Oberstar Offers $85B Package

WASHINGTON - House Transportation and Infrastructure Committee chairman Jim Oberstar has proposed a spending package totaling $85 billion to be included in forthcoming stimulus or economic recovery legislation.

The Minnesota Democrat's measure would provide $12 billion for bond-related clean water state revolving funds, as well as require governors to promise to distribute infrastructure funding in the bill equitably within their states.

The $85 billion package, which was presented to the House leadership last month but not publicly released until this week, includes $30 billion for highways and bridges, $14 billion for environmental infrastructure, $12 billion for transit, $5 billion for rail, $5 billion for the airport improvement program whose grants are used to back tax-exempt bonds or supplement other funding sources such as bond proceeds, and $10 billion for federal buildings.

Oberstar's request is roughly triple the amount of infrastructure spending approved by the House in September as part of a stimulus bill that died in the Senate and does not cover projects outside of the committee's jurisdiction, such as green energy, broadband, or schools.

Although the total amount of recovery spending that President-elect Barack Obama wants in the stimulus bill is in the range of $800 billion, or about 10 times the amount Oberstar recommends for infrastructure spending, about half of Obama's measure is expected to take the form of tax cuts, and is expected to include non-infrastructure spending such as unemployment insurance.

"Is there more to do than $85 billion can cover? Certainly," said committee spokesman Jim Berard. "But we felt, first of all, that what we are recommending is reasonable, and second of all, the $85 billion covers the things that are doable in the short term."

Under Oberstar's recommendations, states would not be required to provide matching funds, but each state's governor would have to sign a certification telling the Department of Transportation that the infrastructure funds would be distributed equitably to various areas within the state.

That is "just a guidance to the states not to concentrate all the projects in one area," Berard said, noting that in Oberstar's home state of Minnesota, "the major metro area is also the capital city and has very strong gravitational pull in state spending."

Oberstar's proposal would provide outlays of funds within one week of enactment. The funds would be allocated by federal agencies, and 10 days later, states would be required to submit plans to the DOT showing how they would award contracts for at least 50% of the funds within 90 days. If the funds were not obligated in time, the U.S. DOT would redistribute them to other states based on a formula. The remaining 50% of stimulus funds would have to be obligated within one year of enactment.

Oberstar called for providing clean water state revolving funds with roughly 23 times the amount of funds the SRFs received in the last round of appropriations.

The proposal asks for $12 billion for clean water SRFs, contrasted with the most recent appropriation of $600 million for the program, which allows states to provide low-cost loans to localities for clean water projects. Drinking water SRFs are not within the committee's purview, so they were not included in the proposal.

The SRFs have become a major source of water infrastructure funding. Several states have leveraged their programs by issuing bonds.

The Council of Infrastructure Financing Authorities gave Oberstar a list of about $9.12 billion worth of SRF projects in 30 states that it said were waiting for funding. Large, urban states with older infrastructure and high growth rates tended to be more in need, said Rick Farrell, CIFA executive director. The massive increase reflects "a lot of pent-up demand" that built up since the program was cut during the Bush administration, he said.

"We are extremely pleased to see Rep. Oberstar and other members of Congress recognize that clean water state revolving funds are significant," said Matthew J. Millea, acting president of New York'se Environmental Facilities Corp. The agency received requests for financing for at least 418 projects totaling $4.7 billion in fiscal year 2009, he said.

States and localities are waiting to see how stimulus funding will be allocated. Oberstar's proposal would distribute funds by existing statutory formulas whenever possible, with no earmarks, and would require grant recipients to publicly disclose how they would use the funding. But it does not recommend Congress mandate what proportion of funds should be spent at the state level versus local or county level.

"I'm very much in favor of making sure we give the power to pick the projects as far down the chain as we can go," New York City Mayor Michael Bloomberg said in a conference call with reporters yesterday.

The National League of Cities is pushing for federal infrastructure dollars to go straight to localities instead of being funneled through state governments, said Lars Etzkorn, principal legislative counsel for the group.

"If you want to fund projects that are shovel-ready, those funds should go directly to the localities," Etzkorn said. "When you really look at where are the major opportunities for the shovel-ready jobs, we see they are at the local level."

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