Connecting state and local government leaders
States and localities would play a big role in reaching the Trump administration's $1.5 trillion goal for investment in public works.
WASHINGTON — Half of the federal dollars in the infrastructure investment proposal President Trump is set to unveil Monday would go to a new grant program that would reward states and localities that line-up greater shares of non-federal money for projects.
Trump’s proposal will call for $200 billion of direct federal funding, with $100 billion going to the competitive grant program, a senior White House official said during a call with reporters on Saturday.
“What we will do is we will match dollars that state and local governments are spending on infrastructure,” the official said, describing the grant program. “If they're creating new revenue streams and they want to build something, we will partner with them.”
“Come with revenue and come with a project, and your score is higher based upon the share of non-federal revenue that you have.”
The president’s plan would also establish a $50 billion block grant initiative for rural projects, add $20 billion to low-cost lending programs for transportation, water and railroad infrastructure, and provide $20 billion for “transformative” projects, the official said.
There is also $10 billion in the plan for a fund that would help with paying for federal office buildings.
And Trump’s plan would lift a federal cap on the amount of private activity bonds that can be issued in each state. The bonds receive favorable treatment under the federal tax code and are used to finance some kinds of infrastructure projects.
By combining the $200 billion of direct federal funding with state, local and private dollars, the Trump administration is aiming to drive $1.5 trillion of total infrastructure investment.
Previously the White House identified a $1 trillion target. “The reason we went from a trillion to $1.5 trillion is because we've actually received a, sort of, more enthusiastic response than we anticipated from state and local governments,” the official on Saturday’s call said.
He added that the president’s proposal would not eliminate bedrock “formula funding” programs like the Highway Trust Fund, a main federal account for roads and transit, or state revolving funds, which provide low-cost financing for water and sewer projects.
“This is a program that sits on top of existing programs,” the official said.
Trump has identified infrastructure investment as one of his priorities throughout his term, which began a little over a year ago.
The general contours of his infrastructure plan have come to light previously in comments White House officials have made publicly and in leaked documents. But the formal release on Monday of White House "principles" for the plan is seen as a starting point for Congress to launch discussions about infrastructure legislation.
Democrats in recent days called for $1 trillion in federal infrastructure funding, and have criticized the Trump administration's proposals.
"What they want to do is devolve the obligation to build a national and coordinated transportation system to the states and the cities," Rep. Peter DeFazio, of Oregon, the top Democrat on the House Transportation and Infrastructure Committee, said last week.
To pay the federal share of the infrastructure program, the official who spoke to reporters Saturday said Trump's budget plan for fiscal 2019, also due out Monday, proposes cuts that could offset new spending.
The budget proposal will not mark specific cuts to fund the program. But the official noted there are reductions “in things like transit funding and TIGER grants, and things where the administration thinks that infrastructure funds haven’t been spent efficaciously.”
TIGER, or Transportation Investment Generating Economic Recovery grants, are an Obama-era program and have helped pay for projects ranging from rural road upgrades to streetcar lines.
Cutting down on federal permitting times for projects is another priority in Trump’s public works proposal. The White House official said the goal is for permitting to take no more than two years.
“We're not saying you can have a bigger impact on endangered species, or the water can be dirtier or the air can be dirtier, or anything like that,” the official added. “We're talking about the process that's used to do the analysis around the environmental impact.”
The president’s proposal also has elements focused on workforce development.
For instance, broadening federal Pell Grant eligibility to aid people who want to go into construction trades, rather than pursue four-year college degrees, adding flexibility to licensing requirements for trades, and expanding apprenticeship programs.
The $20 billion the president’s plan will call for adding to federal infrastructure financing would go to to three main lending programs.
These include: the Transportation Infrastructure Finance and Innovation Act, or TIFIA, which supports regionally and nationally significant transportation projects; the similar Water Infrastructure Finance and Innovation Act, or WIFIA; and the Railroad Rehabilitation and Improvement Financing, or RRIF, program.
Funding for rural projects would be awarded as block grants to states and governors would control how the money is used, the White House official said. He added that the “transformative” grant program would support projects that “lift the American spirit," and that are "next-century-type of infrastructure.”
As for where state and local revenues to support investments might come from, the White House official said, "that could be property taxes; it could be user fees; it would be sales taxes."
"We're saying to state and local governments, who are currently spending the vast majority of funds on infrastructure, that if you, sort of, increase what you're doing already, we want to partner and match with you," the official added, while discussing the matching grants.
For some jurisdictions options for raising new revenues are limited.
Mark Poloncarz is the county executive in Erie County, New York, which encompasses Buffalo and has about 920,000 residents. State-imposed caps restrict property taxes increases there, he noted.
"I don't have the revenues available, nor the possibility of increasing the revenues by going back to the taxpayers and saying 'I'm going to raise your taxes,'" he said during a recent phone interview. "I can't do that under the scheme that we have here in New York state."
Poloncarz said the county is already borrowing $45 million to $50 million annually for capital costs, paid for out of general revenues. But he highlighted pending, and expensive, projects involving wastewater treatment and light rail that he described as important for the county and said it was all but certain they would require federal funding.
Increasing the county's level of infrastructure investment, he said, would be difficult without cutting spending in other areas, like libraries, parks, or health care. "I don't want to cut money that we've invested to address the opioid epidemic," Poloncarz added, "because the federal government says you're only eligible for dollars for this transportation project if you increase your local share.”
Mayor Lydia Mihalik, of Findlay, Ohio, told Route Fifty last month that her city, with about 41,000 residents, has money available to invest in infrastructure. But she recognized other cities are not doing as well.
“Infrastructure across the country is failing,” Mihalik said, noting drinking water and sewer systems specifically. “I think, while leveraging public-private partnerships is a great idea, and while leveraging a finite amount of federal dollars with state and local dollars is a great idea, not everybody succeeds.”
“The package has to address those cities that need more help,” Mihalik added. “And I’m hopeful that Congress and the president will see that.”
Bill Lucia is a Senior Reporter for Government Executive's Route Fifty and is based in Washington, D.C.