The Federal Transit Administration on February 5 released its Annual Report on New Starts. This document contains detailed descriptions, ratings and recommendations on transit new starts nationwide. Please use the link below to access the report. Our analysis section will have a look at the meaning of the document by COB on Friday, February 7.

Annual Report on New Starts

In its release of the President's Budget for fiscal 2004 on February 3, the Administration proposed earmarks for 26 specific transit new starts for the coming fiscal year. The list includes 19 existing Full Funding Grant Agreements (FFGA's), 3 FFGA's now pending final approval and 4 FFGA's the Administration expects to propose to Congress for approval in the cmoing year. The newly proposed FFGA's are the Chicago Ravenswood Line Extension, Las Vegas Monorail, New York Eastside Access and Seattle/Sound Transit Central Link Light Rail.

The proposal leaves $ 121.2 million available for other projects nationwide.

Here is the list of project earmarks suggested in the President's budget.

FEDERAL TRANSIT ADMINISTRATION

Existing Full Funding Grant Agreements (FFGAs)

• California -- San Diego - Mission Valley East LRT Extension 65.0
• California -- San Francisco - BART Extension to SFO 169.9
• Colorado -- Denver - Southeast Corridor LRT 80.0
• District of Columbia -- Washington - Largo Metrorail Extension 65.0
• Florida -- Fort Lauderdale - Tri-County Commuter Rail Upgrades 18.4
• Illinois -- Chicago - Douglas Branch Reconstruction 85.0
• Illinois -- Chicago - North Central Corridor Commuter Rail 20.0
• Illinois -- Chicago - Southwest Corridor Commuter Rail 20.0
• Illinois -- Chicago - Union-Pacific West Line Extension 12.0
• Maryland -- Baltimore - Central LRT Double-Track 40.0
• Minnesota -- Minneapolis - Hiawatha Corridor LRT 75.0
• New Jersey -- Northern New Jersey - Hudson-Bergen MOS-2 100.0
• New Jersey -- Northern New Jersey - Newark Rail Link MOS-1 22.6
• Oregon -- Portland - Interstate MAX LRT Extension 77.5
• Pennsylvania -- Pittsburgh - Stage II LRT Reconstruction 30.2
• Puerto Rico -- San Juan - Tren Urbano 43.5
• Tennessee -- Memphis - Medical Center Extension 9.2
• Texas -- Dallas - North Central LRT Extension 30.2
• Utah -- Salt Lake City - Medical Center Extension 30.7

Pending FFGAs

• California -- Los Angeles - Eastside Corridor LRT 55.0
• California -- San Diego - Oceanside Escondido Rail Corridor 48.0
• Louisiana -- New Orleans - Canal Street 36.0

Proposed FY 2004 FFGAs

• Illinois -- Chicago - Ravenswood Line Extension 45.0
• Nevada -- Las Vegas - Resort Corridor Fixed Guideway 40.0
• New York -- New York - Long Island Rail Road Eastside Access 75.0
• Washington -- Seattle - Central Link Initial Segment 75.0

Proposed Project Funding

• Projects in Preliminary Engineering and Final Design 121.2
• Ferry Capital Projects [Alaska/Hawaii] 10.3
• Oversight Set Aside [1%] 15.2

Total 1,515.0

The chairman of the House Transportation and Infrastructure Committee, Rep. Don Young (R-Alaska), reacted yesterday to the FY2004 Budget proposal the administration released on Monday. His thoughts?

"The President's FY 2004 budget request for the Department of Transportation increases overall funding levels by six percent.

"However, within the surface transportation agencies up for reauthorization this year - Federal Highway Administration, Federal Transit Administration, National Highway Traffic Safety Administration, and Federal Motor Carrier Safety Administration - there is not much growth. In fact, the Federal-aid highway program request level of $29.3 billion is $2.5 billion less than the FY 2002 enacted level, and the Federal Transit Administration budget is flat-lined at zero growth.

