WASHINGTON – The Trump administration wants to expand the use of private activity bonds as well as transportation and water credit assistance and grant programs as well as interstate tolling to foster infrastructure development, according to a fact sheet released on Tuesday. It also says the administration should use "different tools" for infrastructure funding such as selling federal assets.
The document, called “Fact Sheet, 2018 Budget: Infrastructure Initiative,” was released in conjunction with the fiscal 2018 budget by the Office of Management and Budget.
The fact sheet calls for expanding the Transportation Infrastructure Finance and Innovation Act program. “One dollar of TIFIA subsidy leverages roughly $40 in project value,” the fact sheet states. “If the amount of TIFIA subsidy was increased to $1 billion annually for 10 years, that could leverage up to $140 billion in credit assistance, and approximately $424 billion in total investment.”
“In addition, the administration supports the expansion of TIFIA eligibility,” the fact sheet states.
The fact sheet also proposes to “lift the cap on private-activity bonds and expand eligibility to other non-federal public infrastructure.” It proposes lifting the $15 billion volume cap authorized in 2005 for private activity bonds used to finance surface transportation infrastructure like roads, bridges, freight transfer and some port facilities.
“PABs have been used to finance many public-private partnership projects, along with TIFIA,” the fact sheet states. “As of Aug. 15, 2016, nearly $11.2 billion in PABs have been issued for 23 projects.”
“The administration recommends removing the $15 billion cap under current law to ensure that future public-private partnership projects can take advantage of this cost-saving tool, and encourage more project sponsors to take advantage of this tool,” the fact sheet states, adding, “The administration also supports the expansion of PAB eligibility.”
The fact sheet says the administration also wants to “liberalize tolling policy.” Current law generally restricts tolling on interstate highways built with federal aid. “We should reduce this restriction and allow the states to assess their transportation needs and weigh the relative merits of tolling assets,” the fact sheet states.
The fact sheet proposes to fund the Water Infrastructure Finance and Innovation Act program. “The Environment Protection Agency’s new WIFIA loan program is designed to leverage private investments in large drinking water and wastewater infrastructure projects, particularly those large, high-cost projects that have private ownership or co-investment,” the fact sheet states. “Because WIFIA loans can only support up to 49% of project’s eligible cost, the federal investment must be leveraged with non-federal sources.”
According to the fact sheet, the federal government currently contributes only one-fifth of infrastructure spending, while four-fifths are roughly equally divided between state and local governments on the one hand, and the private sector on the other.
“We will reevaluate the role for the federal government in infrastructure investment,” the fact sheet states.
The fact sheet lays out key infrastructure principles: make targeted federal investments; encourage self-help for states and localities; align infrastructure investment with entities best suited to provide sustained and efficient investment; and leverage the private sector.
It covers some fiscal 2018 budget proposals and then lists proposals to be pursued, like the expansion of PABs, TIFIA, WIFIA and interstate tolling.
It also describes “different tools to support better decision-making while maintaining transparency and fiscal restraint.” These include creation of a federal capital revolving fund for the financing of federally-owned civilian assets and partnership grants for federal assets.
The fact sheet also said the administration “will seek several proposals that will enhance the environmental review and permitting process.” It says the administration “will submit proposals that curtail needless litigation” as part of that initiative. It adds, ”the administration supports putting infrastructure permitting into the hands of responsible state and local officials where appropriate.”