US infrastructure needs repairs. But who should pay?

Opening the second year of his presidency with an address to the nation, President Trump launched a long-awaited initiative on infrastructure that is both bipartisan in spirit – and highly contentious.

It’s common ground as a priority, because the need is as obvious and widespread as the nearest airports, bridges, or water mains. It’s contentious because of a rift over funding – partly over sheer dollar amounts, but also over the proper government role. While Mr. Trump pitches reliance on state and local governments, aided by private-sector partnerships, Democrats are pushing a much stronger role for federal funding.

That state-federal rift between the parties isn’t limited to this issue, of course. But it’s one that now threatens deal-making on a concern that in many ways should be ripe for congressional compromise.

The Trump plan, still not released in full detail, tilts toward the states at a time when infrastructure planning and funding have already been moving in that direction. But experts say the dueling visions could be a theme that persists as a source of tension, even as the realities of a “deferred maintenance” America push the parties toward action.

“A lot of this [state-level emphasis] is based on a phenomenon that's happening across the country, where states and cities and metro areas are raising their own taxes” to pay for infrastructure projects, says Robert Puentes, who heads the Eno Center for Transportation, a policy think tank in Washington.

The idea of localities taking a lead role in their own infrastructure is already well established, he says. But the challenge, he adds, is that “not all projects … are right for private investment,” and some communities that need investment don’t have money at hand to pay for it from taxes or user fees like tolls.

On top of that, some projects – such as a proposed new rail tunnel from New Jersey into New York City – span local, state, and federal purviews. The project matters to Manhattan-bound commuters, but also to flows of freight and people along the whole Northeast corridor. All this leaves plenty of room for debate over the proper federal role and purpose in infrastructure.

“That’s the real point of contention,” Mr. Puentes says.

A plan with scant details

Trump offered scant details during his televised State of the Union address in Congress Tuesday night, but he used the speech in part to paint himself as open to compromise with a Congress where Senate legislation will hinge on bipartisanship. While emphasizing themes that would resonate with his conservative base, he also sought to draw Americans together on goals involving national security and economic improvement.

“Tonight, I'm calling on Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment that our country so desperately needs,” Trump said. “Every federal dollar should be leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment to permanently fix the infrastructure deficit.”

His other specific call was for speedier permits, to bring the approval process “down to no more than two years, and perhaps even one.”

Judging by comments from his administration, and a leaked draft document recently published by Axios, Trump’s goal is to hit that $1.5 trillion target (over 10 years), while spending just $200 billion or so in federal money, using it to reach the larger total by incentivizing the local and private investment.

Critics have voiced a host of concerns, including that speedier permitting as outlined by Trump would come at the cost of undercutting environmental safeguards, but also that the budget math isn’t adding up.

“Democrats agree with the president: America’s physical infrastructure is the backbone of our economy, and we have fallen behind,” Senate minority leader Chuck Schumer of New York said in a commentary published ahead of the address.

Presidents Eisenhower and Reagan were Republicans who understood “that direct investment of federal resources was the best way to maintain and build our nation’s infrastructure,” Senator Schumer said. “Only a plan with direct investments can properly address the scale of the challenge we face.”

His concern is shared by many outside experts, who say it’s quite possible that Trump’s coming budget plan will include no net increase for infrastructure (perhaps adding some new funds while cutting back on other existing programs).

A plan that’s tight on federal money risks leaving some areas of the country – notably poorer cities or ones facing population loss – behind.

Already, the trend in federal funding has been downward. Federal spending on infrastructure, while not down drastically, is lower as a share of the nation’s gross domestic product than it was in the 1960s and ‘70s, with a modest rise under President Obama’s post-recession stimulus package balanced by a decline later in his term.

So the question may be: Is the federal retreat from infrastructure funding palatable, even prudent – or a problem?

At present, the parties seem far apart on that question. Democrats also appear little-inclined toward any compromise that could give Trump and Republicans a legislative victory to tout heading into the midterm elections this fall.

“Our nation’s roads, bridges and tunnels would become tools for wealthy investors to profit off the middle class, rather than the job-creating public assets they ought to be,” Schumer warned in his commentary, voicing a common Democratic concern about private sector partnerships.

Nor is Trump's legislative path smoothed by the fact that a federal fund for highway projects is in deep need of a refill. His new tax cuts, meanwhile, may make it harder for state and metro areas to dig up their own financing for projects.

Potential for common ground

Still, if the partisan rift is real and considerable, so is the potential for common ground over time – since already the nation’s overall pattern includes big roles for federal, state, and private investment.

“There is a growing consensus that the United States should boost investment in transportation infrastructure, but ... the United States is moving into an era where more of the agenda-setting and funding responsibilities are falling to local governments,” states a new report by Adie Tomer and Joseph Kane of the center-left Brookings Institution.

A key reason? Not Trump, but the way “local governments are also especially attuned to local needs.”

That can protect federal taxpayers: If localities have to raise the biggest funds, “bridges to nowhere” become less likely to be built. But the new report echoes the point made by Puentes (who’s also affiliated with Brookings): A city like Milwaukee doesn’t have the same money-raising potential as Denver or Seattle.

Trump’s plan appears to nod to that issue in one way: It sets aside funds for rural areas, which are among the places where it’s hard to lure in private investors with promises like long-term toll revenues.

Nationally, groups representing business, private-sector labor unions, and governors have joined to promote infrastructure plans that include both robust federal funding and private-sector partnerships, saying that the US needs “policies to deliver modern infrastructure more quickly and at less cost.”

Both Republican and Democratic states have already been relying on both public and private-sector projects – and tolls are just one way to pay for them. States also deploy gas taxes to fund infrastructure, and the next-generation approach may be mileage-based user fees, already being tested in blue states like California and Oregon, among other places.

Along the Kentucky and Ohio border, Democratic and Republican governors teamed up in 2015 to call for investing big local dollars – and for users to pay tolls – to replace a bridge from Cincinnati to Covington, Ky. The project is still pending, but the idea hasn’t gone away, because, well, people on both sides of the Ohio River need a bridge.