"Unfortunately, the President's budget proposal for highways and transit will not close the funding gap that is needed to address the nation's infrastructure. In fact, the Department of Transportation reported in its 2002 Conditions and Performance Report that the needs of the nation's highway and transit infrastructure are greater than twice the number in the President's Budget.

Young expressed encouragement that fatalities and accidents have declined, but noted that the nation's transit infrastructure: roads, bridges and transit facilities, are all old and deteriorating. In order to decrease congestion and ensure capacity for future growth, he stressed the need for further investment.

On January 30th, only two days after the President made mention of the issue in his State of the Union speech, Senators Rick Santorum (R-PA) and Joseph Lieberman (D-CT) reintroduced their faith-based initiative from the previous Congress. The Senators cosponsored the ‘CARE’ Act in the last Congress, which failed to pass the Senate after a bombardment of last-minute democratic amendments.

The bill, which was less controversial than its House counterpart, contained language that would encourage charitable giving through tax exemptions, increase Social Services Block Grants by $1.2 billion and make it easier for religious charities to compete for billions of dollars in federal funds for social programs. Opponents of the bill were fearful that such provisions that made it easier for religious organizations to procure federal funds could create an entanglement between Church and State and permit job discrimination on the basis of religion by the recipients of such funds. The bill would allow religious charities to remain religious in nature, while receiving federal funds and administering social services. Also, in the bill is language that prevents federal agencies, states and grantors of federal funds from discriminating against religious charities on the basis of their religious affiliation, when awarding grants for the administration of social services. If such discrimination exists, the bill provides recourse for religious charities in federal court.

The notion of allowing religious charities to compete for federal funds to administer social services began in 1996 with the passage of charitable choice legislation. However, the 1996 law did not prohibit grantors of federal funds from subtly discriminating against non-governmental organizations on the basis of religion. Since 1996, many religious organizations have found it tough competing for federal funds. Some religious charities also lack the business and legal credentials necessary to document and ensure proper the use of federal funds, which is required of all recipients. The current legislation would allow federal agencies to provide such organizations lacking the proper apparatus, assistance enhancing their accounting and performance capabilities.

When the CARE Act was being considered in the last Congress, many cities and local governments expressed concern over their legal liability. For example, if a recipient of a social service objected to the religious character of an organization, can the individual sue the city or local government that lacks the resources to offer a purely secular alternative for that service? Also, can faith-based organizations (FBO) take legal action against cities or municipalities if the local government did not award a contract to an FBO for a valid reason? Would this legislation create a floodgate of frivolous lawsuits?

Such legal questions will certainly be discussed as debate on the CARE Act proceeds ahead in the coming months. Evidenced by mention in his State of the Union speech, President Bush considers the CARE Act to be a legislative priority. With the Republicans now controlling the Senate, passage of faith-based legislation might be easier, but there still remains steadfast opposition from a contingent of Democrats. Serious debate on the bill should commence very shortly.

Today, the National Conference of State Legislatures (NCSL) released a report indicating that state budget gaps have grown by 50% in the last two months and that state policy makers will have to work to resolve unprecendented budget shortfalls for the next 15 months.

The news only gets worse. State legislatures face a minimum $68.5 billion budget shortfall for FY 2004. Thirty-three states estimate budget gaps in excess of 5%, with 18 of those facing gaps above 10%. This is a cause of great concern as deficit numbers continue to grow.

A major cause of the budget deficit are the budget shortfalls. At least 30 states say revenue collections are below budget forcasts, with 12 of these reporting collections below revised estimates. Thirty-seven states say spending is exceeding budgeted levels, with all but five reporting excessive Medicaid or health care costs.

Other reasons for the poor budget forecasts include the declining national economy, declines in the stock market, contractions in the manufacturing and high-tech sectors and soaring health costs.

