Wednesday, January 10, 2018

Blogger Candidate Forum: Fixing Infrastructure, Maybe

http://www.citylab.com; December 27, 2017


Hello Everyone:

Blogger Candidate Forum is back at its regular day and time.  Today the subject is Mr. Donald Trump $1 trillion infrastructure plan.

Throughout 2017, Mr. Donald Trump took frequent (citylab.com; March 22, 2017; date accessed Jan. 10, 2018) aim (Ibid; May 23 2017) to row over the state of American infrastructure, pointing to the catastrophic Amtrak derailment in Washington state (Ibid; Dec. 18, 2017) as example of the nation's deteriorating bridges, roads, and railways.  He tweeted (how else),

[O]ur soon to be submitted infrastructure plan must be approved quickly

A reference to his oft-repeated campaign promise to invest $1 trillion rebuilding the U.S.

Laura Bliss writes in her CityLab article "The New $1 Trillion Infrastructure Plan Could Pressure Struggling Cities," "That plan turned into little more than a punchline this past year."  Now that January is upon us, a senior official told Fox News that the White House will begin an intiative for a national infrastructure package that results in $1 trillion in overall investment (wsj.com; Dec. 24, 2017; date accessed Jan. 10, 2018), using $200 billion "seed" money (washingtonexaminer; date accessed Jan. 10, 2018).

The President's advisors previously described the infrastructure package as relying on "the private sector to make up the $800 difference.  In this version, most of the $200 billion would be rewarded on a competitive basis to states and localities that promise to raise new, infrastructure-dedicated revenue on their own, for a total of $1 trillion, according to White House officials [washingtonpost.com; Dec. 7, 2017; date accessed Jan. 10, 2018]."  Some of the $200 billion would be allocated to projects in rural areas.

Laura Bliss opines, "Such a plan could have its merits-many communities have long needed to look to themselves, rather than the federal government, for the means to build roads, pipes, and transit."  However, governors and mayors may not be too thrilled to take on more responsibility for infrastructure payments, especially in the wake of the newly signed into law Tax Reform which promised to "dramatically trim tax revenue coming in to certain states and cities" (citylab.com; Dec. 5, 2017; date accessed Jan. 10, 2018).  POTUS's new plan may intensify the debate over how involved the federal government should be in creating local planning and policy.

"The plan that wasn't"

America's deteriorating transportation and communication systems was a recurring theme during the Trump campaign.  Ms. Bliss writes, "A campaign proposal even sketched the philosophical outlines of a Trumpian infrastructure bill: $200 billion in federal dollars would be leveraged to attract $800 billion in private investments through public-private partnerships."

Like every other presidential infrastructure pronouncement, it was frequently upstaged buy other events (Ibid; June 9, 2017) following the inauguration and no serious funding proposal ever materialized.  Kevin DeGood, the director of Infrastructure Policy at the Center for American Progress, told CityLab the White House actually called to obliterate the primary source of funding for surface transit, following its draft budget release for this year (Ibid; May 23, 2017).  The 2018 budget proposes cuts the Department of Transportation's discretionary fund by $2.4 billion, and reduce government funding to the evaporating Highway Trust Fund by $95 billion by 2027.

In the meantime, the Republican Congressional leadership made it clear that infrastructure was not one of their top priorities, putting far behind the aborted attempt to repeal the Affordable care and reforming the tax code.  Ms. Bliss reports, "Then, in September something shifted: Trump began to emphatically state that private investment would not be the focus of his eventual infrastructure plan."  In a White House gathering the same month, the Washington Post (washingtonpost.com; date accessed Jan. 10, 2018) reported that Mr. Trump cited well-known examples in Vice President Mike Pence's home state of Indiana of how public-private partnerships can burden governments with debt if contracts are not roperly negotiated from the start.  The new funding focus: states and cities.

"Spotlight on states and cities"

At an event at a White House event, last month, Mr. Trump's policy adviser D.J. Gribbin said "that the administration's plans to make it easier for local governments and public-private partnerships to apply for federal infrastructure funding,..." (thehill.com; Dec. 12, 2017; date accessed Jan.10, 2018), described as incentive plan.  Mr. Grabbing said,

Part of what we want to do...is say, "LIsten, if you as a state or local elected official are willing to create a new revenue stream for infrastructure, we as the federal government want to partner with you in doing that,...

Adie Tomer, a fellow at the Brookings Institution's Metropolitan Policy Program, has previewed the draft plan.  Mr. Tomer told CityLab, "...that it emphasizes transportation projects, and that it basically resembles a discretionary grant program similar to New Starts and TIGER, two DOT programs popular across bipartisan lines for helping projects led by states and local transportation authorities meet their findings needs..."  Ms. Bliss notes that the "2018 budget blueprint called to eliminate TIGER entirely, and cut New Starts in half."

