Administration Readies Transportation Plan

By Joan Lowy | January 25, 2011 | 4:52 PM EST

Washington (AP) - Obama administration officials are preparing a long-term highway and transit spending plan even though they've had to dip into the general treasury just to keep the current program afloat and Republicans are demanding that government shrink.

Transportation lobbyists and interest groups said administration officials have indicated in public forums and private conversations in recent weeks that they expect to unveil a transportation plan after President Barack Obama presents his budget to Congress in mid-February.

Transportation Secretary Ray LaHood told a recent business conference in Atlanta that the six-year bill will include a $50 billion "upfront investment to help employ the nearly one in five construction workers that are still out of a job," according to a transcript of his remarks. He has also said he wants Congress to put a transportation bill on Obama's desk for signature by August.

What's unclear is how large a program the administration will propose and how officials plan to pay for it. Any plan that increases transportation spending without a means to pay for it, or which raises taxes, is likely to get a cold reception from House Republicans.

White House and Transportation Department officials declined to answer questions about the plan.

Obama sees greater transportation spending as one of the important levers government can turn to jumpstart job creation. Last Labor Day, he laid out a plan to invest $50 billion in highways, bridges, transit, high-speed rail and airports, adding it to the first year of a six-year transportation bill. Congress didn't act on the proposal before adjourning last year, but White House and Transportation Department officials appear determined to stay the course.

Roy Kienitz, the Transportation Department undersecretary for policy, laid out some of the key themes of the administration's plan at a meeting last week of the U.S. Conference of Mayors. They included support for high-speed trains and the administration's livability initiative, which seeks to foster communities that have densely-built housing mixed with office, retail and entertainment development, as well as an array of transportation alternatives to driving.

Both programs have been criticized by GOP lawmakers as wasteful.

If Obama comes forward with a plan as expected, it would be a departure from most of the past two years. The administration and Congress have seemed content to keep transportation programs on life-support through a series of short-term program extensions and money transfers from the general treasury, with about $40 billion in infrastructure spending in the economic recovery law picking up the slack.

State and local officials and transportation industry groups are hopeful an administration plan will prod Congress to pass a long-term funding bill that provides the kind of economic certainty required to undertake major projects.

"If the president makes a proposal, then there at least needs to be a response (from Congress). The dynamic becomes, 'What are you going to do about it?'" said Mort Downey, a former Obama transportation adviser and the No. 2 Transportation Department official during the Clinton administration.

But selling legislation with a price tag in the hundreds of millions of dollars - the last long-term transportation bill was nearly $300 million - will be difficult in the House, industry officials said.

"You have a majority in the House that was elected with a mandate to cut spending. It's kind of hard to understand a scenario where early on one of the things they embrace is a several hundred billion dollar spending bill," said Brian Turmail, vice president of the Associated General Contractors of America.

Key members of Congress - Senate Environment and Public Works Committee Chairman Barbara Boxer, D-Calif., and House Transportation and Infrastructure Committee Chairman John Mica, R-Fla. - have also said passing a transportation will be a high priority for them. Boxer has scheduled a hearing for Wednesday; Mica has said he's planning a series of hearings around the country in mid-February.

In the last three years, two bipartisan, blue-ribbon transportation commissions have called for massive increases in transportation spending to modernize the nation's aging transportation infrastructure. Without those increases, a future of nightmarish congestion is virtually assured, they said.

The president's fiscal commission recommended a gas tax increase of 15 cents a gallon. But raising fuel taxes is politically unpalatable to both Democrats and Republicans. The administration has said a gas tax increase is a nonstarter.

"I'm really interested in knowing what they have in mind to pay for the bill because that's the key to the whole thing," said Jack Basso, finance director for the American Association of State Highway and Transit Officials. "Maybe somebody has a magic bullet that I don't know how to produce ... but I can't see a way out of this without basic new revenue."

Transportation officials and lawmakers have discussed imposing tolls on more highways and bridges to pay for new construction, and making use of public-private partnerships in which investors help underwrite construction in exchange for a share of tolls or fees from users later on. The president has also requested that Congress come up with seed money for an "infrastructure bank" that would make loans to help finance projects, but so far that request has been largely ignored.

Even if all those things were to be done, transportation experts say it's hard to see how they could generate enough funds to keep pace with spending demands.

Meanwhile, lower gasoline consumption has decreased revenues to the federal Highway Trust Fund, which pays for highway and transit construction. The trust fund can support a highway program no bigger than $35 billion a year and a transit program no bigger than $8 billion a year over the next six years, Basso said. But current spending is about $43 billion for highways and $11 billion for transit, he said.

Congress has had to transfer tens of billions of dollars from the general treasury to make good on annual commitments to states for projects.