ST. PAUL, Minn. – President Barack Obama said Wednesday he will ask Congress for $300 billion to update aging roads and railways, arguing that the taxpayer investment is a worthy one that will pay dividends by attracting businesses and helping put people to work.
Obama announced his plan at the Union Depot rail and bus station after touring a light rail maintenance facility. Funding for surface transportation programs expires later this year, and the White House says 700,000 jobs could be at risk unless Congress renews them.
“At a time when companies are saying they intend to hire more people this year, we need to make that decision easier for them,” Obama said, by rebuilding aging transportation systems, power grids, communications networks and other projects that ease commerce.
“The bottom line is there’s work to be done, workers ready to do it,” he said, adding that one of Congress’ major responsibilities is to help states and cities pay for such projects.
Transportation Secretary Anthony Foxx warned Wednesday of a “transportation cliff” coming in August or September when the Highway Trust Fund, which finances federal highway and transit projects, is forecast to go broke.
The trust fund will need an influx of $100 billion over the next six years just to maintain transportation spending levels. But Obama and Congress have been unwilling to raise federal gasoline and diesel fuel taxes that have been the main source of federal transportation funding for decades.
AAA, the automobile association, on Wednesday criticized Washington’s refusal to increase fuel taxes to pay for projects.
In the budget he sends Congress next week, Obama will propose that half of the $302 billion he’s seeking come from an overhaul of the corporate tax system.
On Wednesday, Rep. Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee, announced a corporate tax overhaul plan that would dedicate $126.5 billion in corporate tax revenue to the Highway Trust Fund over the next eight years.
Obama stressed the job-creating power of federal transportation projects. As part of his promise to take action where Congress won’t, he also announced a $600 million competition for federal grants to help local governments pay for infrastructure projects.
The primary sources of revenue for the Highway Trust Fund are the federal 18.4 cent-per-gallon gasoline and 24.4 cent-per-gallon diesel taxes, which haven’t been increased in 20 years. While highway construction costs have risen over the decades, revenue going into fund has declined. Among the reasons for the decline are that vehicles are getting more miles per gallon and people are driving less on a per capita basis.
The fund experienced its first shortfall in 2008. Since then, Congress has shifted tens of billions of dollars from the general treasury to make up continuing shortfalls. Some of the transfers have been paid for through spending cuts or tax increases elsewhere in the federal budget, while others have not.
Earlier this month, the nonpartisan Congressional Budget Office estimated that the trust fund again will not have enough money to meet its obligations to states by the end of the federal budget year on Sept. 30.
Even if Congress transfers enough money into the fund to keep transportation aid flowing, it’s generally acknowledged that current spending levels are insufficient to keep up with repair and replacement of the nation’s aging infrastructure. Three blue-ribbon commissions have called for raising the gasoline tax and indexing it to inflation. But congressional leaders and the White House have shied away from a fuel tax increase, considered a politically dangerous move.
Kathleen Bower, AAA vice-president of public affairs, called a gas tax increase “the most viable, responsible and effective near-term solution” for keeping the trust fund solvent.
The association will continue to discuss long-term funding remedies, such as corporate tax reform or other fixes, Bower said, but added that “immediate action is necessary” on a short-term funding solution for the transportation system.
Associated Press writers Joan Lowy and Stephen Ohlemacher in Washington contributed to this report.
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