President Obama’s ambitious $3.55-trillion budget outline for fiscal year 2010 is the latest salvo in his administration’s efforts to revive and reshape the nation’s economy. The proposed budget blueprint, unveiled Feb. 26, aims to cut the federal deficit in half by 2013 but doesn’t slash construction accounts to reach that g oal. Instead, it would boost funding for water infrastructure and create a National Infrastructure Bank.

Photo: AP/Wideworld

OMB’s Orszag (left) delivers plan to Rep. John Spratt (center) and Sen. Kent Conrad

Meanwhile, Congress still needs to approve final spending numbers for fiscal 2009. Lawmakers approved a stopgap measure this fall to continue spending at 2008 levels through March 6.

White House officials say the 134-page fiscal 2010 budget outline provides a broad framework for fiscal policy over the next 10 years. A more detailed budget plan specifying requested amounts for individual programs will be released in April. But even after that plan comes out, it will only be an early step in a long legislative process. Months of hearings by appropriations and tax-writing committees will take place, followed by committee and floor votes. Final numbers for 2010 spending won’t emerge until late summer, at the earliest.

Nevertheless, the summary does begin to flesh out the Obama administration’s spending priorities. The outline, together with the massive $787-billion stimulus package signed into law on Feb. 17, gives a clearer picture of Obama’s fiscal policy.

Initial reaction to the budget proposal has been mixed. Senate Finance Committee Chairman Max Baucus (D-Mont.) calls the budget a "strong proposal that focuses on urgent priorities." But the top Republican on the Senate Budget Committee, Judd Gregg (N.H.), asks, "Where is the spending restraint?"

Jeff Shoaf, senior executive director of government and public affairs at the Associated General Contractors, says, "After all the talk of infrastructure [investment] during the stimulus debate, we would have hoped there would be more room for growth in construction accounts."

"While we have not seen all the details, the president’s disappointing budget proposal appears to move in exactly the wrong direction," says Bruce Josten, U.S. Chamber of Commerce executive vice president for government affairs. "More taxes, heavy-handed regulations and command-and-control government will not hasten recovery."

Under the Obama 2010 plan, the Environmental Protection Agency would be one of the big winners. The $10.5 billion proposed is a $3-billion increase over EPA’s 2008 funding and represents the largest budget request in the agency’s 39-year history. Within the $10.5 billion, Clean Water and Drinking Water State Revolving Funds would receive a combined $3.9 billion to support approximately 1,000 clean-water and 700 drinking-water projects. By comparison, the two SRF accounts received $1.5 billion in 2008. The request calls for reinstating excise taxes that expired in 1995 to collect more than $1 billion to clean up Superfund sites.

The National Association of Clean Water Agencies likes the proposed numbers for water infrastructure projects. "For too long and despite our best efforts, we have watched funding for the popular SRF program dwindle to levels that threaten our ability to provide strong public health and environmental protections at a cost that our struggling communities can afford" says Ken Kirk, NACWA’s executive director. "We must work with members of Congress to ensure strong support for these funding levels."

Construction and transportation groups are less pleased about the funding proposed for the Dept. of Transportation. The administration proposed $72.5 billion, a modest $2-billion increase over expected 2009 levels for DOT. The outline provides few details about how the funds would be divided among DOT programs but indicates the administration will work with Congress to change the mechanisms for financing surface transportation programs. The budget proposal suggests that those reforms could include merging trust-funded and non-trust- funded aviation and highway programs into domestic discretionary spending, or general revenue.

Shifting trust-fund money from the current separate dedicated fund into general discretionary spending could have a dampening effect on long-range planning and investment, says Jack Basso, director of programs, finance and administration at the American Association of State Highway and Transportation Officials. "It simply becomes part of the annual appropriations process...and it makes it much more difficult to have any stable planning for the future because you don’t know what you’re going to get year to year," he says.

Critics already are blasting the proposal. Fourteen lawmakers from the House and Senate, including House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) and the committee’s top Republican, John Mica (Fla.), on Feb. 27 urged Obama to drop any efforts to change the scoring of transportation funding. "This is a big deal," says Brian Pallasch, American Society of Civil Engineers’ managing director for government relations and infrastructure initiatives. He says of the administration proposal, "I would say that it is troubling."

AGC also is disappointed in the total transportation dollars proposed. Shoaf says, "We were hoping there would be more of a boost in transportation, instead of a limiting factor....That will have a detrimental impact on the smooth flow of long-term big projects, and we think that is wrong way to go."

The DOT budget request includes a five-year, $5-billion high-speed-rail state-grant program to add to the $8 billion for high-speed rail provided in the American Recovery and Reinvestment Act. The Next Generation Air Transportation system, a long-running program to modernize the air-traffic control program, would receive approximately $800 million.

For the Corps of Engineers’ civil works, the budget proposes $5.1 billion, a $200-million increase from the expected 2009 funding levels. The stimulus measure allocated $4.6 billion for the Corps programs. Construction priorities will include flood-control projects, aquatic ecosystem restoration projects and projects that facilitate commercial navigation.

The budget requests $26.3 billion for the Dept. of Energy, a slight reduction from 2009 levels but an increase over the $24.1 billion enacted in 2008. Funding priorities would include aid for federal building-modernization projects, renewable-energy projects, smart-grid transmission projects and further development of carbon-capture...