Trump's Infrastructure Initiative

President Donald Trump—as part of his budget—includes a 2018 Infrastructure Initiative Fact Sheet.

It has received little fanfare, besides a counterproposal from a group of Progressive Democrats. Mainly, I’d say because it is not especially controversial at this point. The plan is mainly geared towards metropolitan regions and makes good sense for them. It does though implicitly cover sparsely populated regions in the country, providing them with special treatment.

These rural areas will just require a greater amount of federal money in either grants or enhancements.

The Infrastructure Initiative departs from previous reporting on his approach.

Public-private partnerships (P3s) are still the cornerstone.

However, the focus is not simply on using federal money as honey to attract large sums of private investment. Instead, the focus is on using federal money to leverage state and local government and also private money.

So, it is not entirely a pro-private investment plan. He seeks to capitalize at high levels a group of federal programs which can be used either to leverage non-federal money or else also private capital: TIFIA, WIFIA, PABs, etc.

Some of the plan is aggressively pro-P3s, such as the ability to toll the interstate highway system, promoting congestion charging, and other initiatives meant to increase road P3s. Related, Mr. Trump encourages the use of what’s called asset recycling. What this means is that a private firm can take out a long term lease from the government in exchange for an upfront cash payment, as well as a commitment to upgrade, operate and maintain the asset over time. This payment can go to fund other pressing government needs in the infrastructure and social service sectors.

Importantly, the President proposes a federal revolving fund for capital projects. It is not yet clear whether the revolving fund will choose projects. If so, it may look a lot like federal infrastructure financing vehicles which have long achieved bipartisan support. I wrote a book on them a few years back, and advised governments extensively. The idea with these vehicles is to de-politicize infrastructure funding decisions.

There is much more of interest in the President’s Initiative. For instance, Mr. Trump figures that, since the federal government contributes so little to certain projects, that the federal government should not impose regulatory requirements on projects.

It explicitly deals with large metropolitan programs. How it will handle rural projects, for instance, is not set out. All indication from statements of the Secretary of Transportation and others is that they will be funded with grants and also hybrid P3 funding structures.

If you would like additional information on the Trump plan or assistance in finding ways of funding infrastructure projects under its umbrella, do be in touch.

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