House transport chair Oberstar proposes $85 billion 'stimulus' program - silent on toll role

House transportation & infrastructure chair James Oberstar (Dem MN) is proposing what he calls a $85 billion plan under the heading "Put Americans Back to Work". He outlined his proposal at a "National Economic Recovery Forum" on Capitol Hill today. The congressman proposes the $85b be split:

- $30b for highways and bridges (35%)

- $12b for transit (14%)

- $5b for rail (6%)

- $5b aviation (6%)

- $14b for "environmental infrastructure" (16.5%)

- $7b for Army Corps of Engineers (8%)

- $10b for federal buildings (12%)

The $30b proposed by Oberstar for highways and bridges compares with $41.2b in FY2008 under the SAFETEA-LU legislation. Transit's $10b proposed by Oberstar compares to $9.3b in the FY2008 budget.

Therefore if the money were spent in a year highway and bridge grants would be increased about 70% and transit grants doubled.

Conditions

Oberstar proposes to incorporate various conditions on the 'stimulus' grants:

- to be 'ready to go projects' with a 90 day use-it-or-lose-it provision for a proportion of the funds for what the congressman in a  rather mixed metaphor calls for a "quick hit" for the "jump-start" of the economy to generate substantial new jobs by June

- 'green collar jobs' for reducing dependence on foreign oil and fighting global climate change

- iron, steel and manufactured goods to be made in the US

- funds to be distributed by existing statutory formulae where possible with no earmarks

- states to report on projects funded and jobs created or sustained

- states required to sustain existing spending and to distribute 'equitably' through the state

Oberstar said: "Infrastructure investment creates family-wage construction jobs, and spin-off benefits that ripple throughout the economy.  These construction jobs will not be outsourced to another country; the work will be done in the United States because roads, bridges, transit and rail systems, airports, waterways, and wastewater treatment facilities are here, in our towns and cities.  In addition to the on-site construction jobs, other construction and manufacturing jobs will be created at home producing the steel, aggregates, asphalt, cement, and construction equipment used in these projects."

COMMENT: The marketing of this as "No earmarks" sounds to us like a "pork-free" ham sandwich.

Oberstar silent on any role for tolls or P3s in stimulus

Oberstar was completely silent today on any role for tolling or any role for private investors in the 'stimulus' via P3s or concessions. Indeed there are signs that 'stimulus' grants proposed by Oberstar could in many cases simply substitute for toll financing, public as well as private.  Oberstar's whole program seems to be grants of tax monies from the US Government budget.

Consider just one project discussed as a candidate for 'stimulus' dollars in a local newspaper (Press of Atlantic City) this morning - the New Jersey Route 72 causeway which is the only link to the mainland of New Jersey for a 32km (20 mile) barrier island called Long Beach Island centered on Surf City and home to a  permanent population of about 9,000 but with a much larger summer and holiday population.

The existing causeway is 50 years old and with structural sufficiency ratings below 50/100 it is a candidate for replacement. NJDOT estimates the cost at at $250m. Until the talk of the stimulus package came along there was no prospect of funding it, and it could have been financed with tolls like many other bridges to barrier islands along the Jersey shore.

No elected official could argue for that with 'stimulus' funds on offer.

Poole on impact on P3s

Bob Poole in his monthly Surface Transportation Innovations has an interesting discussion of what is needed from the Feds to to encourage some private sector activity. We excerpt:

"In contrast to the (full grant) model to be used in the stimulus bill—handing out cash to fund 90 to 100% of projects—the PPP model provides a powerful filter, singling out larger projects whose benefits exceed their costs, and for which users are willing to pay.

"Federal credit support puts a much smaller amount of federal funds into a project, so the federal dollars not only go much farther, but they also support the kinds of projects that make the economy more productive.

"The PAB (private activity bonds)  program would be more attractive to bond buyers if such bonds were exempted from the Alternative Minimum Tax (AMT), as the Senate Finance Committee currently plans to do (in the stimulus bill) for PABs for airport, water, and housing projects—but not so far for highway projects. That omission should be rectified.

"Longer-term, the existing $15 billion cap on highway PABs needs to be raised or eliminated (since projects now in the pipeline are likely to use it up in 2009), but this can be done via the six-year reauthorization bill, to be taken up later this year.

"Changes to TIFIA via the stimulus bill could leverage federal funding by jump-starting the $19 billion worth of PPP projects now in the pipeline (and potentially some of the $67 billion worth of such projects at earlier stages of procurement). TIFIA to date has provided credit assistance of about $4.8 billion for projects involving $18.6 billion total investment.

"Possible reforms include the following:

•    Provide immediate funding (~ $250 million) for existing projects awaiting loans, and increase the total amount of funding available for TIFIA going forward;
•    Allow some funds to be used (perhaps subject to a reimbursement agreement) to pay for early development costs such as financial feasibility studies, preliminary design, and environmental clearance (to be repaid if and when the project is fully financed);
•    Increase the TIFIA share of total project costs from the current 33% to perhaps 50%; and
•    Remove the “springing lien” provision (which dilutes the program’s intended credit enhancement of project obligations, especially in today’s challenging market)." ENDS Poole

COMMENT: we can understand Congressman Oberstar wanting to steer clear of springing liens - which sound like some kind of explosive device aimed to blow up unwary politicians and other big spenders. See principle of the "bounding mine" which springs up and detonates at chest height.

TOLLROADSnews 2009-01-07