President Obama proposes 50% increase in spending on clean transportation, funded by $10/barrel tax on oil
President Obama has laid out a plan for building a “21st Century Clean Transportation System”, the investment for which would be funded by a new $10 per barrel fee on oil paid by oil companies, which would be gradually phased in over five years. The President’s plan would increase US investments in clean transportation infrastructure by roughly 50%.
The President’s plan invests nearly $20 billion per year above current spending to reduce traffic and provide new ways for families to get to work and to school. The plan would expand transit systems in cities, suburbs and rural areas; make high-speed rail a viable alternative to flying in major regional corridors and invest in new rail technologies like maglev; modernize the freight system; and expand the Transportation Investment Generating Economic Recovery (TIGER) program begun in the Recovery Act to support high-impact, innovative local projects.
The plan invests roughly $10 billion per year to transform regional transportation systems by shifting how local and state governments plan, design and implement new projects. Obama is proposing to reform the existing transportation formula programs to ensure that local, regional, and state governments are maximizing returns on public investments and delivering better outcomes.
As part of reforming formula programs, the plan would create a new Climate Smart Fund that provides bonus funding to states that use existing formula funding to cut greenhouse gas emissions in the transportation sector—for example by encouraging better land use planning, investing in clean vehicle fueling infrastructure or increasing use of public transportation. The plan would also launch three new competitive grant programs:
- a 21st Century Regions program to implement regional-scale transportation and land-use strategies;
- a Clean Communities program to support more livable cities and towns with expanded transportation choices; and
- a Resilient Transportation program to spur investments that bolster resilience to climate impacts.
The President’s plan invests just over $2 billion per year to launch a new generation of smart, clean vehicles and aircraft by expanding clean transportation R&D and launching pilot deployments of safe and climate smart autonomous vehicles. It also accelerates the transition to cleaner vehicle fleets in communities around the country, including expanding Diesel Emissions Reduction Act Grant Program funding, and supports the creation of regional fueling infrastructure for low-carbon vehicles. The budget also proposes to invest $400 million a year to ensure that new and changing technologies are integrated safely into our transportation system.
The Obama Administration says the the $10/barrel tax raises the funding necessary to make these new investments, while also providing for the long-term solvency of the Highway Trust Fund.
In addition, the plan:
Utilizes one-time revenues from business tax reform: The plan would continue the President’s call to use the one-time revenues from pro-growth business tax reform to fund a temporary near-term surge in investment, while the oil fee will play for the long-term investments needed to put us on the right path for the years ahead.
Provides assistance to relieve energy cost burdens for families: Consistent with other Congressional proposals to increase energy fees, the plan would provide assistance to families to relieve energy cost burdens, including a focus on supporting households in the Northeast as they transition from fuel oil for heating to cleaner forms of energy.