Greater reliance on user fees, federal loans rather than grants, and corporatization are three keys to the Trump administration’s infrastructure initiative released as a part of its 2018 budget. The plan will “seek long-term reforms on how infrastructure projects are regulated, funded, delivered, and maintained,” says the six-page document. More federal funding “is not the solution,” says the document; instead, it is to “fix underlying incentives, procedures, and policies.”
In building the Interstate Highway System, the fact sheet observes, “the Federal Government played a key role” in collecting and distributing monies to “fund a project with a Federal purpose.” Since then, however, those user fees, mainly gas tax receipts, have been “inefficiently invested” in “non-federal infrastructure.”
As a result, the federal government today “acts as a complicated, costly middleman between the collection of revenue and the expenditure of those funds by States and localities.” To fix this, the administration will “explore” whether transferring “responsibilities to the States is appropriate.”
The document contains a number of specific proposals:
- Allow states to toll interstate and other federally funded highways;
- Encourage states to fix congestion using “congestion pricing, enhanced transit services, increased telecommuting and flex scheduling, and deployment of advanced technology”;
- Corporatize air traffic control, as many other developed countries have done;
- Streamline the environmental review process by having a one-stop federal permit process and “curtailing needless litigation”;
- Expand the TIFIA loan program and lift the existing cap on private activity bonds, both of which will make more money available for infrastructure without increasing federal deficits.
The paper also includes proposals for reforming inland waterways, the Power Marketing Administration, and water infrastructure finance. Like the transportation proposals, these call for increased reliance on user fees, corporatization, privatization, or loans rather than grants.
“Corporatization” means creating a non-profit or for-profit corporation that may be government owned but doesn’t necessarily rely on taxpayer subsidies. Comsat is a classic example, but Canada and other countries’ air traffic control systems work in this way.
Except for air traffic control reform, Trump’s plan isn’t fleshed out in detail. But these ideas have all been tossed around enough that everyone pretty much knows what they mean. Most importantly, they mean a significant change in the way Washington deals with infrastructure.
Because it doesn’t contain a list of projects that members of Congress could take credit for, the plan has received relatively little notice in the media. Democrats, of course, are unhappy with it, but they would be unhappy no matter what Trump proposed.
One of the more controversial proposals is to allow the states to toll interstate highways. “I don’t like paying for a road twice,” Representative Sam Graves (R-MO), who chairs the Highways and Transit Subcommittee of the House Transportation and Infrastructure Committee, told The Hill. But, given that Congress has had to inject tens of billions of dollars of general funds into the highway trust fund in recent years, what makes Graves thinks existing user fees are paying for the roads now? All roads need maintenance and occasional rehabilitation, so the fact that user fees paid for construction 50 years ago doesn’t mean that costs stop.
The most important point is that Trump wants user fees to pay a greater share of infrastructure costs. Naturally, the transit lobby, which represents the most heavily subsidized form of transportation, per unit of output, is upset about this. But Trump’s agenda sounds good to anyone who wants an efficient, user-fee-driven infrastructure program.