September 10, 2010
Obama Proposes $50B Upfront Investment <br>in Long-Term Surface Transportation Bill
President Barack Obama laid out a plan Monday during a Labor Day address in Milwaukee to jumpstart job creation with a $50 billion investment in highway, bridge, transit, high-speed rail, and aviation infrastructure that would be added to the first year of a six-year surface transportation reauthorization bill.
"Over the next six years, we are going to rebuild 150,000 miles of our roads -- that's enough to circle the world six times. That's a lot of road," Obama said in a 39-minute speech to a union audience during Laborfest at Henry Maier Festival Park. "We're going to lay and maintain 4,000 miles of our railways -- enough to stretch coast to coast. We're going to restore 150 miles of runways. And we're going to advance a next-generation air-traffic-control system to reduce travel time and delays for American travelers."
While the president did not cite a specific dollar figure for transportation investment in his remarks, the White House issued a three-page briefing paper containing $50 billion as the targeted upfront investment level. That amount presumably would be in addition to already planned spending for federal Fiscal Year 2011, which begins Oct. 1. The House of Representatives approved a transportation spending bill July 29 that contains about $45 billion for the Federal Highway Administration, $11 billion for the Federal Transit Administration, and $3 billion for high-speed and intercity passenger rail grants to Amtrak and states. The Senate has yet to act on the measure.
"We are highly supportive of President Obama's proposal to immediately invest $50 billion to rebuild roads, expand high-speed rail, and rehabilitate airport runways," said John Horsley, executive director of the American Association of State Highway and Transportation Officials. "We have demonstrated that investing in transportation infrastructure is one of the fastest ways to create and sustain jobs."
An AASHTO January 2010 survey of states showed 9,800 ready-to-go projects valued at nearly $80 billion.
"If Congress wants to pass legislation investing in our transportation infrastructure," Horsley said, "the states stand ready to put those dollars to work."
Horsley pointed out that state transportation departments' track record creating and sustaining jobs is excellent. More than 90% of American Recovery and Reinvestment Act-funded transportation projects are under contract. The February 2009 act allocated $48 billion for transportation projects in addition to regular annual appropriations. More than 74,000 direct, on-project jobs were created or sustained in the highway and transit sectors in July as a result of the recovery act's extra federal funding. (see Aug. 27 AASHTO Journal story and AASHTO's economic recovery website for more information on state DOTs' implementation of the recovery act)
During Monday's speech, Obama praised states for their outstanding work putting recovery act infrastructure dollars to work.
"Because of these investments, and the tens of thousands of projects they spurred all across the country, the battered construction sector actually grew last month for the first time in a very long time," the president said to applause.
Obama noted, however, that nearly one in five construction workers is unemployed. (see related story) The nation's overall unemployment rate has been stuck above 9% for 16 straight months, and there are currently almost 15 million Americans unsuccessfully searching for a job.
"It doesn't do anybody any good when so many hardworking Americans have been idled for months, even years, at a time when there is so much of America that needs rebuilding," he said. Front-loading a surface transportation reauthorization with extra cash in the first year "will not only create jobs immediately, it's also going to make our economy hum over the long haul."
The president also touched on how his infrastructure plan will help spur job creation during a Wednesday speech at Cuyahoga Community College in Parma, Ohio.
"When the housing sector collapsed and the recession hit, one in every four jobs lost were in the construction industry," Obama said. "That's partly why our economic plan has invested in badly needed infrastructure projects over the last 19 months. ... Now, there are still thousands of miles of railroads and railways and runways left to repair and improve. And engineers, economists, governors, mayors of every political stripe believe that if we want to compete in this global economy, we need to rebuild this vital infrastructure. There is no reason Europe or China should have the fastest trains or the most-modern airports -- we want to put people to work building them right here in America."
Several state DOT leaders issued statements Tuesday expressing their readiness to put additional federal transportation funding to work immediately.
"WSDOT and local agencies, and our private-sector partners, have proven that we can deliver projects on time and on budget, and that investing in transportation infrastructure is one of the fastest ways to create and sustain jobs," said Paula Hammond, secretary of the Washington State Department of Transportation. "We look forward to learning more details about the president's plan and helping shape programs so that Washington state communities and travelers will benefit."
