Takeaway #1: Going local. For most infrastructure projects in which it participates, the federal government would no longer provide the lion’s share of funding for projects, but only 20%. States and local governments will have to find the rest.
Our take: Regardless of debate on the proper role for the federal government, the country is in the midst of a soaring budget deficit with no political will for new taxes. Limited federal funds may be the new reality.
Takeaway #2: Unlocking private finance. To attract more private money, the plan would expand Private Activity Bonds, TIFIA and WIFIA; allow commercial development of rest areas and other facilities on interstates; allow tolls on interstates with revenue recycled to infrastructure; create a capital fund for federal lands to pay for deferred maintenance; and sell government assets.
Our take: There’s a lot of private capital eager to invest in infrastructure, and there’s room for public-private partnerships that create revenue even in projects that aren’t traditional money makers (such as streetlights). Regardless, many projects don’t offer the revenue stream that the private sector needs.
Takeaway #3: Cutting regulations. Among the many measures to ease regulations are: creating a two-year environmental review with a single lead agency and lifting federal oversight and compliance requirements where federal funds play a minimal role.
Our take: Regulations can be burdensome. The US should be able to get projects approved as quickly as other advanced economies — such as Australia — do. The plan’s measures could help if local and state governments can update their procedures and find the right people with the right skills to lead the initiatives.
Takeaway #4: Developing the workforce. The plan has several provisions to increase the supply of skilled workers for infrastructure — including reallocating existing funds to encourage more technical education and apprenticeships. It would also require projects with federal funds to accept out-of-state skilled trade licenses.
Our take: If infrastructure investment really does pick up, we will likely see a shortage of skilled labor — so much so that the plan’s measures may not go far enough.
There’s a still a lot we need to know before we can judge if this plan will fulfill its potential. Here are the big questions:
If passed, the plan will likely impact all stakeholders.
Overall, the plan is promising—but for now, no more than that. We’ll pay close attention as the plan works its way through Congress and as the different stakeholders react.