WASHINGTON — President Obama in his fiscal 2011 budget yesterday proposed a $4 billion infrastructure bank to fund or finance worthwhile transportation projects.
Total new obligations for surface transportation — including highways, bridges, and a new “livable communities” initiative — would be $43.4 billion, according to the budget. That is downsized from fiscal 2010’s estimated $43.7 billion and fiscal 2009’s actual $40.1 billion. Interstate maintenance, congestion mitigation, and demonstration projects would be pared down, but the federal government would obligate more money to federal-land highways, bridges, and other programs.
The bank proposed by the president resembles a hybrid of the one-time-only Transportation Investment Generating Economic Recovery grant program, and the popular Transportation Infrastructure Finance and Innovation Act program.
The National Infrastructure Innovation and Finance Fund would have to be authorized by Congress and would not be subject to pay-as-you-go rules, according to budget documents.
It would fund or finance projects “that provide a significant economic benefit to the nation or a region” and “encourage collaboration among non-federal stakeholders including states, municipalities, and private investors, and also promote coordination with investments in other infrastructure sectors,” the documents said.
Investment categories would include highways, tunnels, bridges, transit, commuter rail, passenger rail, freight rail, airports, aviation, and ports — almost the whole transportation universe.
Projects or programs generally would cost $25 million or more, but small cities, regions, or states could squeeze in with lower-priced proposals.
Not all of the $4 billion would be available right away. The budget proposes $2 billion of infrastructure grants and $417 million to subsidize $2.1 billion of direct loans. About $270 million would fund administration, cost-benefit analyses, planning, and other areas, with $1.313 billion left over for fiscal 2012.
The fund resembles TIFIA and TIGER programs, which are oversubscribed. TIFIA offers low-interest loans and various flavors of credit assistance. The TIGER grants, authorized by the American Recovery and Reinvestment Act, will be awarded based partly on economic benefit.
TIFIA would remain intact even with the addition of an infrastructure bank, according to budget documents. The program would receive $100 million for direct loan subsidies and $20 million for loan guarantee subsidies — identical to 2010 estimates — in the 2011 fiscal year.
The bank would “help fund some significant projects around the country,” Transportation Secretary Ray LaHood told reporters during a teleconference call yesterday. “It’s for big, significant projects.”
LaHood said the infrastructure bank would be capitalized with general funds, appropriated by Congress.
In last year’s budget, the administration proposed a stand-alone national infrastructure bank, funded at $5 billion per year over five years. This year’s proposed program would be housed in the U.S. Department of Transportation.
This year’s budget also backs away from a fiscal 2010 recommendation to make federal highway funds subject to annual appropriations by making them discretionary — an idea quickly protested by key members of Congress and the transportation industry.
The fiscal 2011 budget proposal points out that $37 billion of discretionary budget authority would be necessary in fiscal 2012 to fill a highway trust fund shortfall, but clarifies, “this is not a policy recommendation.”
In other infrastructure sectors, clean and drinking water state revolving funds would be pared down slightly. The budget proposes giving them $3.3 billion total — $2 billion for wastewater and $1.3 billion for drinking water — or about $100 million less than each received last year.
The amount is “mildly disappointing,” said Rick Farrell, executive director of the Council of Infrastructure Financing Authorities. But “it’s not a major cut ... against the backdrop of $6 billion in ARRA funds,” he said.
The proposal would give a “good, solid” funding basis for bond issuance, he added. Twenty-seven states leverage their SRF grants with bonds.