E O KL AH O M A DI ST R I CT O F CO LU M BI A M IS SI SS IP PI SO U TH D AK O TA Figure 5-3. Funds transferred from highway programs to transit as a percentage of total FHWA funding apportioned, FFY2013–FFY2020. Figure 5-4. Funds transferred to FTA by FAHP category from FFY2013 to FFY2020. Table 5-1. Amount of funds transferred from each of the FAHP categories to FTA, FFY2013–FFY2020.

Funding Transfer from FHWA to FTA 35   Figure 5-5. Funds transferred from CMAQ to FTA as a percentage of CMAQ apportionment from FFY2013 to FFY2020. Figure 5-6. Funds transferred from STBG to FTA as a percentage of STBG apportionment from FFY2013 to FFY2020. STBG, and TA to FTA. Figures 5-8 and 5-9 show percentages of NHPP and HSIP apportionments transferred to FTA by state between FFY2013 and FFY2020. NHFP is the only FAHP category from which no funds were transferred to FTA in the study period. In terms of the type of project funded by transferred FAHP funds, bus purchases were the most common, based on responses to the survey. Figure 5-10 shows a list of project types funded with transfers to FTA. Note that some respondents provided multiple answers to the question. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% VE RM O N T M AR YL AN D RH O DE IS LA N D N EW Y O RK N EW JE RS EY O RE G O N M IN N ES O TA W AS H IN G TO N CA LI FO RN IA AR IZ O N A N EV AD A IL LI N O IS O HI O IO W A N EW M EX IC O N EW H AM PS H IR E VI RG IN IA U TA H M IS SO U RI PE N N SY LV AN IA W IS CO N SI N TE XA S HA W AI I TE N N ES SE E M AS SA CH U SE TT S CO N N EC TI CU T M IC HI G AN M AI N E N O RT H C AR O LI N A CO LO RA DO KA N SA S LO U IS IA N A AL AB AM A IN DI AN A FL O RI DA KE N TU CK Y G EO RG IA AL AS KA M O N TA N A O KL AH O M A N EB RA SK A SO U TH C AR O LI N A DE LA W AR E AR KA N SA S DI ST RI CT O F CO LU M BI A ID AH O M IS SI SS IP PI N O RT H D AK O TA SO U TH D AK O TA W ES T VI RG IN IA W YO M IN G 0% 5% 10% 15% 20% 25% 30% 35% 40% N EW JE RS EY O RE G O N CA LI FO RN IA AR IZ O N A VI RG IN IA VE RM O N T FL O RI DA M IN N ES O TA G EO RG IA O HI O M AS SA CH U SE TT S HA W AI I N EV AD A CO LO RA DO IO W A IN DI AN A N EW H AM PS H IR E M AR YL AN D TE XA S N EW Y O RK ID AH O W AS H IN G TO N U TA H LO U IS IA N A KA N SA S PE N N SY LV AN IA TE N N ES SE E M IS SO U RI AL AS KA N O RT H C AR O LI N A N EW M EX IC O M IC HI G AN W IS CO N SI N AL AB AM A N O RT H D AK O TA M AI N E IL LI N O IS KE N TU CK Y W ES T VI RG IN IA RH O DE IS LA N D N EB RA SK A SO U TH C AR O LI N A CO N N EC TI CU T AR KA N SA S DE LA W AR E DI ST RI CT O F CO LU M BI A M IS SI SS IP PI M O N TA N A O KL AH O M A SO U TH D AK O TA W YO M IN G

