Stakeholders, DeFazio Send Trump Infrastructure Ideas

February 8, 2017

Recently, President Trump received unsolicited advice on transportation infrastructure financing from two different sources.

A broad group of hundreds of stakeholder groups sent Trump a letter on February 1 congratulating him on his election victory but asking him to focus, not just on his plan for a new infrastructure financing initiative, but also on the post-2020 financial needs of the Highway Trust Fund.

The letter reminds Trump that:

Failure to resolve the issues facing the trust fund prior to the expiration of the current law in 2020 will require you to make a decision to either pass additional short-term stopgap measures or find a $110 billion off-set to pass a long-term bill that will at best maintain current funding levels that do not meet our transportation infrastructure needs. Absent long-term stability for the Highway Trust Fund, many projects critical to the efficient movement of people and goods have the real potential to be backlogged or never built. Further, mounting deferred maintenance could cause current infrastructure to fall into an even greater state of disrepair.

(The $110 billion figure was recently updated by the Congressional Budget Office – the estimated bailout needs of the HTF for a six-year bill at baseline spending levels after the expiration of the FAST Act are now around $120 billion. See table below.)

The stakeholder letter also says the President has a “generational opportunity to end the cycle of uncertainty that has plagued America’s infrastructure network and usher in a new era of stability and improvements we so desperately need” but stresses that “Private financing, while important and needed, cannot replace the role of public funding and federal leadership.”

And yesterday, Rep. Peter DeFazio (D-OR), the ranking Democrat on the House Transportation and Infrastructure Committee, sent the President his own letter offering “three simple solutions that could be a critical part of your commitment to invest $1 trillion in infrastructure, without increasing the size of the budget deficit.” They are:

  1. Have the Treasury issue special “Invest in America” bonds, to be repaid with the revenues from annual indexation of the gasoline and diesel excise taxes to begin in 2017. The proceeds from each year’s bond issuance would be deposited in the Trust Fund – DeFazio’s letter says that the proposal “provides the necessary funding to address the shortfall in the Highway Trust Fund and make substantial improvements to our surface transportation system through FY 2030.” The bonds would have a 30-year duration, meaning that the indexed gas/diesel tax increase increments would be paying down bonds through the year 2060. DeFazio’s staff estimates that a total of $510 billion in bonds would be issued in the 2017-2030 period – $226 billion of which would keep the Trust Fund solvent at current baseline spending levels through 2030, and the remaining $284 billion would provide an additional $20.3 billion per year in new spending above the current baseline levels. DeFazio’s proposal would index the taxes not just for inflation of construction costs but also for reduced fuel usage due to increasing fuel economy standards. But CBO projects motor fuel taxes at current rates will drop 1.2 percent per year, and even though the 1.5 cent per year maximum increase in fuel taxes is said by DeFazio’s staff to itself be indexed after 2017, it is possible that cost inflation and fuel efficiency could spell trouble for paying back the bonds in the 2030-2060 period – we simply don’t have the details yet.
  2. Spend accrued balances and all new revenues in the Harbor Maintenance Trust Fund. The letter says this will provide more than $27 billion for ports – $9 billion from spending down accrued balances from prior years, and the remainder from spending every dime of Harbor Maintenance Tax receipts moving forward. The problem is that this requires amending the Budget Control Act’s spending caps, or else the $9 billion in balance spend-down (and a good chunk of the new tax spending) has to be offset by cuts in other non-defense discretionary appropriations. (See ETW’s September 2016 article “What To Do About the Harbor Maintenance Trust Fund?” for more details.)
  3. Increase or remove the passenger facility charge (PFC) cap for airport development. DeFazio notes that the “head taxes” charged by local airports on enplaning passengers are capped by federal law and have not been increased since 2000, when the maximum allowable fee was increased from $3.00 per head to $4.50. DeFazio wrote that “if we increased the PFC cap by $4.00 (from the current limit of $4.50 to $8.50), airports’ PFC revenue would almost double, from $3 billion per year currently to about $5.7 billion per year. That additional revenue would go a long way toward addressing the $32.5 billion in airport needs identified by FAA, and help airports keep pace with increasing demand.”


Search Eno Transportation Weekly

Latest Issues

Happening on the Hill


Related Articles

DOT Establishes Multimodal Freight Office

December 1, 2023 - The U.S. Department of Transportation this week announced the establishment of its new Office of Multimodal...

A Tale of Two States: California vs Texas

December 1, 2023 - When assembling data for the donor state article elsewhere in this issue, something leaped out at...

Running on Empty: The Highway Trust Fund

October 18, 2023 - The U.S. House Transportation and Infrastructure subcommittee on Highways and Transit met to discuss the solvency...

Eno’s MAX Program Takes Off with Airports

October 20, 2023 - Eno is partnering with three major metropolitan airports to launch an exciting and innovative airport-led program...