Infrastructure Funding Gap

Questions Arise Over How to Fund $1.5 Trillion Building Plan

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The Trump administration's funding plan sets aside a pot of money for rural infrastructure, but would require states and cities to significantly increase spending to rebuild dilapidated roads and bridges. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- Farm leaders largely had praise Monday for the Trump administration's infrastructure plan, which calls for spending $200 billion in federal funding over 10 years, including a special $50 billion pot of money just to target rural areas.

Other groups tied to the barge and trucking industries were more skeptical of the White House plans, largely because new funding would likely come in the form of new tolls on highways and river locks.

Agriculture Secretary Sonny Perdue said no area of the country needs more investment infrastructure than rural America. "With a quarter of the new federal money heading to rural parts of the country, states will have the ability to expand broadband access, increase connectivity, rebuild roads, and supply affordable utilities. Importantly, states will have the flexibility to choose which projects will best meet their unique needs," Perdue said.

Roger Johnson, president of the National Farmers Union, said the group was encouraged that the Trump administration is acknowledging the need for significant investments in rural America. With over $3.6 trillion required to overcome decades of deferred maintenance, our nation's roads, bridges, rails, locks and dams, water and waste systems, and rural broadband are in desperate need of robust funding."

Yet, the White House budget proposal released Monday also includes eliminating $509 million in rural water and wastewater grants that are run out of USDA as well.

Zippy Duvall, president of the American Farm Bureau Federation, said the president's plan, particularly regarding the $50 billion for rural America, "promises to bring long overdue improvements to the country roads, bridges and broader infrastructure that farmers and ranchers depend on to reach customers at home and abroad. While past infrastructure plans have left rural America in the dust, this administration has not forgotten the rural communities that form the backbone of our nation."

The administration sees the projects including any various transportation public works, but also technology as well, such as expanding rural broadband. A pool of $50 billion in rural funding will go to governors as block grants as well.

Regarding broadband, the president on Monday specifically said, "The rural folks have been left out," when talking about the need for rural infrastructure.

The $200 billion, over 10 years, wouldn't necessarily be new spending -- unless Congress chooses otherwise -- the $200 billion in infrastructure would come at the expense of other parts of the federal government.

To hit $1.5 trillion in investment, the White House plan also requires states and local governments to commit to 80% to 90% of the funding in some cases to receive a federal match for some projects. The Highway Trust Fund would stay in place and would remain the current pot for state revolving funds. White House officials see state and local revenues being generated from property taxes, user fees or sales taxes to boost local investments and achieve a higher share of federal matches.

"So if they're creating new revenue streams and they want to build something, we will partner with them to help them to match and fulfill that one final gap in terms of financing infrastructure," a senior administration official said on a press call Saturday.

Mike Steenhoek, executive director of the Soy Transportation Coalition, said the group was hopeful the president's plan will ultimately lead to a program to benefit soybean farmers and agriculture in general. Steenhoek added the group appreciated the president's plan didn't just focus on roads and bridges, but includes waterways, ports and rails. But Steenhoek said more details were needed on funding such projects.

"We are still anxious to see greater specificity -- particularly regarding funding -- from the White House and Congress on an infrastructure strategy," Steenhoek said. "Funding remains the main obstacle to seeing an infrastructure package transition from an intention to an outcome. The President's infrastructure plan highlights the need to encourage greater degrees of investment from states and the private sector. While the plan clearly wants to stimulate future investment from non-federal sources, a question I have is how the White House regards the additional investment that states have recently committed."

The Waterways Council Inc., which lobbies for the river barge industry, expressed disappointment that the White House plan seeks to reduce or eliminate the role of the federal government in constructing, operating or maintaining river waterways. Instead, the White House seeks to shift more management to non-federal entities or private companies. The Waterways Council noted the president had pointed last year to the need to fix dilapidated locks and dams.

"While we were extremely gratified that the President mentioned waterways in the State of the Union address and visited the Ohio River last June, where he said that 'together we will fix it,' the administration infrastructure proposal actually seems to mean that commercial operators and shippers are the only ones who will be expected to pay, and significantly more, for the Nation's waterways transportation system, despite being just one beneficiary of the lock and dam system," said Mike Toohey, president and CEO of the Waterways Council.

Chris Spear, president and CEO of the American Trucking Association, said it was heartening the president was bringing infrastructure to the forefront of national debate, but funding sources are needed to make that happen. Spear said "new tolling on existing interstates is a non-starter for our industry."

Spear added, "We also have grave concerns with the failure of the administration's budget proposal and infrastructure proposal to address the imminent collapse of the Highway Trust Fund. To be blunt, America is hurtling toward a highway funding cliff. If we continue on this trajectory, the motoring public, the American taxpayer and future generations are going to pay a very steep and unacceptable price. Any infrastructure funding proposal that does not address this situation is unacceptable."

NATSO, the trade association for truck stops, also opposes the prospect of increased interstate tolls and commercialized rest areas on those tolled highways.

"Interstate tolls cost the government significantly more to administer and enforce than the existing motor fuels tax. Why would anyone fail to support an increase in the fuel tax and, at the same time, work to create another type of tax (such as toll roads) that costs more to collect than the fuel tax?" said NATSO President and CEO Lisa Mullings.

Several major governmental organizations issued a joint statement last week welcoming the focus on infrastructure by President Trump and Congress. The groups included the National Association of Counties, National Governors Association, the National League of Cities and U.S. Conference of Mayors, as well as associations for transportation officials and local engineers. They all called on efforts to move forward but called for "a strong federal-state-local partnership" as well.

"States and local governments know firsthand the needs of our communities and invest in infrastructure accordingly. This includes roads and bridges, airports, waterways and ports, transit, passenger rail, water and sewer systems, public facilities, energy, broadband and telecommunications networks," the group of government associations stated.

The groups added that they want to secure the long-term solvency of the Highway Trust Fund, and they welcomed the idea of streamlining federal permits. "Additionally, we must find the correct balance between federal, state and local investments and private sector partnerships."

The $50 billion for rural spending will come from local governments or private entities asking for matching grants. Projects would go beyond roadways to upgrading rural broadband access as well. State governments would be in charge because the funding would come from block grants to the states "to allow governors to select what the priorities for infrastructure are in their respective states."

Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee, said any infrastructure bill needs to be bipartisan and fiscally responsible. He stressed the need to deal with the long-term sustainability of the Highway Trust Fund.

"There is widespread desire to work together on this effort. Passage of an infrastructure bill will require presidential leadership and bipartisan congressional cooperation," Shuster said. "I look forward to the constructive debate ahead of us on this critical issue. Our constituents elected us to address the Nation's problems, and we now have a golden opportunity to work together to do that."

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Chris Clayton