Proposed White House FY 2016 budget includes plans for new six-year $478 billion transportation bill

Transportation infrastructure received a fair amount of attention in the White House’s proposed Fiscal Year 2016 budget, which was released yesterday.

This is welcome news, considering the many obstacles United States transportation infrastructure is facing, including a dwindling Highway Trust Fund that has been on the edge of insolvency for several years, coupled with the fact that the country has dropped from 7th to 18th globally regarding the quality of its roads, according to the most recent World Economic Forum rankings.

Some of the most notable transportation infrastructure and freight-related highlights of the proposed budget include:
-$478 billion for a six-year transportation reauthorization proposal geared towards improving safety, supporting critical infrastructure projects and job creation while improving the country’s roads, bridges, transit systems, and railways;
-providing $1.25 billion per year for the TIGER grant program, which ensures that economic funding is rapidly made available for state and local transportation infrastructure projects and that project spending is monitored and transparent;
-implementing a six-year, $18 billion freight program focused on eliminating existing freight transportation bottlenecks and also improve the efficiency and safety of moving goods in support of the President’s National Export Initiative;
-providing $6 billion over six years to cover the subsidy cost of providing credit assistance for nationally or regionally significant transportation projects through the Transportation Infrastructure Finance and Innovation Act, which leverages private sector investments in public infrastructure projects;
-developing a $29.4 billion, six-year Critical Immediate Safety Investments Program to provide targeted infrastructure investments toward bridges and roads that are deficient and pose a safety risk; and
-modernizing the infrastructure permitting process by cutting through red tape and getting more timely decisions on Federal permits and reviews

White House officials said that this proposed budget included significant investments to repair the existing infrastructure and build the infrastructure of tomorrow in smart, efficient, and cost-effective ways.

What’s more, they said that by reinvesting the transition revenue for the six-year, $478 billion surface transportation reauthorization proposal from pro-growth business tax reform, it will ensure the health of the Highway Trust Fund for another six years, which is two years longer than its 2015 budget GROW AMERICA proposal.

The total FY 2016 proposed budget for the Department of Transportation calls for $94.7 billion in discretionary and mandatory budgetary resources.  And the White House said that funding would come, in part, from savings from comprehensive business tax reform, which can help create jobs and spur investment, as well as ensure a fairer and more equitable tax system that eliminates loopholes which reward companies for moving profits overseas and allow them to avoid paying their fair share. It would also use savings from reforms to the business tax system to fully offset the needs of the Highway Trust Fund’s needs.

A New York Times report stated that about half of the funding for the proposed six-year, $478 billion surface transportation reauthorization would be paid for by taxes on offshore profits at 14 percent, which would raise nearly $240 billion in one-time revenues for the federal government to use to finance a new transportation trust fund, and an additional $240 billion would come from the federal tax on gasoline and other revenue sources.

“In the GROW AMERICA Act, the Administration’s multi-year surface transportation proposal released in 2014, President Obama called for an unprecedented $10 billion for freight infrastructure, spent over four years,” said Leslie Blakey, executive director of Washington, D.C.-based Coalition for America’s Gateways and Trade Corridors. “In yesterday’s announcement, the President increased this request to $18 billion, spent over six years, with a commitment to transmitting the updated GROW AMERICA Act to Congress again in the coming weeks. Freight funding distribution will mirror the 2014 GROW AMERICA Act by splitting the money evenly between formula dispersal and a competitive grant program designed to resolve the most egregious bottlenecks.”

Blakey also noted that the Administration’s funding proposal, which suggests dedicating funds from corporate tax reform to pay for the program, aligns with proposals by both Republicans and Democrats in recent months. And she called it a “logical approach,” as America’s commerce benefits from transportation mobility, particularly freight mobility, and corporations’ tax dollar investment in the system will return value well beyond their contributions.

James Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan, said in an interview that the proposed streamlining of infrastructure permitting process is likely to be well-received in a bipartisan manner––and within transportation infrastructure circles––should it be included in the final budget.

One thing made clear in the proposed budget, he explained, was that any chance of an increase in the federal gasoline tax is not a reality, as members of Congress on both sides of the aisle are reluctant to call for one, even though it has not been raised since 1993.

“Now, we have a debate on the horizon about to use various [funding] proposals and schemes that are floating around to either entice companies to bring offshore profits back at an attractive tax rate, or, in effect, coerce them to either bring them back or to accept a tax whether they bring offshore tax profits back or not, which the Administration is proposing” he said. “That is going to be a pretty robust debate.”