Trump’s highly touted infrastructure dream nixed for this year

Infrastructure is an early casualty of Washington’s fixation on the November mid-term elections. Retiring House Speaker Paul Ryan, R-Wis., Senate Majority Leader Mitch McConnell, R-Ky., and others are signaling that Trump’s $200 billion federal infrastructure plan is all but dead for this year.

By John D. Schulz · April 18, 2018

 

Wait ‘til next year. Maybe.

If promises were concrete and asphalt, this country would have the world class infrastructure that President Donald Trump keeps talking about. Unfortunately, it takes careful planning, political will and, most importantly, billions of dollars. All those characteristics are in short supply in the Trump administration.

Infrastructure is an early casualty of Washington’s fixation on the November mid-term elections. Retiring House Speaker Paul Ryan, R-Wis., Senate Majority Leader Mitch McConnell, R-Ky., and others are signaling that Trump’s $200 billion federal infrastructure plan is all but dead for this year.

Even Trump admits infrastructure is dead until 2019—or maybe forever. He has been talking about infrastructure improvements for at least three years since the early days of his candidacy, often calling U.S. roads and bridges akin to “a Third World country.”

“I don’t think you’re going to get Democrat support very much,” Trump said in Ohio recently, before adding: “And you’ll probably have to wait until after the election, which isn’t so long down the road. But we’re going to get this infrastructure going.”

Maybe yes, but maybe no. There is the not-so-small area of how to pay for these improvements without resorting to usual Washington bookkeeping and scorekeeping trickery. Truckers and the U.S. Chamber of Commerce briefly floated a nickel-a-year increase in the fuel tax—18.4 cents a gallon on gasoline, 24.4 cents on diesel, unchanged since 1993—but that trial balloon crashed and burned by the no-tax pledge signed by most Republicans in Congress.

In more bad news, a planned infrastructure fund by the private equity firm Blackstone that was said to be creating up to $40 billion in private money has been slow to get off the ground. Saudi Arabia was supposed to be the fund’s largest backer, but they have backed off. Saudi money was supposed to be half of the $40 billion.

According to a New York Times report, Blackstone’s goal is now $15 billion, but even that figure is suspect because of lukewarm returns on infrastructure investments.

So that leaves truckers and other motorists absorbing billions of dollars in delays and repairs due to outdated infrastructure at highways, bridges and intermodal facilities around the country.

American Trucking Associations President and CEO Chris Spear has estimated the trucking industry currently loses nearly $50 billion annually to congestion. “That is unacceptable,” he said recently. “We must unclog our arteries and highways and make our infrastructure safer and more efficient by investing in our roads and bridges.”

Jim Burnley IV, who was Transportation Secretary under Ronald Reagan, said working on an infrastructure program in an election year is a neat political trick—and one just not possible in the current political climate.

“Sadly, that’s probably true,” Burnley, now a partner with the Venable Inc. law firm in Washington, told LM. “We’re just not in a political environment where big, bold infrastructure programs are available.”

With the Highway Trust Fund collapsing, Burnley said, the time is ripe for bold, new thinking. According to the Congressional Budget Office (CBO), from 2021 to 2026 trust fund revenue is projected to total $243 billion. But outlays will amount to $364 billion, resulting in an imbalance of $121 billion. Each year during this period, the trust fund faces shortfalls of between $19 billion to $23 billion, the CBO says.

“Was it this hard when I was there? Yes,” Burnley said. “I hope Congress will have the political will to really come to grips with that fundamental resource. That doesn’t mean dramatic increases in the fuel tax. There are almost an infinite other ways to do it. But the political will has to be there—and right now it isn’t.”

Even if funding is coming from Washington, a majority of it appears heading to rural states that supported Trump. Transportation Secretary Elaine L. Chao recently said DOT awarded more than 64% of this round of TIGER funding was for rural projects, as opposed to bottlenecks in and around urban areas.

