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ARTBA: Where Will Transportation Funding Come From?

ARTBA sees no potential of tax reform moving through Congress before the November elections, which would endanger transportation funding.

Thu March 06, 2014 - National Edition
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The Obama Administration’s budget for FY 2015, released March 4, recommends investing $90.9 billion in transportation improvements, a proposed increase of $18.6 billion over the amount enacted for FY 2014, or a 25.7 percent increase.

In a follow up to the President’s February 26 outline of his MAP-21 reauthorization priorities, the administration again called for a four-year, $302 billion surface transportation program from FY 2015 through FY 2018. The new proposal suggests combining the federal passenger rail program with the highway, transit and safety programs to create one surface transportation authorization, most of which would be funded out of the current Highway Trust Fund (HTF). The President proposes augmenting current HTF revenues with $150 billion from “transition revenue generated from pro-growth tax reform.”

Within the surface transportation proposal, the President suggests investing $199.2 billion in activities administered under the Federal Highway Administration (FHWA). This is a $30.8 billion, or 18 percent, increase over current funding levels plus inflation over the four year life of the bill. While the proposed increase is a welcome step in the right direction, it should be noted that $25.4 billion of the $30.8 increase is slated for investments in new operations beyond the core highway program authorized in MAP-21. This includes $10 billion for a multi-modal freight program and $2 billion for a new competitive program “to incentivize transformative programmatic reforms that improve transportation outcomes” the Administration is calling FAST (Fixing and Accelerating Surface Transportation). Also new to the President’s plan is a $13.4 billion “Fix-it-First” initiative called the Critical Immediate Investments Program (CIIP). This plan aims to “reduce the number of structurally deficient Interstate Highway System bridges, target safety investments and support a state of good repair on the National Highway System.”

The federal transit programs would receive $72.3 billion over the four year life of the proposed law, including $10.8 billion in transit capital grants. This marks a $27.9 billion, or 63 percent, and $2.7 billion, or 33 percent, increase respectively. The administration also calls for $2 billion in FAST program funds for transit, in addition to the $2 billion funded through the highway program. As mentioned previously, the proposal would bring the Federal Railroad Administration into the surface transportation bill, and would authorize $19 billion for passenger rail programs.

The reauthorization proposal includes $5 billion for the Transportation Investment Generating Economic Recovery (TIGER) multi-modal, discretionary grant program first created as part of the American Recovery and Reinvestment Act of 2009 and regularly funded through the annual appropriations process since. The Transportation Infrastructure Finance and Innovation Act (TIFIA) loan and loan guarantee program under FHWA would receive $1 billion per year each of the four years of the proposed reauthorization, the same financing level as FY 2014. The plan also calls for $3.7 billion and $3 billion for highway and motor carrier safety, respectively.

Elsewhere in the budget plan, funding for airport capital grants would decrease from $3.35 billion in FY 2014 to $2.9 billion in FY 2015, a cut of $450 million. The administration would attempt to focus the $2.9 billion on smaller commercial and general aviation airports that otherwise don’t have the resources to raise capital. However, the administration proposes to increase the Passenger Facility Charge, a per enplanement commercial ticket charge airports, from $4.50 to $8.00 to allow medium and large airports the ability to raise additional revenue for their own capital needs.

While the Obama Administration should be applauded for coming forward with a surface reauthorization proposal, with DOT Secretary Anthony Foxx saying March 4 a formal reauthorization bill will be sent to Congress in the coming months, questions remain about how the new proposal would be paid for. The idea of using revenues from tax reform legislation to shore up the HTF and pay for the next surface authorization has been expressed by both the administration and House Ways and Means Committee Chairman Dave Camp (R-Mich.) and both should be commended for their recognition of the problem. However, many in Washington, including members of the House and Senate leadership, see no potential of tax reform moving through Congress before the November elections. Therefore, ARTBA members and staff need to keep pushing Congress and the President to come up with a tangible plan with actual revenues for the HTF before its projected insolvency in August, 2014.

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