WASHINGTON - President-elect Barack Obama yesterday vowed to work closely with state and local officials to craft his two-year, multibillion-dollar stimulus plan and stressed that it will focus on providing funding for transportation and infrastructure projects that are already underway or ready to go.

Obama made the remarks at a press conference in Chicago, during which he announced he is nominating Peter Orszag as director and Robert Nabors as deputy director of the Office of Management and Budget.

Orszag yesterday said he is resigning as director of the Congressional Budget Office. Nabors is staff director for the House Appropriations Committee.

During the press conference, Obama was asked how he plans to help states and localities that are "hemorrhaging" from the economic downturn.

"We're going to be working very closely with governors. We're going to be working very closely with mayors of towns small and large across the country. This economic recovery plan will require their input, their participation," Obama said.

"Part of our job is to make sure that we are listening to what's happening on the ground, where the rubber hits the road, and not simply designing something out of Washington," he said.

The incoming administration will focus on "fast-tracking" road, bridge, and other infrastructure projects - possibly prioritizing projects already being undertaken by state and local governments "and making sure that they have the funds to continue those projects," he said.

A survey of 47 state transportation departments released in January by the American Association of State Highway and Transportation Officials found that $17.9 billion is needed for 3,000 ready-to-go transportation projects. The most recent stimulus package, which passed the House but not the Senate, would have provided $12.8 billion for transportation projects.

In addition, local governments need at least $15.4 billion to fund public works projects that are in the queue but lack the money to go forward, according to the American Public Works Association. The group surveyed members in late October and early November, finding that 1,100 members of the association had roughly 3,636 projects ready to go at the local government level.

APWA's executive director Peter King said that while "everyone is concerned about what the budget will look like next year," shoring up local governments would strengthen the national economy.

"We were pleased that [Obama has] recognized there's a need and a correlation to job creation," King said.

The Council of Infrastructure Financing Authorities hopes a stimulus plan will include $6.5 billion for clean water projects and $1 billion for drinking water projects. The group is polling its members now on how many projects are ready to go around the country and what their financing needs would be.

State revolving funds are used in conjunction with bonds and allow state governments to provide low-cost loans for water and wastewater projects.

However, CIFA hopes the stimulus plan will not require states to provide matching funds for these projects, said Joe Freeman, CIFA's president and financial assistance division chief of the Oklahoma Water Resources Board.

Meanwhile, Orszag appears to differ with Obama on the need for a national infrastructure bank, something the president-elect has supported.

In July, Orszag told Senate Finance Committee members that a national infrastructure bank would be impractical and that tax-credit bonds could be part of a solution for transportation funding gaps.

As Congress drafted the economic stimulus package earlier this year, Orszag said he believed a fiscal stimulus would not necessarily need to target the housing market even though housing was "one of the major forces leading to this period of economic weakness."

In September, he warned members of the House Budget Committee that the Treasury Department's proposal for a bailout package "could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values."

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