http://www.businessweek.com/news/2012-02-16/obama-proposes-doubling-highway-spending-on-military-savings.html

Bloomberg News

Obama Proposes Doubling Highway Spending on Military Savings

February 16, 2012

(Updates with LaHood in third paragraph. For more on the budget, see NI BUDG <GO>).

Feb. 13 (Bloomberg) -- President Barack Obama’s fiscal 2013 budget proposed almost doubling the amount spent on U.S. highway, bridge and mass transit projects by using money previously spent on military operations in Iraq and Afghanistan.

The White House budget released today proposes $476 billion over six years for surface transportation, and the president calls for an immediate $50 billion infusion in spending this year. It also increases a transportation lending program by four fold while reducing funding for airport grants.

“This transportation budget is fully paid for,” said Transportation Secretary Ray LaHood on a conference call with reporters. “This is real money.”

The Highway Trust Fund, which finances U.S. transportation projects using vehicle-fuel taxes, faces insolvency as soon as October, according to the Congressional Budget Office. Obama would transfer about $38.5 billion a year from the U.S. general fund for use on roads and bridges, offset by “reduced overseas military expenditures,” to supplement trust-fund income, the document said. No funding sources for transportation other than the trust fund were specified in last year’s budget.

Half of the money from reduced war expenditures would go to pay down the U.S. deficit, with the rest targeting infrastructure, LaHood said. The president and some Republicans have ruled out raising fuel taxes to fill the funding gap.

House, Senate Proposals

The House has proposed a five-year transportation spending plan of $260 billion. The Senate’s proposal is for $109 billion over two years. House and Senate committees have turned to non- transportation funding ideas to offset the difference between fuel-tax income and proposed spending in both bills, including having federal employees pay more toward their pensions and changing the tax treatment of some IRAs.

The Transportation Infrastructure Finance and Innovation Program, or TIFIA, would have financing authority of about $5 billion under the president’s budget. In fiscal 2012, financing authority was $1.23 billion. The TIFIA program provides loans to help pay for toll-road and other projects in combination with private financing.

The budget reduces grants to airports by $900 million. Larger airports would be permitted to raise more money for improvements by increasing so-called passenger facility charges on airline tickets, as grant money is directed more to small airports.

--Editors: Bernard Kohn, Cesca Antonelli

To contact the reporter on this story: Carol Wolf in Washington at cwolf@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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