Senators introduce "Build America Bonds" legislation

Funding would finance roads, rail, bridge, water and other infrastructure projects

September 10, 2007

Senators Ron Wyden (D-Ore.) and John Thune (R-S.D.) recently announced the introduction of legislation authorizing the issuance of $50 billion in "Build America Bonds" over the next six years to finance roads, rail, bridge, water and other critical infrastructure projects. The funds raised by the bonds would be administered by a commission that would provide funding for "qualified projects" proposed by states. The funding would provide a one-time boost in supplemental infrastructure funding above the amount the Highway Trust Fund and other federal construction spending programs currently support. AGC's CEO Stephen Sandherr participated in a press conference Sept. 6 with Senators Wyden and Thune and other industry stakeholders in support of the legislation.

The Congressional Budget Office (CBO) released its mid-session budget review updating data presented to Congress in February. CBO's new data agrees with projections made by the Office of Management and Budget (OMB) in July and shows that revenue into the Highway Trust Fund in FY 2009 will be $4.3 billion short of the amount necessary to fund the SAFTEA-LU authorized funding levels. CBO released its figures last week and at that time indicated that the shortfall was actually $5 billion short of projections. However, an adjusted report was sent out yesterday indicating that the shortfall projection actually concurs with OMB.

Because of the spending rate in the HTF, government budget rules would require Congress and the President to find additional revenues to plug the $4 billion hole or cut highway funding for FY 09 by an estimated $16 billion. The cuts in FY 2009 from the promised level of $43.4 billion to about $27 billion, would result in a 37 percent reduction in funds provided to states for highway construction. AGC is working with our Congressional and transportation allies to craft a solution to keep these draconian cuts from being implemented.

The Senate Finance Committee Chairman Max Baucus (D-Mont.) announced that his committee will hold a markup Sept. 12 to consider its proposal for funding the nation's aviation programs over the next four years.

Sen. Baucus said he and ranking member Charles Grassley (R-Iowa) have been working with committee members Sens. Jay Rockefeller (D-W.Va.) and Trent Lott (R-Miss.) to come up with a funding mechanism that aims to placate both general aviation and commercial aviation interests. "We think we're going to come up with a proposal that satisfies, by and large, both sides," Baucus said, referring to the industry split between general aviation and commercial aviation. Programs within the Federal Aviation Administration and the taxes that pay for those programs expire Sept. 30.