Earlier today, President Barack Obama released his approximately $4 trillion budget proposal for Fiscal Year 2016, which begins on October 1 of this year. While the President’s proposed budget covers everything from defense to diseases, he has included a particularly ambitious proposal for transportation.
The President’s proposed budget provides $94.7 billion in funding for the Department of Transportation (“US DOT”), covering infrastructure development and safety enhancement in highways and bridges, transit, railroads, and aviation. The President is proposing a one-time, mandatory 14% tax on American-based companies’ overseas profits to help fund the Highway Trust Fund, along with the current gas tax. Similar “repatriation” proposals have been made in the past by both Democrats and Republicans.
In particular, the proposed budget includes a $478 billion, six-year surface transportation authorization, including the following highlights:
- A permanent authorization of the Transportation Investment Generating Economic Recovery (“TIGER”) program, which was first implemented under the American Recovery and Reinvestment Act of 2009, and $1.25 billion per year to the TIGER program each year of the surface transportation authorization bill;
- $18 billion to address freight bottlenecks;
- Increasing transit and inter-city passenger rail funding to $144 billion;
- $1 billion per year for the Transportation Infrastructure Finance and Innovation Act program, which provides credit assistance to projects of national or regional significance;
- Funding for a new Interagency Infrastructure Permitting Improvement Center and a Permitting Dashboard within the US DOT, both intended to modernize the permitting process for infrastructure projects;
- A new Fixing and Accelerating Surface Transportation program, which will dedicate $6 billion to incentivize state and local agencies to improve safety and address peak traffic demand management;
- Establishing a National Infrastructure Bank, with $7.703 billion allocated over the next decade to help leverage public and private investment in infrastructure of national or regional significance; and
- Creating two new bond programs:
- Allocating $258 million over the next decade to American Fast Forward bonds, which are taxable bonds modeled after Build America Bonds and which provide state and local governments an alternative to traditional tax-exempt bonds; and
- Tax exempt Qualified Public Infrastructure Bonds, which may be used on eligible projects such as airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water, sewage facilities, solid waste disposal facilities, and qualified highway or surface freight transfer facilities owned by state or local governments and available for general public use.
The proposed surface transportation authorization in the President’s budget is different from last year’s GROW AMERICA Act proposal in two significant ways: (1) the new proposal will last six years; and (2) last year’s proposal did not include a formula for funding.
It should be emphasized that the President’s proposed budget is just that – a proposal. Congress is required to take action on transportation and all other policy areas which, along with a Presidential signature, will enact changes. With the most recent fix to the Highway Trust Fund expiring at the end of May 2015, work on this issue cannot start soon enough.