Daily Dirt

Both Parties Oppose Changes In Budget To Infrastructure Funding

The authorizing legislation for surface transportation, which includes oversight of the Highway Trust Fund, expires this year, and Congress is gearing up to draft a new authorization. The fund was depleted this past summer, and Congress passed a law to temporarily pump more funds into its account.

President Obama’s newly released budget, would move responsibility for setting funding levels for highways, public transportation and airports to the annual budget and away from authorization laws that usually cover three years or more.

Members of both political parties in the U.S. Congress are spoiling for a fight over changes to infrastructure funding since appropriations could fluctuate each year because they would be discretionary.

On Thursday, the House of Representatives’ Transportation and Infrastructure Committee released a document laying out its view of the budget that criticized the change, saying it would hurt highway and aviation trust funds created from taxes on drivers and passengers.

“We will fight it,” said Rep. James Oberstar, (D-MN) who chairs the committee. Under programs like the Highway Trust Fund, Oberstar said states and cities can plan for long-term projects such as building new public transportation. In the same light, contractors are assured that funding will be approved for a project that takes longer than a year.

Rep. John Mica of Florida, the highest-ranking Republican on the committee, said his party supported the criticism.

Opposition to the changes is not limited to the House. Republican and Democratic senators, including Banking Committee chairman Christopher Dodd (D-CT), signed a letter to Obama saying the trust funds represent a contract between the government and those using highways and airports.

The budget, they wrote, “fails to recognize the unique nature of trust-funded programs.”

In budget documents, President Obama hailed the modifications as a means to creating more transparency and efficiency in how the federal government funds transportation.

“Surface transportation programs are at a crossroads,” he said in the budget. “The current framework for financing and allocating surface transportation investments is not financially sustainable; nor does it effectively allocate resources to meet our critical national needs.”

Rep. Peter DeFazio (D-OR), an outspoken, vocal critic of the Republican Bush administration, called the budget “incredibly destructive of our infrastructure and our economic recovery.”

“I remember an awful lot of talk about rebuilding America’s infrastructure in the campaign and I want to help the president deliver on that promise. And this budget not only will not deliver on that promise, this budget would set us back dramatically,” he said.

Below is a copy of the letter signed by the 14 Chairmen and Ranking Minority Members of key transportation committees. A similar letter has been sent to the House and Senate Budget Committees:

Dear Mr. President:

The President’s Budget released on February 26, 2009, reflects a proposal by the Office of Management and Budget (OMB) to change how programs funded by contract authority are treated for budget scoring purposes. Currently, the highway, transit, and airport grant programs are funded by contract authority, a form of mandatory budget authority, derived from the Highway Trust Fund and the Airport and Airway Trust Fund (“Aviation Trust Fund”). OMB proposes to no longer score contract authority as budget authority, but rather to score the obligation limitations that are imposed on these programs in annual appropriations acts as discretionary budget authority.

We strongly oppose this proposed scorekeeping rule change and any other budget process reform that fails to recognize the unique nature of Trust-Funded programs. Such a rule would essentially convert the mandatory contract authority that currently funds our highway, transit, and airport grant programs to a simple authorization of appropriations for budget scoring purposes.

While proponents of such a scorekeeping rule change argue that it would increase Trust Fund transparency, it would in fact do the opposite, by further merging Trust-Funded programs with non-Trust-Funded programs in the budget process. If any budget process reforms are to be made, they should serve to increase the separation of Trust-Funded programs from non-Trust-Funded programs.

We have a longstanding commitment to ensuring that the user fees deposited into the Highway and Aviation Trust Funds are in fact used for their intended purposes – to rebuild our nation’s infrastructure. These Trust Funds represent a contract between the Federal Government and the user. This contract specified that certain user fees would be levied on the users of our surface and aviation transportation systems. In return, the Federal Government pledged to use the receipts to build transportation infrastructure for the taxpayer’s use.

Over the past decade, we achieved hard-fought reforms to ensure that this contract was upheld, even in the context of the unified budget. These battles were largely put to rest with the enactment of the funding guarantees established by the Transportation Equity Act for the 21st Century (TEA 21) in 1998 and the Aviation Investment and Reform Act for the 21st Century (AIR 21) in 2000. However, the OMB proposal raises these issues once again.

We urge you to reconsider OMB’s ill-advised proposal.

Sincerely,

Rep. James L. Oberstar (Minn.), Chairman, House Committee on Transportation and Infrastructure;

Rep. John L. Mica (Fla.), Ranking Member, House Committee on Transportation and Infrastructure;

Sen. Barbara Boxer (Cal.), Chairman, Senate Committee on Environment and Public Works;

Sen. James M. Inhofe (Okla.), Ranking Member, Senate Committee on Environment and Public Works;

Sen. John D. Rockefeller, IV (W. Va.), Chairman, Senate Committee on Commerce, Science, and Transportation;

Sen. Kay Bailey Hutchison (Texas), Ranking Member, Senate Committee on Commerce, Science, and Transportation;

Sen. Christopher J. Dodd (Conn.), Chairman, Senate Committee on Banking, Housing, and Urban Affairs;

Sen. Richard M. Shelby (Ala.), Ranking Member, Senate Committee on Banking, Housing, and Urban Affairs;

Sen. Max Baucus (Mont.), Chairman, Senate Committee on Finance, and Subcommittee on Transportation and Infrastructure;

Sen. George Voinovich (Ohio), Ranking Member, Subcommittee on Transportation and Infrastructure;

Rep. Peter A. Defazio (Ore.), Chairman, Subcommittee on Highways and Transit;

Rep. John J. Duncan, Jr. (Tenn.), Ranking Member, Subcommittee on Highways and Transit;

Rep. Jerry F. Costello (Ill.), Chairman, Subcommittee on Aviation; and

Rep. Thomas E. Petri (Wis.), Ranking Member, Subcommittee on Aviation.

Terex CEO Declines Bonus

Terex Corp. CEO Ron DeFeo has declined a $1.17 million annual bonus since the maker of construction and mining equipment has been cutting jobs, the company said in a regulatory filing last week.

“Mr. DeFeo believed that he should lead by example and share some of the economic burden and voluntarily declined acceptance of his bonus,” Terex said in its filing.

Other Terex executives received bonuses ranging from $143,000 to $664,000, the company said.

Terex has already announced 5,000 job cuts and might have to eliminate more jobs, DeFeo said at the 2009 Reuters Manufacturing and Transportation Summit held in Chicago, where a group of manufacturing sector CEO’s gave their views on what companies do in this environment to protect profits, cut costs without cutting too deeply, and the likely impact of the Obama stimulus.

Terex is now reviewing its construction and road building units for possible divestiture, as it focuses on generating cash and positioning itself for life after the current downturn.

Greg Sitek

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