$1.5 T Federal Infrastructure Plan Offers a New Transportation Financing Strategy

Love him or hate him, there seems to be no in-between, President Donald Trump has touched on at least one issue many Democrats and Republicans both believe needs to be addressed—infrastructure.  Regions and states are struggling to finance their public infrastructure.  A $170,000,000,000 infrastructure funding gap exists.   Recently, President Trump announced a $1.5 T infrastructure plan tied to the federal budget process that is stirring substantial debate.

The Trump Infrastructure Plan provides:

  • $200 B in Federal funds to spur at least $1.5 T in infrastructure investments with partners at the State, local, Tribal, and private level with
  • $100 B to create an Incentives Program to spur additional dedicated funds from States, localities, and the private sector;
  • $20 B dedicated to the Transformative Projects Program focused on projects that could have a significant positive impact on States, cities, and localities but may not attract private sector investment because of the project’s unique characteristics;
  • $20 B allocated to expanding infrastructure financing programs such as using $14B to expanding a number of existing credit programs: TIFIA, WIFIA, RRIF, and rural utility lending;
  • $6 B for expanding Private Activity Bonds;
  • $10 B for a new Federal Capital Revolving Fund, which will reduce inefficient leasing of Federal real property which would be more cost-effective to purchase; and
  • $50 B will be devoted to a new Rural Infrastructure Program to rebuild and modernize infrastructure in rural America primarily allocated to State governors, giving States the flexibility to prioritize their communities’ needs, and the remaining funds will be distributed through rural performance grants to encourage the best use of taxpayer dollars.

President Trump is seeking a Third Way of addressing this growing infrastructure funding gap through the use of Public-Private-Partnerships (PPPs).  A PPP is a contractual agreement formed between a public agency and private sector entity that allows for greater private sector participation in the delivery of transportation projects. These projects are not just the private sector construction of roads, but instead they shift a larger share of the economic risk and financial rewards to the private sector.  Private firms agree to construct, finance, maintain and/or operate a project. The Chicago Skyway, Indiana Tollroad, and Ohio’s Portsmouth By-Pass are just a few examples of PPPs that use private companies to carry the burden of infrastructure construction and, at times, operation.

As with all matters in Washington, the Trump Infrastructure Plan has its detractors.  While most agree that America’s infrastructure is in desperate need of a tune up, a national consensus on how to approach that issue is still forming. Democrats are focused on the traditional methods of promoting infrastructures spending tied to the gasoline taxes and conservatives oppose all taxes in any form.  Communities desperate for infrastructure should advocate aggressively with their members of Congress about the need for a new federal infrastructure program no matter whose name is on it.