The only thing the White House has been able to produce on infrastructure this year is a vow to expedite review and permitting for major U.S. infrastructure projects. It establishes a lead federal agency with a commitment to oversee any major projects, but few details how this will streamline complex deals. Under the current process, agencies may conduct their own environmental review and permitting processes sequentially resulting in unnecessary delay, redundant analysis, and revisiting of decisions.  Now federal agencies conduct their processes at the same time.

But at least that was welcome news in some quarters of the business community looking for any action on infrastructure.

“(That) is a welcome change that will not only expedite review and approval of important infrastructure projects, but also help increase American competitiveness and economic growth,” said Mike Burke, Chairman and CEO of AECOM and Chair of the Business Roundtable Infrastructure Committee. “While much work remains to revitalize our nation’s aging infrastructure, this is a vital step forward in accelerating long-overdue infrastructure improvements throughout the country.”

Illinois Roads and Transportation Builders Association President and CEO Michael Sturino said while the plan helps cut through red tape, it probably won’t help Illinois because it favors rural (Republican-leaning) states at the expense of blue states.

“This is really going to go to more of the Wyomings, and the Oklahomas, and the Dakotas, those very sparsely populated states,” Sturino told the Illinois News Network.

About the Author

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.

We Need Bigger Cities, But We Also Need Unique Cities

“If you don’t want processed food, why do you want processed cities?” asks architect Vishaan Chakrabarti.

BY EILLIE ANZILOTTI  3 MINUTE READ

 

Think of the pedestrian bridges of Venice, or the steep, tiled streets of the favelas in Rio de Janeiro. Or the winding back alleys of Hong Kong, and the intricate apartment buildings of Paris.

And then, think about a modern downtown. Charlotte, North Carolina, the planned business district of Konza Techno City in Kenya, Shanghai. They all look the same.

That, says architect and Practice for Architecture and Urbanism founder Vishaan Chakrabarti at TED 2018 in Vancouver, is a major problem. “There’s a creeping sameness besieging our planet,” he says. And this matters, he adds, because more and more people around the world–hundreds of thousands every day–are moving into urban areas every day. By 2050, around 70% of the world’s residents will live in cities.

This, he says, is a necessary development against climate change–dense dwellings well-served by mass transit are the most sustainable ways to live, and must be done well to continue to convince people away from sprawling suburban developments. But our homogenous cities are beginning to fail their residents. “Are they condemned to live in the same bland cities we built in the 20th century, or can we offer them something better?” Chakrabarti asks.

His answer is yes, but first, we have to understand how are our cities homogenized over the last century. Mass-production of materials like concrete, steel, asphalt, and drywall, he says, equipped architects with building features that “we deploy in mind-numbing quantities across the planet,” he says. Developers, armed with this materials, “want to build bigger and bigger” to house as many people as possible to recuperate the cost of building, and that has brought about “the dull thud of the same apartment building being built in every city across the world,” Chakrabarti says. Not only is this trend homogenizing design, but it’s homogenizing societies, and fostering the affordability crises gripping our cities.

Chakrabarti is all for housing as many people as possible, and creating safe and accessible environments for urban residents. His issue is with the lack of creativity and local sensitivity with which we have gone about providing for these things.

We need, he says, to go back to building “cities of difference.” And that starts with injecting into the global, the local. While in the past, designers, architects, and planners have leaned on mass production and homogeneity to do their jobs, Chakrabarti suggests they look to food as inspiration to free themselves from this way of thinking. “Look at the way that craft beer has taken on corporate beer,” he says. He then asks the audience how many of them still eat Wonder Bread. Very few do. “If you don’t want processed food, why do you want processed cities?” he asks.

Instead, Chakrabarti suggests that designers and architects build cities “that respond to local communities, climates, cultures, and construction methods.” Some are already doing so: Balkrishna Doshi, who won the Pritzker Prize this year for his work on affordable housing in India, creates beautiful, culturally specific dwellings that invoke a sense of place while effectively housing thousands.

