Going For Broke?

Going For Broke?

With a sweeping new surface transportation plan in his 2012 budget proposal, President Obama is setting out the ambitious multiyear vision much of the transportation world had been awaiting from the White House and what’s likely to be a pitched battle with deficit-slashing House Republicans.

Obama would spend $556 billion over six years, and absorb highway and transit programs into a broad Transportation Trust Fund that includes an expanded passenger rail program and a big-basket National Infrastructure Bank of $30 billion in grants and loans.

The fund could help intermodal corridors, multimodal projects including port upgrades and barge container services. That plan would lock in some grant accounts and spending programs launched in the 2009 stimulus bill, and replace federal aid programs that are now housed in an array of modal stovepipes. A separate set of Transportation Leadership Awards would provide $32 billion more to states and regions for new collaborative project planning.

Side Bar: A $50 Billion Jump-Start.

Obama would start it, as he telegraphed last autumn, with a first-year spending jump of $50 billion to help cover long-delayed infrastructure needs, split half between highway spending under traditional state formula allocations and among various grant and loan accounts from multimodal project grants to cross-border land ports of entry.

For the 2012 budget year that starts Oct. 1, the Department of Transportation would see spending authority jump to $129 billion from $104 billion in 2010 — when it was distributing new stimulus funds — and an expected $76 billion for 2011.

“The president has some very big dreams for transportation, and I think a very bold vision,” said Transportation Secretary Ray LaHood. Although the administration is still developing detailed legislative language for the multiyear program — and the proposal did not include a new funding mechanism — LaHood said at bottom “our budget is the (surface) transportation bill.”

The president’s team offered no new revenue idea to come up with more than $300 billion extra the plan requires in the next six years, but officials said the administration will work with Congress to come up with the money. LaHood also reiterated the president’s stance against raising federal per-gallon motor fuel taxes while the economy is still recovering from the recession.

Congress, for now, is heading in the other direction. The House began working on a plan to slash $100 billion from the rest of this year’s 2011 budget, by such measures as chopping off any unobligated transport stimulus money still on the table and taking a whack at the president’s cherished intercity passenger rail program.

“There’s no way to get from the House GOP philosophy to the DOT philosophy,” said Greg Cohen, president and CEO of the American Highway Users Alliance. “They couldn’t be more different.”

If nothing changes, he said, “at some point there’s going to be a big clash between these two theories” of how to invest in transport systems and the belief that the budget must be cut. Some industry observers said heads of federal transport agencies are feeling the push-pull of the political debate, as House appropriators say they will drastically cut some of the same programs that Obama would dramatically increase.

The Democratic-controlled Senate was yet to be heard from on 2011 budget cuts, but Congress must act before federal spending authority runs out March 4 or parts of the government could begin shutting down.

Industry specialists liked the size of the Obama transportation plan, even if some were still concerned about potential program details or how to pay for the plan.

“The broad picture is there, and I like the picture,” said Mortimer L. Downey, senior adviser to project engineering firm Parsons Brinckerhoff and a former DOT deputy secretary. “I like the fundamental idea of ‘big and bold’ and stating the needs,” he said. The president’s plan sets the stage for “a good debate” about the country’s transportation needs and how to pay for them, Downey said.

Janet F. Kavinoky, executive director of congressional and public affairs at the U.S. Chamber of Commerce, believes the missing revenue component is too large to ignore.

The Obama plan is “a big vision, but without leadership on funding, one that is not going to be realized,” she said. The Chamber, Kavinoky said, was “disappointed that the budget proposes expanding eligibility for uses of the Highway Trust Fund without addressing the underlying revenue needs for highways and transit, much less pinpointing additional revenue sources that would support the expansion.”

Highway interests noted the plan would add DOT-controlled grant accounts or other spending outside traditional state formula allocations from the Highway Trust Fund, but DOT officials assured them 90 percent of highway funds would remain under state formula controls.

The American Road and Transportation Builders Association called the plan “one of the boldest budgets in memory,” but cautioned it is “the first step in the annual budget process. It will face hard going in the Congress.”

The House and Senate also will write their own surface transport bills this spring and summer.

At the American Association of Port Authorities, President and CEO Kurt Nagle saw the DOT budget plan as “a mixed bag for seaports.”

Although the first-year $50 billion infrastructure spending boost includes a $2 billion grant pool that could include port work, the proposed I-Bank’s broad list of eligible projects would “cause funding for seaport-related infrastructure to be overshadowed by high-profile initiatives such as transit and intercity rail,” Nagle said.

The Obama budget also would cut spending on marine civil works by the Army Corps of Engineers, including a $6 million reduction in how much the Harbor Maintenance Trust Fund spends out while the fund’s uses expand. Concerned that this undercuts maintenance and development of navigation channels, Nagle said the AAPA “is greatly disappointed with this portion” of the budget proposal.

Inside the DOT, the plan also trims the Maritime Administration’s budget, partly by ending its shipyard and marine highway grants, although the I-Bank could help fund some of those projects. The proposal on paper would also wipe out 55 separate highway related programs, but folds them into five new DOT offices. For instance, a popular highway loan account would be funded enough in the first year to leverage up to $4.5 billion in new project finance, but would later disappear into the I-Bank’s offerings.

Contact John D. Boyd at jboyd@joc.com.