6 Things Cities Need to Know About Trump’s Infrastructure Plan
While proponents argue the infrastructure proposal would deliver greater control to states and local governments, the proposal appears to back down on a direct investment in infrastructure that cities and the nation desperately need.
This post was co-authored by Irma Esparza Diggs and Will Downie.
Last week, the White House rolled out ideas on how to fix our nation’s ailing roads, bridges, schools and water systems in their version of “Infrastructure Week.” Building off the $200 billion in federal investment included in President Donald Trump’s FY2018 budget, ideas such as corporatizing air traffic control, streamlining the permitting process, and improving inland waterways were all recently highlighted by the president.
While proponents argue the infrastructure proposal would deliver greater control to states and local governments, the proposal appears to back down on a direct investment in infrastructure that cities and the nation desperately need. The result is a mixed bag for cities — some crucial programs shored up, major changes to regulations, and a great deal of funding uncertainty for the future.
On Thursday, President Trump met with mayors, county commissioners and governors to provide further details and seek feedback directly. The National League of Cities (NLC) was at the table for those discussions with the president, vice president and cabinet secretaries, along with other White House and Office of Management and Budget (OMB) officials, on specific topics including rural infrastructure, permitting reform and expediting infrastructure, transformative projects, water infrastructure, transportation infrastructure and energy infrastructure. Mayors stressed the need for direct funding to cities, greater flexibility, and ensuring that federal funding programs that cities use to leverage additional investments continue.
Here’s what we know so far about the president’s infrastructure plan:
- Public-private partnerships will play a starring role.
The administration has solidified public-private partnerships, or P3s, as one of their four key principles of infrastructure, describing them as a solution to help advance the nation’s most important regional projects. NLC fully endorses an “all of the above” approach to infrastructure — but cities should remain skeptical of an overreliance on policy tools like P3s that only offer solutions to a small subset of infrastructure projects.
- Major deregulation and permitting changes are on the way.
The White House’s other big hope for infrastructure development is to streamline regulatory and permitting processes to generate investment in infrastructure and reduce the timeline for projects.
First, the administration proposes creating pilot programs for environmental impact, citing current processes as time-consuming and ineffective. While NLC has weighed in on unfunded mandates and regulatory reform, we are opposed to any attempts to reduce environmental protection. Improvements must be designed to enhance our existing environmental protections while streamlining the regulatory process.
The administration also proposes designating a single entity that would be responsible for leading each project through the review and permitting process. This has the potential to reduce the costs and time associated with these processes, and could be worth pursuing. However, any shifting of responsibility to local leaders must come with appropriate federal funds to compensate local governments for their new responsibilities — and the increased costs and workload.
- Certain successful programs could be expanded.
While most of the discussion on federal spending has been around proposed cuts, some successful infrastructure programs could receive expanded funding under the new proposal. NLC recommends the following three actions:
- Expand the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program to $1 billion. TIFIA provides flexible funding for major transportation projects and helps local governments leverage private and other non-federal investments. NLC welcomes increases to TIFIA, which helps finance transportation projects through direct loans, loan guarantees and lines of credit.
- Fund the Water Infrastructure Finance and Innovation Act (WIFIA) Program. WIFIA leverages private investments in large drinking water and wastewater infrastructure projects, and is an asset to local communities for high-cost projects. NLC supports robust funding for this program, along with other federal water programs such as the Clean Water and Drinking Water State Revolving Loan Funds.
- Lift the Cap on Private Activity Bonds (PABs) and expand eligibility. PABs allow the Department of Transportation to issue tax-exempt bonds on behalf of private entities for infrastructure projects. The administration has proposed lifting the current $15 billion cap on PABs for transportation projects and expanding eligibility. NLC calls on Congress to lift the cap on PABs for water and wastewater projects and views them as another tool for financing infrastructure projects.
- A Red Flag for Small, Rural Communities: Privatizing Investment in Rest Areas
President Trump’s plan calls for liberalizing tolling policies and allowing for private investment in rest areas. Current laws restrict tolling on interstate highways and prevent private construction and operation of interstate rest areas. While NLC supports a more flexible tolling policy for federally-aided highways, bridges and tunnels, the commercialization of rest areas could have drastic effects on cities and towns. Many rural communities rely on their proximity to the interstate traffic to drive their economies and support their tax base. Allowing the development of private rest areas threatens to divert much needed taxes and money from these communities, endangering their ability to provide vital public services and crippling local businesses.
- Broadband infrastructure may not be on the menu.
Unfortunately, the new infrastructure plan lacks any real mention of broadband infrastructure. This fast-growing sector of our nation’s infrastructure serves to tie together smart cities, allow for flexible, resilient energy and water systems, and help move our transportation networks into the future. While the majority of the nation’s existing broadband infrastructure is built and operated by private companies, federal investment plays a major role in ensuring that reliable, affordable high-speed internet eventually reaches every American community.
- The proposed plan alone probably won’t be enough.
Throughout the campaign trail, NLC called on both candidates to prioritize discussion on infrastructure. NLC welcomes the administration’s focus on this important topic, but remains skeptical that the policies proposed thus far will make a significant dent in the nation’s infrastructure deficit.
Any infrastructure plan that aims to help cities must be rooted in an “all of the above” strategy, and that includes P3s and regulatory reform. But that also means reassuring the tax-exempt status of municipal bonds, including broadband development in the portfolio, and making sure that increased local responsibility comes with corresponding direct funding.
Read our issue brief to learn more about NLC’s infrastructure priorities.
About the authors:
Irma Esparza Diggs is a senior executive and director of federal advocacy at the National League of Cities. Follow Irma on Twitter @iediggs.
Will Downie is an intern with the National League of Cities’ Federal Advocacy team.