And Chakrabarti’s team at PAU is developing a 21st-century urban center for Ulaanbaatar, Mongolia. Instead of leaning on generic buildings, Chakrabarti’s team is creating a catalog of colorful edifices–homes, shops, theaters–designed with local material, that work together in concert and create a diverse, culturally sensitive and unique city center.

“We’re searching for a new model for growing cities that could shape-shift in response to local needs and building materials,” Chakrabarti says.

By going back to designing urban areas with cultural sensitivity and difference in mind, “we can disincentive sprawl and protect nature, and build cities that are high-tech but respond to the cultural needs of its peoples,” he says.

ABOUT THE AUTHOR

Eillie Anzilotti is an assistant editor for Fast Company’s Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

More

Trump’s Infrastructure Strategist Is Leaving The White House

April 4, 2018, 4:51 PM ET

Another top adviser to President Trump is leaving the White House. An administration official tells NPR that DJ Gribbin, architect of the president’s $1.5 trillion infrastructure plan, “will be moving on to new opportunities.”

This latest staff departure comes as the infrastructure plan hits a roadblock in Congress.

A little over a year ago, Gribbin left his job at Macquarie Capital, a finance and asset management firm where he focused on public-private partnerships, to take the lead on crafting a infrastructure plan for the president. The proposal relies heavily on using incentives to attract private investments.

Trump initially promised he’d deliver a trillion-dollar infrastructure plan in his first 100 days, but it took more than a year until Gribbin and the White House would unveil and deliver the plan to Congress in February. And the president upped the ante, calling it “the biggest and boldest infrastructure plan in the last half-century,” promising it would generate a $1.5 trillion investment in rebuilding the nation’s highway, railways, bridges, tunnels, airports, seaports and water systems.

But the Gribbin-drafted proposal calls for federal spending of just a fraction of that, $200 billion over 10 years, with the rest coming from state and local governments and private investors.

Gribbin told NPR’s All Things Considered that America is up to the task. “It’s apparent that cities and states and counties are eager to invest more in infrastructure,” he said.

And he pushed back on the notion that the administration can’t ask state and local taxpayers for such funding, when a much a bigger federal investment in infrastructure is long overdue.

“All of these funds come from taxpayers — right?” said Gribbin. “And if you go out and you ask the public, you know, where do they want to invest? They have much more confidence if they write a check locally that that money will be spent in a way that they can be held accountable for than if they send a check to Washington.”

He also added in a briefing for reporters that “this is in no way, shape or form … a take-it-or-leave-it proposal. This is the start of a negotiation.” And White House officials added that “the president has said he is open to new sources of [federal] funding,” including an increase in the gas tax. “We want it to be bipartisan.”

Nonetheless, the plan has received a cool reception in Congress. It calls for the $200 billion in federal funding coming from unspecified cuts elsewhere to the federal budget, which Democrats vehemently oppose. Democrats also want a much bigger portion of the infrastructure spending to come from federal sources, such as the gas tax, while many Republicans refuse to consider a gas tax hike to fund it.

At an event to promote the infrastructure plan in Ohio last week, Trump went off script and acknowledged his plan to rebuild and repair the nation’s roads and bridges isn’t going anywhere fast, telling the crowd, “you’ll probably have to wait until after the election” in November.

 

COMMENTARY: Replacing Per-Gallon Taxes With Per-Mile Charges Is the Best Path Forward

The transition from per-gallon to per-mile will be a major shift in transportation funding.

By ,

 

Regular readers of this column for Public Works Financing know that I’m a big fan of tolls as a better highway funding source than fuel taxes. But even those who aren’t big fans of tolling should be concerned about the coming demise of fuel taxes as the primary source for funding America’s highways.

Back in 2005, I served on a special committee appointed by the Transportation Research Board (TRB). Our challenge was to examine likely future changes in vehicle propulsion and the demand for highway travel. Even then, it became clear to all 14 members that fuel taxes were not sustainable, long-term. Our report, The Fuel Tax and Alternatives for Transportation Funding, explained why we’d reached this conclusion and suggested steps toward finding a replacement. They included:

  • Retain and strengthen the users-pay principle;
  • Expand the use of tolls;
  • Test what we now call mileage-based user fees; and,
  • Find a stable source of tax funding for transit.

