In Missouri, that might mean a bump in taxes
When President Donald Trump called for a $1.5 trillion infrastructure investment in his State of the Union address, he didn’t pledge that the federal government actually would provide that much money for roads, bridges, rail and waterways.
To the contrary, Trump’s plan counts on state and local governments working with private investors to come up with much of the cash.
Exactly how that would work remained unclear Wednesday, as state transportation officials noted that Trump’s proposal could put more pressure on them to raise taxes, fees and tolls just to qualify for a share of his infrastructure program. Questions surrounding Trump’s plan are likely to leave costly projects, such as plans for a new Hudson River tunnel connecting New York and New Jersey, in limbo.
“The Trump administration has issued a charge that sounds a lot like ‘show me the money,’” said Missouri Department of Transportation Director Patrick McKenna, who is president of the Mid America Association of State Transportation Officials.
In his speech Tuesday night, Trump called upon Congress to pass a plan “that generates at least $1.5 trillion” for infrastructure.
“We will build gleaming new roads, bridges, highways, railways and waterways all across our land,” he said.
He did not provide a roadmap on how to achieve that or give specifics on how it would be funded. The Republican president said only that “every federal dollar should be leveraged by partnering with state and local governments and, where appropriate, tapping into private-sector investment.”
The federal government typically provides 80 percent of the funding for capital expenditures on highways, with state and local governments coming up with the rest. On transit projects, the federal share typically ranges from 50 percent to 80 percent, according to the American Association of State Highway and Transportation Officials.
A six-page summary of Trump’s plan, which was widely but unofficially distributed a week ahead of his speech, indicates that Trump is envisioning a significant shift of financial responsibility. Half his proposed federal money would go toward competitive grants for a wide range of infrastructure, including various transportation modes, hydropower, and drinking and wastewater facilities. But the federal grants would cover no more than 20 percent of project costs while requiring applicants to commit to “new, non-federal revenue.”
To participate in Trump’s plan, Missouri likely would have to ask voters to raise taxes for transportation, McKenna said. That’s because the state transportation department already is spending at a deficit of roughly $80 million a year to meet its current federal highway match.
Neighboring Arkansas is in a similar predicament.
Gov. Asa Hutchinson’s budget proposal seeks to transfer $16 million from surplus general revenue to the transportation department in order to meet its current federal highway allotment. Qualifying for Trump’s plan could require a new revenue source.
“We’re shaking the couch cushions out to see where we can find the rest of it,” said Republican state Rep. Dan Douglas, who has backed various unsuccessful transportation funding bills.
Over the past five years, about three-fourths of the states have taken some sort of step to boost transportation funding, including 26 states that have raised motor fuel taxes.
Trump has suggested a greater role for public-private partnerships, in which a private entity helps finance and construct a major public infrastructure project in exchange for collecting tolls or fees from the users for years to come. But some states don’t allow such projects.
Tennessee doesn’t use tolls or bonds to finance roads, making it difficult to undertake public-private partnerships without a change in state policy.
“It would be kind of sad to me that the federal government, who is in debt up to their ears, puts pressure on states who aren’t in debt to go into debt to build roads,” said Tennessee Transportation Commissioner John Schroer, president of the state highway association.
So far, Trump’s plan hasn’t identified any particular priority projects nor how much money would be devoted to one type of infrastructure compared to others.
One of the most costly projects on the drawing board is an estimated $13 billion rail tunnel under the Hudson River between New York and New Jersey. Under an agreement with then-President Barack Obama, a Democrat, the two states would pay for half the tunnel, with the federal government picking up the rest. But the Trump administration has criticized the project’s cost while questioning the Obama-era funding plan. In a letter to the states last December, a top federal transportation official referred to it as a “non-existent ‘agreement.’”
Nationwide, the American Society of Civil Engineers has projected a funding gap of over $1.4 trillion through 2025 to address infrastructure needs for road, rail and transit systems, water and sewer systems, the electric grid, airports and inland waterways.
Trump said during his State of the Union speech that his plan would “permanently fix the infrastructure deficit.”
Robert Puentes, president and CEO of the Washington-based Eno Center for Transportation, cast doubt on that claim. He said some states could see a net loss in federal funding if Trump’s plan fails to fill a shortfall in the federal transportation trust fund while simultaneously asking states to put up a greater share to participate in his program.
“There is some switcheroo that seems to be happening where it looks like it’s a big federal initiative that’s going to result in more funding, but really what we’re looking at here is a financing package for infrastructure,” Puentes said.