House Files Omnibus Appropriations Bill and Tax Extenders Package; Transit Commuter Tax Benefit Raised to Parity with Parking Benefit Permanently
Late Tuesday night, congressional leaders released an Omnibus appropriations bill funding all federal departments, agencies and programs through the balance of Fiscal Year 2016. This agreement has been under negotiation for the past several weeks. In addition, a broad tax extenders package was also filed in the House of Representatives, and it was the intent of congressional leaders to combine the tax extenders bill with the Omnibus appropriations bill during House consideration. Due to the timeline necessary for consideration of legislation, the House of Representatives voted earlier today on a short stop-gap Continuing Resolution (CR) to fund the government at current levels through December 22, and the Senate later passed the measure by voice vote.
On the broader Omnibus and tax extenders legislation, the House Rules Committee was meeting earlier today to consider these measures.
The significance of this latest “tax extenders” agreement is that it includes a number of permanent provisions, including a provision that APTA has long advocated for: the permanent extension of parity for the transit commuter benefit. Section 105 of the proposed legislation, the Extension of Parity for Exclusion from Income for Employer-Provided Mass Transit Parking Benefits, effectively raises the amount an employer can offer to their employees either as a tax-free fringe benefit or as a pre-tax option in order to pay for their mass transit commute to and from work. The provision increases the transit commuter tax benefits from the current $130 to $250, rising to $255 the following year.
While the tax extenders package amends the statute to raise the level in law to $175 per month, the Internal Revenue Code also includes a cost of living adjustment [Section 132(f)(6)] that has been causing the benefit for parking to be raised by IRS rulings each year. The parking benefit has been $175 in the statute, but due to the COLA, it is scheduled to go up to $255 in 2016. By increasing the statutory level for the transit benefit from $100 to $175, the transit commuter tax benefit would then be subject to all of the historic COLAs, thereby raising the transit benefit to $250 in FY 2015 and $255 in FY2016.
This is an historic agreement, putting to an end the annual fight to restore parity to transit commuter tax benefits.
The tax extenders agreement also extends for two years through FY 2016 (retroactive to 2015) the Alternative Fuels Tax Credit and the alternative fuels property (infrastructure) credit. These provisions were previously extended retroactively for 2014 in the tax extenders bill passed in December 2014. Small, medium, and large-sized transit agencies across the country benefit from these tax credits, especially, the $0.50 per gasoline gallon equivalent (GGE) tax credit offered to transit agencies fueling their vehicles with compressed (CNG) or liquefied (LNG) natural gas. These credits provide important offsets to transit agency fuel and operating costs, thereby supporting improved transportation services, as well as aiding in job retention. A two year extension of these credits will assist those transit agencies that use CNG and LNG fueled vehicles to operate their systems safely and efficiently to carry millions to work, school, medical appointments and other activities.
In total, the bill provides $57.6 billion for the Transportation-HUD portion of the omnibus, $3.8 billion higher than Fiscal Year (FY) 2015 levels. The discretionary appropriations for the Department of Transportation (DOT) reaches a level of $18.7 billion, or an increase of $847 above FY 2015 enacted levels.
Included in the spending package is $500 million for National Infrastructure Investments (previously TIGER grants), maintaining FY 2015 levels.
The overall increase in funding levels was possible due to a budget agreement reached by former Speaker of the House John Boehner before his departure. This deal raised discretionary spending caps by $80 billion over two years and suspended the debt limit to March 2017.
The Omnibus bill appropriates a total of $11.8 billion for the Federal Transit Administration (FTA), an increase of $870 million. Of this amount, $9.347 billion is allocated from the Mass Transit Account (MTA). All formula programs and discretionary bus grants are appropriated at levels authorized in the Fixing America's Surface Transportation (FAST) Act. Additionally, $2.177 billion is provided for Capital Investment Grants (New Starts), a level that is $125 million below the FAST Act authorization, but nearly $256 million more than the House passed level, and $592 million above the Senate Appropriations Committee reported level. Of the total for Capital Investment Grants, $1.250 billion is to go to all Full Funding Grant Agreement (FFGA) projects within FTA. Consistent with the FAST Act, the maximum share for a New Starts FFGA is capped at 60 percent. Additionally, $353 million is dedicated for Small Starts projects, $50 million for core capacity grants, and $5 million is allocated for a new expedited project delivery pilot authorized in the FAST Act.
No General Funds were appropriated for FTA Transit Research programs, although the FAST Act funds a portion of those programs, including the Transit Cooperative Research Program (TCRP) from the Mass Transit Account (MTA). FTA Administrative Expenses are appropriated at $108 million, $6.5 million of which is dedicated to the administration of the Sec. 5329 Public Transportation Safety program, and $1 million is allocated to Transit Asset Management. The Washington Metropolitan Area Transit Authority (WMATA) is funded at the same level of $150 million as in FY 2015.
The appropriations bill includes language that continues to allow grantees to use geographic preferences (local hire). However, the bill includes new limitations on when such preferences may be used, conditioned on a certification that qualified, unemployed residents in the jurisdiction are prepared to do the work, that the contractor will not displace any of its existing employees, and that any delay or increase in cost for the project due to a hiring preference will not delay or displace any other project in the STIP or TIP.
The Federal Railroad Administration (FRA) sees an increase of $52 million, rising to $1.678 billion. Within this amount, Amtrak grant funding is maintained at $1.39 billion. Of that amount, $1.102 billion is dedicated to Capital and Debt Service Grants, and $289 million is for Operating Subsidies. Several provisions are included in the Amtrak appropriations, such as requiring overtime limits on employees, and prohibiting federal funding for routes where Amtrak offers a discount of 50 percent or more off peak fares. While Amtrak maintained the current structure of how they are appropriated funds for this year, they will be required to make their future budgetary requests in the format prescribed in the FAST Act (with a carve out for the Northeast Corridor from the National Network). An additional $50 million is appropriated for Rail Safety Grants, including $25 million specifically for Positive Train Control (PTC) implementation.
No funds are provided for the state passenger rail grants authorized from the general fund under the FAST Act (Consolidated Rail Infrastructure and Safety Improvements, Federal-State Partnership for State of Good Repair, Restoration and Enhancement Grants). The FAST Act authorized $200 million for these grants in FY 2016. However, the bill provides no prohibition on the use of funds for the California High Speed Rail program, as was included in the bill as passed by the House earlier this year.
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