President Outlines Priorities for Reauthorization Bill
For the first time, the president spoke about areas he wants to see emphasized in the next six-year surface transportation reauthorization bill: creating a national infrastructure bank, continuing to support states' development of high-speed rail, consolidating programs, and promoting competition and innovation in federal transportation grants. The White House fact sheet also notes a priority of expanding investments in safety, environmental sustainability, economic combativeness, and livability including "options that reduce oil consumption, lower greenhouse-gas emissions, and expand access to job opportunities and housing that's affordable."
The timing for Obama's plan is not clear. The last authorization law expired Sept. 30, 2009, and has been temporarily extended by Congress five times. The latest extension expires Dec. 31. (see March 19 AASHTO Journal story) The administration has maintained a position since June 2009 that it favors postponing surface transportation reauthorization until Spring 2011. Obama did not cite a target date for signing a reauthorization bill during Monday's speech nor does the White House fact sheet contain any mention of a timeframe.
Obama also did not mention a desired price tag for a six-year reauthorization bill, which House leaders have pursued at around $500 billion. The president instead laid out some general principles during Monday's speech in Wisconsin.
"We're going to continue our strategy to build a national high-speed rail network that reduces congestion and travel times and reduces harmful emissions," Obama said. "We want to cut waste and bureaucracy and consolidate and collapse more than 100 different programs that too often duplicate each other. So we want to change the way Washington spends your tax dollars. We want to reform a haphazard, patchwork way of doing business. We want to focus on less-wasteful approaches than we've got right now. We want competition and innovation that gives us the best bang for the buck."
The fact sheet contains more details about Obama's wish to create a national infrastructure bank.
"This marks an important departure from the federal government's traditional way of spending on infrastructure through earmarks and formula-based grants that are allocated more by geography and politics than demonstrated value," according to the White House document. "Instead, the bank will base its investment decisions on clear analytical measures of performance, competing projects against each other to determine which will produce the greatest return for American taxpayers."
The Senate Banking, Housing, and Urban Affairs Committee announced this week it will hold a Sept. 21 hearing on Obama's infrastructure bank concept. (see related story)
Obama said his $50 billion upfront investment in transportation projects would be fully paid for, but he did not mention increasing the federal tax on gasoline and diesel fuel in his remarks Monday or Wednesday. During a media briefing prior to Monday's speech, administration officials told reporters they propose paying for the transportation spending by asking Congress to close tax breaks for oil and gas companies as well as multinational corporations, The Associated Press reported.
U.S. Transportation Secretary Ray LaHood, who was in the audience Monday for Obama's address in Milwaukee, wrote on his blog Tuesday that states have already shown terrific progress on their recovery act transportation investments and that it makes sense to continue that progress with another dose of federal funding.
"You've seen the results across the country this summer: 33,000 miles of road improvements, enough to crisscross the nation a dozen times," LaHood wrote. "And even as those miles of roadwork are paving the way for a 21st century economy, they are also employing thousands of American workers."
Transportation Industry Reaction Mostly Favorable, But Key Details Lacking
The White House held conference calls Tuesday with transportation interest groups to brief them on the president's infrastructure plan. Key industry leaders released statements and said in media interviews this week that they are pleased to see Obama's call for greater transportation investment, but they need to see more facts to understand exactly what the administration is proposing.
Among the details up in the air is whether the administration will push for the $50 billion investment as part of the six-year surface transportation reauthorization measure or first as a single bill that would cover only a year and later be followed by a five-year authorization.
The American Road & Transportation Builders Association stressed it wants to see the upfront spending to create jobs enacted as part of a full six-year measure.
Passage of a robust, multiyear transportation authorization "is essential to assure predictability and continuity in the domestic transportation design and construction industry," said ARTBA President Pete Ruane. "The $50 billion investment proposed by President Obama must be part of a long-term reauthorization bill and not a stand-alone measure."
Motor club AAA said the president's plan is unlikely to go anywhere until it comes with a gas-tax increase to pay for it.
"There is no 'free money' with which to fulfill our nation's infrastructure needs," AAA President and CEO Bob Darbelnet said. "That's why AAA has not taken any funding option off the table -- including an increase in the federal gasoline tax -- in order to pay for a reformed federal program."
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