Our findings were reinforced several years later when the congressionally-appointed National Surface Transportation Infrastructure Financing Commission assessed a wide array of replacements and concluded that replacing per-gallon taxes with per-mile charges (mileage-based user fees—MBUFs) was the best way forward.

For the last five years or so, a growing number of state DOTs have operated pilot programs to test various ways of implementing MBUFs to replace per-gallon fuel taxes. They have learned that it’s wise to offer people several alternative ways of having their mileage reported and that it might make sense to have private firms provide the interface with vehicle operators to alleviate concerns over government monitoring people’s travel. They’ve also found that actual experience with a per-mile charging system alleviates most of the concerns people have based only on what they’ve read about the idea.

The transition from per-gallon to per-mile will be a major shift in transportation funding. So it is critically important that we think hard about the scope of this change. As I see it, there are four serious flaws with the 20th century model of paying for highways via per-gallon tax in addition to dependence on one particular mode of vehicle propulsion. The others are:

  1. Most fuel taxes are not indexed for inflation;
  2. The original users-pay/users-benefit principle has been seriously breached;
  3. Fuel taxes are viewed by people as taxes, not payments for highway use; and,
  4. Fuel tax revenues are sent to politicians, not directly to highway providers.

Ideally, we should fix these four flaws as part of the transition from per-gallon to per-mile.

Problem one is the smallest change. A growing number of US toll roads now index their toll rates to the Consumer Price Index (CPI) or some other inflation index; this has been made a lot easier thanks to all-electronic tolling. Eight states have recently indexed their fuel taxes to inflation, too, so inflation-indexing state MBUFs should not be a big deal.

Problems two and three are related, I believe. Highway users readily accepted gas taxes when they began at the state level in 1919, because they were sure that although it was called a tax, it actually operated as a pure user fee: all the revenues were deposited into a dedicated state highway fund, so the users-pay/users-benefit principle was visible and widely understood. But in the second half of the 20th century, that principle was eroded, bit by bit, as state highway departments became state transportation departments. In a large number of states, the dedicated highway fund morphed into a state transportation fund, supporting a whole array of transportation modes. Congress did the same thing with federal fuel taxes, starting in the 1970s. But the large majority (and in some cases all) of the revenue still comes from “highway user taxes.” Thus, while users-pay has been retailed, the users-benefit part of the deal has been seriously undercut.

And that, I believe, has contributed to the public perception of a “gas tax increase” as simply a tax increase, and therefore something to be resisted. House Speaker Paul Ryan (R-WI) objected vociferously to recent calls for a federal gas tax increase, right after Congress had given most Americans a tax cut. A whole array of taxpayer groups seconded that motion, and the odds of Congress enacting a federal fuel tax increase look very small.

That kind of battle does not, for the most part, occur when your cell phone company increases rates in order to add more cell towers to give you better reception. Nor does it occur when your electric company replaces an aging coal-fired power plant with a state-of-the-art gas-fired plant. A well-supported rate increase for such a project is likely to be approved by the state regulatory commission without much fuss. In these and other cases, what you pay is clearly a user fee—one that meets the users-pay/users-benefit principle. And this is true even when the supplier in question is a municipal electric, gas, or water utility. You pay utility bills, not tax bills.

Those utility cases are also different from highways in that you pay the user fees directly to the provider of the service. Here again, the same is true whether the utility is run by the local or state government or is an investor-owned company. You are charged based on how much or what category of service you use, and you pay the provider, not the government. The only case where this is true in the highway sector is toll roads (whether private or public).

My point here is that the emergence of viable methods of charging per mile also makes it feasible to de-politicize highways and re-organize them along the same lines as the other public utilities on which our economy depends. If we are going to go through the great effort it will take to change the method of paying for highways, let’s at least attempt to fix all the flaws that are now evident with today’s fuel tax model.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.

This column first appeared in Public Works Financing.