Infrastructure

New Leak Confirms Infrastructure Package Outline

The long-promised Trump infrastructure package may be unveiled later this month when the President delivers his State of the Union Address. A new leak confirms what we reported several weeks ago, including money that could be used to expand broadband access in rural areas.

The long-promised Trump infrastructure package may be unveiled later this month when the President delivers his State of the Union Address. A new leak confirms what we reported several weeks ago, including money that could be used to expand broadband access in rural areas.

Expectations are building that President Trump will unveil his long-promised infrastructure package during his State of the Union Address January 30.

A well-publicized leak of his proposal emerged this week, which conforms closely with what we reported – also based on leaked material – last month in this blog.

There will be four pots of money. The largest, totaling $100 billion, is intended to provide a federal incentive for transportation, water, hydroelectricity and brownfield reclamation projects. Money from this pot would cover 20 percent of project costs and non-federal funding would make up the rest.

A second pot sets aside $50 billion for rural projects, which also can include broadband investments. The last leak indicates $40 billion from this pot would be allocated to states after they produce a comprehensive rural investment plan.

A third pot would give the Department of Commerce the discretion to spend $20 billion on what are called transformative projects, including higher-risk and higher-reward projects.

Around $30 billion would be dedicated to federal capital financing and credit programs including TIFIA and WIFIA that are intended to spur public-private partnerships such as toll roads.

There are congressional proposals on infrastructure, so the final shape of a package that can pass remains to be seen. But it is encouraging to see the debate over an actual package may begin soon in Congress.

Congressional attention has been focused – and will continue to focus – on reaching an agreement on spending. The nation is operating under its fourth continuing resolution, with a February 8 deadline to negotiate a longer-term agreement under the shadow of other issues that range from increased military spending and immigration.

The three-day partial federal government shutdown that ended Monday may be a precursor of what’s to come. Senate Democrats want to use their limited leverage to filibuster to secure the future of 800,000 “Dreamers.” Trump and conservative Republicans in the House want to use the Dreamers as a bargaining chip to get up to $18 billion for a border wall and other changes in immigration policy.

The consensus view of political observers is that Senate Democrats folded fairly quickly because they weren’t geared up for a war of words in print and on social media. Republicans pounded them, saying they shut down the government to protect illegal immigrants.

Government shutdowns probably don’t shower any political party with praise, but Democrats may be better armed to defend their position if February 8 rolls around and there is no deal on immigration, border security or military spending.

DRIVE Act: The Little Engine That Might

The recent bridge collapse in California is fueling momentum in Congress to act on a transportation package.

The recent bridge collapse in California is fueling momentum in Congress to act on a transportation package.

The updated DRIVE Act cruised up to the Senate floor yesterday weighing in at 3.25 pounds and 1,030 pages. Ultimately, it ran out of gas shortly after the shiny new bill was driven off the lot.

Majority Leader Mitch McConnell gave senators less than an hour to read the bulging bill before voting to proceed. Democrats wanted more time to read the bill, while some Republicans opposed the “pay fors.” Ten Republicans joined every Democrat in opposition to proceeding to the bill and we now await McConnell’s next jump start of the bill. 

While news of our crumbling infrastructure is not new, the recent bridge collapse in California is fueling momentum in Congress to act on a transportation package. Most in Congress believe our country is underinvesting in roads and bridges, but the urgency hasn’t spurred long term action or clever ways to pay for our infrastructure deficit.

The current transportation bill expires July 31 and the Highway Trust Fund is nearly broke. If Congress doesn’t act with at least a short-term extension by July 31, transportation projects around the country will grind to a halt and DOT furloughs will be issued. It’s unlikely Congress will let this happen, but there are a lot of obstacles to quick action on a transportation bill or extension.

The House has already passed an extension to December, along with $8 billion in funding offsets. McConnell doesn’t like that plan and has teamed up with Democratic Senator Barbara Boxer to push for a longer term solution that transportation stakeholders badly crave. McConnell wants to demonstrate the Republican controlled Senate can pass consequential legislation on his watch.

The DRIVE Act would reauthorize federal highway and transit funding at an increased funding level of about 3.3 per per year for six years, from FY 2016 through FY 2021. Highway funding would increase 19 percent over the six years of the bill. Transit funding programs would increase from $10.862 billion in the current year to $11.797 billion in FY 2016 and to $13.26 billion in FY 2021. 

Only three years of funding offsets have been identified. After the third year, additional funds would need to be raised to prevent a shutdown.  The complicated provisions of the bill leave many policymakers asking questions, while other senators are concerned about the pay-fors. 

How Is the Bill Paid For?

The multi-year highway bill includes approximately $47 billion in offsets from other areas of the federal budget to help pay for new highway funding over the next three years. The proposal relies largely on revenue from reducing interest rates paid by the Federal Reserve to large banks, selling oil from the Strategic Petroleum Reserve and redirecting fees from the Transportation Security Administration and customs processing. The offsets are typical for Congress, they found three years’ worth of funding over a 10-year budget timeline. 

Many Democrats wanted simply to raise the gas tax to cover the cost of a long-term bill. However, nearly all Republicans and President Obama have expressed opposition to raising the tax, even though it hasn’t been raised since 1993.

