When it comes to infrastructure, President Obama faces a tricky balancing act. On one side he needs to invest in the kind of infrastructure that the nation needs to remain competitive and put us on the path to a low-carbon future. On the other he has to operate in a constrained fiscal environment with programs that are in fundamental need of reform.
With that as a backdrop the president’s proposed 2011 budget is an interesting collection of investments and reforms.
In the former, there is a proposal to create a $4 billion National Infrastructure Innovation and Finance Fund which appears to be this year’s iteration of the National Infrastructure Bank idea. The fund would support projects of regional or national significance based on merit. While we have written extensively about the need for such a reformed process, the narrow focus on transportation-only projects is somewhat disappointing.
Other areas of infrastructure investment are worth noting including a bump in loans and grants to connect rural communities with broadband infrastructure, an additional $3.3 billion for the Clean Water and Drinking Water State Revolving Funds, and an additional $1 billion to fund competitive high speed rail projects.
The 2011 budget also proposes to make the Build America Bond program permanent. The popular program would be increased to $3.2 billion, the subsidy level dropped, and expanded to include some operating costs, in addition to capital investments.
But what is striking about the budget proposal is the strong language about reform. Notably, the budget reinforces the administration’s desire to extend the current transportation law an additional year. This means not reauthorizing the program at a higher spending level—as many in Congress have proposed to do—but working on key reforms to make smarter investments. It also provides more time to come up with sufficient and sustainable sources of revenue.
The other interesting proposal is to eliminate 353 transportation earmarks from the 2010 appropriations law. In that piece of legislation, these projects are identified as ‘surface transportation priorities’ and include investments such as the Hammond Drive Roadway Upgrades in Sandy Springs, GA, the Edwards County Bone Gap Road in Illinois, and $2 million for something called “Urban Collector Road, MS.” The Administration proposes cutting them because the choice of these projects was “not subject to merit-based criteria or competition.” Overall, cutting these projects from special funding would save $293 million.
Also slated for cuts is the Army Corps of Engineers. The Corps would see a 10 percent drop in funding for its water and flood programs. But the budget also proposes a new direction for the Corps by incorporating new planning concepts and analytical methods.
The general theme, then, appears to be consistent with the reforms that accompanied last year’s budget and the American Recovery and Reinvestment Act (a.k.a. the stimulus bill) which provided a number of avenues for coordinating its various funding streams at a metropolitan level, particularly in new competitive grant programs, and a nudge away from the troublesome formula-driven programs so prevalent today.