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U.S. Infrastructure Plan Must ‘Look at All Financing Mechanisms’, USDOT Secretary Chao Affirms

By: 
Bill Cramer

U.S. Transportation Secretary Elaine Chao is opening an important new line of discussion with Congressional voices that share widespread concerns about the dire need for highway infrastructure improvements, but haven’t yet embraced tolling as a major part of the solution to the problem.

Last week, in a media interview, Chao pointed to tolls as one of the financing tools the U.S. government will have to consider as it digs into the details of President Trump’s infrastructure plan.

“I have to say that there are some people who may not support toll roads,” Chao told Fox News last Tuesday evening, after President Donald Trump’s address to Congress. “But we have to take a look at all of these financing mechanisms, because once again, the needs of our infrastructure are so great that the federal government cannot and should not be the only source of funding to repair our bridges, our roads and our energy grids.”

The Feds Can’t Assume the Whole Cost

In the President’s speech, last week, to a Joint Session of Congress, he reiterated his vision for the future of American infrastructure.

“Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land,” he said. “To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States—financed through both public and private capital—creating millions of new jobs.”

In Chao’s interview with Fox’s Sean Hannity, Chao reiterated that “public-private partnerships are a very important part of a new way of financing our roads and bridges.” and tolling “is certainly one example of how that would work.”

The Washington Post takes the argument a step farther, noting that tolling could be a crucial element of the Trump plan. “Even if investors were attracted by the 82% tax credit Trump said he hopes to offer, they would expect an additional return on their money, and when it comes to roads and bridges, that cash would come from imposing new tolls.”

The Conversation Shifts

The Post coverage suggests a sea change in the conversation about toll revenue and federal infrastructure programs: It’s no longer a question of whether tolling has a place, but whether tolls can backstop all the highway infrastructure investment the country needs. Citing unidentified “independent authorities”, the Post put the value of that activity at $3.7 trillion through 2020.

“The challenge in luring private investment to build roads and bridges is that vast portions of the country outside of high-traffic volume urban hubs would not produce the toll revenue desired by investors,” the Post warns, citing a Congressional Budget Office report that “just 26 private-investment projects” were under way or complete across the U.S. in 2015.

“Funding solutions that involve public-private partnerships, as have been discussed by Administration officials, may be innovative solutions for crumbling inner cities, but do not work for rural areas,” Senate Environment and Public Works Chair John Barrasso (R-WY) said last month.

The Conversation We Want to Have

Tolling agencies should be entirely comfortable with both lines of argument. Because this is precisely the conversation we want to have with legislators.

The United States highway system is as incredibly diverse as the country’s population. There are vast differences between an urban commuter route in Austin or Miami, a freight corridor in Pennsylvania, and a rural highway in Wyoming or Montana, and there’s no single, one-size-fits-all solution that will suit every highway, bridge, and tunnel in every community.

So IBTTA has never taken the position that tolls can or should be applied to every project in every state. We’ve been suggesting for years that user financing is a central tool—but still just one tool—in the country’s infrastructure funding toolbox.

If the U.S. Transportation Secretary, the chair of a key Senate committee, and one of the nation’s most influential newspapers are putting forward their own variants on that position, a solution to the country’s infrastructure funding crisis may be closer than we think.

Let’s keep this conversation going! Register today for IBTTA’s Summit on Finance, Policy and VMT, April 23-25, 2017 in Jersey City, NJ.