Currently, states are using their rainy day funds, utilizing other state funds, releasing prisoners early, laying off workers, delaying capital projects and cutting spending to balance their budgets. Twenty-nine states have imposed across-the-board budget cuts.

Also of concern to states are the actions of Congress and the Administration in the months ahead. NCSL is concerned that yesterday's budget proposal does not meet the the costs of mandates for the No Child Left Behind Act, special education and election reform. They also believe that flexibility alone won't meet their needs.

The report found that tax increase proposals are being considered in 24 states. At least 14 will consider higher cigarette taxes and 6 are weighing higer taxes on alcohol. Six states are looking at sales taxes and four at income taxes.

The report concludes that there is "no immediate end in sight" to the budget troubles and warned that next year promises to be even more difficult.

Over on the analysis side of the website, we've got a new article up detailing each Department's budget. Between the raw numbers we posted yesterday and the more fleshed out analysis today, clients and friends should get a good sense of the administration's priorities for the fical year 2004 budget. The new page is being updated throughout the day (as are any last-minute revisions to the raw numbers as consolidations and reorganizations are ironed out) so be sure to check back often for the latest information. With the large number of projects that have been renamed, moved or consolidated, our analysis is invaluable to deciphering the entire miraculous mess.

As we continue to analyze the Bush Budget, we've got a more in depth look at the Department of Transportation budget with details on rail, road and air programs. The total funding will increase by 6%, but monies are shuffled around to reflect a new set of priorities from the administration. A few programs have been dropped entirely, some have seen drastic cuts while still others have been increased just as dramatically. For the full scoop, head over to our analysis side.

President George W. Bush today released his budget plan for the fiscal year beginning October 1, 2003. This is the first of a series of reports Peyser Associates will send to our clients regarding the budget proposal. For the full analysis of the budget and how it breaks down from program to program, be sure to check out the analysis side of the website.

The Bush budget calls for spending of $2.2 trillion in the coming fiscal year, an increase of 4.2 % from projected fiscal 2003 spending. Revenues are estimated to total $ 1.9 trillion, leaving a deficit of $ 307 billion. The budget documents project the fiscal 2003 deficit to be $ 304 billion.

Under this budget, entitlement spending, referred to as "mandatory" would increase by $46 billion ( 3.8 %) the major components of this category are Social Security, Medicare and Medicaid.

The Defense function is the major winner in this proposal. Defense spending would increase by $ 14 billion (3.8 %) to in fiscal 2004, but future year projections in the budget call for larger increases going forward. Major highlights of the Defense spending plan are

Non-Defense domestic discretionary spending overall would increase by approximately 3% -- about 1% above the projected inflation level. Here is how spending in key agencies would change from FY 2003 to FY 2004:

On Wednesday, Senator James Inhofe (R-Oklahoma), chairman of the Senate Environment and Public Works Committee, announced that he plans to introduce legislation that would reform the way highway funds are distributed. Under the current surface transformation law, TEA-21, states are guaranteed a minimum 90.5% of the taxes that they send to the Highway Trust Fund. The Fund derives most of its revenue from the 18.4-cent-per-gallon federal gas tax.

Inhofe plans to introduce legislation that would raise the guaranteed minimum level of funds to 95%. The change in law would necessitate that lawmakers find alternative sources of revenue for the Highway Trust Fund, raise the current federal tax on gas, appropriate additional monies to states for earmarked projects or redistribute highway funds that are distributed to states. If Inhofe's proposal placed any state in jeopardy of losing highway funds, the plan would certainly have trouble garnering broad support and would face many obstacles.

Currently, Inhofe’s plan enjoys broad congressional support, including Rep. Don Young (R-Alaska), chairman of the House Transportation and Infrastructure Committee. Also, Sen. Christopher Bond (R-Missouri), said it is "absolutely essential" to increase the minimum guarantees. Both Inhofe and Bond come from what are considered 'donor states' because their respective states contribute more funds to the Highway Trust Fund than they receive in annual highway funds. With regard to the inequity, Inhofe stated "this is a moral issue for me" and "I plan to work with my colleagues and the administration, to find the resources we need to pay for transportation priorities."

