Chao Fields Infrastructure Questions

May 19, 2017

Transportation Secretary Elaine Chao used two public events this week to promise infrastructure stakeholders that details of the Trump Administration’s $1 trillion infrastructure plan would soon be forthcoming.

At a Monday event to kickoff Infrastructure Week and a Wednesday hearing before the Senate Environment and Public Works Committee, Sec. Chao said that the White House hoped to release the “principles” for the infrastructure bill in the latter part of May. (Just how bare-bones the principles document will be remains to be seen.) She also said the plan is being discussed with an interagency task force consisting of “16 different federal government department and agencies, including Transportation, OMB, Treasury, Commerce, Interior, EPA, Agriculture, Labor, Energy, the Department of Defense, Veterans Affairs, the Council of Environmental Quality, the Education department and others.”

The number of stakeholders is proportional to the scope of the plan, Chao said:

“The administration’s definition of infrastructure is broad and inclusive.  It not only recognizes traditional infrastructure such as roads, bridges, railroads, inland waterways and ports.  It may also potentially include energy, water, broadband and veteran hospitals, as well.  That’s why there are 16 different departments and agencies working to put together this initiative.  In addition, a few special projects that are not candidates for private investment will likely be identified and funded directly.  Candidates for this special category may include projects that have the potential to significantly increase GDP growth, or to lift the American spirit.”

At the hearing, Sen. Joni Ernst (R-IA) asked Chao to clarify that final sentence, and Chao responded “We will not specify any list of projects or anything like that. What my remarks wanted to confirm and to reassure was that this administration understands the needs of rural America. And as we go forward we need to find some way to address the needs of rural America in a way with other financing mechanisms that may not work — they may work for urban areas but not for rural areas. So that is also one of the topics that we are working within the task force I’m trying to address.”

At the Monday event, Chao also indicated that, like the Lord, President Trump will help those who help themselves: “states and localities that have secured some funding or financing of their own for infrastructure projects will be given higher priority access to new federal funds. The goal is to use federal funds as an incentive to get projects underway and built more quickly, with greater participation by state, local and private partners.”

Like most hearings, a large part of the Wednesday meeting was devoted to legislators discussing the particular needs and interests of their electorate. Those included the Gateway tunnel project under the Hudson River (Cory Booker (D-NJ)), the plight of Penn Station (Kirsten Gillibrand (D-NY)), the impact of rising ocean levels on infrastructure (Sheldon Whitehouse (D-RI)), and the potential for a FASTLANE grant to Chicago for the 75th Street Corridor project (Tammy Duckworth (D-IL)).

In answer to Duckworth’s question, Sec. Chao indicated that the Administration might do a “first tranche” of FY 2018 FASTLANE grants and then issue an amended application for the rest.

Discussion of one local project at the hearing did have national programmatic implications. Sen. Kamala Harris (D-CA) said that the Caltrain electrification project, which had tentatively been approved for Capital Investment Grant funding by the Obama Administration in January, needed to have its full funding grant agreement (FFGA) signed by Chao by June 30 in order to prevent the expiration of construction contracts already issued.

Chao responded “Fifty percent of the new starts in the budget, if I’m not mistaken, goes to California, so there’s a lot of money going to California. There are a number of projects there. (Ed. Note: This is correct – of the projects that have signed FFGAs, the FY 2018 installments due total $550 million, which is more than half of the $1.070 billion total.) The fiscal year 2017 budget following the omnibus gave about $100 million. That has helped. Going into fiscal year 2018 we will hear the rest of it. It’s another $118 (million). But California, and in particular Caltrain, is not the only project that’s waiting for this money.”

As reported elsewhere in this issue, the FY 2018 budget request for the FTA Capital Investment Grants account appears to be $1.232 billion, less one percent for oversight leaves $1.220 billion. Projects that already have their FFGAs signed expect to get about $1.07 billion in 2018. And while the 2017 omnibus gave $520 million for the FY 2017 installments of seven projects that do not yet have signed FFGAs (Santa Ana, CA streetcar; Maryland Purple Line; Minneapolis Southwest LRT; Seattle Lynwood Link; Caltrain; NYC Canarsie; and Dallas DART), $1.220 minus $1.070 only leaves $150 million for the FY 2018 installments for any and all of those projects.

The Maryland Purple Line and Caltrain are the two projects in that list that were closest to getting their FFGAs signed before President Trump was sworn in. But as long as the Administration maintains that they are only going to get an appropriation of $1.232 billion in for the account in 2018, there won’t be enough money left over to sign both agreements and pay the fiscal 2018 installments.

So until Congress enacts a FY 2018 bill with at least $1.8 or $1.9 billion in appropriations for the Capital Investment Grants account, which won’t be until October or November 2017 at the earliest, it seems like there can be only one new FFGA signed, and the Maryland Purple Line is in direct competition with Caltrain electrification for that slot.

(Ed. Note: This is a manifestation of a fundamental problem – it’s hard to do multi-year capital spending with annual discretionary appropriations. This is why full funding grant agreements are not legally binding on the United States.


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