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Highway, Aviation, Rail Aid Grows in Obama Budget

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Fiscal Year Budget 2012: Transportation
Amtrak would have to compete for money from the “system preservation and renewal” fund Obama would create in its six-year surface plan. Photographer: Kamm/AFP/Getty Images

Feb. 14 (Bloomberg) -- President Barack Obama proposed a 16 percent transportation spending increase for fiscal 2012 while tying spending on many highway, aviation and rail programs to Congress passing a multiyear funding bill.

The plan calls on Congress to approve $556 billion in surface transportation spending over six years, almost doubling the amount from the $286.5 billion enacted by Congress in 2005. The president’s plan doesn’t specify where revenue fueling the increase would come from.

Obama’s surface plan, unlike the 2005 law, includes operating and capital assistance for Amtrak, the national passenger railroad, and funding for airport runway construction. Those items historically have not been included in legislation typically referred to as a “highway bill.”

Overall, Obama’s budget gives the Transportation Department authority to spend $119 billion in fiscal 2012, up from $103 billion in 2010. Winners include electric vehicle makers such as General Motors Co. and high-speed rail equipment producers such as Alstom SA. Losers include U.S. airlines, which would have to collect higher passenger ticker taxes under Obama’s plan.

The budget would devote $8 billion in fiscal 2012 to high-speed and intercity passenger rail programs. Over six years, Obama would spend $53 billion for high-speed rail.

Alstom, the world’s third-largest power-equipment maker, and Siemens AG, Europe’s largest engineering company, are among the firms that would benefit from higher rail spending in the U.S.

Electric Vehicles

Amtrak, which received $1.5 billion in fiscal 2010 capital and debt-service grants and operating subsidies, would have to compete for money from a “system preservation and renewal” fund Obama would create in the six-year surface plan.

Obama also would create an $80 million annual safety inspection fee that railroads including Norfolk Southern Corp. and Union Pacific Corp. would have to pay.

Obama’s budget boosts government investment in electric battery-powered cars sold in the U.S. by companies including GM, Nissan Motor Co. and Tesla Motors Inc., while cutting spending on hydrogen fuel-cell technology, such as that used by Honda Motor Co., and on clean diesel technology for commercial trucks and buses.

Aviation Spending

The Federal Aviation Administration would get $18.7 billion, a 17 percent increase, in Obama’s budget. FAA operations, including payments for staff and controller salaries, would grow 5 percent to $9.82 billion.

Spending on equipment, including modernization of the air-traffic control system called NextGen, would grow 6 percent to $3.12 billion.

Airport grants would be cut 31 percent to $2.4 billion. However, airports could compete for a one-time allocation of $3.1 billion that would come from Obama’s proposed surface-spending plan. Including that revenue, airport grants would increase 57 percent.

Obama’s plan also calls for airports to have the authority to raise airline passenger fees to get additional revenue for construction projects. That would be a loss for carriers including Delta Air Lines Inc. and AMR Corp.’s American Airlines, who have resisted any increase in the $4.50-per-passenger charge.

The National Highway Traffic Safety Administration, which coordinates vehicle recalls and writes automotive safety standards, would have a 16 percent budget increase to $950 million from $822 million in the fiscal year ended Sept. 30.

The Federal Motor Carrier Safety Administration, the agency chartered to reduce the number of trucking fatalities, would receive $606 million in fiscal 2012, a 10 percent increase over 2010.

To contact the reporters on this story: John Hughes in Washington jhughes5@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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