Infrastructure Week 2018: Looks Like State and Local Governments May Be On Their Own Again This Year

Greetings from Washington, D.C. As Infrastructure Week 2018 kicks off today here and around the country, a federal infrastructure push appears increasingly unlikely this year. For state and local governments that means doing what they’ve been doing for years: trying to fill the gap.

Status of the Trump Infrastructure Plan

For those who didn’t quite believe the President’s $1.5 trillion infrastructure proposal released in February might face an uphill battle in an election year and were still holding out hope, it appears that administration officials are ready to throw in the towel three months later. White House Press Secretary Sarah Huckabee Sanders told reporters last week: “I don’t know that there will be (an infrastructure package) by the end of this year. … We’re going to continue to look at ways to improve the nation’s infrastructure. But in terms of a specific piece of legislation, I’m not aware that that will happen by the end of the year.”

Call Oregon Congressman Peter DeFazio, the ranking Democrat on the House Transportation and Infrastructure Committee, not surprised.

“It was an absurdity to begin with, and it’s, you know, it’s nonexistent,” he told NPR last week. “It was never real. … Funding is absolutely critical, and there is the rub.”

An op-ed in Roll Call noted recently that while House Speaker Paul Ryan earlier this year called for the infrastructure plan to be delivered in “five or six” different bills this year, only three infrastructure-related measures appear to be on the 2018 Congressional agenda: the farm bill, FAA reauthorization (which passed the House late last month) and the Water Resources Development Act, none of which alone or combined offer a coherent overall infrastructure plan. And with midterm elections already pulling legislators home to their districts, the narrow window for Congress to tackle a more comprehensive infrastructure plan is likely closed.

President Trump seemed to echo Ryan’s suggestion that infrastructure legislation could be split among several bills when he addressed the issue over the Easter Congressional break early last month, but conceded at the time that a comprehensive plan might have to wait until after the November midterm elections.

If that didn’t make it abundantly clear The White House was giving up the ghost, the announcement April 3 that D.J. Gribbin, the President’s chief aide on infrastructure issues, was leaving probably should have. Gribbin, who as the architect of the President’s plan was charged with helping translate campaign rhetoric into a vision for infrastructure, likely didn’t see an opportunity to help sell the plan on the immediate horizon.

Roll Call also noted recently that Gribbin and Trump’s vision seemed to find little enthusiasm on Capitol Hill. The FY 2018 omnibus appropriations act approved by Congress in March “seemed to go out of its way to emphasize differences with the Trump plan,” the newspaper said. “The omnibus raised spending on infrastructure by more than $10 billion, but instead of putting that money into new grant programs as Gribbin had proposed, the omnibus added it to previously authorized programs that the president’s budget request had asked to eliminate or cut.”

State governments also took issue with one of the key assertions in the President’s proposal: that states could be called on to fund up to 80 percent of federal infrastructure projects.

As an op-ed in The Hill noted last month: “There are two reasons states likely will not be able to expand funding for federal projects. Unfunded liabilities are creating structural deficits in budgets that need to be balanced, and 31 states have used up political capital since 2012 to address transportation infrastructure.”

The author of the op-ed, Dennis Powell of public affairs consultancy Massey Powell, cites the example of Pennsylvania, which increased its per-gallon gas tax in 2013 by 28 cents to 58.2 cents, the nation’s highest. The bill funded $2.4 billion of the commonwealth’s $3.5 billion needs in 2010 dollars and fell $6 billion short of funding Pennsylvania’s 12-year plan. So while it has slowed unmet needs, Powell writes, those needs have continued to grow.

Powell says states like Pennsylvania have been forced to act using not just gas tax increases but bonding, tolling, leasing, General Fund transfers and fees.

“The trend over the past decade has seen more responsibility shifted to the states,” he writes. “Inaction at the federal level for the past 25 years to craft a long-term solution has resulted in funding from the Federal Highway Trust Fund to states dropping 10.9 percent from 2007 to 2013. Pennsylvania’s funding decreased by 13 percent during this period.” 

Powell argues that Pennsylvania, with the nation’s highest gas tax, has expended its political capital on transportation funding for the foreseeable future and likely wouldn’t be able to go to the well again to assume 80 percent funding for federal projects as the President has suggested.

