This post is excerpted from the
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Tomorrow, President Trump will give his second State of the Union address, which will likely feature a lot of boasting about the economy and the stock market— and, provided Trump doesn’t fall over while reading from a teleprompter for forty-five minutes, will likely lead lots of credulous pundits to declare that Trump is a real leader now. But beyond the optics, there are two key things to watch. The first is his approach to Dreamers: Does he abandon his hard line for a national audience, or double down on it? The second, and the one I want to talk about today,
WHAT IT MEANS:
- The background: For years now, we’ve known the U.S. has an infrastructure problem. Our roads, bridges, and airports are often in disrepair. President Obama spent much of his time in office harping on this subject, but, after the stimulus, he saw little luck [The Atlantic]. Finally, at the end of 2015, Congress passed a $305 billion infrastructure bill [The Atlantic], but during the 2016 campaign, both Trump and Hillary Clinton promised to go bigger, with Trump promising a ten-year, $1 trillion effort.
- On Tuesday, Trump is expected to pitch his long-awaited infrastructure plan, though it won’t look anything like a trillion-dollar New Deal program. Instead, according to Politico, the federal government will chip in $200 million, which even Trump has conceded isn’t enough money. Instead, the White House hopes that “it would lure a far larger pool of state, local and private money off the sidelines, steering as much as $1.8 trillion to needs as diverse as highways, rural broadband service, drinking water systems and veterans hospitals.”
- For local and state governments, there’s a catch: “Democratic lawmakers and mayors fear the plan would set up a vicious, zero-sum scramble for a relatively meager amount of federal cash—while forcing cities and states to scrounge up more of their own money, bringing a surge of privately financed toll roads, and shredding regulations in the name of building projects faster. … The administration isn't expected to issue full details for two to four weeks. But already, the details that have emerged are unnerving some key infrastructure supporters in Congress, who say it's unrealistic to propose such a mammoth program without money to pay for it. They also note that Trump's budget proposals have called for cutting existing infrastructure programs at the Department of Transportation and the Army Corps of Engineers.”
- “For the president, a victory on infrastructure would fulfill one of the striking themes of his campaign—that the developer who built skyscrapers such as Trump Tower is ‘the only one to fix the infrastructure of our country.’ His stump speeches frequently bemoaned the ‘Third World’ quality of American airports, the lack of any U.S. equivalent to Chinese bullet trains and the trillions of dollars spent reconstructing countries like Iraq.”
This paragraph is key—especially, at first blush, for the Durham-Orange Light Rail project: “A purported plan draft leaked to POLITICO last week increased complaints in states like New Jersey and New York, where officials were already dismayed by the Trump administration’s refusal to pay half the costs of a $13 billion rail project under the Hudson River. The draft—whose accuracy the White House would not confirm—indicated that federal grants under one major part of the plan could pay no more than 20 percent of a project’s costs.”
***Update and correction: As a reader pointed out, the feds weren’t asked to cover half of $3.3 billion. Rather, the Department of Transportation was asked to cover half of about $2.5 billion, which is the project’s projected costs without accumulated interest, or about $1.25 billion. So, were the Trump administration to reduce the match from 50 percent to 20 percent, it would total about $500 million, meaning a shortfall of more than $700 million, rather than $1 billion.
- “For most transit agencies, accustomed to a 50 percent federal share for most capital investment grants, reducing that to 20 percent is ‘a nonstarter,’ transit consultant Jeff Boothe said. He said it could disrupt work in communities where voters approved ballot measures to raise money for projects.”
- Depending on when it takes effect, such a change could be a death knell for the region’s light rail aspirations. Last year, the FTA green-lit the project for the next phase of a grant application that would cover half of the $3.3 billion project, or about $1.6 billion. If that $1.6 billion grant dips to $660 million—or 20 percent—that would leave local and state officials on the hook for an extra billion dollars. Given the state’s stinginess, most if not all of that would fall to local governments in Durham and Orange counties.***
- That’s just one example. All over the country, cities have set out similar plans, all counting on a 50 percent federal match. Those projects would almost certainly disintegrate if the match slipped to 20 percent—or, at least, the funding formula would have to change.
- From Politico: “Regardless of how cities and states decide to raise money, administration officials have said Trump’s blueprint would heavily favor projects that put more of their own dollars on the table. And that has some infrastructure supporters worried.”