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On Monday, President Obama released his proposed budget for Fiscal Year (FY) 2016, highlighting investment in the growth of the nation. Among the many initiatives recommended in this budget framework, he urges that “our Nation’s businesses and workers also need a stronger infrastructure that works in the new economy—modern ports, stronger bridges, better roads, faster trains, and better broadband.” Included in his budget is a reworked GROW AMERICA Act, a $478 billion, six-year authorization, increasing highway and public transportation spending beginning next year. This new version builds upon last year’s four-year proposal of the same name.
Click here to view the US DOT Budget Highlights document outlining the many initiatives set forth in the President’s transportation request to Congress.
Transit and Highway Initiatives
The budget proposes $18.4 billion for the Federal Transit Administration (FTA) in 2016, increasing from $11 billion in FY 2015. The Transit Formula Grants program would be funded under the proposal at $13.9 billion, and Capital Investment Grants (New Starts) would receive $3.25 billion. The proposal would also fund BRT style investments through the Rapid Growth Area Transit Program at $500 million, and once again recommends the Fixing and Accelerating Surface Transportation (FAST) program, a TIGER-like performance-based incentive grant program which would be funded at $500 million in FY 2016. All of these programs would be funded under the restructured Transportation Trust Fund.
The budget also includes new project recommendations for the Capital Investment Grants (New Starts/Core Capacity) Program. That list can be found here.
The FY 2016 Budget and GROW AMERICA Act also propose to spend $51.3 billion for highway investments, an increase of more than $10 billion from FY 2015. The funding for Congestion Mitigation & Air Quality Improvement (CMAQ) Program is proposed to be $2.3 billion and $10.3 billion allocated to the Surface Transportation Program (STP).
The President’s budget again calls for rail programs to be consolidated into a restructured Transportation Trust Fund. The proposal includes a Rail Service Improvement Program of $2.3 billion, aimed at expanding and improving the rail networks throughout the United States, including $825 million to be allocated to help implement Positive Train Control (PTC) on commuter railroads. Also recommended is funding for the Current Passenger Rail Service Program at a level for FY 2016 of $2.5 billion. Of that amount, $550 million would be for Northeast Corridor improvements and $225 million for state-supported corridor investments. The plan also calls for $475 million for Amtrak rail improvements, debt payments, and the costs of equipping their trains with PTC. Finally, $850 million would be made available for Amtrak long-distance routes, and $350 million would be for Americans with Disabilities Act (ADA) compliance.
A variety of other proposals of interest included in the budget:
- A $750 million increase over the FY 2015 enacted appropriation to the TIGER Grant Program.
- An additional $6 billion over 6 years for the Transportation Infrastructure Finance and Innovation Act (TIFIA), which would result in $60 billion of direct loans.
- Reduces the cost for obtaining a loan under the Railroad Rehabilitation and Improvement Financing (RRIF) Program by reducing the cost of obtaining a loan for short line railroads and increases the availability of private activity bonds by raising the cap to $19 billion.
- A creation of a national infrastructure bank
- Creates America Fast Forward Bonds, taxable bonds similar to the Build America Bonds program in the American Recovery and Reinvestment Act.
- Creates the Qualified Public Infrastructure Bonds, a new municipal bond for states and local communities seeking to leverage public private partnerships for infrastructure investment.
The President’s proposal looks to fund infrastructure through a mandatory 14 percent tax on corporate profits now held abroad – a version of the widely discussed concept of “repatriation” – that could be included in broader tax reform to be considered later this year. This would, according to the White House, generate an estimated $238 billion in revenue. The President, and bipartisan leaders in the U.S. House and Senate have expressed interest in addressing comprehensive tax reform this year, although there remain significant differences between the two parties on the specifics of the approach to this and what might be included.
Homeland Security Components
Also included in the Administration’s FY 2016 budget, is a proposal for the creation of a National Preparedness Grant Program within the Department of Homeland Security (DHS) and the elimination of the current Transit Security Grant Program (TSGP), Port Security Grant Program, and Urban Area Security Initiative (UASI). The proposed grant program would require transit agencies to compete with other local and state first responder units by forcing them to all to apply for security funding through a single State Administrative Agency (SSA). The SSA would make all final decisions on which projects would be submitted to the DHS for funding consideration, and transit agencies would no longer be able to apply directly to the DHS for funding. APTA has voiced its opposition when the Administration has submitted similar program proposals in previous budget cycles, and the House and Senate authorizing and appropriations committees have rejected the National Preparedness Grant Program concept each time.
At present, the FY 2015 Homeland Security Appropriations remains incomplete due to continuing disagreement between the Administration and Congress over immigration policies. A final resolution on the FY 2015 bill, and the impact on FY 2016 is unclear at this time.
Congress must now take the recommendations received from the President and work on developing a budget framework under its own procedures, including a Budget Resolution and potentially budget reconciliation, as well as the aforementioned tax reform discussion, and the annual appropriations bills. Many decisions remain to be made before any of the spending included in the President’s budget will be realized.
For questions on matters addressed in this alert, please contact a member of the APTA Government Affairs Department at (202) 496-4800.