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Obama Budget Asks for Oil Fee for Transportation Investments

President Obama’s FY 2017 budget request for the US Department of Transportation supports FAST Act funding levels of $43.27 billion for the federal-aid highway and $9.535 transit programs. The proposal also revives an idea the Administration has suggested several times previously to replace the existing Highway Trust Fund with a new Transportation Trust Fund. Included within the restructured trust fund is a new 21st Century Clean Transportation Plan which creates a series of new initiatives to fund infrastructure improvements and expand clean technologies and transportation initiatives.

The Administration proposes a $10.25 fee per barrel of oil to pay for these new initiatives as well as to provide sufficient additional revenue for the trust fund to keep it solvent until 2026. The oil fee would be phased in over five years and in the meantime additional revenue to support these new initiatives would come from business tax reforms. This is also an idea floated by the Administration in the past and no additional details were provided in the budget about these reforms.

DOT Budget Highlights:

Clean Transportation Plan: The budget calls for FY 17 funding of $17.935 billion for various programs in the different transportation modes including for regional transportation planning, climate mitigation, clean vehicles, transit oriented development, high speed rail and other similar initiatives. The Federal transit Administration would receive an additional $5.86 billion for transit formula grants and $525 Million for Bus Rapid transit corridors.

TIGER: The Administration requests $1.25 billion for the Transportation Investment Generating Economic Recovery (TIGER) program. This program funds multi-modal projects and has been highly popular. While TIGER was not reauthorized in the FAST Act, it funded at $500 million in FY 2016. TIGER would be funded out of the trust fund rather than from general fund revenue.

TIFIA: The TIFIA program is proposed to be funded at the FAST Act level of $275 million and would be funded in the future from trust fund revenue rather than general fund.

Aviation: The budget proposes to decrease funding for the Airport Improvement Grant program from its current $3.35 billion level to $2.9 Billion. To make up for this cut it is proposed that larger airports be removed from eligibility for AIP grants. Instead the Administration proposes increasing the cap on passenger facility charges from its current $4.50 to $8. PFC funding is largely available for larger airports for infrastructure projects.

Transit Capital Grants: The FTA capital grants program is requested to be funded at $3.5 billion in FY 17 an increase from its $2.177 billion level in FY 2016. This funding category would be moved to the trust fund and would no longer receive general fund revenue.

 

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