Obama proposes more robust transportation funding plan

White House augments GROW America Act by two years, $178 billion as part of 2016 budget proposal.    The White House, in its fiscal year 2016 budget proposal released Monday, recommended to Congress a six-year, $478 billion surface transportation reauthorization that increases the size and scope of the four-year, $300 billion plan President Obama rolled out a year ago.
   The new plan also increases the amount of funding to $18 billion, up from $10 million, for a first-time fund set aside for regional freight transportation projects, especially on major corridors that experience significant bottlenecks. Half the money would go to states under a normal formula approach and the rest via a competitive grant program. 
   The updated GROW America Act would be paid for through a one-time windfall associated with corporate tax reform, although political observers question the chances of any tax overhaul in the near future even though several Democrats and Republicans have recently advanced similar ideas.
   Funding for highway aid to states will begin to run dry at the end of May, when a temporary appropriation of $11 million from the General Fund to prop up the Highway Trust Fund is used up. The HTF is the repository for highway user fees, such as gasoline and diesel fuel taxes and excise taxes on the sale of heavy duty trucks and tires. Inflation has eroded the buying power of the HTF because fuel taxes have not been increased since 1993. At the same time, more efficient vehicles that consume less fuel are reducing potential revenue, while demand remains high at the state and local level for maintenance and upgrade of roadways.
   Hill watchers expect Congress to pass some sort of continuing resolution to keep highway programs operating at their current levels and states from postponing construction work, but agreeing on a long-term transportation reauthorization could take longer because of disagreements over new sources of revenues. So far, few are willing to consider raising the gas tax, even though several business groups have said their members are willing to pay more if the money goes for pure transportation investments. Congress has also adopted a pay-as-you-go approach towards the deficit, meaning that any increases in one area of the budget have to be offset by reductions elsewhere.
   Sen. Tom Carper, D-Del., said the president’s plan “offers only a temporary solution. Instead, I favor restoring the purchasing power of the federal gas tax to create a permanent funding source to pay for this investment for decades to come.” 
   The President’s plan includes $317 billion to rebuild roads and bridges, an increase of almost 29 percent over current investment in the system and $143 billion to improve transit and passenger rail service. Another $1 billion per year would go towards credit assistance for national or regionally significant transportation projects that have private investors through the TIFIA program.
   The transportation budget again proposes the establishment of a national infrastructure bank that would essentially provide seed capital for projects supported by public-private partnerships. It also includes President Obama’s recent action to create a new tax-exempt Qualified Public Infrastructure Bond program that would extend the benefits of municipal bonds to partnerships whereby local governments outsource financing and management of facilities under long-term leases to private companies.
   The Transportation Infrastructure Generating Economic Recovery grants program would be increased to $1.25 billion per year, up more than 150 percent from last year’s $500 million appropriation.
   The budget also calls for the creation of a new Office of Safety Oversight to improve safety efforts across all modes of transportation. It also features measures to streamline the federal permitting process and conduct more timely reviews. It dedicates approximately $6 billion over six years for a competitive grant program designed to create incentives for states and local governments to adopt critical reforms in a variety of areas, including safety and peak traffic demand management. The fiscal year 2016 budget includes $956-million initiative known as NextGen to modernize the nation’s air traffic control system with new satellite-based technology that will make air travel more efficient and safe.
   The increased emphasis on freight-related infrastructure investment came as welcome news to many private and public sector interests, but the seaport industry expressed disappointment with cuts for programs to dredge harbor channels so that larger vessels can efficiently reach wharves and support growth in trade.
   An analysis by the American Association of Port Authorities found that the budget would reduce the U.S. Army Corps of Engineers’ funding from the $2.33 billion appropriated last year to $1.95 billion, if adopted by Congress. The White House would apply the same level of Harbor Maintenance Tax receipts as it requested last year even though, under the Water Resources Reform and Development Act enacted last summer, the amount is supposed to incrementally increase 10 percent each year until all the money collected is used for its intended purpose instead of masking the budget deficit.
   Last year, Congress appropriated $1 billion for maintenance dredging, and under the new formula it appropriated $1.1 billion in December for the Army Corps in fiscal year 2015.
   The Harbor Maintenance Trust Fund collected $1.8 billion from taxes on waterborne imports and cruise passengers last year, and revenue is expected to reach $1.93 billion in the current calendar year.
   The funding target for fiscal year 2016 is $1.32 billion, but the President’s request is for $915 million.
   The President’s budget request for the Corps’ coastal navigation construction program also dropped from $97 million to $81 million. If enacted, it would represent a 16 percent decline to its lowest level in more than 10 years. 
   The 10 waterways receiving funds include the Port of Charleston in South Carolina and Port Manatee in Florida.
   The budget contains almost $20 million towards dredging the Port of Charleston’s harbor to a depth of 52 feet. The Army Corps gave preliminary approval to the project last year and the recommendation exceeds last year’s total by $5 million. Port Manatee would receive $700,000 to cover the cost of a feasibility study to take the navigation channel from 40 to 45 feet. 
   “These potential benefits to landside freight transportation, however, could be heavily for naught if the budget’s proposed cuts to waterside infrastructure programs are adopted,” AAPA President Kurt Nagle said in a statement.
   At an AAPA meeting in Tampa last week, Nagle and other port directors explained that the surface transportation bill is important to help fund infrastructure connections to ports so that cargo can move seamlessly between modes at a reduced cost.
   “The Corps of Engineers’ budget proposal falls well short of the waterside maintenance and modernization needs of this country,” Nagle said. “Our nation is at a critical point in maintaining our international competitiveness, and implementation of the fiscal year 2016 budget request would result in trade-related infrastructure losing further ground at a time when we are already behind many of our competitors.”
   The AAPA said it remained opposed to continued attempts by the administration to move management of a consolidated National Preparedness Grant Program to the state level. The program includes grants for port security.
   The Environmental Protection Agency’s budget only requests a third of the current $30 million funding level for the Diesel Emissions Reduction Act, which has been successful in helping the port sector reduce air emissions from older diesel engines through subsidies for new engines or retrofits of emission-control technology. Last year, the President recommended eliminating DERA funding all together. Congress has authorized the program at $100 million.
   AAPA officials say that investment in ports is money well spent during tight budgets because of the increased trade, jobs and tax revenues the facilities generate.