White House officials remain neutral about how civic actors would raise their share of the money.  An anonymous White House official told the Washington Post,

We will be agnostic as to the type of revenue, as long as it is new and dedicated to infrastructure.

At the state leve, this could translate into raising the gas tax, like politically diverse states such as New Jersey, California, Tennessee, Montana, and Indiana (pewtrusts.org; July 26, 2017; date accessed Jan. 10, 2018) have done over the previous year. "For cities, the answer might be in sales-tax-boosting measures, such as the ones that L.A. and Seattle passed last year."  Other jurisdictions might prefer to enact tolls, congestion prices, or assorted other user fees.  They could seek financing from the private sector investors.

D.J. Gribben said, "the White plan will lay out clear, measurable, objective criteria, for how localities and states would win money." However Mr. Tomer said "the details he's seen place less stress on the nature of the projects it would fund and more who would be paying for them."

The more you come up with new revenue, the more likely you are to get help from the Feds.  This going to be the key to the details.

Ms. Bliss adds, "Compared to what TIGER and New Starts have provided, states and cities would foot larger shares of the final bills of their infrastructure projects."

"Roads for the highest bidder?"

Laura Bliss makes this observation, "On one hand, an infrastructure plan that calls on states and cities to rethink how they raise infrastructure funds could be welcome."  The Highway Trust Fund is on life support, states and cities have been receiving dwindling outlays for roads and transit for years.  Tracy Gordon, a senior fellow at the Tax Policy Center, an allied project of the Brookings Institution and Urban Institute, told CityLab,

Doing things the old way and allocating [money] based on population, or trust fund contributions, or lane-milieus-that could use some revamping...It's not a bad idea to force some creativity in the sector.

Ms. Bliss also observes, "On the other hand, Trump's push to rebuild infrastructure would come on the heels of the most dramatic rewrite of the U.S. tax code since the Reagan years, with major implications for every tier of governance."  The new law, signed just before Christmas, would add almost $1.5 trillion to the federal budget deficit over the next ten years, according to the Congressional Budget Office.  This would likely trigger cuts to discretionary spending that help jurisdictions build roads, fly airplanes, drink clean water, and connect to the Internet.

Scott Goldstein, policy director for the lobbying organization Transportation for America, said,

That's where we are starting from,...With that as a foundation, it's hard to see how you'll find that trillion to invest.

Added to this is that almost of the states already faced budget deficits last year (cbpp.org; Oct. 4, 2017; date accessed Jan. 10, 2018).  Ms. Bliss writes, "A 2016 survey of municipal leaders by the Natinal League of Cities found that ever-lasting infrastructure needs were a top source of fiscal strain [nlc.org; date access Jan. 10, 2018]."  Further, now that there is a $10,000 cap in SALT tax deductions (citylab.com; Dec. 5, 2017; date accessed Jan. 10, 2018) on federal returns, state and municipal governments will likely find a myriad of essential services-e.g. public schools, first responders, fixing potholes, and streetlight repair-harder to pay for.

By using infrastructure grants as bait for the would-be bidders, "the White House's proposal old pressure those same layers of government to corral what few resources they have into paying their hare of an infrastructure plan."  Cities that have not financially recovered from the Great Recession-i.e. Detroit, Cleveland, Stockton, and Memphis (nytimes.com; Feb. 24, 2016; date accessed Jan. 10, 2018)-may feel particularly hamstrung in their spending if federal grants are only available for those willing to spend the money.

Tracy Gordon said,

It's an interesting time to be asking this sector to be more creative with revenue sources,...Trying to get them to share more of the funding burden is probably not going to go over that well.

Adie Tomer was more blunt, "For cities,"  it's going to be like, 'You're messing with my money.,' Insisting that cash-strapped states and cities to contribute more resources might adversely spotlight on the "poor fiscal health that many of those places are suffering."  The debate is now centered on how much should the federal government committ to helping local economic recoveries will intensify.

Let us be clear: all of this is still conceptual.  Whatever the White House presents ahead of the State of the Union address-scheduled for January 30 (bring popcorn), according to Politico (politico.com; Dec. 14, 2017; date accessed Jan. 10, 2018)-should be a white hot subject for the social media.  The White House hopes that nudge could be helpful in turning POTUS's sagging public polling numbers (Ibid; Dec. 19, 2017) around.  Laura Bliss reports, "Some Democrats in Congress are already criticizing the pacakage's small federal contribution, while others have said they'd be willing to negotiate to shepherd such a package [wsj.com; Dec. 24, 2017; date accessed Jan. 10, 2018]."  However, it is the mayors and governors who will be the ones to dealing with aftermath, soon, and they will not stay quiet.