Proposal includes 6-year reauthorization bill, infrastructure bank

President Obama's proposed fiscal 2012 budget calls for a six-year, $556 billion surface transportation reauthorization plan that would boost spending for high-speed rail, public transit and livability programs.

Following Obama's promise to "out-innovate, out-educate and out-build the rest of the world," the proposed budget raises the Department of Transportation's overall funding by $53 billion over 2010 levels. Much of the increase is directed to the transportation reauthorization, including $8 billion for high-speed rail and $30 billion for a national infrastructure bank to fund major transportation and public works projects.

The proposal shows a $1.3 billion drop in discretionary resources for fiscal 2012, excluding $109 billion in obligation limitations. Proposed increases for several programs, including the Federal Highway Administration, the Federal Railroad Administration and the Federal Transit Administration, are moved to the Transportation Trust Fund, which has a separate funding source (currently the federal gas tax).

The proposal for a surface transportation reauthorization bill is the administration's first such detailed plan to replace the current highway bill, which expired in September 2009 and has been continued with a series of stopgap extensions. The proposed program represents a 60 percent increase over inflation-adjusted levels for previous transportation reauthorizations but would combine rail and transit into a single trust fund.

The six-year package would be kicked off with a $50 billion "boost" above current spending levels to "create hundreds of thousands of jobs in the short-term." The initial investment, which Obama originally pitched in a Labor Day speech on investment, is designed to take advantage of low construction pricing and kick-start the sagging construction industry.


The bill also places a larger focus on transit and rail as part of Obama's goal to provide 80 percent of Americans with rail access in 25 years. The budget would combine highway, transit and rail funding, including funding for Amtrak, into a single transportation trust fund as a way to streamline funding and cut waste.

As announced last week, the budget includes a proposed $53 billion, six-year investment in passenger rail, including $8 billion in fiscal 2012. The investment, which is accompanied by a consolidation of existing rail programs, builds on the $10.5 billion already spent on high-speed rail from the economic stimulus and 2010 budget (Greenwire, Feb. 8).

Overall, transit programs would get $119 billion over six years, more than doubling previous spending in a bid to boost capacity and ridership.

Robert Puentes, a transportation expert with the Brookings Institution, said the budget showed that the administration was serious in its effort "to put some more balance into a program that's been dominated on the highway side." The White House has been adamant about directing more transportation resources to nonautomotive sources to create a multi-modal transportation network that is more environmentally friendly and safer.

Transportation Secretary Ray LaHood said he hopes to work with Congress to have a six-year transportation bill on the president's desk by August. House Transportation and Infrastructure Chairman John Mica (R-Fla.), Senate Commerce Chairman Jay Rockefeller (D-W.Va.) and Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) are all said to be working on a bill with the August goal in mind.

However, there is concern about how to pay for the bill, since the Highway Trust Fund is currently fed by the gas tax. Raising the gas tax is not seen as politically viable, and congressional Republicans have balked at drawing more money from the general fund to cover the transportation bill.

The budget does not specify an additional funding source for the transportation reauthorization but says Obama "is committed to working with the Congress to ensure that funding increases for surface transportation do not increase the deficit." Following recommendations from the national Commission on Fiscal Responsibility and Reform, the budget would require that all programs in the reauthorization be subject to pay-as-you-go spending.

Last year, the administration and Congress put the brakes on a $500 billion, six-year proposal from former T&I Chairman Jim Oberstar (D-Minn.) because of the high price tag and lack of a funding mechanism.

Infrastructure bank

Obama also asks for $30 billion to create a national infrastructure bank, which would provide loans and grants to support public works projects. The bank would offer funding with an eye toward leveraging federal funds with state, local and private investors and is meant to help "transportation and transportation-related projects that provide a significant economic benefit to the Nation or a region."

"For example, the I-Bank could support improvements in road and rail access to a West Coast port that benefits farmers in the Midwest or a national effort to guarantee private loans made to help airlines purchase equipment in support of the Next Generation Air Transportation System (NextGen)," the budget states.

The $30 billion would be financed through the Transportation Trust Fund and would be part of the administration's six-year reauthorization proposal.

Treasury Secretary Timothy Geithner announced the infrastructure bank plans last week. Obama proposed such a bank in his two previous budgets, but appropriators would not give him the funding without separate congressional action creating the bank.

Rep. Rosa DeLauro (D-Conn.) and Sen. John Kerry (D-Mass.) are championing similar I-Bank proposals in Congress this spring.


The budget also directs more funding to the administration's goal of fostering livable communities, defined in the budget as "places where coordinated transportation, housing and commercial development gives people access to affordable and environmentally sustainable transportation."

The fiscal 2012 budget sets up livability funding across a number of agencies, including DOT, EPA and the Department of Housing and Urban Development. The Federal Highway Administration would get $4.1 billion in 2012 and $28 billion over six years for a livability grant program, while HUD would get $150 million to create planning incentives for communities.

The previous budget requested $500 million for livability initiatives as well as millions for the Transportation Investment Generating Economic Recovery (TIGER) grant program.

The fiscal 2012 budget requests $2 billion for a single round of competitive TIGER grants as part of the surface transportation reauthorization.

The budget also includes nearly $32 billion for a competitive grant program for states and metropolitan areas to reform transportation spending. The program -- which Brookings' Puentes compared to the Race to the Top education competition -- is designed to help states adopt reforms in areas including livability, transportation safety and demand management.

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