36 Federal Funding Flexibility: Use of Federal-Aid Highway Fund Transfers by State DOTs 0% 2% 4% 6% 8% 10% 12% W AS H IN G TO N HA W AI I CA LI FO RN IA M AR YL AN D N EB RA SK A N EW M EX IC O U TA H G EO RG IA TE XA S N EW JE RS EY N EW Y O RK KA N SA S O RE G O N LO U IS IA N A O HI O M IC HI G AN TE N N ES SE E PE N N SY LV AN IA AR KA N SA S VI RG IN IA IN DI AN A IO W A M AS SA CH U SE TT S CO LO RA DO KE N TU CK Y ID AH O O KL AH O M A AL AB AM A AL AS KA AR IZ O N A CO N N EC TI CU T DE LA W AR E DI ST RI CT O F CO LU M BI A FL O RI DA IL LI N O IS M AI N E M IN N ES O TA M IS SI SS IP PI M IS SO U RI M O N TA N A N EV AD A N EW H AM PS H IR E N O RT H C AR O LI N A N O RT H D AK O TA RH O DE IS LA N D SO U TH C AR O LI N A SO U TH D AK O TA VE RM O N T W ES T VI RG IN IA W IS CO N SI N W YO M IN G Figure 5-7. Funds transferred from TA to FTA as a percentage of TA apportionment from FFY2013 to FFY2020. 0% 1% 2% 3% 4% 5% 6% W AS H IN G TO N HA W AI I PE N N SY LV AN IA KE N TU CK Y N EW Y O RK SO U TH C AR O LI N A AL AB AM A AL AS KA AR IZ O N A AR KA N SA S CA LI FO RN IA CO LO RA DO CO N N EC TI CU T DE LA W AR E DI ST RI CT O F CO LU M BI A FL O RI DA G EO RG IA ID AH O IL LI N O IS IN DI AN A IO W A KA N SA S LO U IS IA N A M AI N E M AR YL AN D M AS SA CH U SE TT S M IC HI G AN M IN N ES O TA M IS SI SS IP PI M IS SO U RI M O N TA N A N EB RA SK A N EV AD A N EW H AM PS H IR E N EW JE RS EY N EW M EX IC O N O RT H C AR O LI N A N O RT H D AK O TA O HI O O KL AH O M A O RE G O N RH O DE IS LA N D SO U TH D AK O TA TE N N ES SE E TE XA S U TA H VE RM O N T VI RG IN IA W ES T VI RG IN IA W IS CO N SI N W YO M IN G Figure 5-8. Funds transferred from NHPP to FTA as a percentage of NHPP apportionment from FFY2013 to FFY2020.

Funding Transfer from FHWA to FTA 37   0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% VI RG IN IA U TA H N EW Y O RK AL AB AM A AL AS KA AR IZ O N A AR KA N SA S CA LI FO RN IA CO LO RA DO CO N N EC TI CU T DE LA W AR E DI ST RI CT O F CO LU M BI A FL O RI DA G EO RG IA HA W AI I ID AH O IL LI N O IS IN DI AN A IO W A KA N SA S KE N TU CK Y LO U IS IA N A M AI N E M AR YL AN D M AS SA CH U SE TT S M IC HI G AN M IN N ES O TA M IS SI SS IP PI M IS SO U RI M O N TA N A N EB RA SK A N EV AD A N EW H AM PS H IR E N EW JE RS EY N EW M EX IC O N O RT H C AR O LI N A N O RT H D AK O TA O HI O O KL AH O M A O RE G O N PE N N SY LV AN IA RH O DE IS LA N D SO U TH C AR O LI N A SO U TH D AK O TA TE N N ES SE E TE XA S VE RM O N T W AS H IN G TO N W ES T VI RG IN IA W IS CO N SI N W YO M IN G Figure 5-9. Funds transferred from HSIP to FTA as a percentage of HSIP apportionment from FFY2013 to FFY2020. 3 6 2 10 8 3 1 1 3 1 1 1 1 0 2 4 6 8 10 12 UNKNOWN YES MASS TRANSPORTATION BUS PURCHASE TRANSIT N/A BUS STOP/SHELTER BIKE SHARE LIGHT RAIL FERRY OPERATIONS POOLED FUND STUDIES MPOS RAPID TRANSIT Figure 5-10. Types of projects that benefited from funding transfers to FTA.