The initiative that Inhofe is set to introduce might be included in the overall highway reauthorization bill as a provision or amendment, when such a measure is debated later this year.

We've got the latest info on the proposed re-organization of the Appropriations Subcommittees over on the analysis side of the side. Included are the finalized list of Republican members, as well as what will be inside the new Homeland Security Subcommittee, and how the Senate is currently reacting to the plan.

Last night, President George W. Bush delivered his annual State of the Union address. He used the address to lay out the case against Iraqi leader Saddam Hussein while at the same time putting forth an ambitious domestic policy agenda. With a battle over the budget on the horizon and presidential politics in play, the time for Congress to meet the President's goals is limited. Congress may have only the spring and the summer for legislative work before election politics begins to lock up the Senate.

On the domestic side, President Bush called again for a $674 billion tax cut over ten years. He proposed eliminating taxes on stock dividends paid to individual investors and immediate implementation of income tax rax rate reductions that currently are scheduled to go into effect in 2004 and 2006. He next called for immediate implementation of tax reductions for married couples not scheduled to take effect until 2009, raising the yearly child credit from $600 to $1,000 now, instead of waiting for scheduled implementation in 2010. Finally, he suggested altering paycheck withholding rates upon the enactment of his tax cut plan to get more money into the economy quickly. Bush said that his fiscal 2004 budget proposal scheduled to be unveiled February 3 will call for capping any increase in discretionary spending to 4%. He then reiterated his support for changing social Security to allow workers to invest some of their withholding taxes in individual retirement accounts.

In addition to the tax cut plan, another major item on the President's agenda was a $400 billion Medicare overhaul. He called also for many other policy initiatives including a $15 billion, five-year plan to fight AIDS in Africa and $6 billion to boost research and production of drugs to fight bioterrorism. He next called for a comprehensive new energy policy and $1.2 billion in new research funding for hydrogen-powered cars, a new $450 million program for mentors of disadvantaged youth and an additional $600 million to treat drug addictions. In other legislative initiatives, the President called for medical liability limits, legislation to make it easier for religious groups to win federal funds and a ban on human cloning.

After he layed out his domestic agenda, the President focused on foreign policy and on Iraq in particular. While he stopped short of committing to war, he provided a long list of allegations of Iraqi President Saddam Hussein's efforts to undermine the U.N. inspectors. President Bush indicated the United States' willingness to go it alone without our allies if need be. Although he made short mention of North Korea and Iran, the other two spokes on "the Axis of Evil" made famous in last year's State of the Union, his primary focus was on Iraq. He offered historical examples of the Iraqi leader's concealment of germ, chemical and nuclear programs. He did not present any new information from the latest round of inspections, but was more specific in his allegations than he has been.

The President did say that Secretary of State Colin Powell would go to the Security Council next week and provide intelligence on Iraq's weapons programs, terrorist links and attempts to deceive the United Nations. He also enlarged the case for going to war with Iraq soon by saying that there was intelligence showing Iraq was helping and protecting terrorists.

According to CQ today, there could be some major shakeups in the House Appropriations subcomittees. A proposal to merge the Transportation and Treasury-Postal subcommittees in order to make room for a new Homeland Security Subcommittee could be proposed this afternoon by House Appropriations Committee Chairman C.W. Bill Young (R-Florida). The plan has not yet been seen by the Senate, which would either need to reorganize or risk having different subcommittees in the two chambers, complicating discussions during House-Senate conferences of spending bills.

