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Capitol Watch: What Do Transportation Stakeholders Want Under
the Tree?



By Katie Cross, Associate, Blakey & Agnew

Encouraged by promises made during the 2016 election cycle, transportation stakeholders began 2017 with hope that they would see more attention paid to the needs of the U.S. transportation system. Sadly, many of those hopes did not come to fruition as Congress instead focused on other topics like health care and tax reform. With 2017 coming to a close and both the Administration and Congress continuing to indicate that they plan to address infrastructure, transportation stakeholders have remained hopeful and vocal about their wishes for the U.S. transportation system. This holiday season, they would like nothing more than to find that Congress and the Administration have a plan to provide robust and dependable infrastructure funding, all wrapped up in a big bow.

Both the House and the Senate released tax reform proposals in November. The House bill passed on November 16 while the Senate was still working to pass its version as of November 30. The two bills are not identical but many transportation industry stakeholders are united in their criticism of both for not including a transportation funding solution. The American Association of State Highway and Transportation Officials (AASHTO) wrote letters to both chambers of Congress requesting they "address the nation's transportation investment crisis" in their tax reform bills and criticizing the existing proposals for potentially making it more difficult to fund a future infrastructure package.

Despite statements from Gary Cohn, chief economic advisor to President Trump, in support of raising the gas tax and a letter signed by 250 U.S. House Representatives calling for a long-term funding solution for the Highway Trust Fund (HTF), neither bill includes a plan to address the HTF's insolvency. Stakeholders criticized Congress, noting that not including a fix for the HTF is missing an opportunity to address a crisis that is only growing. The HTF is populated primarily by funds raised through a motor fuels tax which has not been raised since 1993. It is currently unable to meet transportation infrastructure needs due to the use of increasingly fuel efficient vehicles and reduced purchasing power.

The House's bill was also panned for eliminating the tax exempt status of private activity bonds (PABs). PABs, which are financing instruments that attract private sector investment for projects that have a public benefit, have only been available to transportation projects for 12 years. However, 20 percent of the PAB market is already comprised of transportation projects. Industry stakeholders objected to the elimination, noting that it would reduce the private sector's incentive to invest in public infrastructure projects. This runs counter to

the Administration's stated goal of "unleashing private sector capital and expertise to rebuild," which President Trump calls for in the White House's "Plan to Rebuild America's Infrastructure."

Tax reform isn't the only potential path to robust funding for infrastructure. At the start of his term, President Trump and Congress pledged that they would focus on three topics in 2017: health care, tax reform, and infrastructure, in that order. With this timeline in mind, transportation stakeholders have written to Congress and the Administration requesting any infrastructure proposal prioritize transportation infrastructure and include robust funding levels to invest in the increasingly dilapidated system. Despite many attempts, the planned timeline has not yet panned out. However, in mid-November The Hill reported that the Trump administration drafted a 70-page document of principals for an infrastructure proposal and began working with Congress to create a funding package.

No such document has been made public and recent comments by the President have posed the possibility that infrastructure will again be pushed back. POLITICO reported that on November 29 in a speech on tax reform in Missouri, President Trump said: "We're not talking about [health care] until after taxes, and then we take care of health care. Then we will have done tax cuts …health care …Does anybody want welfare reform? And infrastructure. But welfare reform."

Pushing back the timeline again would most certainly be an unwelcome development for the industry. While it's well known that President Trump is a big fan of coal, the transportation industry is hoping it sees more than just a lump of it in their stocking this year. Instead, stakeholders are holding out hope that the economic benefits of infrastructure investment will put transportation squarely on the nice list and that they'll see the gift of an infrastructure package under the tree.

Blakey & Agnew, LLC is a public affairs and
communications consulting firm based in
Washington, DC.