AASHTO Journal, 6 February 2015
President Obama sent Congress a budget plan with a six-year, $478 billion road, transit and rail proposal that drew industry praise for helping build momentum on infrastructure, while some lawmakers including a senator in the GOP leadership said they are working on their own funding plans.
While the Obama surface transportation proposal will be followed by a rewrite of the bill the administration offered last year to little congressional support, this time it included a detailed funding measure that would levy a onetime 14 percent tax on companies’ foreign earnings left overseas and devote those receipts to infrastructure.
That is different than some other ideas on Capitol Hill linked to voluntary low-tax repatriation or outright taxation of those foreign profits, but close enough that it puts some lawmakers in the same general area for replenishing the Highway Trust Fund.
MOVEMENT IN CONGRESS
Sen. Roy Blunt, R-Mo., who is on the Appropriations and Commerce committees and vice chairman of the Senate Republican Conference, said in response to the Feb. 2 budget proposal: “I’m in discussions with my colleagues in the House and Senate to determine the best way forward to address our country’s overall infrastructure needs, as well as specific funding for a multi-year surface transportation bill, and to do so without raising gas taxes.”
Blunt said that “unlike the president’s proposal, my colleagues and I believe we can create a new innovative financing tool and have the resources to fund a six-year highway bill at lower repatriation rates, which ultimately means a better deal for Americans and a better incentive to bring this money back home.”
The senator also said that prior to Obama’s January State of the Union address, he was part of a bipartisan group of Senate and House members who wrote the president saying “we can use overseas earnings through a deemed repatriation to provide a revenue source for both the highway trust fund and for an independent infrastructure bank.”
Since then, the AASHTO Journal has reported on separate bipartisan repatriation measures to be introduced by senators and House members.
In his fiscal 2016 budget plan, the president proposed raising about $238 billion through its foreign earnings tax and add that to the roughly $240 billion the Highway Trust Fund is projected to receive over the next six years through dedicated fuel and equipment charges on road system users. As he proposed before, Obama would add passenger and freight rail programs to create a broader Transportation Trust Fund that extends beyond the HTF’s current highway and transit programs.
“Our budget proposal lays the foundation for a future where our transportation infrastructure meets the demands of a growing population and an economy that depends on the free flow of freight,” said Transportation Secretary Anthony Foxx. But he said that depends on Congress passing “a long-term reauthorization to put Americans to work rebuilding America.” More details of the administration plan are listed below.
INDUSTRY REACTION
Bud Wright, executive director of the American Association of State Highway and Transportation Officials, said the administration through its budget proposal showed “leadership that has set the stage for a serious discussion about the next surface transportation bill.” Wright also said, “We know the hardest conversations will involve how to fund infrastructure investments.”
At the American Public Transportation Association, CEO Michael Melaniphy said, “The proposal would create new, dedicated funding for public transportation, intercity passenger rail and highways, to better address needs in all these areas. This higher level of investment would not only help to address the aging infrastructure needs of public transit systems, but also allow for expanded public transit systems to meet the growing demand.”
Pete Ruane, CEO of the American Road and Transportation Builders Association, said, “The president’s budget recognizes the obvious. Status quo federal investment levels in America’s highways, bridges, and transit systems just won’t cut it anymore and isn’t a formula for strong economic growth. Passage of a robust, six-year transportation investment proposal as envisioned by the president would send the right signal to states planning new projects and to private sector companies contemplating whether to hire workers and make capital investment decisions.
The American Association of Port Authorities saw pluses and minuses for the budget plan, since the proposed landside spending could help freight shipments headed to and from ports, but proposed cuts in waterway projects could hurt.
AAPA President Kurt Nagle said: “We’re pleased to see and support the increased funding requested for surface transportation infrastructure, but deeply troubled by the proposed cuts to maintenance and modernization of federal navigation channels, the critical waterside infrastructure that connect our ports and nation to the world marketplace.”
Each of the association executives also said they plan to remain active in the unfolding budget and transportation authorization processes.
AASHTO’s Wright: “We look forward to working with the president and Congress on developing a new transportation bill supported by a long-term, sustainable source of funding.”
Ruane at ARTBA added that the immediate need is replenishing the Highway Trust Fund past May, so he urged the president and Congress “to check political expediency at the door and work together to quickly find a permanent funding solution for the nation’s transportation networks.” Melaniphy said, “APTA recognizes that the revenue solution remains to be determined. However, the time has come to act.”
HIGHLIGHTS OF DOT PROGRAMS
By transportation program category, the president’s budget proposal includes:
–$317 billion over six years for road and bridge programs, or 29 percent above fiscal 2015 enacted levels. However, core highway programs that distribute funding to states by formula only receive an inflationary adjustment, as nearly all the proposed funding increase would be for new programs.
That includes $29.4 billion over six years for “critical immediate safety investments.” A new $18 billion multimodal freight program run by the Federal Highway Administration would start at $1 billion in 2016 and reach $4 billion in 2019, for projects that tie in other transportation modes. The plan would also let the FHWA administer $500 million a year in competitive FAST grants for “fixing and accelerating surface transportation.”
–$117 billion for transit, which would increase it 79 percent over 2015 levels. A Department of Transportation explanation said that increase “will enable the expansion of new projects that improve connectivity, such as light rail, streetcars and bus rapid transit, in suburbs, fast-growing cities, small towns, and rural communities, while still maintaining existing transit systems.” The Federal Transit Administration would also receive $500 million a year for FAST grant awards.
–$28.6 billion for Amtrak and other passenger rail programs. That includes a funding request of $5 billion for the Federal Railroad Administration just for fiscal 2016, up from $1.6 billion in 2015. That would increase federal support for Amtrak’s current passenger service to $2.44 billion the first year, and create a $2.3 billion account to invest in rail system expansions and upgrades. The six-year plan includes spending $3.05 billion to help commuter railroads build automated collision-avoidance systems.
–The DOT’s TIFIA loan program would be maintained at $1 billion a year, which leverages up to 10 times that much in total project financing.
–The plan would sharply expand the department’s TIGER infrastructure grant program to $1.25 billion a year from $500 million this year.
–Separately from the DOT programs, the proposal aims to increase private sector project investments by creating “an independent National Infrastructure Bank to leverage private and public capital to support infrastructure projects of national and regional significance.” It would also create two types of tax incentivized bonds to help woo private investors.