DRIVE program highlights include:

  • A new Freight Mobility Program will distribute $1.5 billion in FY2016 and grow from there. Freight corridors throughout the country will see a needed influx in resources. In FY2016, Washington and Oregon would receive $34.2 million and $25.3 million to build important infrastructure projects.
  • A new Major Projects Program will distribute $300 million in FY16 and grow to $450 million in FY2021. The new initiative will fund large projects of regional and national significance throughout the country.
  • The bill increases funding for the Transportation Alternatives Program from $800 million to $850 million and gives local governments 100 percent control over the use of funds. TAP provides funding for trails, bike paths, safe routes to school and other local priorities. 
  • The Surface Transportation Program allocation to local governments is increased from 50 to 55 percent. However, the overall pot has shrunk, so local governments will actually see a reduction. There are efforts underway to offer amendments to increase local governments share of STP funds.
  • The bill increases funding that must be spent on projects to maintain and repair bridges off of the National Highway System, as these bridges often struggle to find a reliable funding stream. These city and county owned bridges were neglected under MAP-21. The bill requires that states allocate at least 110 percent of the funds they allocated to bridges in FY2014.
  •  The bill restores funding for the FTA Bus and Bus Facility grant program and increases transit formula dollars for transit agencies in urban and rural areas. 

It’s unclear what’s in store next for the DRIVE Act. The Senate was expected to take up the bill again today, but the bill has yet to make an appearance. If senators move to proceed, there will be a flurry of amendments and likely a rare weekend Senate session to complete the bill.

Even if senators pass the long-term measure, the House could reject the bill and opt for its short-term measure extension.

The Shape of Government to Come

Gov2020 attempts to predict the future of government, which turns out to look much like today but with even more technological innovation.

Gov2020 attempts to predict the future of government, which turns out to look much like today but with even more technological innovation.

Predicting the future is tricky business, but Deloitte and Touche LLP gave it a whirl in painting a picture of government in 2020. It turns out to be not that much different than government today.

Governments will still be puzzling over how to finance a growing backlog of infrastructure investments, health care will become even more ubiquitous with technological innovations and we still will be debating over personal privacy, increased convenience and the need to snoop to protect us from terrorists.

Through in-depth research and interviews with experts on each topic, Deloitte provides analysis on 39 drivers that will impact government operations and 194 trends that represent the shifts that may result by 2020. The results are posted on its new website, Gov2020.

Gov2020 is designed to be a one-stop shop for leaders in the private and public sectors to analyze how changing demographic, societal, economic and technological trends may impact the future. William Eggers, the leader of Deloitte’s public sector research department, compares the website to a “Wikipedia on the future of government.” However, Eggers also hopes the creation will spur an interactive discussion among its users about what is possible in the future.

For instance, it’s no surprise that investing in infrastructure will remain critical to economic competitiveness in 2020. As with today’s ongoing debate, the challenge for governments will be finding a way to pay for these investments. More electric and fuel-efficient cars on the road will continue to have a significant impact on the gas tax.

Gov2020 predicts this will lead to revamped infrastructure pricing models to account for efficiency and meet consumer demand. Governments will need to contemplate mileage-based user fees, which generate revenue based on how much one drives rather than on gasoline purchased. This also is likely to lead to increased efficiency. For example, when travelling on a toll road, we may notice a more dynamic system where rates depend on the time of day or amount of traffic.

When predicting health care service and delivery in 2020, Deloitte simply says “healthcare will be everywhere.” Physicians will increase the use of telemedicine, enabling those living in rural areas to have access to care. We may encounter more remote-monitoring practices through creations like an ingestible “smart pill.” Using smart phones to transmit health conditions to providers will mean more precise information and better treatments for patients.

Gov2020 forecasts that society will be debating the clash between individual privacy, convenience and the information exchange. With advancements in technology such as increased presence of drone police, online government transactions and self-driving cars, we will be forced to contemplate individual independence. What do our smart phones report back and to whom? Governments will be required to walk a fine line between navigating this new world of emerging technologies while maintaining ethical practices.

Based on just this brief sample, the common theme is technology and innovation. Governments, private companies and individuals alike must be prepared to participate and be competitive in this emerging reality. The question is, are you ready?

Infrastructure Investment at Crossroads

The Columbia River Crossing is just one example of faltering attempts to improve existing infrastructure as voter and ratepayer skepticism grows about footing the bill.Americans have engaged in a running dialogue on what in Abraham Lincoln's day were called public improvements, but what we today, perhaps with less clarity, refer to as infrastructure. 

The debate hasn't really changed over time. Political and business leaders have called for canals, highways and water systems to stoke progress. Individuals, taxpayers and ratepayers have resisted, citing the cost and the benefits that accrue to the few, not the many.

The Great Depression changed the national mind for at least a generation or two. Public works, as Franklin Roosevelt called them, became the engine to put America back to work, while creating roads, bridges, power plants, parks and monuments that would offer opportunities for future generations.

A similar instinct inspired Dwight Eisenhower, after World War II, to begin building an interstate highway system to expand the mobility of Americans, speed the movement of freight, and open vast new vistas for development in what became America's suburbs — where returning veterans could invest in new homes and a new lifestyle.