Bush Budget Squeezes Construction Funds

Compiled by Carl Molesworth | September 28, 2010

President Bush released his $2.9-trillion budget proposal for fiscal year 2008 in February. The budget favors funding military and war programs over domestic spending, which is essentially frozen from last year.

Funding for the U.S. Army Corps of Engineers construction program is cut by more than $500 million, water infrastructure is cut by nearly $400 million, prisons are cut by about 50 percent, and General Services Administration Construction is cut by more than $200 million under this budget proposal.

The defense-related construction programs offer the only bright spot for construction. Military construction is increased by $11 billion, including $5.6 billion for Base Realignment and Closure, and Veterans construction is increased by more than $400 million.

"While there is real concern about fiscal restraint and winning the war on terror, this budget does not address our nation's long-term capital investment needs," said Stephen E. Sandherr, chief executive officer of The Associated General Contractors of America. "For a country that relies so heavily on its infrastructure for increased efficiency and economic growth, the competing budget priorities highlight the need to create a true capital budget to fund long-term infrastructure investment."

The president's budget does propose to fully fund the SAFETEA-LU guaranteed level of $39.6 billion for the federal-aid highway program for FY 08 — a $500-million increase over projected FY 2007 investment — and reports Highway Trust Fund Highway Account revenues have exceeded projections by $631 million.

However, the budget does not propose to include a $631-million positive adjustment required under SAFETEA-LU to reflect the latest user fee receipts. The budget calls for new user fees to fund growing aviation needs, and it also identifies plans to propose expansion of the existing inland waterways user fee to address system needs but gives no contemplation to enhancing the user fee for the highway trust fund that is nearing insolvency.

The measure also calls for increasing federal transit investment by $450 million to $9.4 billion. This amount, however, is $300 million below the FY 2008 funding level required by SAFETEA-LU and also would be a major break from the transportation funding guarantees.

On the bright side, Sound Transit received a $10-million surprise in President Bush's proposed FY 2008 budget. Along with the expected $70 million for building Seattle's initial light rail segment, the budget also includes an unexpected $10 million in proposed funding for extending light rail to the University of Washington.

The University Link Light Rail Transit Extension is one of two projects nationwide listed in the president's budget as "Proposed Full Funding Grant Agreements." Sound Transit intends to complete and submit its FFGA application for University Link later this year.

The administration's budget also recommends a $765-million, or 22-percent, reduction in federal airport construction investment from the current level of $3.52 billion to $2.75 billion in FY 2008.