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President Obama proposes $556 billion federal transportation bill

In his Fiscal Year 2012 budget proposal, President Obama recommended a $556 billion six-year federal transportation bill, almost doubling what was approved in SAFETEA-LU, the last — and now expired — piece of transportation legislation. The proposal illustrates the White House’s strong commitment to change the budget system – moving away from arbitrary federal formula funding to a system that makes existing transportation infrastructure more efficient, creates new financing tools, and demonstrates the value of innovative investments.  

The administration proposes to do this through key programs and initiatives, including a new National Infrastructure Bank and the Transportation Leadership Awards, a “race-to-the-top” style incentive program. The President’s plan also  prioritizes “fix-it-first” ahead of new spending; consolidates 60 U.S. Dept. of Transportation (DOT) programs into five, promotes planning and performance; and, for the first time, fully pays for the plan without increasing the deficit (although he does not outline any new revenues). 

The White House proposal would increase funding for road and bridge construction by 48 percent over the previous authorization. Even more encouraging, the President recommends a 127 percent increase in funding for public transit, to $119 billion over six years. This more than doubles the yearly funding level from the current $8 billion to $22 billion. It also levels out the disparity between the federal project cost share for highways (~80%) and transit (50% on average), and will create jobs; every billion spent on transit operations creates as many as 60,000 jobs. That thinking coincides with what Europe, Asia, the Middle-East, and South America are already doing. In fact, European countries, through the Europan Investment Bank, have been using public dollars to leverage capital markets and private investment for over 50 years.

Obama has proposed two interesting concepts that will leverage private dollars and drive innovation. A new National Infrastructure Bank would finance projects of regional significance. It would be funded with $5 billion per year upfront that would then leverage another $500 billion in private-sector investments, similar to the European Investment Bank. A new Transportation Leadership Award would provide $32 billion in incentives over six years, to reward states and regions that implement proven strategies that further DOT’s strategic goals, strengthen collaboration among different levels of government, focus on performance and outcomes; and encourage the development of a multimodal transportation system that connect people to opportunities and goods to markets.

Other key programs in the proposal include $53 billion over six years for High Speed Rail and an “Up-Front” $50 billion economic boost targeted to projects that will quickly create jobs, like highway infrastructure, transit state of good repair, New Starts, and Transportation Infrastructure Finance and Innovation Act (TIFIA) loans.

The President proposes to subject surface transportation spending to “PAYGO” provisions, which ensure spending and revenue are in line. The administration did not propose additional funding sources, but said it was “committed to working with Congress to ensure that the funding increases for surface transportation do not increase the deficit.”  

The proposal is a good blueprint that Congress can use as a basis for its transportation reauthorization bill. It includes the private sector, a key goal of House Transportation and Infrastructure Committee Chair John Mica (R-FLA) and for the first time expands the current Highway Trust Fund into a new Transportation Trust Fund with four accounts – one for highways, one for transit, one for high-speed passenger rail, and one for the National Infrastructure Bank.

U.S. Rep. Mica recently held listening sessions across the nation to solicit feedback from local transportation officials and citizens on the next six-year federal transportation bill.  Read MPC’s written testimony at the February 20th listening session in Chicago.

Transportation for America

MPC is a member of Transportation for America, a broad coalition seeking to align national, state, and local transportation policies with an array of issues such as economic opportunity, climate change, energy security, health, housing and community development. Subscribe to T4America’s blog to stay up to date on federal legislation related to these goals.

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