What the Trump Administration’s Infrastructure Proposal Means for the SACOG region
The White House released its much anticipated infrastructure plan on February 12. The proposal to invest $1.5 trillion over 10 years is eye-catching and shines a sorely needed spotlight on the need to invest in the nation’s roadways, railways and waterways. The plan itself is significant in that it represents a major departure from how the federal government has viewed infrastructure and its role in supporting state and local projects.
The Administration defines and makes eligible a broad range of infrastructure projects—from airports to water projects and brownfield sites—not just roads and transit. The plan proposes a major new program to provide incentive payments for state and local governments who raise their own revenue through new tolls or taxes. And it takes the historic role of the federal government providing up to 80 percent of project costs and flips it on its head, shrinking federal participation on projects to just 20 percent and asking state and local governments to come up with the rest.
Indeed, while the White House proposal touts a $1.5 trillion investment over 10 years, it assumes $1.3 trillion will come from private investment, or state and local sources. The $200 billion in federal funds would likely come TIGER or other existing federal programs. The proposal includes:
- $100 billion for a new federal infrastructure incentives program that would be spread across roads, highways, transit, airports, passenger rail, ports and waterways, flood control and water systems, wastewater facilities, storm water facilities, and Brownfield and Superfund sites. Of the money that would be available for transportation, the proposal would reward regions with local dedicated transportation taxes and/or highway and bridge tolls. This may disadvantage the six county Sacramento region. While new state transportation funds under SB 1 might count (the proposal isn’t clear on this), existing local sources such as Sacramento County’s Measure A may not qualify because the proposal only rewards recent tax measures;
- $50 billion for a broadly defined Rural Infrastructure Program, partly distributed by formula to rural regions with populations under 50,000, and partly distributed through a competitive merit-based program. However, despite significant infrastructure needs in our region’s rural areas, the SACOG region may not qualify for these funds due to the fact that eligible rural areas cannot be adjacent to an urbanized area;
- $20 billion for a Transformative Projects Program for nationally significant high-cost infrastructure projects that have some ability to generate their own revenue (most likely toll lanes, toll roads and mass transit projects with significant urban development potential);
- $30 billion for investment in several existing federal loan programs for water, transportation and railroad infrastructure as well as private activity bonds;
The plan also proposes to further streamline the federal project approval process, eliminate the current ban on tolling existing interstate highways, and expand the eligibility of other federal programs to encourage more workforce development and job training programs that could broaden the labor pool for infrastructure projects.
While an ambitious federal proposal to reinvest in the nation’s infrastructure and reform the regulatory process is sorely needed and long overdue, this particular proposal would significantly disadvantage the six-county Sacramento region for the following reasons:
- The region has no toll roads, toll bridges or toll lanes—a revenue source supported by the proposal and a key source of the remaining 80% of the money that won’t come from the federal government;
- The region has a limited number of dedicated local transportation tax measures and even those may not be new enough to qualify for the $100 billion incentive program; and
- Public transit projects would require value-capture financing—which is hard to do in our largely suburban region.
Even more alarming for the Sacramento region is the fact that the $200 billion in federal spending under the White House proposal appears to be funded in part by cutting existing programs such as TIGER, Amtrak and the federal transit Capital Investment Grants (which funds light rail and streetcar capital projects). These are all federal programs that the region has competed well in and will continue to rely on in order to advance key infrastructure projects. This could jeopardize projects such as the Capitol Corridor third track project to Roseville, the I-80/65 interchange in Placer County, the Downtown/Riverfront Streetcar project connecting West Sacramento and Sacramento, as well as new public transit expansion and passenger rail connections to serve a growing region in the years to come.
Of course, the White House infrastructure proposal is just that—a proposal. It now heads to Congress where a variety of committees will claim jurisdiction over various elements of the plan and begin to rewrite it. Despite predictions from some transportation stakeholder groups that the Administration’s proposal has little chance of passage this year, there are two things that local leaders from the six county region should do: (1) help shape the plan as it makes its way through Congress so that the Sacramento region stands a better chance of competing; (2) get serious about the message that the proposal is sending to metropolitan areas across the country: that “self help” regions that raise their own revenues through local tax measures, tolls and value capture mechanisms will do better in the long run. On the last point, our region has a lot of work ahead of us.
For more information on the new infrastructure proposal’s impact on our region, please contact Erik Johnson at email@example.com.