Published 11:54 p.m. ET June 26, 2018
Washington — Uncertainty surrounding President Donald Trump’s plans for infrastructure funding is making it difficult for Michigan to plan long-term construction projects.
A five-year, $305 billion transportation funding law signed by former President Barack Obama in 2015 that distributes money collected at fuel pumps by the federal government is set to expire in 2020. And Trump’s proposal for a $1 trillion replacement — funded mostly by private investment — is stuck in neutral.
Trump has called for federal spending of $200 billion over 10 years that administration officials say can be used to “incentivize” up to $800 billion in private, state and local spending on infrastructure. At the plan’s core is the assumption that private companies would enter into “public-private” partnerships with local and state governments.
The prospects for the president’s proposed transportation bill are so dire that “infrastructure week” has become a running joke in Washington. Nearly every time the Trump administration designates a week to promote his plan to rebuild the nation’s deteriorating highways and roads, the message is abandoned as the president goes off-script.
Michigan typically receives about $1 billion per year from the transportation department’s Highway Trust Fund, which has to be renewed each time the law known in Washington as the highway bill is set to expire. The highway fund is supported by the 18.4-cents-per-gallon federal gasoline tax.
The Michigan Department of Transportation says it counts on federal money to pay for 65 percent of its Highway Capital Program.
Jeff Cranson, a spokesman for the Michigan Department of Transportation, said the uncertainty is making it difficult for state officials to plan for long-term construction projects. He cited the fact that the Trump administration has not put much meat on the bones since the president released his proposed budget in February.
“Not only is the proposal still vague, much of it involves discretionary or competitive grants,” Cranson said. “That makes it difficult for us to figure out how Michigan would be affected.”
Cranson continued: “As you know, Michigan’s infrastructure is in desperate need of more investment at all levels — city, village and county road systems as well as state trunklines. And (public-private partnerships) hold promise in some specific applications but are not the sole answer to make up for decades of under-investment.”
The Trump infrastructure plan calls for private investment, but there is little clarity on what that might look like. Critics say privatization of public assets could lead to increased use of tolls and other mechanisms that will allow private companies to generate profits in exchange for financing projects. They cite examples of companies that have entered into agreements with state and local governments and later gone bankrupt or charged higher than expected tolls for the use of roads and bridges.
The federal government usually spends about $50 billion per year on roads, but the 18.4-cents-per-gallon gas tax only brings in $34 billion. The gas tax has not been raised since 1993, and there is little appetite in Washington for taking a vote to do so now. Congress has turned to other areas of the federal budget in recent years to close the infrastructure funding gap, most recently transferring $70 billion to help cover five years’ worth of transportation spending that will run out in 2020.
Michigan adds its own gasoline tax. The state increased its local gas tax by 7.3 cents in 2017 to 26.3 cents per gallon; the diesel tax went up 11.3 cents to 26.3 cents. But the state could be forced to dig deeper into its own coffers to pay for highway improvements if the federal spigot is turned off in 2020.
Jim Tymon, chief operating officer and director of policy and management for the American Association of State Highway and Transportation Officials, which represents state transportation departments, said states have a bit of breathing room because federal transportation is secured until September 2020.
“Unfortunately, 2020 is closer than it was a year ago,” said Tymon, “and we still don’t have a fix for the Highway Trust Fund, so we’re starting to get back to the mode of wondering what Congress is going to do.”
The White House has admitted Trump’s plan, which called for spending $200 billion in an effort to elicit $800 billion in private sector investment, is likely shelved for the rest of the year.
When asked in May about the prospects for an infrastructure bill, White House Press Secretary Sarah Huckabee Sanders told reporters, “I don’t know that there will be one by the end of this year.”
Congressional leaders also rarely mention the possibility of placing such a bill before the November elections.
Tymon is pessimistic about the prospects for Trump’s big $1 trillion proposal this year with elections coming up in November, however.
“It’s unlikely that Congress is going to pick up the proposal that was proposed by the Trump administration and just move it through,” he said. “I think it’s likely that you’ll see some of these concepts work their way into other bills.”
Larry Willis, president of the AFL-CIO’s Transportation Trades Department, said the Trump administration proposal relies too heavily on private sector investment in place of federal dollars and places heavy burden on state and local governments.
“The plan spent a lot of time devolving responsibility to the states,” Willis said. “There’s a significant over reliance on the private sector. We thought it was a little unrealistic. We’re going to turn $200 billion into $1 trillion with some sort of magic pixie dust.”