Sen. Barack Obama, D-Ill., unveiled an "emergency" economic plan Friday that would provide $25 billion to states to cover budgetary shortfalls and another $25 billion to replenish the struggling highway trust fund to avoid cutbacks in infrastructure repair and renovate schools.
The presumptive Democratic presidential nominee is the latest politician to tackle the issue of the anemic federal highway trust fund, which is projected to face a $3.1 billion to $6 billion shortfall by the end of fiscal year 2009, according to administration and other estimates.
"Declining tax receipts have sapped the highway trust fund and are threatening road and bridge construction projects," a summary of his proposal stated. "As a result, states have been forced to stop work on current infrastructure projects and delay implementation of new projects as well."
The House Wednesday approved an $8 billion patch for the trust fund, which would be transferred from the general fund. Meanwhile, Senate Appropriations Committee members unanimously approved an $8 billion transfer to the trust fund three weeks ago.
Federal highway and transit construction funds are generated mostly from the federal gas tax. Revenues pooled into the highway trust fund are allocated to states based on a formula, and states sometimes use the allocations to back tax-exempt bonds issued for transportation projects.
Under Obama's plan, the amount used to shore up the trust fund would come from the $25 billion pool that would also go towards helping struggling schools finance energy costs and repairs.
The plan also calls for another $25 billion to be distributed to states to offset budget cuts. According to the summary, 29 states are facing budget deficits in fiscal 2009, amounting to a combined shortfall of $53 billion. The money would help states maintain their essential functions and help them avoid budget-cutting measures like reductions in state employee salaries and benefits.
The plan also would send a second stimulus check to Americans, care of the federal government. Each individual would receive $500, and married couples would get $1000. The amounts aim to help struggling Americans cover their growing gas costs, as well as help them pay for rising heating prices as the winter season approaches.
The costs of these payments would be offset be a windfall profit tax on oil companies. The administration sent individuals checks earlier this year after Congress enacted stimulus legislation.
