Obama budget would quadruple TIFIA funding

If Congress enacts the president’s budget, $450m will be available for the low-cost infrastructure lending programme next year, nearly four times more than current levels. The TIFIA programme would also be merged into a National Infrastructure Bank capitalised at $30bn over six years.

President Barack Obama’s 2012 budget would provide $450 million to the Department of Transportation’s TIFIA credit programme, nearly quadrupling the money the department has available to make low-cost infrastructure loans that have become the lifeblood of public-private partnerships in the nation’s highway sector.

The proposal was part of a much larger $3.7 trillion budget that would dramatically scale-up funding for the Department of Transportation. Obama proposed a six-year $556 billion transportation spending plan that would nearly double the total amount of money Congress allocated in the 2005 transportation bill. 

“We owe the American people a government that lives within its means while still investing in our future  — in areas like education, innovation, and infrastructure that will help us attract new jobs and businesses to our shores,” Obama said at a press conference Tuesday, noting that his infrastructure proposals would create “millions of jobs around the country”.

TIFIA, short-form for the 1998 Transportation Infrastructure Finance and Innovation Act, promotes infrastructure development by providing investors and governments with low-cost, long-term loans for bridge, highway and transit projects. The financial crisis caused such a spike in demand for TIFIA loans that the programme’s current level of $122 million in annual funding is barely keeping up with demand.

During last year’s round of TIFIA funding, the department received 39 letters of interest for $12.5 billion of TIFIA loans but only cleared applications for four projects seeking $1.3 billion.

Each federal dollar can create up to $10 in TIFIA loans, according to the programme’s website, so, at $450 million, Obama’s proposed funding level could enable the department to make $4.5 billion in loans – more than three times last year’s take.

The dramatic step-up in loan volume available from increases in TIFIA funding has prompted investors and members of Congress to push for scaling-up the programme. Last month, Eddie Bernice Johnson, a Democrat from Texas, introduced a bill to fund TIFIA at $285 million a year from 2012 through 2016.

Obama’s budget proposes that, after 2012, TIFIA be absorbed into another government programme long-sought by investors and some members of Congress: a national banking entity that would lend to infrastructure projects based on merit.

Obama’s budget allocates $30 billion for a “National Infrastructure Bank” over six years.  The bank would give grants and loans to projects of “regional or national significance to the economy” and would fund projects on merit rather than on “on more narrow considerations” such as regional or local politics.

But Obama’s proposals could face a tough road ahead in Congress, which must ultimately approve the budget. In 2009, Congress nixed President Obama’s call for a $5 billion National Infrastructure Bank in his 2010 budget.

A similar idea in his 2011 budged was also denied because Congress funded the Department of Transportation through a continuing resolution, meaning that no new budget proposals were enacted into law.