While a comprehensive infrastructure bill may not be in the cards for 2018, the Trump administration’s philosophy of having states put up a larger share of infrastructure spending reportedly is being brought to bear in the overhaul of the popular TIGER competitive grant program, which was given a new name—BUILD—and new funding criteria this Spring. USDOT says grant applicants will now be judged in part on whether they can show they’ve generated new, non-Federal revenue through taxes, tolls and the like to help cover projects.

During a recent visit to Bowling Green, Kentucky, U.S. Secretary of Transportation Elaine Chao touted the potential for BUILD’s $1.5 billion in discretionary grant funding to benefit rural areas in particular, another of the President’s goals. Secretary Chao will keynote today’s Infrastructure Week kickoff event in Washington. I’ll be there and have a full report in the coming weeks.

But Politico reported last week that it appears not everyone in Washington shares the administration’s goal of encouraging those states that generate more of their own transportation revenues. House Republican leaders, including Majority Leader Kevin McCarthy, have contributed thousands of dollars to an effort in California to use a ballot measure to repeal the state’s 2017 gas tax increase this November. Supporters of the repeal say the state didn’t need to raise fuel taxes, should direct more of its existing revenues to roads and bridges, and that tax increases seldom go where they’re supposed to go. Southern California Public Radio reported recently on the efforts to gather signatures to put the repeal on the ballot.

Further Reading

A Look Back at Infrastructure Week 2017

Colorado Among Most Recent States to Address Transportation Funding

Lawmakers in Colorado last week completed work on a last-minute compromise deal that will set aside $645 million for transportation projects over the next two years, the Associated Press reported. It will also send voters a referendum in 2019 to issue $2.34 billion in transportation bonds, which would put the state on the hook for $3.25 billion in borrowing costs over 20 years to be paid back by tapping the state’s general fund to the tune of $122.6 million annually. A number of outside groups are looking to get other transportation funding options on the ballot this year, which could result in the cancelation of the 2019 referendum. An editorial in the Grand Junction Daily Sentinel called it “a good deal on roads” and said “having a dedicated funding stream will help the state address the $9 billion backlog of priorities” rather than just filling potholes year after year. The deal ended a months-long stalemate among lawmakers just two days before the 2018 legislative session adjourned. Political and business leaders in the state have been trying for more than a decade to increase funding for transportation. Colorado hasn’t raised its 22-cents-a-gallon gas tax since 1991. The state’s constitution requires voter approval for any tax hikes.

Updates on State Transportation Funding

  • Arizona: The state Senate last month gave final approval to legislation that allows the director of the Arizona Department of Transportation to levy vehicle fees, The Daily Courier reported. The legislation advises the agency chief to raise enough to fund the Highway Patrol and a little bit more for good measure. According to estimates, that would mean an $18 increase in registration fees. Beginning in 2020, drivers who purchase alternative fuel vehicles will be charged a registration fee based on the price of the vehicle.
  • Minnesota: A bill to put a constitutional amendment on the ballot this November that would dedicate sales tax revenues to road and bridge projects appears to have hit a snag in the narrowly divided state Senate, Minnesota Public Radio reported last week.
  • Missouri: Lawmakers in both chambers are working on a variety of measures that could raise fuel taxes if voters approve, Land Line Magazine reported. A fuel tax increase was among the recommendations from a 23-member task force of state officials and private citizens to help address the state’s $825 million gap in annual road and bridge funding.

Forum on Public-Private Partnerships

Colorado (Denver Mayor Michael B. Hancock, High Performance Transportation Enterprise Director David Spector) and Arizona (Office of P3 Initiatives Director Gail Lewis) will be among the states represented on the agenda next month at the US P3 Infrastructure Forum 2018 hosted by Inframation. CSG is pleased to be a supporting organization and media partner this year on the conference, which takes place June 13-14 at The Hilton Midtown in New York City. The full agenda for the 14th annual event is now available and you can request your copy here. The Infrastructure Forum brings together state and federal public officials and regional transportation authorities, along with infrastructure developers, investors and financiers to talk about what’s happening with public-private partnerships around the country and the issues that are shaping the industry’s future. You can find out more about how to register for the conference on the event website. I’ll also have more details about the event here on the CSG Knowledge Center in the weeks ahead. For an idea of what to expect, you can read my coverage of the 2016 forum here.