Federal Infrastructure Proposal Unveiled; What It Means for Indiana

On Monday, the Trump administration released its long anticipated $1.5 trillion plan for public works and infrastructure. The plan is based on $200 billion in direct federal spending to leverage $1.3 trillion in state, local and private infrastructure investment. (See https://www.whitehouse.gov/wpcontent/uploads/2018/02/INFRASTRUCTURE-211.pdf.)

With many of our nation’s roads, bridges, airports and other infrastructure in need of upgrading and building out for the future, this plan relies heavily on additional investment from the states and the private sector. The base of the plan has $100 billion in incentives in the form of grants to state and locals that includes $50 billion for rural projects, $30 billion for revolving federal credit and capital funds, as well as $20 billion for innovative projects that may not be ripe for private investment.

Indiana was one of several states that passed a bold, long-range infrastructure plan last year. (In fact, more than half of the states have raised their gas tax over the past five years.) So we should be well positioned to take advantage of this plan, as we have already taken the needed step to enhance our state and local road infrastructure funding.

Water infrastructure is a big issue for Indiana and this plan also proposes to leverage local investment with up to $40 in local and private money for every $1 in federal investment.

Additionally, the plan also proposes to cut federal permitting and approval times to two years, down from five to 10 years. This could be a big benefit for many projects.

Presently, this plan does not lay out specific funding for the proposal and puts that issue before Congress to solve. That could prove more difficult with concerns that the recently passed federal tax plan will raise the nation’s deficit. One option: the U.S. Chamber of Commerce recently proposed raising the federal gas tax, which has not been raised since 1993. No doubt, this will be a tough discussion in Congress.

There is usually an economic multiplier effect with infrastructure investment. America’s infrastructure is in dire need of modernization. Indiana has taken big steps to take care of its own and will hopefully benefit from this package. As details develop, we will continue to see how this plan evolves and impacts Indiana infrastructure.

Highway Funding Another Test for Congress

Among its growing list of priorities, Congress must also deal with reauthorization of the surface transportation bill — in other words, how much money each state gets for highway needs. Transportation Secretary Ray LaHood and James Oberstar (D-Minnesota), chair of the House transportation and infrastructure committee, hint that something "big" is coming.

In fact, a six-year reauthorization of near $500 billion (compared to $286.4 billion in 2005) has been mentioned. One problem: Where is the money going to come from? Oberstar wants to raise the 18.4-cent federal gas tax, but general consensus is that new, innovative ideas (public-private partnerships and the like) must be part of the solution. LaHood says the White House will be providing guidance to Congress.

Indiana, of course, is among several "donor states" that already sends more to Washington in taxes than it receives back in the highway allocation.

Lawmakers hope to get a bill through the House in June. The current law expires in September.

Good luck. Past history, and current funding woes, indicate this will be a tough one.