Obama Introduces Proposed FY 2011 Budget; Transportation Appropriations Stay Largely Intact

» President reaffirms trust in potential of national infrastructure bank, continues interest in high-speed rail.

As expected, the Administration released its budget for fiscal year 2011 today. The Department of Transportation has been awarded with a total of $78.8 billion in expenditures, compared to $77.0 billion enacted by the Congress in fiscal year 2010.

Transportation spending did not suffer much from the spending freeze Mr. Obama proposed for the overall non-defense discretionary budget in his State of the Union address last week. Nor, however, did it see much of an increase. Transportation spending has been relatively flat relative to inflation since the passage of the last transportation bill in 2006, because that legislation defined expenditures on transit and highways over a five-year period. Because of a continued decline in revenue from the gas tax, which has not been increased since 1993, the Department of Transportation will continue to be funded through deficit spending, rather than some new source of revenues.

Congress is supposed to debate the implementation of a new transportation bill later this year, though it has been reluctant to determine any major new source of funds for such projects. Deficit spending will continue.

Though the proposed budget does not include specific decisions about allocations for the Federal Transit Administration or Amtrak, it does indicate that the President wants to continue an annual investment in high-speed rail: Mr. Obama proposes $1 billion for FY 2011, the same as he suggested in FY 2010. The Congress increased total spending on fast trains to $2.5 billion during negotiations last year; it seems poised to do the same again considering the bipartisan support for what’s becoming a national project.

The budget will also increase spending on livable community-related transportation to $530 million, which, if enacted, could bode great things for streetcar and bus rapid transit in cities across the nation. This is basically an extension of the $280 million in inner city circulator grants announced last December by Secretary of Transportation Ray LaHood.

Decisions about specific allocations for the FTA and the FHWA (highways) will be announced later in the month. There is little reason to expect significant increases.

Though the Congress decided last year not to fund Mr. Obama’s infrastructure bank, which would provide states a new method to finance merit-based projects, he has included it in his proposed budget once again this year, with a suggested $4 billion allocation. The Administration would also extend the current ability of state governments to release low-interest Build America Bonds to pay for important projects.

The budget did include a provision for a jobs bill, which would finance infrastructure construction as a sort of second stimulus as long as the Congress agrees to the proposal in the coming months. Preliminary indications from the Senate show that transit may receive $7.5 billion, highways $14 billion, and high-speed rail $2.5 billion under that program.

The President’s budget proposal does not represent the definitive outlays of the federal government in fiscal year 2011. Rather, Congress will spend the next few months debating and settling on final numbers. Last year, Congress increased spending on Amtrak, transit, and high-speed rail substantially over what Mr. Obama had suggested, as indicated above. We’ll see whether members of the House and Senate are in the mood to do the same this year as well.