This Associated Press article discusses where the infrastructure and HSR money is supposed to come from. Since the Tuscon shooting, there has been more civility in Congress. It can't last. Here's one reason. The Republicans have made it clear that Obama's five year "freeze" on discretionary spending is unacceptable. They want greater cuts, including the cutting of the high-speed rail program.
In this discussion, we can see where this is all heading; that is, into the usually contentious confrontations. Congress will paint itself into a corner. No new taxes, including gasoline taxes. No new revenue. Multi-trillion dollar debt. No new funding sources. They can't afford to fix the broken infrastructure we already have. How will they pay for anything as expensive as this new train system?
On the one hand, we fear even greater highway congestion. So we want to spend on building high-speed trains to relieve that traffic increase. On the other hand, due to reduced driving, the Highway Trust Fund is suffering from reduced gas taxes, so there isn't enough funding to pay for those high-speed trains. Which is it? Too much traffic or not enough? None of this is ever discussed in California as the rail authority plows ahead as if they had all the money in the world.
Why is this a problem? Because it's not about the train; it's about the money! Since the HSR construction is going to commence in the Central Valley and there isn't even enough funding to complete a single segment there, wouldn't you think it wise to suspend any further engineering design and CEQA work for the Bay Area and the LA Basin until there is some sense of whether more funding will become available? But, that's not how the CHSRA operates. They get money; they spend the money. They lobby for more money. They act as if they already had all the money. What or where they build isn't as important as doing anything that costs money and keeps the contracts flowing
To make the case of the funding challenge even more clear, there's a Wall Street Journal article below the Associated Press one.
If this seems like a lot of boring reading, just remember, the existence of high-speed rail in California depends totally on what Congress does or doesn't do about funding for the project. These decisions will impact all Californians.
============================================
Administration readies transportation plan
(AP) – 23 hours ago
WASHINGTON (AP) — Obama administration officials are preparing a long-term highway and transit spending plan even though they've had to dip into the general treasury just to keep the current program afloat and Republicans are demanding that government shrink.
Transportation lobbyists and interest groups said administration officials have indicated in public forums and private conversations in recent weeks that they expect to unveil a transportation plan after President Barack Obama presents his budget to Congress in mid-February.
Transportation Secretary Ray LaHood told a recent business conference in Atlanta that the six-year bill will include a $50 billion "up-front investment to help employ the nearly one in five construction workers that are still out of a job," according to a transcript of his remarks. He has also said he wants Congress to put a transportation bill on Obama's desk for signature by August.
What's unclear is how large a program the administration will propose and how officials plan to pay for it. Any plan that increases transportation spending without a means to pay for it, or which raises taxes, is likely to get a cold reception from House Republicans.
White House and Transportation Department officials declined to answer questions about the plan.
Obama sees greater transportation spending as one of the important levers government can turn to jump-start job creation. Last Labor Day, he laid out a plan to invest $50 billion in highways, bridges, transit, high-speed rail and airports, adding it to the first year of a six-year transportation bill. Congress didn't act on the proposal before adjourning last year, but White House and Transportation Department officials appear determined to stay the course.
Roy Kienitz, the Transportation Department undersecretary for policy, laid out some of the key themes of the administration's plan at a meeting last week of the U.S. Conference of Mayors. They included support for high-speed trains and the administration's livability initiative, which seeks to foster communities that have densely-built housing mixed with office, retail and entertainment development, as well as an array of transportation alternatives to driving.
Both programs have been criticized by GOP lawmakers as wasteful.
If Obama comes forward with a plan as expected, it would be a departure from most of the past two years. The administration and Congress have seemed content to keep transportation programs on life-support through a series of short-term program extensions and money transfers from the general treasury, with about $40 billion in infrastructure spending in the economic recovery law picking up the slack.
State and local officials and transportation industry groups are hopeful an administration plan will prod Congress to pass a long-term funding bill that provides the kind of economic certainty required to undertake major projects.
"If the president makes a proposal, then there at least needs to be a response (from Congress). The dynamic becomes, 'What are you going to do about it?'" said Mort Downey, a former Obama transportation adviser and the No. 2 Transportation Department official during the Clinton administration.
But selling legislation with a price tag in the hundreds of millions of dollars — the last long-term transportation bill was nearly $300 million — will be difficult in the House, industry officials said. [Edit: Do they mean million or billion?]
"You have a majority in the House that was elected with a mandate to cut spending. It's kind of hard to understand a scenario where early on one of the things they embrace is a several hundred billion dollar spending bill," said Brian Turmail, vice president of the Associated General Contractors of America.
Key members of Congress — Senate Environment and Public Works Committee Chairman Barbara Boxer, D-Calif., and House Transportation and Infrastructure Committee Chairman John Mica, R-Fla. — have also said passing a transportation will be a high priority for them. Boxer has scheduled a hearing for Wednesday; Mica has said he's planning a series of hearings around the country in mid-February.
