Bipartisan Report Underscores Hard Truths About Infrastructure Funding

WASHINGTON — Recommendations for upgrading the nation's public works that a bipartisan group of House lawmakers released this week underscore the difficult budget math Congress will face coming up with the money for any eventual White House infrastructure plan.

The Problem Solvers Caucus, a group of 48 lawmakers, outlined their recommendations in a report issued Wednesday. Reps. John Katko, a New York Republican, and Elizabeth Esty, a Connecticut Democrat, led a caucus working group that authored the report.

In the backdrop, is a yet-to-be-released proposal from the Trump administration for major new investment in the nation's roads, bridges, waterworks and other infrastructure.

Details that have surfaced so far suggest that the White House is aiming for $200 billion of direct federal investment, with the hope of attracting another $800 billion from state, local and private sources.

But, as Esty noted during an event announcing the release of the report, "the White House proposal is principally talking about not the baseline funding, but plussing up above that."

"Our attention has been on that baseline has not really been adequately funded, or appropriately dealt with. And that needs to be addressed," she added. "Otherwise you're talking bells and whistles when you actually haven't attended to the baseline."

That baseline includes accounts like the Highway Trust Fund, a primary pot of money for roads and mass transit that has historically received the bulk of its funding from taxes on gasoline and diesel fuel.

But, as the Problem Solvers report points out, in 2008 spending from the account exceeded declining revenues for the first time since its inception in 1956. Congress has since moved to transfer about $140 billion from the government's general fund, and from other sources, to make up for the shortfalls.

Reasons for the lagging fuel tax revenues that are highlighted in the report include: the fact that the gas tax remains 18.4 cents per-gallon, equivalent to its 1993 level; the tax isn't indexed to account for factors like inflation, fuel economy standards or construction costs; and vehicle fuel efficiency has improved over the years.

The Problem Solvers make a variety of suggestions for how to address declining fuel tax revenues, such as indexing the tax with the Consumer Price Index, or with a construction cost index.

Another option: "An immediate or phased in modernization of the federal gasoline user fee that fully and sustainably funds the Highway Trust Fund and provides accountability to taxpayers by stopping future general fund transfers."

The squishy language here is difficult to overlook. Calling outright for a gas tax hike would no doubt be a tough political decision for many lawmakers—particularly in an election year.

"People have already tried to say that we're advocating for a gas tax increase," Katko said Wednesday.

“No one in this room is saying, advocating—or it is certainly not the position of the Problem Solvers Caucus to say that this is a gas tax increase,” he added, referring to proposals in the report. “It’s not.”

Two other ideas for increasing Highway Trust Fund revenues the lawmakers floated include registration fees for electric and hybrid vehicles, and incentivizing additional pilot programs in states to test mileage-based charges.

Infrastructure funding questions extend beyond the Highway Trust Fund.

For instance, the Problem Solvers noted in their report that Congress has been diverting revenue from fees assessed on the value of imported commercial cargo, from its intended use on harbor maintenance and dredging.

One of the recommendations in the report is to simply dedicate 100 percent of these revenues to the Harbor Maintenance Trust Fund, and the activities it's meant to support. 

"Allowing the expenditure of Harbor Maintenance Tax revenues would provide more than $18 billion over the next decade, which is a 29 percent increase in investment," the report says.

The caucus members also recommend increasing funding for the Water Infrastructure Finance and Innovation Act program to its currently authorized level of $45 million.

Commonly referred to as WIFIA, the program provides long-term, low-cost, supplemental loans for water infrastructure projects.

Additionally, the Problem Solvers call for tweaking WIFIA, and a similar financing program under the Transportation Infrastructure Finance and Innovation Act, with the aim of expanding eligibility standards and attracting more small and rural jurisdictions.

Another water- and sewer-related proposal is beefing up funding for the Clean Water and Drinking Water state revolving funds, which are two other popular infrastructure financing programs.

Mark Poloncarz is the county executive in Erie County, New York. He described by phone Thursday how his jurisdiction will likely have to replace a wastewater treatment plant in the near future. Erie County encompasses Buffalo and has about 920,000 residents.

"That's at least a $100 million project," he said of the wastewater facility.

"We borrow, normally, no more than $50 million for all of the county's various projects. And, in one project alone, it could be double that in one year," he added. "We're not going to be able to do that on our own. We're going to need federal dollars."

The Trump administration told a group of senators earlier this week to expect more details about the president's infrastructure plan around the time of his Jan. 30 State of the Union address.

Katko said that throughout the process of developing the caucus report, lawmakers talked with White House officials multiple times to discuss infrastructure, with one meeting taking place earlier this week.

"They are excited about this report," he added.

The congressman said that one of the group's goals was to get the report out ahead of the release of the administration's infrastructure proposal. "We want to be able to say 'you've got some votes already, let's get this thing going,'" Katko added.

Noteworthy though, is that as the White House labors over its proposal, some of the key areas where there's bipartisan agreement on infrastructure, which come into focus in the Problem Solvers plan, center on programs that already exist. Less clear is where lawmakers and the Trump administration will find more money to pay for them.