Tolling in the Mix as 2018 Federal Infrastructure Plan Takes Shape

With transportation advocates looking to 2018 as the year when infrastructure policy and investment may come to the forefront, the White House has been floating a plan that calls for federal “sweeteners” for state and local governments that raise revenue from tolling or other forms of funding to meet their own infrastructure needs.

On Monday, President Trump huddled with key transportation leaders at the White House, including Transportation Secretary Elaine Chao, U.S. House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA), Director of Legislative Affairs Marc Short and others senior officials.  In conjunction with the meeting, the White House announced that it is expected to submit a roughly 70-page document outlining the administration’s “detailed legislative principles” to Congress in early January.  Expect to hear these principles touted fully during the State of the Union scheduled for January 30^th. 

While there are questions and inevitable wrangling ahead about the share of the $1-trillion investment to be covered out of federal coffers, the great news is that state and local governments won’t be going into a major round of infrastructure renewal with one hand tied behind their backs.

“We will be agnostic as to the type of revenue, as long as it is new and dedicated to infrastructure,” said one White House official, who spoke to the Washington Post last week on condition of anonymity. “Jurisdictions could raise their gas or sales tax rates, for example, or increase revenue flowing to infrastructure projects in a variety of other ways, such as imposing new tolls on roads or selling off existing assets to the private sector to generate money for new projects,” the Post reported.

While public-private partnerships will be permitted under the federal plan, the latest signals suggest the approach will receive no special preference in projects submitted for federal approval under a competitive process. Administration officials had previously said P3s “would be key to spurring new projects,” the Post recalls. “But Trump has since soured on the concept.”

R. Richard Geddes, director of the Cornell Program in Infrastructure Policy, said the federal plan could be structured to help other jurisdictions wean themselves off a gas tax that has been eroded by changes in driving patterns and the rise of electric vehicles. “To the degree that the federal government can incentivize states to think about alternatives, I’m happy,” he said.

The latest proposal puts forth $200 billion in direct federal funding or “seed money” in hopes of spurring at least $800 billion in spending by states, localities and the private sector.  As recently reported by Bloomberg, the $200 billion in federal funding would be structured to support funding in four areas:

• Cash to state and localities for infrastructure projects that already have their own dedicated funding from tolling, taxes, public-private partnerships or other alternative forms of revenue;

• Block grants for rural areas;

• Federal lending programs;

• And money for projects that fall into a special category titled “transformational” such as recent high-profile designs like Elon Musk’s “Hyperloop”.

But even before plans are released, issues are being raised around a plan that would set out to mobilize $1 trillion in new infrastructure investment with only $200 million in direct federal funding. State and local officials and Democrats in Congress would like to see a more robust federal investment.

Tracy Gordon, a senior fellow with the Urban-Brookings Tax Policy Center, noted that “the state and local sector as a whole is already feeling beleaguered,” adding that “I’m not sure this is going to go over very well.”

And lobbyist Jim Manley, a former spokesperson for Senate minority leader Harry Reid (D-NV), said the incentive to raise local taxes could be a hard sell with the majority party in Congress. “I believe that is going to be a deal-killer for a lot of Republicans,” he told the Post, while many Democrats are likely to see the plan as a way of “sticking it to the states”.

The takeaway is that nothing is certain, but 2018 is shaping up to be an interesting, complicated, and possibly decisive year for transportation infrastructure. The very good news is that IBTTA’s Moving America Forward campaign will keep the tolling industry at the table, making the case for a funding and financing mechanism that might be the key to breaking a monumental policy logjam.

Click here for the latest on IBTTA’s Moving America Forward campaign.