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Updated: President Trump Proposes $1.5 Trillion Infrastructure Spending Bill

President Calls for Federal Spending to be Leveraged by State, Local and Private-Sector Funds; Real Estate Roundtable Urges Gas Tax Hike, 'Recapturing' of Sales Tax, Private Bonds to Fund Projects
January 30, 2018
Credit: U.S. Department of Transportation

President Donald Trump called on Congress to push through a $1.5 trillion infrastructure program during his first State of the Union address Tuesday night, with a White House plan that reportedly includes at least $200 billion in federal spending to spur investment from the private sector, state and local governments.

Trump said federal appropriations should be leveraged by partnerships with state and local governments and tap into private-sector investment "where appropriate." The president further called for the reduction of time required for approval of building permits to as little as one year.

Beyond that, however Trump offered no plan or specifics Tuesday night on when or how the legislation should be crafted. A six-page draft of the White House plan to overhaul the nation’s highways, bridges, railroad and airports was published last week by Axios.

The leaked document contains no specific dollar amounts for any of the initiatives introduced. After successfully pushing through tax reform legislation and winning a stare-down wish Democrats in ending a federal government shutdown, White House has signaled that it would turn its attention to infrastructure.

The draft includes a program making federal funding and technical assistance available for "innovative and transformative infrastructure projects" that must be exploratory and ground-breaking ideas that have more risk and offer larger rewards than standard infrastructure projects in commercial space, transportation, clean water, energy and telecommunications.

The American Society of Civil Engineers describes as an infrastructure-funding shortfall of up to $2 trillion, just to keep pace with repairs and upgrades to the country's congested and crumbling roads and highways alone. By 2030, a staggering $30 trillion in investment will be necessary to fund global infrastructure needs, according to a 2016 report by McKinsey Global Institute.

Real Estate Roundtable on Jan. 11 sent a letter to President Trump with suggestions on how innovative financing sources can be used to help fund infrastructure, and how cutting unnecessary red tape and streamlining the project permitting process can help control costs and minimize delays.

"Private-sector financial contributions from real estate developments are often essential components to infrastructure projects," the Roundtable said. "Federal spending will always be critical, yet a total legislative package in the range of $1 trillion must also rely on revenue from states, localities and the private sector to meet our country's infrastructure demands."

The Roundtable called for a "responsible and sustainable" increase to the federal tax on gasoline and diesel, the largest federal funding source for the Highway Trust Fund. The tax, currently 18.4 cents per gallon for gasoline and 24.4-cents/gallon for diesel, and has not been raised since 1993.

The fund is "perpetually on the brink of insolvency and frequently bailed-out by Congress" and its purchasing power has been diminished over time by inflation and strides in fuel economy of passenger vehicles, noted Roundtable, which is advocating that the gas tax should be recast as a "user fee" for Americans to repair and modernize roads, bridges and mass transit.

The U.S. Chamber of Commerce this month released a proposal to raise the gas tax by five cents a year for five years for a total of 25 cents, a move that would cost drivers an estimated $9 a month and raise nearly $400 billion over the next decade. The National Association of Manufacturers has supported a smaller 15-cents-per gallon increase, indexed to cover future inflation.

However, the gas tax proposals received a sharp rebuke from Republican leaders over the weekend, including Senate Majority Whip John Cornyn, R-TX, who said he opposes raising the tax, which he called an unsustainable and "declining source of revenue." Other influential conservative advocacy groups, including networks connected to billionaire industrialists Charles and David Koch, have also come out against raising the gas tax.

"The gasoline tax would just be a disaster, especially coming on the heels of a really good tax proposal," Tim Phillips, head of the Koch-affiliated Americans for Prosperity, said during a retreat for private donors on Saturday, who added an increase would "just be terrible for the country."

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