The White House released its long-awaited infrastructure proposal to Congress this morning, along with the President’s fiscal year 2019 budget proposal. While elements have been hinted at and leaked before, the 55-page document released today provides significant new details. Though the Administration began to advance discrete priorities by executive action this past year, this broad proposal will require legislation. The Administration has opted to leave to Congress the drafting of the bill, just as it did with tax reform.
The White House proposal includes:
- Creation of new federal infrastructure programs that (1) incentivize project sponsors to secure new revenue and deliver projects more efficiently, (2) provide funds for innovative and transformative projects, (3) encourage investment in rural communities, and (4) increase the capacity of federal loan programs.
- Providing more control to state and local project sponsors to prioritize projects and make investment decisions.
- Elimination of the transportation and state volume caps on Private Activity Bonds and expansion of eligible asset classes.
- Expansion of TIFIA eligibility to include airports and maritime and inland ports.
- Removal of federal tolling limitations on the Interstate System.
- Conditioning federal transit funds for major capital projects on the use of value capture financing.
- Reducing the federal environmental review and permitting timeline for infrastructure projects to two years.
- Expansion of federal workforce training programs.
An official summary of the proposal can be found here. The White House infrastructure proposal requests that Congress allocate $200 billion in new federal spending over the next ten years, estimating that will generate an additional $1.5 trillion in total infrastructure investment through state and local revenue measures such as those recently passed in Los Angeles, Austin, Seattle, and Wyoming.
While the White House does not specify how Congress should fund or offset the $200 billion in additional infrastructure spending, its accompanying 2019 budget proposal will generate significant controversy regarding transportation, recommending a significant reduction in federal spending for Amtrak and transit capital projects and proposing that outlays from the Highway Trust Fund be aligned with receipts (which, according to the latest Congressional Budget Office estimate, would begin to result in reduced outlays for existing programs beginning in 2021).
Will this prove to be a negotiating position, encouraging Congress to offer up alternative sources of funding to avoid these draconian cuts? Indeed, a senior White House official noted recently that $200 billion in additional federal spending is the minimum and that the final number may well rise significantly once Congress begins its consideration of the infrastructure proposal.
A key indicator for the infrastructure proposal’s success on Capitol Hill will be whether congressional negotiators start from the premise that any new infrastructure legislation must supplement, and not replace, existing federal spending. There is a fear that if this proposal replaces existing programs, it would actually be a policy regression, devolving responsibility for critical infrastructure development to the states, instead of asserting the importance of the federal role in partnering with state and local project sponsors.
The bottom line is that governments at all levels—federal, state, and local—are not spending enough to keep up with the nation’s infrastructure backlog, let alone modernize the physical backbone of our economy. Given the scarcity of infrastructure funds, any new infrastructure initiative must supplement existing programs instead of cutting or replacing them. Therefore, using new federal infrastructure funding as a carrot to incentivize increased investment at the state and local levels is a realistic policy goal.
This is not a new idea. Congress included in the Fixing America’s Surface Transportation (FAST) Act seed money to leverage non-federal dollars for projects of national or regional significance. The Administration’s funding notice for the FAST Act program essentially serves as a pilot program for the incentive concept included in today’s proposal.
In taking these ideas from concept to reality, the House will be led by Transportation and Infrastructure Committee Chairman Bill Shuster. The retiring Shuster will be unbound by reelection pressures and has a track record of working effectively across party lines. In the Senate, multiple committees with overlapping jurisdictions will likely be involved, including the Commerce Committee, led by Republican Conference Chairman John Thune, the Environment and Public Works Committee, led by Republican Policy Committee Chairman John Barrasso, and the Banking and Finance Committees.
By all accounts, Congress intends to tackle the Herculean task of sustainably resolving the Highway Trust Fund’s systemic insolvency. Not tackled purposefully in over twenty-five years, Chairman Shuster has made this a priority, and Transportation and Infrastructure Committee Ranking Member Peter DeFazio has long been a champion for additional revenue and laid out a number of potential options in a recent white paper distributed at the House Democratic Retreat.
The mere fact that so much political attention is now focused on infrastructure investment—from both parties, in both Chambers, and from the Administration—makes this a rare moment in time. Proposing a massive infrastructure investment outside of the normal transportation authorization process allows policymakers the luxury of thinking about what long-term federal infrastructure policy ought to be, absent the constraints of existing program implementation. For this reason, the White House infrastructure proposal represents an historic opportunity to bring the nation’s infrastructure into the twenty-first century. It is essential that all stakeholders seize this opportunity for shaping a bipartisan initiative that will incentivize permanent paradigm shifts and lasting positive outcomes.