President Trump’s infrastructure plan is a disappointment to states and localities looking for significant help from the federal government to address the country’s crumbling infrastructure. As my colleague Jacob Leibenluft explained, the plan is a mirage that would cut federal support for infrastructure over the long term and shift costs to states and localities. It also relies heavily on private investors, who likely wouldn’t support needed projects that won’t generate investment returns, like school construction. This plan would fail to make necessary investments — and even puts the nation’s future economic growth at risk.
States, localities, the private sector, and the federal government are partners in building and maintaining the nation’s roads, public transit, airports, water treatment facilities, and other infrastructure. The federal government plays a critical role since it can support projects with multi-state and national benefits and ensure that people who live in areas with limited local resources — like the children of Flint, Michigan, for example — are treated equitably. The federal government also contributes reliable funding for long-term investments through good and bad economic times.
The Trump plan’s design and funding make it clear that he mainly wants to reduce the federal role in supporting infrastructure and has little regard for the goals cited above.
For example, half of the plan’s proposed $200 billion in federal funds would go to grants to give states and localities incentives to invest in infrastructure. The federal government would provide up to just 20 percent of the projects’ cost. The criteria upon which project proposals would be evaluated weigh — far more heavily than anything else — the ability to attract non-federal funding, while the project’s ability to improve the nation’s economy, quality of life, or equity barely matters.
Administration officials say they want to reduce the federal role in funding infrastructure because state and local funding is more sustainable and stable than federal funding over the long term. In fact, the opposite is true. It’s a challenging time for states to raise money for a variety of reasons. Half the states already have raised gas taxes — the main source of state revenue for highway improvements — in the last five years. And many states are struggling just to keep up with existing needs; at least 30 states closed budget shortfalls over the last year, the most since the Great Recession. Plus, a new cap on the federal deduction for state and local taxes makes it harder for states to raise revenue, which is a challenge even in good economic times.
Relying on states and localities to fund more of the nation’s infrastructure would be especially harmful during recessions, since states must balance their budgets and find it harder to come up with funds when revenues fall. The federal government, on the other hand, can sustain funding during those downturns.
States and localities play a key role in improving and maintaining the nation’s infrastructure, but broadly shared prosperity requires that the federal government contribute more — not less — to this partnership.