The plan would result in the new subcommittee receiving jurisdiction over the Customs Service, the Federal Law Enforcement Training Center, the Secret Service, the Transportation Security Administration and the Coast Guard. The chair of the new subcommitee would likely be Harold Rogers (R-Kentucky), the current chair of the Tranportation panel. The remaining areas left in both the Transportation and the Treasury-Postal subcommittees would then be merged together and chaired by the current pork-busting chair of Treasury-Postal, Representative Ernest Istook (R-Oklahoma). This would keep the total number of subcommittees at 13. More information will be posted as it becomes available.

Today, AP is reporting that the Congressional Budget Office (CBO) released a deficit projection outlook that show a further deterioration since the last report. Since the CBO is required by law to only factor in existing laws under effect, the projections of a $199 billion deficit this year and a $145 billion deficit next year, don't include the cost of war with Iraq, the President's proposed stimulus package, or any increases in spending from Congress. Therefore, private analysts have been predicting a much higher deficit that could run up to $300 billion this year. Clearly, these declining numbers will affect the ongoing budget battles between Congress, the Administration and both political parties.

In a departure from the vague priorities outlined three weeks ago from the GOP led Senate, Senator Bill Frist (R-Tennessee) announced his legislative priorities in advance of the President's State of the Union address. His agenda included prescription drugs and an economic stimulus package, and seemed to mirror the priorities that the President is likely to suggest tonight. We'll see how his legislative strategy plays out in the weeks ahead and keep everyone updated.

President Bush and the Democrats are engaging in a debate about funding options.

In his radio address on Saturday, President Bush said that the war against terrorism will remain a prority. He said he will focus his State of the Union address tomorrow on domestic priorities, including proposals to boost the economy and to help the unemployed. The President wants Congress to put his tax cut proposal into effect this year. He also plans to ask Congress to eliminate taxes on stock dividends and raise deduction limits for investments by small businesses.

In the Democrats' radio address, Martin O'Malley, mayor of Baltimore, Maryland, charged that Bush's tax cuts are shifting the burden of funding homeland defense to "already cash-strapped cities." Those "cities [are] still reeling from the tax cuts that primarily benefit the wealthy, and a damaged and sluggish economy," O'Malley said.

Towns and cities, Mayor O'Malley claimed, have been left defenseless due to the federal government's failure to fund homeland defense. Cities first responders are still without the necessary equipment, training, and communication systems.

Traditionally, the opposition party turns to a member of Congress to respond to the President's State of the Union address. Tomorrow night, following Republican President George W. Bush's address to the nation, the Democrats will follow putting forth Governor Gary Locke, of Washington State to make the case for their party.

Governor Gary Locke is currently in his second term as governor and serves as the head of the Democratic Governors Association. He is the first Chinese American to hold a state's top position.

In his remarks, the Governor will try to make the case the "drums of war should not drown out the worst economic crisis in a half-century for state governments." In an interview over the weekend, Governor Locke said he planned to contrast President Bush's proposal to cut dividend taxes with Democratic plans to "help out everyday people who are struggling."

He noted that 1.5 million jobs had been lost since the recession began two years ago and that many states were facing budget deficits. He believes that the president's plan to eliminate taxes on stock dividends will only make the problem in the statehouses worse. On foreign policy, Governor Locke will be unlikely to vere far from the President, but will continue to push the case for allied support.

53 percent of Americans live in states governed by Democratic executives. Last fall, the Democrats won governor's races in big states like Pennsylvania, Illinois and Michigan and also in Republican strongholds like Kansas and Wyoming. But they lost in two big states, Florida and Texas, where they thought they had a real chance.

Last month, Senator Tom Daschle of South Dakota, the Democratic leader in the Senate, agreed to let the governors pick someone to give the response speech from among their ranks. They chose Governor Locke, 53, who was elected to two terms by wide margins and is chairman of the Democratic Governors' Association.

Nationwide, the states are projecting budget deficits of $60 billion to $80 billion over the next two years, with California's shortfall alone making up half of that. The Democratic governors have requested direct aid from the federal government to help with the deficits, arguing that much of the red ink was caused by new federal burdens for domestic security and medical aid for the elderly.