House Democrats Unveil 5-Year, $760B Infrastructure Proposal
House Democratic leaders unveiled the outline of their long-awaited infrastructure proposal at a press conference this morning. The 18-page outline calls for $760 billion in spending over the five-year FY 2021-2025 period, spread through a variety of bills from several committees, as follows:
|5-Yr Billion $|
|Intercity Pass. Rail||55|
|Harbor Maint. TF||20|
|Clean Water Act||51|
|Safe Drinking Water Act||25|
|Next Gen. 911||12|
For most modes (including surface transportation), this spending is not in addition to current spending, it includes the “baseline” spending levels enacted in 2020 and extrapolated forward.
Beyond those totals, the document provides few specifics on the transportation side, beyond a lot of reassurance that spending in the various types of transportation projects would provide climate change resiliency and would work towards fewer carbon emissions, greater electric vehicle reliance, etc. (even working towards alternative fuels for aviation).
The press conference did not provide any clarity as to whether this infrastructure package would move through the House as one big bill, or whether it would move in several different packages. (Seriously – read the transcript of the Q&A to see just how little clarity there was.) Speaker Pelosi did say that none of it would move until the legislation was ready, which is not imminent.
Reaction to the plan from transportation stakeholders was generally positive, with the U.S. Chamber of Commerce, the AFL-CIO, the road builders, and APTA issuing positive statements (though many called it just a step forward and urging bipartisan cooperation. Transportation for America was a bit more neutral, wanting to see the details and asking the hundred-billion-dollar question, “whether the committee believes a 80/20 split between highways and transit is still warranted considering that nearly a third of the program is paid for with general funds instead of user fees.”
Rep. Sam Graves (R-MO), the ranking Republican on the Transportation and Infrastructure Committee, responded ““I may not agree with all of the principles in the majority’s outline, but as the Republican leader of this Committee, I expect to play a constructive role in the development of infrastructure bills before us this year, including expected surface transportation and water resources legislation. Any serious effort toward enacting infrastructure legislation must incorporate Republican principles as well.”
Highway bill. Regarding the incorporation of baseline spending levels in the above totals – for example, the $434 billion total for the traditional surface transportation bill (highways-transit-safety) agencies is $106 billion, or 32 percent, more than the $329 billion CBO baseline total for those agencies over five years.
Pivotally, the document released this morning is silent as to how much funding for surface transportation infrastructure will come from the Highway Trust Fund and how much will come from general revenues. Earlier this week, the Congressional Budget Office released its latest budget baseline, part of which predicts that the Trust Fund will need $72 billion in additional revenues by the end of fiscal year 2025 if spending from the Trust Fund continues at the fiscal 2020 enacted levels plus annual inflation increases (which total $301 billion in new obligation authority over that period).
Inclusive of both Trust Fund and general fund dollars, the following table shows the outline of the Democratic surface transportation reauthorization proposal, compared to the new CBO baseline. (“Safety” is the combination of NHTSA and FMCSA.) Any outlays from Trust Fund spending above the levels shown below would increase the size of the 5-year Trust Fund revenue gap above the baseline $72 billion. (Table updated at 3:30 pm 1/29/2020 once I finally got official CBO numbers on the Trust Fund ob limits.)
Traditional Surface Transportation Bill Agencies
|Billions of dollars of new obligation authority.|
|FHWA – Trust Fund||250.5||???|
|FHWA – General Fund||11.5||???|
|FTA – Trust Fund||54.0||???|
|FTA – General Fund||14.7||???|
|Safety – Trust Fund||7.8||???|
|Safety – General Fund||1.1||???|
Mass transit would get 24.2 percent of the funding in this part of the package, with highways, highway safety, and motor carrier safety combining for the other 75.8 percent.
The last two pages of the outline were provided by the Ways and Means Committee, which simply stated that they wanted to “Address the long-term solvency of the Highway Trust Fund through user-based mechanisms.” At the press conference, Ways and Means chairman Richard Neal (D-MA) said that Democrats would “not volunteer a revenue stream until the Administration reaches an agreement with us” but also said he has had recent discussions with Treasury Secretary Mnuchin about paying for infrastructure.
