Trump Infrastructure Plan Wants to Stop ‘Overreliance’ on Federal Money
The president’s long-awaited infrastructure plan pushes state and local governments to spend more but offers them a smoother path to getting federal regulatory approval.
State and local officials who have clamored for years for the federal government to increase spending on infrastructure projects like highways, transit and water systems won’t get much new money under President Donald Trump’s infrastructure package. But they could get help building those projects more quickly.
There are few surprises in the broad outline of Trump’s long-awaited infrastructure plan, as described by a senior White House official this weekend and set for release Monday. That could be disappointing news for many state and local leaders who have been skeptical of the effort.
The administration wants state and local governments to pay more for infrastructure, and it wants the federal government to speed up its approval processes for those projects.
“The flexibility to use federal dollars to pay for essentially local infrastructure projects has created an unhealthy dynamic in which state and local governments delay projects in the hope of receiving federal funds. Overreliance on federal grants and other federal funding can create a strong disincentive for non-federal revenue generation,” the White House explained in a statement.
“At the same time, we continue to apply federal rules, regulations, and mandates on virtually all infrastructure investments. This is despite the federal government contributing a very small percentage of total infrastructure spending,” it added.
The administration hopes to reshuffle the federal government’s budget to find $200 billion for new infrastructure initiatives, although some of that money would come from cuts to Amtrak and other infrastructure grants that it considers ineffective.
Of that money, the White House proposes spending:
- $100 billion on competitive grants for state and local governments;
- $20 billion to expand low-cost federal loans and other borrowing, particularly by expanding the use of private activity bonds, railroad loans, water loans and loans authorized by the Transportation Infrastructure Finance and Innovation Act (TIFIA);
- $50 billion in block grants to states for rural infrastructure;
- $20 billion for “transformative” projects, such as those relying on using new technologies; and
- $10 billion to improve federally owned infrastructure.
The administration hopes the $200 billion will be enough to entice $1.3 trillion in new infrastructure spending by states, local governments and private investors. In other words, the federal government would pay only about 13 percent of the cost of its infrastructure initiative.
The White House adviser, who spoke to reporters on the condition that he not be named, said the administration settled on the $1.5 trillion total, which officials had originally pegged at $1 trillion, based on feedback from state and local officials.
“We've actually received a more enthusiastic response than we anticipated from state and local governments coming to us,” he said.
The plan would leave in place most current infrastructure programs, including those paid for with the Highway Trust Fund, the main federal source of funding for road and transit projects.
But the way that most of the new money under the Trump plan would be spent would be a sharp departure from how many transportation projects, in particular, are currently funded.
Overall, the federal government pays roughly a quarter of the cost of building and maintaining roads in the country. But the federal government’s role skews heavily toward big projects. It subsidizes up to 80 percent of the cost of federal highways, and even many of its subsidized loan programs are tailored for megaprojects.
Under Trump’s plan, though, the federal government presumably would take a back seat even in paying for large projects that could have a widespread impact, like the New York region’s effort to replace damaged and traffic-choked passenger rail tunnels under the Hudson River.
While megaprojects could get some money under the Trump plan, they won’t get special consideration, the White House adviser said.
“We want to stay away from what has been historical precedent and what undermines the public's trust in sending money to Washington, and that is Washington picking and choosing what we think priorities ought to be for states and communities across the country,” he said. “One of the problems, when you pick specific projects, is that you then tend to pool federal resources in select areas, and everyone else gets left out.”
Trump’s plan also does not address one of the top infrastructure priorities of state and local leaders: fixing the Highway Trust Fund.
The account, which is funded by motor fuel taxes, has repeatedly run into the red over the last decade. Every time it has, Congress has had to scramble to find money from other parts of the federal budget to plug the holes in the transportation fund. But lawmakers have not found a long-term solution for keeping the trust fund solvent, such as raising the 18.4-cent-per-gallon tax on gasoline, which was last raised in 1993.
A who’s who of state and local groups, in a joint statement last week, said that “secur[ing] the long-term solvency of the Highway Trust Fund” is one of their top priorities. Signatories included the National Governors Association, the U.S. Conference of Mayors, the National League of Cities, the National Conference of State Legislatures and the American Association of State Highway and Transportation Officials.
“The plan does not call for fixing the Highway Trust Fund,” said a separate White House official, “however it’s something we have told members of Congress we want to work with them on. We anticipate any final legislation will address the challenges of the highway trust fund.”
The White House official said relying more heavily on state and local governments to fund their own infrastructure improvements would help make that funding more “sustainable.”
He pointed to Los Angeles, where voters decided in 2016 to extend a sales tax indefinitely to pay for transportation improvements, and to more than two dozen states that have raised their fuel taxes in recent years. That stood in contrast to the federal government, where highway funds were flush in the 1990s but are scarce now.
“One of the problems with federal funding, as you know, is it's very intermittent,” he said.
Still, Trump infrastructure adviser D.J. Gribbin told a group of mayors last month that the administration is open to the idea of raising the gas tax to pay for more infrastructure improvements. But the administration is not asking Congress to do that, either.
In fact, getting an infrastructure bill through Congress could be difficult even without the gas tax increase.
Many of the cuts the Trump administration is proposing in this year’s budget plan, which would help pay for the new initiative, also appeared in the president’s budget outline last year but went nowhere.
The bill would also be a heavy lift, especially in an election year when members of Congress are anxious to tend to their campaigns. If it proceeded normally, it would need the sign-off of six committees in the U.S. House and five in the Senate, and agreement between the two chambers.
Congress also passed a budget deal last week that would keep the federal government going through September 2019. Lawmakers still have to flesh out how that money will be spent in the next few weeks, but it’s unclear whether they’ll be able to reflect the changes sought by Trump for his infrastructure plan as they do so.
What might get more traction is Trump’s efforts to streamline the federal approval process for infrastructure projects, which can sometimes stretch out for a decade or more for large projects. The president wants federal officials to make a decision in two years or less.
To do that, the administration wants to put a single federal agency in charge of the permitting process for each project, so that there would be “one federal decision” on each project. That would prevent federal agencies from second-guessing each other and drawing out the approval processes. The lead agency would have 21 months to review the project and another three months to issue the necessary permits.
The plan would make numerous other changes to the approval processes, but the White House official said the administration would not ask for changes to the major provisions of signature environmental laws, such as the Endangered Species Act or the Clean Water Act.
The official also said the White House wanted to make it easier for people without college degrees to work on infrastructure projects. The administration wants to make it easier for tradespeople to transfer their licenses from one state to another. It also called for expanding the use of trade apprenticeships.