Trump urges passage of infrastructure bill without suggesting how to pay for it

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President Donald Trump used a small portion of his State of the Union Address to ask Congress to pass a Senate surface transportation bill, without mentioning how to pay for it.

During Trump’s address on Tuesday night, he voiced his support for America’s Transportation Infrastructure Act of 2019, which authorizes $287 billion in federal surface transportation spending over five years. It was approved in July 2019 by the Senate Environment and Public Works Committee, which Sen. John Barrasso, R-Wyo., chairs.

“We must also rebuild America's infrastructure,” Trump said. “I ask you to pass Senator Barrasso's highway bill, to invest in new roads, bridges, and tunnels across our land.”

The bill reauthorizes the depleted Highway Trust Fund and would be about a 27% increase over current funding levels that are set to expire Sept. 30. It is co-sponsored by Senate EPW ranking member Tom Carper, D-Del., and passed on a unanimous 21-0 vote.

ATIA is now in the hands of the Senate Finance Committee to figure out how to pay for it. Options could include combinations of a gas tax increase, vehicle miles traveled fee, and other measures.

Lawmakers could decide to maintain current authorization levels, but current spending is widely perceived to be insufficient.

Muni market participants have said ATIA is the one must-pass piece of infrastructure legislation. A new reauthorization could be the muni market’s best chance to attach hoped-for initiatives such as raising the cap on private activity bonds and the reinstatement of tax-exempt advance refunding.

Some of those wishes gathered steam last week when the House introduced a $760 billion, five-year plan calling for the restoration of Build America Bonds, advance refunding, expanding qualified private activity bonds and the reinstatement of tax-credit bonds. Direct-pay BABs offered issuers a 35% federal subsidy on the interest owed to investors, but the authority to issue them ended in 2010.

“There’s a lot of tools there within the muni landscape, and you’ve got a lot of proven resources there that would benefit infrastructure,” said Mike Nicholas, CEO of Bond Dealers of America.

Two years ago, Trump called on Congress to pass a bill that would generate $1.5 trilllion for new overall infrastructure investment. Though ATIA is just surface transportation, Trump’s prior proposal is a far cry from a few years ago.

Trump’s budget will come out next week, which will detail how much he plans to spend on infrastructure in 2021.

If an infrastructure bill were to pass, it would likely have to move earlier this year before the 2020 elections get underway. A reauthorization bill would give municipalities more certainty for planning infrastructure projects.

Some muni market members don’t see hope for an infrastructure bill passing in 2020, even though Trump mentioned the issue in his address.

“We’re working with members that believe in the value of muni bonds, even though we don’t think it’s likely that a big infrastructure bill will pass in 2020,” Nicholas said.

Barrasso called for putting aside partisan politics to pass an infrastructure plan.

“The president spoke loud and clear tonight about putting partisan politics aside to pass a monumental American infrastructure plan,” Barrasso said in a statement. “This is our moment. We passed a bipartisan bill out of my committee. It’s the largest highway infrastructure bill in our history to rebuild our roads, highways, and bridges.”

Barrasso proposed an annual highway user fee on alternative fuel vehicles last year that would funnel money to the Highway Trust Fund.

Rep. Peter DeFazio, D-Ore., and chair of the House Transportation and Infrastructure Committee, was disappointed that Trump did not say more on infrastructure.

“That is incredibly disappointing, because the reality is that three years into his administration, President Trump has yet to put forth a single new idea that would fix our roads, bridges, ports, airports, water infrastructure, and transit systems, or show any leadership on how our country funds significant infrastructure investment,” DeFazio said in a statement.

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Infrastructure Build America Bonds Highway trust fund Private activity bonds Donald Trump BDA Washington DC
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