The outline also summarizes a variety of bonds that could be used for infrastructure. At the press conference, Transportation and Infrastructure chairman Peter DeFazio (D-OR) said he hoped to pay for surface transportation infrastructure with some combination of user charges and bond issuance, noting that Treasury can now borrow at around 2 percent and newly built assets could last as long as a century. DeFazio once again called for a type of long-term capital budget for infrastructure.
In a sign that we still aren’t ready for implementation of a VMT fee, the outline says that the highway funding: “Transforms revenue collection and distribution by authorizing a multi-year national pilot program to test revenue collection to ensure the future viability and equity of surface transportation user fees, including a vehicle-miles travelled fee.”
Passenger rail. The proposed spending increases above baseline are sharpest in passenger rail. The five-year baseline total for extrapolated current spending levels is $14.9 billion, and the Democratic outline proposes $55 billion, a 269 percent increase. No details are available other than that the money will “support Amtrak’s complete passenger rail network, including the Northeast Corridor, State-Supported routes and Long-Distance routes.” The FAST Act of 2015 was the first surface transportation reauthorization bill to include a full reauthorization of passenger rail programs as well, and the rail reauthorization will probably be folded into the surface bill again this time.
Airports and airways. The five-year baseline for federal grants to airports is $20.0 billion. And the five-year baseline for Federal Aviation Administration capital for its internal activities (including air traffic control) is $16.4 billion. The outline proposes $30 billion in airport and airway investment, which appears to be in addition to those baselines, not incorporating it. However, the outline also mentions that airports currently raise $3.5 billion per year on their own by levying passenger facility charges (PFCs). The federal cap on PFC’s is $4.50 per enplanement and has not been increased since 2000. The outline says it will increase the cap on PFCs but does not say to what level the cap will be increased. (The cap will also be indexed for inflation, as recommended in the recent RAND report.) So we’re not sure if the $30 billion includes the proceeds of increased airport PFCs, which would not flow through the U.S. Treasury.
The airline trade association was quick to denounce the PFC proposal, while the head of the airport executives said the proposal was “exactly what’s needed” to spur airport investment.
In terms of non-airport (airway) investment, the outline says it “Creates [a] new Airport and Airway Investment Program focused on investing in modernization projects that enhance airport and airspace capacity, reduce an airport’s carbon footprint, or achieve an otherwise significant national or regional objective. The program would also provide additional investment to accelerate completion of the FAA’s airspace modernization program (NextGen) to ensure the safety, efficiency, and reliability of air travel as air traffic increases over the next several years, and thereby reduce aircraft fuel burn, pollution, and noise. The program would be funded through the Airport and Airway Trust Fund.” Which should remind people to look at yesterday’s article about just how much extra spending could be supported by projected AATF revenues, without any additional tax increases.
Water navigation. The outline proposes $20 billion in funding for port dredging out of the Harbor Maintenance Trust Fund. The five-year baseline for such appropriations is $8.9 billion, but the HMTF will enter FY 2021 with an unobligated balance of $9.3 billion that has been built up over the last 30 years. Spending down that balance, as DeFazio’s bill that passed the House in October 2019 would call for, would raise the spending total to $18.2 billion. But the new baseline projections only anticipate $8.8 billion in HMTF tax receipts over 2021-2025, so there doesn’t appear to be a way to get $20 billion out of the Trust Fund by 2025 without a tax increase.
The outline also calls for $10 billion in water resources investments, and this money appears to be on top of baseline spending, not inclusive of it. This is definitely the case with inland waterways, which would receive $3 billion in funding over five years. The user-supported Inland Waterways Trust Fund is a comparative pittance – the new CBO baseline for the IWTF shows that an average of $139 million per year in baseline line spending would bankrupt the Trust Fund by 2023 because its receipts are only anticipated to average $114 million per year over that period and they are only starting 2021 with a $56 million balance.
We have to assume that almost all of the $3 billion is above and beyond Trust Fund spending. No word if the package will increase IWTF taxes or institute lock access fees (which many Presidents have proposed), but remember that the IWTF just got a major user tax increase five years ago – see my epic December 2014 article How To Get A Transportation User Tax Increase Through the House of Representatives.
The other $7 billion is for “critical construction funds to carry out congressionally-authorized and locally-supported water resources development projects.”