AASHTO Journal - Two-Year Budget Deal Leaves Rescission in Limbo for Now

A “big picture” two-year budget deal hammered out between Congressional leaders of both parties and President Trump on July 23 does not contain any provision to halt the rescission of $7.6 billion in highway contract authority scheduled to occur in 2020.

However, though state departments of transportation are being encouraged to “take steps now” to minimize their exposure to the rescission, the American Association of State Highway and Transportation Officials policy team noted that the broad-brush nature of this budget deal deliberately side-steps smaller fiscal issues, while legislative fixes to the rescission remain on track.

“It is clear that this deal, involving only the senior-most leaders in federal government, is focused solely on big-picture issues and does not address any specific budgetary issues that tend to ‘ride’ a must-pass package like this,” AASHTO’s policy team noted in a memo.

The principal provisions of the budget deal – passed by a vote of 284 to 189 in the House of Representatives and expected to clear the Senate next week – increase defense and non-defense discretionary spending caps by $320 billion over the next two fiscal years, the policy team said.

That means federal spending will total roughly $1.37 trillion in fiscal year 2020 and climb to $1.375 trillion in FY 2021, while at the same time suspending the statutory limit on public debt through July 31, 2021.

Meanwhile, AASHTO noted that two separate legislative efforts designed to cancel the rescission continue winding their way through the House and Senate: HR 3612 and S 1992, respectively.

As a fallback position, however, AASHTO is encouraging state DOTs to begin looking at ways to “minimize their exposure” to the rescission.

“At this time, FHWA [the Federal Highway Administration] has yet to determine what would happen if one or more states do not have sufficient unobligated balances on July 1, 2020, from which to take the calculated rescission amount,” the policy team said in its memo.

“The rescission will be calculated based on each state’s overall share of the unobligated balances of contract authority as of September 30, relative to all states,” the memo added. “This share will determine the proportional amount of the rescission applied to each state on July 1, 2020.”