President Releases Budget Request for 2016
On Feb. 2, President Obama released his $4 trillion fiscal year (FY)
2016 budget request. The budget calls
for tax changes to offset increased spending for defense, infrastructure and
job training and education programs. The
budget also includes tax increases for corporations and top individual earners.
The budget busts the spending caps set by the Bipartisan Budget
Agreement in 2013 by $71 billion ($38 billion extra for defense and $33 billion
for nondefense spending categories).
Last year, the president also proposed to bust the spending caps, but
Congress rejected that request.
Republican leaders in Congress have criticized this year’s budget
The budget also outlines a six-year, $478 billion transportation
bill and includes several infrastructure financing provisions including:
eliminating the volume cap on private activity bonds for water infrastructure;
adding to the eligible projects that can be financed through Private Activity
Bonds; creating a national infrastructure bank; providing for America Fast
Forward Bonds and expanding their eligibility; and creating Qualified Public
Infrastructure Bonds. Unfortunately, the
budget also imposes a 28 percent limit on the value of the tax exemption for
In terms of federal construction accounts
tracked by AGC, the budget provides about $134 billion for FY 2016 –
a 21 percent increase from 2014 enacted levels.
There are winners and losers in the budget. Most of the
winners can be found in transportation – where the president proposes to
increase both highway and transit spending – and military construction accounts.
The U.S. Army Corps of Engineers Civil Works construction account is the major
loser – with cuts of over $3 billion.
The budget asks for record amounts of
funding for transportation infrastructure and presents the administration’s
ideas for a six-year reauthorization bill with tax proposals to pay for it.
Under the request, the Department of Transportation budget would increase by
almost 33 percent in 2016. For the Federal Highway Administration, that would
mean a 25 percent increase from $41 billion to $51.3 billion. Transit formula
spending would grow almost 70 percent from $8.6 billion to $13.9 billion with
the new starts program growing from $2.12 billion to $3.25 billion. The Federal
Railroad Administration's budget would roughly triple to about $5 billion. The
TIGER grants program would more than double from the fiscal year (FY) 2015
level of $500 million to $1.2 billion in FY 2016. The administration also
proposes increasing the cap on Passenger Facility Charges (PFCs) that airlines
are allowed to charge for airport infrastructure improvements from $4.50 to
$8.00. In exchange for this increase, the budget proposes reducing the Airport
Improvement Program (AIP) funding from this year’s $3.35 billion to $2.9
billion but only allowing the AIP funds to go to airports that do not benefit
from the PFC increases.
The proposed large increase in transportation
funding is part of the administration’s revised version of the Grow America
Act, its proposal from last year presenting ideas for addressing MAP-21
reauthorization. That proposal was for four years at $302.3 billion using
unspecified corporate tax reforms as the way to provide the additional revenue
needed to support the increased funding levels. This year’s budget includes a
six–year, $478.3 billion version of the Grow America Act. As with last year’s
proposal, this version of the Grow America Act would rename the “Highway Trust
Fund” as the “Transportation Trust Fund” and would be expanded to include
funding for Amtrak, high-speed rail, mass transit new starts, administrative
expenses and research, TIGER grants, and the National Highway Transportation
Safety Administration’s (NHTSA) vehicle safety programs. All would receive
significant funding increases. These programs are currently funded out of
general fund proceeds. The budget also proposes to increase the national
limitation amount for PABS for qualified highway or surface freight transfer
To pay for the increased funding, the administration
proposes a one-time tax on U.S. corporations’ earnings overseas that would be
taxed at a 14 percent rate. This is proposed to generate $239 billion in
revenue; however, it would need to be replaced with another revenue source after
the six-year period or the transportation programs would revert back to their
FY 2015 levels.
of major direct-federal construction accounts would see funding increases in FY
2016 compared to FY 2015 levels based on the president’s budget. With the
considerable withdrawal of troops in Iraq and Afghanistan and the winding down
of stimulus and 2005 Base Closure and Realignment Commission (BRAC) round
funding, investments in federal facilities and infrastructure have seen steady
decreases since FY 2012. The president’s budget request would generally buck
this trend, despite the threat of sequestration looming for FY 2016.
president’s budget would provide the greatest increase in funding for military
construction accounts, while the greatest decrease for U.S. Army Corps of
Engineers Civil Works (USACE) programs in FY 2016 compared to the previous
year. Military construction accounts would be set at $6.653 billion, a
nearly $1.9 billion (40 percent) increase. The president requested $1.669
billion for the Navy and Marine Corps (a $650 million, 64 percent increase),
$1.389 billion for the Air Force (a $577 million, 71 percent increase) and $743
million for Army (a $214 million, 41 percent increase) military construction
accounts. The defense-wide military construction account would be increased to
$2.3 billion (a $309 million, 16 percent increase). On the other side, despite
increased calls for infrastructure investment, the president’s budget would cut
$758 million (14 percent) from the USACE Civil Works programs, funding it at
about $4.4 billion. Most significantly, the construction account would be cut
to $1.172 billion (a $467 million, 28 percent cut), the operations and
maintenance account would be cut to $2.7 billion (a $198 million, 6 percent
cut) and the Mississippi River and Tributaries account would be cut to $225
million (a $77 million, 25 percent cut).
federal facilities, both the General Services Administration (GSA) and U.S.
Department of Veterans Affairs (VA) construction accounts would see overall
increases under the president’s FY 2016 budget. GSA’s construction and
acquisition account would increase to $1.258 billion (a $748 million, 146
percent increase) and the repairs and alterations account would increase to
$1.247 billion (a $429 million, 52 percent increase). The VA’s major
construction account (for projects over $10 million) would increase to $1.143
billion (a $582 million, 103 percent increase) and the minor construction
account (for projects at or below $10 million) would be cut to $406 million (an
$89 million, 18 percent cut).
budget provided a mixed bag for the Environmental Protection Agency’s (EPA)
state revolving loan funds (SRFs) and the Rural Utilities Service’s Rural Water
and Waste Disposal program. As for the SRF’s – the budget provides $1.116
billion for clean water SRFs – a 23 percent cut from FY 2015 enacted
levels. Drinking water SRF’s would receive $1.186 billion under the
budget – a 30 percent increase from FY 2015 enacted levels. The
Department of Agriculture’s Rural Water and Waste Disposal Program is funded at
$464.9 million, same as the enacted FY 2015 levels.
For more information, please contact Sean
O’Neill at (202) 547-8892 or email@example.com.
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