Our Take on Trump's Leaked Infrastructure Plan
Since the 2016 presidential campaign, infrastructure spending has been a popular topic and one that seems to have plenty of bipartisan consensus — not in what exactly the money should be spent on, but that some infrastructure money (a lot) should be spent.
Unsurprisingly then, the recently leaked Trump infrastructure plan has elicited a number of reactions — everything from joy to outrage — particularly when it comes to the plan's assumed impact on cities. From the perspective of people who care about strengthening American towns and creating more resilient local economies (i.e. this organization), the whole idea of a federal infrastructure bill is a troubling to begin with, because it could go wrong in so many ways:
- It could focus too much on building new rather than maintaining what we already have.
- It could focus too much on auto infrastructure over other modes of transportation.
- It could increase our towns' reliance on outside money rather than encouraging local economic resilience.
- It could mire our communities further into maintenance obligations we have no hope of paying off... and so on.
In essence, it could exacerbate all of the existing problems in our current infrastructure funding model.
But the latest leaked infrastructure plan isn't as bad as we feared.
Last year, Strong Towns was invited by the Trump transition team to submit our thoughts on what a federal infrastructure bill should include. We highlighted four things:
- Prioritize maintenance over new capacity.
- Prioritize small projects over large.
- Spend far more below ground than above.
- Prioritize neighborhoods more than 75 years old.
Some of those are beginning to be addressed in the latest leaked plan.
Source: Igor Ovsyannykov
So What's in the bill?
The bill's Infrastructure Incentives Initiative allows any local government entity to apply for funding and the ones willing to spend the most (and likely go into debt to do it) will be scored more favorably than communities that put less of their own money on the table. This sounds like it's going to encourage our towns to go into debt to spend more on infrastructure, right? Not a good plan.
But crucially, under this proposal, federal funding will only amount to up to 20% of any project's total cost. Now that changes things. This means that instead of the federal government baiting municipalities into taking on debt to accomplish their projects but still incentivizing those projects with a big pot of federal money, now the federal government will only be a minority stakeholder in any infrastructure investment and local communities will need to prudently decide on their financial priorities for the long term.
"We have to put the onus back on the people who are actually responsible for maintenance," says Chuck Marohn, president of Strong Towns. "It's a really weird system to have one person pay to build the house and the other person pay to maintain it."
On the other hand, the infrastructure plan's proposed Transformative Projects Program leaves a lot to be desired. It would "partner" with private companies to fund large-scale gambles where the payoff — if an experimental project succeeds — mostly goes back to the private company and the federal government bears up to 80% of the financial risk. That's not a true partnership.
Another section that stands out in this infrastructure bill is the 25% set aside for rural areas. This is structured to reward communities that have built lots of roads in a wasteful manner, which is a terrible idea. The only saving grace of this portion of the infrastructure plan is that the funding would go directly to governors, which means that the few smart, thoughtful governors out there (like Doug Burgum in North Dakota) might do some good with it.
Tolling gets a promising mention in the infrastructure plan as well. Under this proposal, states would have the option to toll their roads and would be required to use that income to fund their roads. This just makes sense. (More on tolling here.)
Value capture financing is also a requirement for any transit project funded by the bill. What this essentially means is that the people and corporations that own property near a transit project that are going to directly benefit from the investment have to help pay for it via the increase in property value that comes from the project. This is somewhat revolutionary in America, although it's the norm in many other countries with robust public transit networks. It's unlikely that this portion of the bill will pass Congress, but if it did, it would encourage a far more stable transit system in our nation than we currently have.
"This isn't the bill I would've created," says Marohn, "but there's enough reform in here [...] that I don't think this is a bad thing. It's not perfect, but I think it's a huge step in the right direction."
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(Top photo source: Mike Wilson)