In the last three years, two bipartisan, blue-ribbon transportation commissions have called for massive increases in transportation spending to modernize the nation's aging transportation infrastructure. Without those increases, a future of nightmarish congestion is virtually assured, they said.
The president's fiscal commission recommended a gas tax increase of 15 cents a gallon. But raising fuel taxes is politically unpalatable to both Democrats and Republicans. The administration has said a gas tax increase is a nonstarter.
"I'm really interested in knowing what they have in mind to pay for the bill because that's the key to the whole thing," said Jack Basso, finance director for the American Association of State Highway and Transit Officials. "Maybe somebody has a magic bullet that I don't know how to produce ... but I can't see a way out of this without basic new revenue."
Transportation officials and lawmakers have discussed imposing tolls on more highways and bridges to pay for new construction, and making use of public-private partnerships in which investors help underwrite construction in exchange for a share of tolls or fees from users later on. The president has also requested that Congress come up with seed money for an "infrastructure bank" that would make loans to help finance projects, but so far that request has been largely ignored.
Even if all those things were to be done, transportation experts say it's hard to see how they could generate enough funds to keep pace with spending demands.
Meanwhile, lower gasoline consumption has decreased revenues to the federal Highway Trust Fund, which pays for highway and transit construction. The trust fund can support a highway program no bigger than $35 billion a year and a transit program no bigger than $8 billion a year over the next six years, Basso said. But current spending is about $43 billion for highways and $11 billion for transit, he said.
Congress has had to transfer tens of billions of dollars from the general treasury to make good on annual commitments to states for projects.
Copyright © 2011 The Associated Press. All rights reserved.
==============================================
Obama Aims to Boost Infrastructure Spending
By JOSH MITCHELL and JARED A. FAVOLE
WASHINGTON—U.S. President Barack Obama called for a boost in infrastructure spending Tuesday to create jobs and lift the economy. But the plan will face a significant hurdle: Money for highway projects is scarce, and neither party has shown an appetite for raising the federal gasoline tax.
President Obama stuck to broad values such as innovation and making sure American business can succeed, in his State of the Union Address. WSJ's Sudeep Reddy joins Kelly Evans and Jerry Seib for analysis of the president's speech.
Mr. Obama will use his State of the Union speech to call for a six-year plan to repair roads, bridges and transit systems, and the creation of a national infrastructure bank to leverage private dollars, White House aides said. He will also call for more spending to build intercity passenger rail lines, and a "national wireless initiative" to give most homes Internet access.
"Our infrastructure used to be the best--but our lead has slipped," Mr. Obama will say, according to prepared remarks released by the White House ahead of the address.
The debate over how to pay for the plan is expected to begin in earnest Wednesday morning in the Senate, where a hearing called by Sen. Barbara Boxer (D., Calif.) will focus on a multi-year highway bill that could provide the framework for Obama's plan.
Journal Community
The plan would likely cost hundreds of billions of dollars, based on the price tag of previous highway bills. The main source of funding for highway projects--the 18.4-cent federal tax on a gallon of gasoline--hasn't drawn enough revenue in recent years to pay for needed highway projects, and Washington will need to find a way to plug the gap.
The White House and congressional lawmakers from both parties have rejected the politically risky step of raising the gas tax.
Congressional Republicans have also vowed to oppose using other sources that would require additional borrowing or raise other taxes.
hat leaves few apparent options for the White House to fund its plan for billions of dollars in new projects and for a national infrastructure bank to oversee them.
"This has tremendous political and institutional hurdles it has to overcome," said Robert Puentes, a transportation expert at the Brookings Institution, a Washington think tank.
The transportation plan outlined by Mr. Obama Tuesday night is expected to call for a six-year bill, with a significant portion of the money spent early on to help generate as many as hundreds of thousands of jobs. He will also call for a "significant down payment" on passenger-rail projects, with a goal of giving 80% of Americans access to rail service within 25 years.
The wireless-network initiative calls for 98% of Americans to have access to high-speed internet service. Obama isn't expected to release details of how he plans to pay for the projects.
A broad proposal by Obama in September called for an immediate $50 billion in infrastructure spending this year on top of existing programs. He suggested eliminating tax breaks for oil companies to pay for the plan.
That idea drew immediate criticism from at least one key House Republican, Rep. John Mica of Florida, new chairman of the House Transportation and Infrastructure Committee. Mica has said that raising taxes would hurt the economy and wouldn't be an option.
Mr. Mica has suggested raising more money through the use of tolling and other types of so-called public-private partnerships.
Other lawmakers and transportation lobbyists have floated ideas such as taxing a barrel of oil and taxing the percentage of gas drawn at the pump, which would bring more revenue as gas prices increased.
The White House has said it will release details on its plan for funding transportation projects when it releases its budget proposal in February.
James Corless, director Transportation for America, a group that lobbies for transportation spending, said the president's speech will help the cause of public-works projects, but he acknowledged the president will face battle in Congress.
"It's not lost on those in the transportation community that we have to build more political support for investing in transportation," Mr. Corless said.
Write to Josh Mitchell at joshua.mitchell@dowjones.com
