Here is a simple explanation for this chart shows. Congress AUTHORIZES transportation spending typically in five year increments. That is the maximum amount that Congress expects to allow. It is not the actual amount. That amount is APPORTIONED annually to the States. Each year the States potentially have this apportionment PLUS what they have not yet OBLIGATED from prior years. However, States are not permitted to obligate this entire total. For budgetary purposes Congress may renege and withdraw money not yet obligated (aka RESCISSION) and set LIMITS through an annual APPROPRIATION on the balance. The result at the funds AVAILABLE to the States to PROGRAM, i.e. include in their STIP and TIP. When a program gets initiated/approved, the State then OBLIGATES those funds. If a program does not get approved in the current, its UNOBLIGATED funds remain "in the pot" and may be available in the following year or could become "low hanging fruit" for rescissions and pulled from the STIP/TIP via reprioritization by the State planners.
Congress may dictate that recissions must come proportionately across ALL program categories (as done in 2007) or it may let the States decide form which categories to withdraw AVAILABLE funds as done in the last couple of years. Certain program categories can get hit hard if they have LOW OBLIGATION.
Alternate funding. Projects may be funded from other sources.
Obligation limitation. Congress, in its annual appropriations acts, sets the annual obligation limitation for the overall amount of Federal-aid highway funding that can be obligated. FHWA informs the states of these limits and monitors for compliance. State DOTs choose how they will manage the required obligation limitation across their programs at their discretion.
Accounting practices. State procedures for obligating projects and varying accounting practices impact the obligation rate. Some states obligate project funding in stages as they are ready to proceed. Some states pay for only the construction phase of projects and release full obligation authority once construction is ready to occur. States with lower obligation rates often use one of these methods. States that release full project obligation for all stages earlier in the process tend to have higher obligation rates.
Level of design detail and environmental review. Some DOTs require a level of design detail and environmental review that can be at odds with the small-scale projects and at odds with federal recommendation that encourages a streamlined approach. Such strict requirements slow down the implementation of projects, thus creating a barrier between the programming and obligation stages.
Inexperienced sponsors. Problems in the project development process that have led to significant project delay are often the result of inexperienced project sponsors that lack the preparation and support to implement projects in a timely manner. States do not obligate funding when expected due to delays resulting from inaccurate cost estimates, the inability to raise matching funding, unfamiliarity with environmental and historic preservation review requirements, and the use of inappropriate design standards. Some states have effectively dealt with this problem by providing more support to project sponsors during the application process as well as during implementation by developing training programs, increasing staff resources, and hiring consultants.
Right-of-way acquisition. Some states have faced costly legal actions due to right-of-way issues and have subsequently adopted more stringent requirements. To combat this problem, some states require applicants to obtain a written right-of-way agreement prior to project selection.
Rescission Notices of Federal-aid Apportionments are listed below. In each notice follow the TABLE 1 link (usually found by scrolling to the bottom) for a listing by State of the amount being rescinded. In early year FHWA specified the categories from which funding was reduced. In latter years the States were instructed to withdraw from UNOBLIGATED balance, typically these are the lower priority programs without a strong sponsor.
Rescissions have become an issue in Tennessee, because in N 4510.729 rescission 95% came from Transportation En- hancement (TE) and Congestion Mitigation and Air Quality (CMAQ) projects, primarily because they represented a large UNOBLIGATED balance. They are two categories that provide a majority of the funding for Bicycle and Pedestrian programs. This document was prepared by the League of American Bicyclists for their 2011 Bicycle Friendly Ranking. Tennessee does not appear favorably in it.
Some of the reasons projects do not get obligated are listed below:
Authorizing legislation is the first step in financing the Federal-Aid Highway Program (FAHP). It is a statutory provision that establishes or continues a Federal agency, activity, or program, and can be for either a fixed or indefinite period of time. The FAHP continues through the passage of multi-year authorization acts. On August 10, 2005 Congress enacted the most recent multi-year reauthorization act for the FAHP, the Safe, Accountable,Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). It includes eleven titles: I - Federalaid Highways; II ‑ Highway Safety; III ‑ Public Transportation; IV ‑ Motor Carrier Safety; V ‑ Research; VI - Transportation Planning and Project Delivery; VII – Hazardous Materials Transportation; VIII - Transportation Discretionary Spending Guarantee; IX - Rail Transportation; X – Miscellaneous Provisions; and XI – Highway Reauthorization and Excise Tax Simplification.
The financing of Federal programs depends on ANNUAL appropriations, rather than on authorizing legislation. In an appropriations act, Congress makes available the amount that can actually be used for the program. “Budget authority”—the approval to distribute, spend, loan, or obligate funds—granted through the appropriations act may be equal to or lower than the originally authorized level of funding. Budget authority is then allocated to the States based on a complex funding formulae that considers: Remaining funds from prior years, Projected revenue for the current year, Congressional limitations on obligations, Rescissions, Congressional earmarks (HPP), and Demonstarations (DEMO). For a complete description of the process, see http://www.fhwa.dot.gov/reports/financingfederalaid/financing_highways.pdf