Lots to keep track of in the pending U.S. infrastructure debate, says former DOT head Burnley

As reported in today’s news section, while there appears to be a decent vision for the nation’s long-term infrastructure planning, as outlined in President Trump’s State of the Union address last night, coming with it are some challenges, too, especially on the financing side.

For a quick review of the infrastructure-themed remarks Trump made last night, here they are:

“I am calling on the Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment we need. Every Federal dollar should be leveraged by partnering with State and local governments and, where appropriate, tapping into private sector investment—to permanently fix the infrastructure deficit. Any bill must also streamline the permitting and approval process—getting it down to no more than two years, and perhaps even one.”

Even though it is only three sentences, there is a lot going on within them to be sure. That was highlighted in a conversation I had earlier today with James Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan.

When I asked Burnley about the infrastructure comments Trump made and how feasible it would be to put his plan into action, he said there are two parts to consider when thinking about it.

“The part, which not only is feasible and that President Trump has already executed upon, is streamlining the environmental review and permitting processes,” he said. “An executive order was put out last summer that directed federal agencies to do all they could within existing laws, with a target of trying to get review processes done, from start to finish, in two years.  I don’t know if additional proposed statutory changes will be locked in. It would not surprise me if they do so, but they have not waited is my point.”

Burnley added that late last summer the White House moved to the extent they could of the existing law to direct agencies to do such streamlining, which he said was significant in itself, and does not receive the attention that it should.

“Going forward, if they are successful…in shortening review times, that could be transformative for many projects,” he noted.

Not to be overlooked, though, when it comes to longstanding infrastructure concerns, of course, is money.  And that is something that is interesting, noted Burnley, in terms of where things currently stand with the ongoing infrastructure debate, as both political parties agree that the U.S. should spend more on infrastructure.

“The way in which we are going about that is contentious,” he explained. “I hope we don’t end up with a sharp partisan divide and that Congress can come to a consensus, but we may be able to get an infrastructure bill that broadly meets the president’s goals, even if the democrats refuse to work on bipartisan legislation. I say that because of how things went with tax reform, but I think it is at least likely that some democrats will support ultimately what Congress decides to do…and much more likely that they will cooperate in the process.”

With Trump expressing last night that he wants both sides of the Congressional aisle working together, should things break down, Burnley said that does not mean it is impossible to pass an infrastructure bill; instead it makes things harder.

As for infrastructure funding, there are various ideas and initiatives afloat, including the U.S. Chamber of Commerce calling for a 5-cent per year increase in the federal gasoline tax, which has remained at current levels since 1993, over the next five years.

Increasing this tax, especially in an election year, makes its prospects a matter of timing, said Burnley.

“It is exceedingly unlikely you would see an increase in an election year, but in 2019, depending on the outcome of the 2018 mid-term elections, the composition of Congress could make a difference,” he said. “I don’t know how it will make a difference, but it will be relevant. But in 2019, as we have to start thinking about reauthorizing surface transportation programs, the fact that the Highway Trust Fund has collapsed as a practical matter and is not anywhere close to generating enough revenue through fuel and other taxes by law to cover current spending. We have had more than $140 billion in funds transferred from general treasury accounts into the Highway Trust Fund in the last decade just to prop it up so never mind increasing spending on surface transportation. That is something that needs to be dealt with. I don’t think Congress is likely to simply kick that can down the road much further, but that is a 2019-2020 debate.”

As for this year, though, he said the major debate is going to be about the infrastructure package broadly along the lines of what Trump said in his speech.

The former DOT Secretary said this probably means that there will be no new revenues on the federal level, followed by a debate in 2019-2020 that has to center around the future of the Highway Trust Fund.

“That is a debate, I think, where it will be more likely to be a discussion of increasing fuel taxes or generating revenues through a non-tax structure,” he said. “The vehicle miles tax (VMT) is getting traction in a few states, and I think it will be at least part of the debate.

While there is a renewed infrastructure debate on the horizon, other efforts focused on infrastructure funding like TIGER( the Transportation Investment Generating Economic Recover discretionary grant program) and TIFIA  (the Transportation Infrastructure Finance and Innovation Act program) remain intact.

In the case of TIFIA, which acts as credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects of national and regional significance, it is likely to be expanded, according to Burnley, perhaps even dramatically expanded, as well as other loan guaranteed programs.

And private activity bonds, which at one point were in jeopardy in the tax bill, survived. There is likely to be a fair amount of focus on expanding these bonds in the infrastructure debate, said Burnley.

“In terms of additional things being made available, things of that sort are where the debate will center on, and not on increasing fuel taxes this year,” he added.

Looking ahead, Burnley said the current expectation for infrastructure legislation is that the White House will release a conceptual framework, not legislative language, within the next week or two, at which point it will be up to Congress to translate and modify that into legislative language.

“What I am expecting is that as soon as the White House does that, you will see hearings scheduled in the relevant committees, and there will be quite a few hearings…in February and March, and April,” he stated. “And at some point in mid-to-late spring you will probably see the various committees and jurisdictions starting to actually draft legislation. Remember, this is not limited to transportation infrastructure. They are also talking about broadband in rural areas, and water projects. I hope and expect the White House package will continue to emphasize the need for reform of the air traffic control system. There are a lot of facets to this discussion; it will not be narrowly focused on just highways.”

As Burnley makes clear, there are many things to keep an eye on and monitor in the coming infrastructure debate. What does and does not come to fruition remains to be seen, but one thing that is certain is that infrastructure is not an issue that falls along party lines. It impacts everyone to some degree, and that is what we need to remember as this debate kicks off in earnest, as well as hope for progress that is long overdue.