Thursday, July 19, 2018

Trump’s Budget for Infrastructure ‘A Good Start’

By on June 3, 2017

The Associated General Contractors of Puerto Rico (AGCP-P.R.) said President Trump’s budget for infrastructure “is a good start” for dealing with the crumbling infrastructure but noted that the island still needs to do more to ensure it receives an adequate share of the funds in negotiations with Congress.

President Donald Trump participates in a wreath laying ceremony at Arlington National Cemetery, Monday, May 29, 2017, in Arlington, Va. (Evan Vucci/AP)

“As long as it can help spur more private investment, Puerto Rico will benefit,” noted Francisco Díaz Massó, president of AGC-P.R. “We are behind anything that can help promote the economy. Construction is the motor of the economy and, if that area is not incentivized, it will be difficult to jumpstart it.”

The president is proposing a $1 trillion investment that will be met with a combination of new federal funding, incentivized nonfederal funding and by initiatives to expedite projects, similar to the permitting law enacted in Puerto Rico, according to the White House blueprint.

Focused on incentivizing nonfederal investment

While the federal budget proposes additional funding for infrastructure, the funds will be focused on incentivizing additional nonfederal investments. The budget includes $200 billion to be spent over the coming decade on outlays related to the infrastructure initiative. Trump hopes the impact of this investment will be amplified with other administrative and regulatory actions that his administration plans to pursue, such as reviewing administrative policies that impact infrastructure, and eliminating and revising policies that no longer fulfill a useful purpose.

Furthermore, as part of the regulatory reform agenda, Trump says he will eliminate or significantly revise regulations that create unnecessary barriers to infrastructure investment by all levels of government and the private sector.

“Trump wants to bring private investments to projects, which will help in the development of priority projects,” Díaz Massó said.

He noted the initiative will be good for plans by the Financial Oversight & Management Board to invest $4.1 billion in critical projects for Puerto Rico, which the board hopes to make a reality through public-private partnerships. Most of the critical projects are in the areas of energy, water, waste management and highways.

However, Díaz Massó said it is now up to the national chapter of the AGC to help negotiate to ensure construction is spurred, as he noted the budget will undergo numerous changes once it passes through Congress.

The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, said that while the budget is a good start, it still needs to achieve the right balance between private and public funds to repair the ailing infrastructure.

“While it is tempting to identify specific elements of the president’s proposed budget that we like and other elements that cause us concern, the fact is members of Congress will likely continue to exercise their constitutional responsibility to establish the federal budget. Therefore, it is better to see this document for what it is—a policy statement designed to provoke significant and productive debate about the best ways to address the nation’s aging infrastructure while simultaneously suggesting appropriate spending priorities,” Sandherr said.

Identifies best ways o pay for improvements

As a policy document, he said the budget provides an important and much-needed first step in identifying the best ways to pay for needed improvements and expansions to the nation’s aging infrastructure. “The president rightly appreciates the need to significantly increase investment levels above current amounts. Moving forward, we plan to work with Congress and the administration to identify the right balance of private and public funds, and establish long-term, sustainable funding sources that will allow us to repair and improve infrastructure for decades to come,” he said.

“We need to ensure federal officials prioritize spending in ways that continue to promote robust economic growth and begins to produce well-educated, well-trained workers for every sector of our economy,” he added.

While the budget allocates funding for infrastructure, it also proposes to repeal numerous programs that help fund infrastructure projects.

The budget eliminates the water and wastewater loan and grant program, saving $498 million, contending rural communities can be served by private-sector financing or other federal investments in rural water infrastructure, such as the Environmental Protection Agency’s state revolving funds.

It focuses funding for the offices of Energy Efficiency & Renewable Energy; Nuclear Energy and Electricity Delivery & Energy Reliability, as well as the Fossil Energy Research & Development Program, on limited, early-stage applied-energy R&D activities where the federal role is stronger. In addition, the budget eliminates the Weatherization Assistance and State Energy programs to reduce federal intervention in state-level energy policy and implementation. Collectively, these changes achieve a savings of about $2 billion.

The budget limits funding for the Federal Transit Administration’s Capital Investment Program (New Starts) to projects with existing full-funding grant agreements only. Future investments in new transit projects would be funded by the localities that use and benefit from these localized projects.

It also eliminates funding for the Transportation Investment Generating Economic Recovery’s (Tiger) discretionary grant program, which awards grants to projects that are generally eligible for funding under existing surface transportation formula programs, saving $499 million.

Nonetheless, the budget provides funding for critical drinking and wastewater infrastructure. The budget includes $2.3 billion for State Revolving Funds, a $4 million increase over the current level. The budget also provides $20 million for the Water Infrastructure Finance & Innovation Act program.

This credit subsidy could potentially support $1 billion in direct federal loans. It also funds the Hazardous Substance Superfund Account at $762 million, $330 million below the current level. The agency would prioritize the use of existing settlement funds to clean up hazardous-waste sites and look for ways to remove some of the barriers that have delayed the program’s ability to return sites to the community, the document says.

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