Infrastructure Plan Being Reshaped in Congress

 

April 4, 2018

 

Congressional committees have begun the process of turning the Trump Administration’s long-awaited infrastructure plan into legislation and the result is sure to be substantially different than the administration’s proposals.

 

As committees started working in March, House Speaker Paul Ryan said Congress will produce multiple pieces of legislation rather than the single program the Administration had outlined with the goal of $1 to $1.5 trillion in upgrades to a wide range of infrastructure.

 

The first step was passage in March of the FY2018 Omnibus Appropriations Bill which included $21.2 billion for infrastructure including transportation, capital projects, water and wastewater projects and expansion of rural broadband.  That is seen as a federal “down payment” on infrastructure improvements.

 

Speaker Ryan indicated that highways, bridges, waterways and airports will be done in different bills.  That could include an update to the 2015 highway authorization bill which expires in 2020, the regular updating of the Water Resources Development Act (WRDA) and reauthorization of the Federal Aviation Administration.

 

The Trump Administration infrastructure plan rolled out in February proposed to set in place a new system of incentives intended to push state and local governments to use new taxes, fees and revenue-backed debt to fund projects.  The administration’s 55-page plan was a framework rather than a proposed bill.

 

The overall amount of federal funding under the proposal would be about $200 billion. This was originally described as helping to finance up to $1 trillion in infrastructure investment, but the President has described it more recently as backing up to $1.5 trillion. Regardless of the amount of non-federal funding the proposal might attract, the federal portion would remain $200 billion spread over 10 years.  The administration proposed that the $200 billion come from cuts to existing federal programs.

 

The plan does not provide details on what percentage of the $200 billion might be available to fund highway projects as opposed to non-transportation projects. Speaker Ryan, Senator John Cornyn and Senator Mitch McConnell are among those who have recently said there is no chance an increase in federal motor fuels taxes to fund highway projects will be considered any time soon.

 

The Trump proposal, some elements of which are likely to make into law, consists primarily of four sections:

 

  • Infrastructure Incentives Program ($100 billion): States would be required to establish a sustainable non-federal funding stream equal to 80% of project costs, which would be matched with 20% federal funding. This competitive program would be aimed at traditional areas of federal investment, including highways and bridges, airports, passenger rail, ports and waterways, flood control, water supply, hydropower, water resources, drinking water facilities, wastewater facilities, stormwater facilities, and Brownfield and Superfund sites.
  • Rural Infrastructure Program ($50 billion):  This funding would come via grants to states with no matching funds required.  Infrastructure sectors covered by this program would include roads, bridges, public transit, rail airports, ports, broadband, water and wastewater, drainage, power transmission, flood control and water supply.  80% of these block grant funds ($40 billion) would go by formula to state governors who would have discretion to choose rural projects. Rural is defined as area with populations of less than 50,000.  The statute would create a rural formula based on rural lane miles and rural population.  Each state would automatically get at least a minimum amount by law and no state could get more than a ceiling amount not yet specified.  The other 20% ($5 billion) would be reserved for competitive federal rural performance grants within eligible asset classes.

 

  • Transformative Projects Program ($20 billion): The federal government would put up funding for 30%, 50%, or 80% of the project cost (depending on project stage). This would be aimed at projects that are commercially viable but have much higher than usual risk/reward. Infrastructure sectors covered by this program could include, but would not be limited to, the transportation, clean water, drinking water, energy, commercial space, and broadband sectors.
  • Infrastructure Financing Programs ($20 billion): These funds would go to advance major, complex infrastructure projects by expanding existing Federal credit programs such as TIFIA and WIFIA and by broadening the use of private activity bonds (PABs).