Less than one week after Donald Trump was elected the 45th President of the United States, it is clear that the President-elect places a high priority on infrastructure spending. "We are going to . . . rebuild our highways, bridges, tunnels, airports, schools, hospitals. We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people back to work as we rebuild it," Trump said in his victory speech.
NATSO has long advocated for increased, sustainable spending on highways and infrastructure, such as by increasing the motor fuels excise tax rates.
It remains unclear, however, how exactly a Trump administration would go about increasing infrastructure spending. Some of his campaign positions, while high-level and abstract, indicate a preference for encouraging the private sector to take the lead on highway projects. The government's role in these scenarios would be to provide tax incentives and other inducements to generate the necessary capital and investment environment to prompt projects and spending to move forward.
For several reasons, this may be less than ideal, according to NATSO's V.P. of Government Affairs David Fialkov. "First, whenever the private sector is taking a lead in infrastructure projects, there inevitably will be a desire for a fast return on investment. This can lead to inefficient and counter-productive revenue-raising concepts such as tolling and rest area commercialization.
"Second, there is the potential that private capital will gravitate toward projects that are more frequently utilized by affluent drivers -- who can afford to pay high user fees -- as opposed to projects in more rural areas that may objectively be of a higher priority."
The importance that Trump places on using tax credits to leverage private sector investment is highlighted by his choice of Shirley Ybarra to head his transportation transition team. Ybarra is best-known for her advocacy of such "public-private partnerships."
Of course, any infrastructure spending plan will have to be approved by Congress. There has long been discussion or reforming America's repatriation tax scheme to incentivize companies to "bring home" money that is currently being stored abroad, and using that revenue to fund transportation and infrastructure spending.
Although Congress passed a long-term highway bill last year, it was unable to develop a self-sustaining funding solution, instead cobbling together spending cuts and revenue increases in the federal budget, some of them more fiscal sleight of hand than real money. By 2021, the Highway Trust Fund is expected to show a $18 billion gap between spending a fuel-tax revenue.
Although it remains a murky and fluid playing field, it is clear that infrastructure spending will be a top-level item for discussion in the opening months of the Trump Administration.
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