38 Federal Funding Flexibility: Use of Federal-Aid Highway Fund Transfers by State DOTs 5.2 Considerations That Drive Decisions of Funding Transfer from FHWA to FTA There are a number of considerations that state DOTs made when deciding to transfer funds from FAHP programs to FTA. 5.2.1 State and Regional Priorities MPOs were often influential in getting a state DOT to transfer funds to transit and other priorities within their respective regions. MPOs must follow the federally required metropolitan planning regulations, including the development of the Long-Range Transportation Plan (LRTP) and the TIP. The LRTP and TIP reflect regional priorities within each MPO region, and transit is a priority in many regions. We found many examples of MPOs’ involvement in transfers to FTA. In Portland, Oregon, the state suballocates the CMAQ and STBG funds to the MPO, and decisions on projects are decided by regional officials. The Capital District Transportation Committee in Albany, New York, transferred NHPP and STBG-Flex funds to help fund regional bus rapid transit projects on the NHS. In Boston, CMAQ funds were transferred to FTA for the Massachusetts Bay Transportation Authority Full Funding Grant Agreement on the Green Line extension project. In Iowa, all MPOs receive STBG suballocations annually, which usually support transit vehicle acquisitions. 5.2.2 Project Readiness and Capacity to Implement Projects Project readiness and capacity to implement a project are another consideration. Spending federal transportation funds in a timely way is important and no state, MPO, or transit agency wants funds to lapse due to lack of timely implementation. As such, when state DOTs decide to transfer funds to FTA programs, the state has assurance that the transit agency implementing the project will do so in a timely manner and that FTA will administer the funds in accordance with its requirements. One example is in New York State where the state DOT suballocates $55 million annually in CMAQ funds to the New York City Metropolitan Transportation Authority (MTA), the transit agency in New York City. While transit is a regional priority, the MTA also has the institutional capacity to implement projects in a timely manner. In addition, MPOs may transfer suballocated STBG and TA funds to FTA programs for eligible projects to be administered by FTA recipients serving the MPO, which could help states and MPOs avoid rescission when suballocated STBG and TA funds cannot be transferred to other FAHP categories. 5.2.3 Federal Oversight Eligibility requirements and federal oversight are also considerations. It is generally a common practice for states to use their transfer authority, including funds swapping, to gain administrative efficiency by letting the most capable agencies manage certain projects and funds. When states transfer FHWA funds to FTA, those funds take on all the eligibility requirements of FTA pro- grams, which are in some cases different (e.g., Buy America) from FHWA program requirements. FTA projects are most often implemented by transit agencies. Once the transfer from FHWA occurs, the administration of funds is the responsibility of FTA and its regional offices, not FHWA. Transit agencies are familiar with FTA requirements and can usually spend the funds within the required time frame (e.g., 3 years plus year of apportionment). Also, the transferred funds often augment other FTA funds, and the projects to be funded are already eligible and meet FTA requirements.

Funding Transfer from FHWA to FTA 39   5.2.4 No 50 Percent Limit on Transfers The decision to transfer funds to FTA is not subject to the 50 percent limit that applies to transfers among FAHP programs. Some states have transferred more than 50 percent of their apportionments from certain FAHP categories. For example, 13 states transferred more than 50 percent of their CMAQ funds to FTA during the study period. 5.3 Trade-Offs, Barriers, and Opportunities of the Authority to Transfer Funds from FHWA to FTA A number of trade-offs are made when a state DOT decides to transfer funds from the FAHP program to FTA for transit agency implementation or for a state DOT to implement transit- eligible projects using FAHP funding. The trade-off of investing in transit projects rather than highway projects is the most obvious and can be a catalyst to the development of a comprehen- sive, multimodal transportation system. In some states, transit is a practical travel option where transfers of federal highway funds to transit support state and regional needs for funding transit projects. The opportunity to transfer funds from FHWA to FTA programs allows regional and state planners to prioritize investments regardless of funding type. This can level the playing field for non-highway projects and has resulted in over $13.3 billion being transferred to FTA for transit projects during the study period. The transfer authority helps break down the funding silos and support more strategic, robust, and long-term planning efforts, which prevents the “color” of money dictating states’ programming efforts.