WASHINGTON—When President Donald Trump unveils his plan to beef up the nation’s infrastructure plan next month, it will include a crater-sized hole.
The trust fund that pays for most federal highway and transit aid is forecast to go broke in about three years unless the government significantly scales back its transportation spending or comes up with more money. But Trump’s infrastructure plan is silent on the looming problem, an administration official familiar with the plan told The Associated Press. The official wasn’t authorized to speak publicly about the plan and spoke on condition of anonymity.
Fulfilling a campaign promise, Trump’s plan proposes to generate $1 trillion in infrastructure spending over 10 years. But the plan seeks only $200 billion in federal dollars, relying instead on state and local governments and private investors to come up with most of the rest of the money.
The administration views the plan as a supplement to current infrastructure spending. The money would be distributed through new types of programs that are designed to generate greater state and local government and private sector spending. Also, there’s no guarantee how much of the money will go to transportation projects since the administration is broadly defining infrastructure as everything from building water treatment plants to expanding high-speed Internet access to rural areas.
The administration is open to working with Congress to address the trust fund later, although those conversations haven’t yet begun, the official said.
Republican leaders have been waiting to see what the White House will propose. There is wide, bipartisan support for continuing, and even increasing, transportation spending. But most lawmakers have been unwilling so far to back tax increases or spending cuts to pay for it.
The federal government is currently spending $15 billion a year more than the Highway Trust Fund takes in through gasoline and diesel taxes. Authorized trust fund spending for the current federal budget year that ends on Sept. 30 is about $56 billion.
“Addressing the solvency of the Highway Trust Fund is the most important infrastructure issue facing us today,” said Bud Wright, executive director of the American Association of State Highway and Transportation Officials, which represents state transportation departments.
“A failure to address the long-term solvency of the (trust fund) could mean a 40 per cent drop in highway spending in 2021,” Wright said. “We’re hopeful the president will play a strong leadership role in addressing this challenge.”
The U.S. Chamber of Commerce last week called for a 25-cent, phased-in increase in the federal gas tax to shore up the trust fund. Congress hasn’t passed a gas tax increase since 1993, primarily because being associated with a highly visible tax hike felt by most Americans is viewed by many lawmakers as political poison. Asking lawmakers to vote for an increase in an election year seems a stretch. On the other hand, 26 states have raised their own fuel taxes since 2013 without significant political repercussions.
The American Trucking Associations has proposed increasing the wholesale transportation fuels tax by 5 cents a gallon a year over four years—a little less visible than an increase at the pump. That would generate about $340 billion over 10 years, the group estimated.
Passing the administration’s infrastructure plan without bolstering the trust fund would amount to “taking one step forward and two steps back,” said David Bauer, executive vice-president at the American Road & Transportation Builders Association.
Michael Sargent, a transportation and infrastructure expert at the conservative Heritage Foundation, said the administration appears to view the trust fund shortfall as “Congress’ problem.”
And, even if it’s not in the infrastructure plan, “a gas tax increase is still on the table—the administration hasn’t written it off,” he said.
Chris Spear, president of the trucking group, said passage of a tax overhaul bill last month provides lawmakers with political cover if they decide to raise fuel taxes.
“You have a situation where the White House and Congress sent historic amounts of money back to the taxpayer,” he said. “We’re here to help this president get a bill passed … but there has to be real dollars in there.”