WASHINGTON – President Trump’s infrastructure plan will expand the eligibility of tax-exempt private activity bonds to all governmental infrastructure projects and lift the state volume caps on them, a senior White House official said on Saturday.
During a briefing on the plan, the official, who did not want to be named, told reporters, “What we're going to do is expand eligibility for them and increase the amount -- in fact, we'd lift the state volume of caps.”
”We would expand [PABs] to all governmental infrastructure,” he added.
The official’s description of the president’s overall infrastructure plan closely tracked the draft version that was leaked last month, which also included PABs.
The president will propose $200 billion in federal funding over $10 years, which could be used to leverage $1.5 trillion in new infrastructure investment, mostly through incentive grants and the enhancement of several federal loan programs.
The $200 billion would be paid for from cuts in existing programs, such as transit and Transportation Investment Generating Economic Recovery (TIGER) grant programs where “this administration thinks funds haven’t been spent that efficaciously,” the official said. Those cuts will be in the president’s budget for fiscal 2019, which is to be released Monday, he explained.
Asked about an increase in federal gasoline tax, the official said, “The president has said he’s open to new sources of funding. This is the start of a negotiation to find best solution for the U.S.”
Of the $200 billion, $100 billion would be spent on incentive grants for state and local governments that identify projects and revenue streams, such as property taxes, sales taxes, or user fees, to fund them. These governments can then apply to federal agencies for some percentage of matching funds to complete the financings.
The White House official took umbrage at the notion that the president wants to reverse funding ratio so that state and local governments will now get only 20% instead of 80% of federal funds for projects.
“It’s wildly inaccurate,” he said, adding that kind of match is currently only available for federal-aid highways.
Currently the federal government only funds 14% of infrastructure costs, the official said. The remaining 86% of costs is evenly split between state and local governments and the private sector.
Many programs involve far less of a federal match than 80%, he said. Water projects, for example, on average involve a 4% federal share and a 96% state or local government share.
Additionally, $50 billion will be invested in rural infrastructure and will take the form of block grants made to governors who will select projects in their states. This funding will be “front-loaded,” or more readily available, the official said.
Another $20 billion will be spent on an expansion of PABs and federal loan programs such as Transportation Infrastructure Finance and Innovation Act (TIFIA) for transportation projects, Water Infrastructure Finance and Innovation Act (WIFIA) for water projects, and Railroad Rehabilitation and Improvement Financing (RRIF) for rail projects, he said.
Also $20 billion will also be used for transformative projects that will be for “next-century-type-of-infrastructure” that will “lift the American spirit” and contain a “vision toward the future,” the White House official said.
And $10 billion will be put into a capital financing fund and used for federal office building infrastructure.
The president wants to shorten the environmental permitting process to two years by establishing a new ‘one agency/one decision’ process, the White House official said.
A federal agency with the most expertise will be designated as the lead agency and it will work with other agencies to coordinate the permitting process to reach a collective decision over a 21-month period. The agencies would all sign a “record of decision.” They will then issue permits over a three month period, he said.
“The process we have in the U.S. just takes way too long,” the official said. “It’s not really focused on the outcome in terms of making sure we build projects responsibly. It’s focused more on litigation and building up massive documents.”
“We are not touching any of the fundamental requirements of the core environmental acts [but rather] the process to be used to do the analysis,” the White House official said.
The plan will also include plans to remove obstacles and disincentives for individuals to go into the trades to work on infrastructure projects, he said. For example, the administration will call for the licensing process to be more flexible so that licenses can be transferred easily from one state to another. And programs will be set up to expand apprenticeships for workers to more easily develop skills.
Administration officials have spent weeks talking about the infrastructure plan and trying to get some ideas and consensus from lawmakers on Capitol Hill and industry groups. President Trump called on Congress in his State of the Union speech to come up with an infrastructure package.
It won’t be easy. White House officials noted there are five to six committees with jurisdiction in each of the House and Senate.
Senate Democrats have called for the federal government to spend $1 trillion on infrastructure and many lawmakers want increases in federal fuels taxes to fix the ailing Highway Trust Fund, the main source of highway and mass transit grants to states.
But the White House official said there is “remarkable overlap” in these proposals.
“We're not proposing eliminating the Highway Trust Fund, or changing the state revolving funds,” he said. “So to the extent that communities are eligible for federal funds already, that eligibility remains.”
“The federal government plays a role” in infrastructure, “but we should move more heavily to state and local governments,” he said.