On August 13, 2010, states were notified that they had less than two weeks to rescind $2.2 billion in transportation funds to the Federal Highway Administration.
Michigan's nonmotorized community did not fare well in the latest round of rescissions - the process by which states are required to return unspent Federal funds to Washington. Michigan rescinded at a total of $59,689,106.00.
Rescissions are essentially a bookkeeping measure when properly administered. It allows USDOT to recoup unspent funds. However, some state DOTs have turned it into an opportunity to gut neglected bicycle and pedestrian funding sources in order to preserve favored programs.
LMB believes that all funding programs should receive equal consideration to others: they should be spent proportionally and rescinded proportionally. Instead, some of the strongest programs for bicycle and pedestrian projects - Transportation Enhancements (TE), Congestion Mitigation & Air Quality (CMAQ) - have traditionally suffered higher rescission rates than other programs.
Apportionment, Obligation Authority and Rescissions
It is important for advocates to understand how much money is available in funding programs like Enhancements and CMAQ so they can help bicycle and pedestrian projects compete. Unfortunately, it is complex.
There are two things that limit the money available in a program: apportionment and obligation
Apportionment is the amount annually allotted to each spending program based on the transportation authorization bill and annual appropriations approved by Congress.
Obligation Authority is a limit on total spending by a state in a given year across all programs. Because Congress doesn't have enough money to fully fund all apportionments they limit the total amount that a state can spend. This is the actual maximum that can be spent overall; it is not program specific.
This is where the trouble begins. This means that the balance for many programs keeps growing and states will never have enough obligation authority to spend the balances in all their programs. Ideally the obligation authority should be spread proportionately among programs, but this never happens. States favor some programs over others and the programs that provide greatest opportunity for bicycle and pedestrian projects often get the least priority for obligation authority.
More Info on Rescissions