Panel mulls incentives, public-private options for $1T plan

Source: Camille von Kaenel, E&E News reporter • Posted: Thursday, May 18, 2017

State and local government officials urged lawmakers to incentivize local partners to help bolster an expected increase in federal infrastructure spending.

Transportation Secretary Elaine Chao has said the administration’s $1 trillion infrastructure plan could land in Congress in weeks. Though it will include $200 billion in direct federal funds over 10 years, it would largely rely on measures aimed at triggering additional private and nonfederal funds, she said.

Los Angeles Mayor and Chairman of the U.S. Conference of Mayors Infrastructure Task Force Eric Garcetti (D) told the Environment and Public Works Subcommittee on Transportation and Infrastructure yesterday that cities could participate.

“Leverage has to be the central principle,” he said.

More than 70 percent of Los Angeles County voters agreed in November to a half-cent sales tax increase to raise around $120 billion over four decades for public transit and roads. Measure M was the largest transportation ballot measure ever. Garcetti said that showed that state and local authorities are taking the issue of infrastructure into their own hands but could benefit from federal incentives like matching funds.

Senators on both sides of the aisle agreed with him. Sen. Jim Inhofe (R-Okla.), the chairman of the subcommittee, noted that federal funds were necessary for a major infrastructure push, though federal funds alone would be insufficient.

“All options should be on the table, and we should incentivize our nonfederal partners to use them,” he said.

Sen. Tom Carper (D-Del.) said he supports public agencies partnering with private companies to build projects but also said that “private financing is not a replacement for public funding.”

Geoff Yarema, an infrastructure expert at the law firm Nossaman LLP who has long advised governments on transportation funding, recommended a three-pronged approach to using federal funds as an incentive for further spending: Federal measures should encourage state and local fundraising efforts, the long-term efficiency of the project and the incorporation of new technology in construction.

“Applying these principles to the allocation of new federal funds would move the government away from selecting what it deems to be the most worthy of projects and move it towards spurring its nonfederal partners to achieving better long-term outcomes and permanent programwide enhancements,” said Yarema.

One of President Trump’s only initiatives on infrastructure so far has been an executive order requiring agencies to fast-track a selected group of major projects stalled by environmental permitting.

Officials and lawmakers also described public-private partnerships in their districts.

Garcetti said he was a “convert” to the idea. Virginia Transportation Secretary Aubrey Layne said he was a big supporter, particularly after using them to build roads, but that they needed to be used with care. Though the financing tool remains limited to a handful of cases in the country so far, the administration has talked about using them more broadly.

Layne also said he saw a politician promising to complete a certain project by the end of a term as a “red flag.” He said infrastructure spending should remain as flexible as possible to allow planners to “walk away from a bad deal.”

“We have neglected maintenance. Everybody likes to cut ribbons,” said Sen. Ben Cardin (D-Md.).

Chao will answer questions from the full Environment and Public Works Committee today (E&E Daily, May 15).