February 12, 2018
The President’s Long-Awaited Infrastructure Proposal
The President released his long-awaited infrastructure proposal today entitled “Rebuilding Infrastructure in America” with the FY 19 budget proposal.
Below is a summary of major provisions of the proposal, including the structure of proposed funding as well as policy, permitting and workforce development provisions. The structure of the program has been generally revealed over the last several months, so the official delivery today of this plan is not a big shock to Congress or stakeholders. The plan is, as expected, a devolutionary approach, reducing the Federal government’s historical role in infrastructure funding, putting greater burdens on States, local governments and the private sector for funding, increasing public-private partnerships, tolling opportunities and innovative finance arrangements. The action now turns to Congress, who will hold some hearings on this proposal and develop their own proposals, which are likely to look quite different. The main problem facing both the administration and Congress remains how to pay for any federal infrastructure investment without the ability to dig up a magic buried pot of gold. Prime Policy Group will provide expanded commentary on the proposal and the Congressional reaction later this week.
“REBUILDING INFRASTRUCTURE IN AMERICA”
$200 billion in funding over 10 years, proposed to leverage a total of $1.5 trillion:
Funding: $100 billion
Eligibility: surface transportation (roads, bridges, transit) airports, passenger rail, ports, waterways, flood control, water supply, hydropower, water resources, drinking water facilities, wastewater facilities; stormwater facilities, Brownfield and Superfund sites;
Lead Agencies: DOT, Army Corps and EPA; $100 billion would be divided amongst these three agencies but does not specify amounts; other agencies can petition these three to transfer funds
Details: competitive discretionary grant program; requires applicants to come to the feds with @80% of project funded with State, local or private sector funds; Federal government is a “completer” not a primary investor.
Rural Infrastructure Program
Funding: $50 billion
Eligibility: surface transportation (roads, bridges, transit), airports, rail, maritime and inland waterway ports, broadband and other high speed data and communication conduits, drinking water facilities, wastewater facilities, stormwater facilities, land revitalization and brownfields, power and electric governmental generation, transmission and distribution facilities, water resources, flood risk management, water supply, waterways
Lead Agency: Commerce
Details: Block grants 80% to Governors and Territories by formula for projects in areas with population less than 50,000; 20% for rural performance grants, a discretionary grant program open to States; set-aside for tribes for tribal transportation program at DOT and DOI; .
Funding: $20 billion
Eligibility: transportation, clean water, drinking water, energy, commercial space and broadband but not limited to these categories. For bold, exploratory and groundbreaking projects that significantly improve performance, safety, reliability, frequency and service speed; substantially reduce user costs for services; introduce new types of services and improve services based on other related metrics. Three tracks of investment: demonstration (up to 30% of eligible costs); project planning (up to 50% of eligible costs) and capital construction (up to 80% of eligible costs).
Lead Agency: Commerce with interagency selection committee of other agencies
Details: competitive grants
Infrastructure Finance Programs
Funding: $20 billion ($14 billion for expansion of existing credit programs; $6 billion for expansion of PABs)
Eligibility: Expansion of existing federal credit programs:
TIFIA – Transportation Infrastructure Finance and Innovation Act – expanded to include waterways, ports and airports
RRIF – Railroad Rehabilitation and Improvement Financing – expanded to include short line freight and passenger rail
WIFIA – Water Infrastructure Finance and Innovation Act – expanded to include non-federal flood mitigation, navigation and water supply; remediation of water quality contamination at brownfield and superfund sites, and federal de-authorized water resources projects
RUS – Rural Utilities Service Program – USDA lending program
PABs – Private Activity Bonds – expands and modifies eligibility; expanded: docks, wharves, maritime and inland waterway ports, waterway infrastructure including dredging and navigation improvements, hydroelectric power generating facilities and three new categories; flood control and stormwater facilities, rural broadband service facilities and environmental remediation costs on brownfield and superfund sites. Require a public attribute test to get tax exemption; eliminate AMT preference on PABs, remove state volume caps on PABs
Lead Agencies: DOT, Army Corps, EPA, Agriculture
Federal Capital Financing Fund
Funding: $10 billion to capitalize a revolving fund
Eligibility: Federal agencies use funding to finance large dollar real property purchases; agencies repay the fund using discretionary appropriations; operates like capital budget but within traditional budget rules.
Public Lands Infrastructure
Funding: From half of additional revenues from energy development on public lands to pay for capital and maintenance needs of public lands infrastructure up to $18 billion to create an Interior Maintenance Fund.
Lead Agency: Interior
Details: Discretion of Interior to use funds to address deferred maintenance and capital needs for infrastructure for national parks and wildlife refuges.
HIGHWAY TRUST FUND STABILIZATION
Proposal does not address the impending bankruptcy of the Highway Trust Fund in FY 2020. Accompanying FY 19 budget documents envision devolution of the Highway Trust Fund.
The proposal does not propose any revenue raisers for the $200 billion of Federal investment. The accompanying FY 19 budget document proposes cuts to domestic spending programs, including existing infrastructure programs such as Transit Capital Investment Grants and TIGER programs, to offset the proposed expenditure.
The proposal contains many provisions proposing policy changes to federal infrastructure development in surface transportation and aviation modes, water infrastructure programs, Superfund/brownfield reforms and flexibility to the Department of Veterans Affairs on use of real property and leases.
Tolling Flexibility: allow States flexibility to toll existing Interstates and reinvest toll revenues in infrastructure
Flexibility for States to Commercialize Interstate Rest Areas – currently prohibited; requires revenues to be reinvested in corridor in which they are generated
Reducing Federal Requirements for Projects with Low Federal Share
Provisions to expand utilization of State Infrastructure Banks
Allow accelerated construction with Airport Improvement Program (AIP) funds
Authorize clean water revolving fund for privately owned treatment facilities
Authorize user fee collection for no more than 10 Army Corps public facilities to incentivize infrastructure partnerships
Create a Superfund Revolving Loan and Grant Program
FEDERAL PERMITTING REFORM PROVISIONS
One Agency, One Decision Environmental Review structure
Reducing inefficiencies in environmental reviews
Streamline and Expand Delegation of NEPA to States
Performance Based Pilot – up to 10 projects
Reforms judicial review standards for environmental reviews
WORKFORCE DEVELOPMENT PROVISIONS
Expand Pell Grant Eligibility to short term programs leading to certification or credential
Reform Career and Technical Education (CTE) programs
Reform Federal Work Study program for college students
Reform licensing requirement for infrastructure project jobs