TRANSPORTATION:

Proposal creates infrastructure bank, adds $1B for high-speed rail

President Obama's proposed fiscal 2011 budget would create a national infrastructure bank to fund major transportation projects and provide an additional $1 billion for high-speed rail projects.

As expected, the request for overall spending on the two largest federal ground transportation programs, highways and transit, remained relatively constant from the previous year. The federal highway program would receive a $200 million bump to $41.3 billion, and transit investment would climb roughly $70 million to $10.8 billion.

The infrastructure bank -- called a National Infrastructure Innovation and Finance Fund -- would be used to expand existing federal transportation investments by providing direct federal funding and seed money for large-scale capital project grants that "provide a significant economic benefit to the nation or a region."

Obama requested $4 billion to launch the bank, $2.6 billion of which would be handed out in grants or loans during fiscal 2011. Roughly $270 million would be used for administrative, planning and project analysis costs, with the remaining carried over to the next year.

"The National Infrastructure Innovation and Finance Fund will establish a new direction in federal infrastructure investment that emphasizes demonstrable merit and analytical measures of performance," the budget states.

Obama requested $5 billion to launch the bank last year, but appropriators balked at providing the cash until Congress first passed legislation that would officially create the bank. During his presidential campaign in the summer of 2008, Obama called for a total of $60 billion over 10 years for the bank.

A number of transportation advocates -- including Pennsylvania Gov. Ed Rendell (D), the Center for National Policy and the American Association of State Highway and Transportation Officials -- have pushed lawmakers to launch the infrastructure fund. Senate Banking Chairman Chris Dodd (D-Conn.) has said that creating it will be one of his top priorities this year, his last before he retires from the Senate (E&ENews PM, Jan. 20).

High-speed rail, livability

Obama also asks for $1 billion for high-speed rail. Last year, the president asked for $1 billion annually for five years to fund the rail projects. However, Congress upped the investment to $2.5 billion for fiscal 2010.

That cash is on top of the $8 billion that the president secured in last year's stimulus for his vision of a nationwide high-speed rail network. DOT handed out all $8 billion last week, dividing the cash among 31 states. The largest grant, $2.35 billion, went to California.

Republicans and some Democrats have criticized Obama's decision to spread the cash so thin, arguing the money would have been better invested in only a few major projects that could rival the top speeds of the European and Asian bullet trains many in Congress have lauded.

According to the budget, DOT would have the right to spend the additional $1 billion the president is asking for on any passenger rail project, even if it is unable to reach the 110-mile-per-hour speed necessary for a federal "high-speed" designation. "FRA also may provide grants for intercity passenger rail capital projects unrelated to high-speed rail service," the budget states.

Obama also is asking for more than $500 million to help state and local governments make more sustainable transportation investments as part of the administration's much-hyped "livability" initiative.

The cash will be used to encourage regional and community planning efforts that integrate transportation, housing and land use.

"This approach aims to reduce greenhouse gases, improve mobility and transportation access to economic opportunity, and improve housing choices," the budget says.

Trust fund, highway bill

The administration remains committed to putting off rewriting the current multiyear bill that provides the bulk of federal funding for roads, bridges and transit systems until March 2011.

"Careful consideration is needed to design a federal surface transportation program that leads to higher performing investments, increases people's transportation options, promotes a sustainable environment, and makes our economy more productive," the budget states.

The current highway law was set to expire at the end of September 2009, but the federal programs have been continued by a series of stopgap extensions.

The largest holdup for lawmakers hoping to write the next bill is figuring out a way to pay for it. House Transportation and Infrastructure Chairman James Oberstar (D-Minn.) has done the most work on crafting a successor, but his six-year, $500 billion proposal stops short of providing an alternative to the federal fuel taxes that currently fund the program.

Inflation and increases in fuel economy have left gas tax receipts unable to keep pace with federal spending. The Highway Trust Fund, the federal account that pays for most road and transit work, is expected to finish fiscal 2010 more than $1 billion short and end fiscal 2011 roughly $11.6 billion in the hole, according to Obama's budget request.

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