As federal lawmakers reconcile a new budget for fiscal year 2025 (FY25) and beyond, a flurry of budget and tax cuts will highlight the next year of federal U.S. Department of Transportation (DOT) funding. As priorities shift, reevaluating the FY25 transportation budget is more important than ever.
The FY25 federal budget, announced by then-Secretary of Transportation Pete Buttigieg last year, represents a federal commitment to modernizing the country’s transportation systems, enhancing safety and building a sustainable future for all Americans. This acting $146.2 billion budget prioritized investments in nationwide infrastructure, environmental resilience and supply chains while pushing existing funding obligations out the door—an issue which the current administration has criticized.
The U.S. federal budget allocated approximately $232.64 billion in budgetary resources to the DOT, or about 1.6% of the federal budget. Previously, allocations from fuel excise taxes have been one of the only ways to fund the DOT. Following Congress’s approval of non-defense outlays for transportation in 2008, discretionary outlays account for the largest portion of the federal transportation budget with about two-thirds earmarked for ground transportation.
DOT authorizes this funding for a variety of transportation initiatives through its 11 subcomponent offices. The FY25 budget features requested funding allocations for each of these subsidiary offices, which are listed below:
· Federal Aviation Administration (FAA) – $21.8 billion requested to support the FAA’s workforce development initiatives and capital improvement projects. $13.6 billion was dedicated to support the FAA’s operations to promote aviation safety and efficiency and expand the hiring of air traffic controllers.
· Federal Highway Administration (FHWA) – $62.8 billion for the FHWA. A majority of this funding, over $33.5 billion, is designed to supplement the National Highway Performance, the Highway Safety Improvement and the Reconnecting Communities Pilot programs.
· Federal Motor Carrier Safety Administration (FMCSA) – $964.6 million to FMCSA for several initiatives, including $526.5 million for Motor Carrier Safety Grants, $43.6 million for information technology modernization and $12 million for a medium-duty truck crash study.
· National Highway Traffic Safety Administration (NHTSA) – $1.3 billion requested to reduce traffic fatalities and crashes on the nation’s roadways, including funding for the newly formed Office of Automation Safety and for updates to the Corporate Average Fuel Economy standards and New Car Assessment Program.
· Federal Transit Administration (FTA) – $16.8 billion for FTA projects that support reliable, safe and accessible public transportation systems. Of the federal funds, $14.3 billion is designated for Transit Formula Grants, which uses a formula to distribute funding to municipalities for transportation projects.
· Federal Railroad Administration (FRA) – $3.2 billion requested to improve the safety and condition of the nation’s railroads and rail services. Amtrak was earmarked for $2.5 billion in grants, primarily for the Northeast Corridor and the national network of locomotives.
· Pipeline & Hazardous Materials Safety – Just over $400 million to conduct inspections, proactive monitoring and incident responses regarding hazardous materials around the country. The latest portion of funding, $82 million, is designed to reimburse states’ costs for pipeline safety inspectors.
· Maritime Administration – $859.7 million for Maritime to strengthen transportation systems and develop the next generation of port workers, including $86 million for the U.S. Merchant Marine Academy’s Capital Asset Management Plan and $80 million for the Port Infrastructure and Development Program.
· Great Lakes St. Lawrence Seaway Development Corporation – $40.6 million to support lock operations and develop infrastructure improvements on the St. Lawrence Seaway. $6 million was dedicated to the construction of a warehouse and Marine Services Office in Massena, New York.
· DOT Office of the Secretary – $1.8 billion for program and policy development, grants management and research supporting essential infrastructure, safety, equity and economic viability. $800 million is slated for the Mega Grant Program and Rebuilding America’s Infrastructure with Sustainability and Equity grants.
· Office of Inspector General – $122.2 million.
Many of the grant and loan programs offered by the DOT for local and regional municipalities were funded, in part, by the Infrastructure Investment and Jobs Act aka the Bipartisan Infrastructure Law of 2021—a centerpiece of the Biden-Harris Administration. However, notably, the Trump administration has criticized the previous administration’s ability to distribute grants efficiently.
Distributing grants and loans from federal programs, especially for transportation, can be a long process. Generally, municipalities will study the feasibility of a transportation project in accordance with federal, state and local laws and regulations before creating an estimated budget for project activities. Officials will submit these reports and studies, including requested funding, environmental impacts and timelines, to the federal government for funding to match municipalities’ commitments.
Through many federal programs, DOT may obligate funding to a municipal entity or applicant, awarding grants, loans, tax breaks or other funding relief to subsidize the total cost of a transportation project. Supplementing some of the costs, public and private partners can be essential to the funding, planning, development and implementation of new transportation projects. Despite this, application processes for funding can take years before projects can break ground.
The transfer of executive power will lead to a shift in funding priorities, especially in the energy and housing sectors and for developments in historically underserved communities.
The Trump administration has issued an executive order effectively suspending the $5 billion National Electric Vehicle Infrastructure (NEVI) Program, which funded electric vehicle (EV) charging stations and infrastructure around the country. Redirecting focus, the president will emphasize gas and fossil fuel-based energy sources to reduce the costs of energy for consumers and keep America competitive internationally.
Another federal funding program, the Community Development Financial Institutions Fund (CDFI), has been directed for elimination, according to an executive order. Since its inception in 1994, the CDFI has delivered over $8 billion in funding and $81 billion in tax cuts for community development financial institutions, local development organizations and financial institutions to invest in low-income communities and underserved populations.
Existing federal grant and loan programs, such as the Port Infrastructure Development Program (PIDP) and the Consolidated Rail Infrastructure and Safety Improvements Program (CRISI), have not been affected by the shift in federal priorities as of yet. PIDP and CRISI, which are significant federal supporters of port infrastructure and rail infrastructure, respectively, are designed to enhance the efficiency, capacity and safety of moving goods in, out and around the country.
Currently, DOT will accept applications for the next round of PIDP funding until April 30 and anticipates unveiling an additional notice of funding opportunity for CRISI in spring.
Some other federal grant programs that have remained undisturbed will provide funding opportunities for municipalities, contractors and public-private partners through FY2025, including the Federal-State Partnership for Intercity Passenger Rail program, several electric and passenger ferry programs and low emissions bus and facilities programs. DOT officials expect notices for funding opportunities for bus and ferry programs in spring and for the Federal-State Partnership for Intercity Passenger Rail by fall.
The reconciliation process for the FY25 budget is ongoing, however House Republicans have approved amendments to House Concurrent Resolution 14 (H.Con.Res.14), outlining the total federal budget, revenue targets and spending caps for FY25 and beyond.
The unofficial deadline for federal lawmakers to pass and enact a new budget will be Sept. 30, as the next fiscal year, FY2026, begins on Oct. 1. Interested parties may view the reconciled budget proposal on Congress.gov.
Image by Richard van Liessum from Pixabay
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