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White House releases Infrastructure Plan

dollar-sign-wallpaper-7The White House released its infrastructure package yesterday.  The package,  “Legislative Outline for Rebuilding Infrastructure in America”, states that it will stimulate at least $1.5 trillion in new investment over the next 10 years, shorten the process for approving projects to 2 years or less, address unmet rural infrastructure needs, empower State and local authorities, and train the American workforce of the future. However for transit there seems to be a reduction in funding.

For FY 2019, the plan proposes to provide $9.90 billion for the Transit Formula Grant program, down from $10.5 billion in FY 2018 and $10.8M in FY 2017.  Following FY 2021, the administration’s budget proposes a reduction in outlays for the transit formula program from $10.1 billion to $6.3 billion in FY 2023 and beyond. Most funding for major transit project construction goes through the Capital Investment Grants/New Starts program. In recent years, this program has been funded from the general fund and requires an annual appropriation. For FY 2019, the administration’s budget recommends cutting new money for this program to $1 billion, down from $2.4 billion in FY 2018, and using the funds only to continue construction activity on ongoing transit projects. There would be no federal funding for new transit projects. Longer-term, the budget projects funding for Capital Investment Grants to remain at the $1 billion level through FY 2028.

The main focus of the plan is largely on incentivizing state and local governments and private sector entities to use their money to capture some of the $200 billion the administration proposes to spend. According to an NPR report, if Congress approves the Trump infrastructure plan, the historical 50-50 funding model for transit projects would be gone, and most projects would require states and local agencies to come up with at least 80 percent of the revenue, in order to get, at most, a 20 percent federal match.  Already, more than 30 states have raised their gasoline or other taxes in recent years to try to meet infrastructure needs. Missouri continues discussions this year about raising the gas tax revenues for roads and bridges, and a recent report by the 21st Century Missouri Transportation System Task Force calls for $50-70 million annually for transit and multi-modal transportation.

The plan does not address the Highway Trust Fund solvency issue.  Beginning in FY2021, the Highway Trust Fund will need roughly $18 billion per year, on average, to avoid severe cuts in the amount of annual investment levels of the federal highway and transit programs.

As outlined by ARTBA, here is a breakdown of how the package intends to leverage the $200 billion in federal dollars:

• Infrastructure Incentives Program ($100 billion), a competitive grant program for projects including major investments by states, localities, and the private sector.  It would be administered by the U.S. Department of Transportation (DOT), U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers.   The federal share is capped at 20 percent per project, and no state can receive more than 10 percent of the $100 billion.

• Rural Infrastructure Program ($50 billion) that aims to improve the condition of  infrastructure, enhance regional connectivity and access to markets and employment opportunities and spur  economic growth outside cities.   Eligible projects would include transportation, broadband, water, power and electric infrastructure.  In this program, 80 percent of the funding would be distributed by a formula based on population of less than 50,000, and lane mileage.  The remaining 20 percent would be distributed via a performance grant program for states that submit a comprehensive infrastructure investment plan.  Tribal and U.S. territorial areas would also be eligible for funding under this program.

• Transformative Projects Program ($20 billion) would provide federal funding for, “bold, innovative, and transformative infrastructure projects that could dramatically improve infrastructure” but are, for various reasons, considered too risky for private sector investment.  The U.S. Department of Commerce would oversee this program, with consultation as needed from other departments, and eligibility would include all previously mentioned uses of infrastructure as well as “commercial space”.  Up to 50 percent of planning costs and 80 percent of construction costs could come from this program.

• Infrastructure Financing Programs ($20 billion) would allocate an additional $14 billion for the expansion of existing federal credit programs, including the Transportation Infrastructure Finance and Innovation Act (TIFIA), Railroad Rehabilitation and Improvement Financing (RRIF) program and Water Infrastructure Finance and Innovation Act (WIFIA).  This additional funding would allow the administration to further diversify the portfolios for these programs.  Specifically, port and airport infrastructure projects would be eligible for TIFIA credit assistance, which is currently limited to highway, bridge, transit and certain intermodal projects.  The RRIF program would be amended with incentives for short-line freight and passenger rail projects.

 


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