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States see Trump's infrastructure promise slipping away

Last December, a delegation from the U.S. Conference of Mayors attended a meeting on the 29th floor ...

Posted: Dec 19, 2017 10:54 PM
Updated: Dec 19, 2017 10:54 PM

Last December, a delegation from the U.S. Conference of Mayors attended a meeting on the 29th floor of Trump Tower, and left encouraged: President-elect Donald Trump had reiterated a promise from the campaign trail that his new administration would use federal dollars to leverage $1 trillion in funding for everything from the nation's roads and bridges, to its transit systems and electrical grid.

In ensuing months, Vice President Mike Pence spoke at the mayors' annual conference, reiterating the White House's commitment to drumming up a massive investment. The administration tapped two well-connected New York developers to run an Infrastructure Council, but it was later disbanded. White House summits and Trump's "Infrastructure Week" came and went, but no concerted effort began.

"We have said to him, 'if you want to do economic development, rather than screwing around with this tax bill that's so unpopular, let's do infrastructure,'" said Tom Cochran, the Conference of Mayors' executive director. "When it's all over, there's just a lot of discussion. There's no plan."

Lately, Trump is again promising action on infrastructure soon, heralding an imminent proposal on Monday after an Amtrak train derailed in Washington state.

"The train accident that just occurred in DuPont, WA shows more than ever why our soon to be submitted infrastructure plan must be approved quickly," Trump wrote in a tweet. "Seven trillion dollars spent in the Middle East while our roads, bridges, tunnels, railways (and more) crumble! Not for long!" (The accident occurred during the inaugural run of a train that had just received millions of dollars in upgrades.)

But Cochran isn't the only one exasperated by a year of inaction on a campaign promise that enjoys broad bipartisan support, and which economists think would improve the economy by providing opportunities to lower skilled workers who may have given up looking for jobs.

State and county governments, gas and water utilities, regional transportation authorities, labor unions and community groups were all looking forward to completing deferred maintenance projects that have led the American Society of Civil Engineers to give the nation's infrastructure system a near-failing grade for almost three decades. The trade group estimates $4.59 trillion would be needed over 10 years to clear the backlog.

Related: What's in the GOP's final tax plan

"States and localities have been able to increase revenue for transportation," said Jim Tymon, chief operating officer of the American Association of State Highway and Transportation Officials. "I think the missing piece here is that there hasn't been a change at the federal level in the last 25 years."

The federal government funds infrastructure projects primarily through grants to states, which peaked as a percentage of the gross domestic product during the construction of the national highway system and sewers under the Clean Water Act in the 1970s. Spending averaged 0.5% of GDP between the late 1950s and early 1980s, and has come down to about 0.37% since then, while the states have increased their share of spending on infrastructure.

Days after Trump's inauguration, Senate Democrats proposed a $1 trillion infrastructure package that would have been paid for by closing unspecified tax loopholes. Trump's budget proposal from March contained $200 billion for infrastructure, but emphasized streamlining permitting processes to boost investment from the private sector, while cutting funding for Amtrak, highway renovations, water facilities on Native American reservations, rural airports and other existing programs.

In recent weeks, administration officials have told industry groups and local government officials that an infrastructure plan would be unveiled in January, with $200 billion in federal funding that will be parceled out in grants to state and local governments that promise to match the investments with their own revenue, either in the form of taxes or private money.

"There's been a trend currently in the U.S. to have more state and local government investment in infrastructure," said DJ Gribbin, Special Assistant to the President for Infrastructure Policy, at an event last week in Washington. "What we want to do is accelerate that trend."

Local governments have two main issues with the president's approach, however. Both have to do with the Republican tax reform plan.

The first problem: There will be a lot less money to go around after tax reform. The nonpartisan Joint Committee on Taxation has calculated the tax bill will add about $1 trillion to the debt - even after economic growth is taken into account - and local leaders fear Congress won't want to expand the deficit even further.

"How are you going to make that up, and what does that mean for spending more money?" said Adam Krantz, chief executive officer of the National Association of Clean Water Agencies. "It was always 'infrastructure, infrastructure, infrastructure,' and now you have tax reform, and it's going to be very difficult to get conservative support for an infrastructure bill."

Related: Trump's $1 trillion infrastructure promise has an obstacle: His own budget cuts

Meanwhile, the GOP's tax package also caps the amount of state and local taxes that filers are able to deduct from their federal income taxes, which may weaken support for future tax hikes proposed by counties, states and cities. That poses a problem, since the ability to contribute local revenue is a large part of how the White House plans to decide which applications are granted.

"You've got a perfect storm where states and localities are not allowed to raise their own revenue, but are encouraged to by the federal government," said Emily Swenson Brock, director of federal relations for the Government Finance Officers Association. "No state or local finance officer is looking at that finance package and saying, 'that seems feasible.'"

When asked about the revenue-raising challenges of limiting the state and local tax deduction, presidential assistant Gribbin said that there were "tradeoffs" made to keep overall taxes low. "Our top priority, because of the huge impact it will have on our economy, is to get tax reform passed," he said.

Some states are in better fiscal shape than others, with many struggling to meet legacy pension obligations, or suffering shortfalls due to a drop-off in natural resource taxes. In 2016, the Government Accountability Office found that cities with declining populations also had a particularly hard time modernizing their water systems by raising rates, since those who remained in town couldn't always pay.

"Some of our states that are so financially strapped, they have been trying to figure out revenue for just basic needs like education," says Kim Glas, executive director of the Blue Green Alliance, a coalition of labor and environmental groups. "When you shift the burden to the states, it leaves more questions about what scale we could do major infrastructure on."

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 590211

Reported Deaths: 9310
CountyCasesDeaths
Marion815581297
Lake44306666
Allen31919541
Hamilton28371304
St. Joseph26766371
Elkhart24098341
Vanderburgh18643213
Tippecanoe17422121
Johnson14496284
Porter14399160
Hendricks13870241
Madison10561212
Vigo10483171
Clark10240130
Monroe9076108
Delaware8836132
LaPorte8771155
Howard7897138
Kosciusko787277
Warrick643890
Hancock638797
Bartholomew626694
Floyd6150105
Wayne5933157
Grant5818110
Dubois544372
Boone534367
Morgan516291
Marshall494184
Henry493664
Cass471760
Noble460557
Dearborn458444
Jackson414745
Shelby402179
Lawrence380575
Clinton364539
Gibson356556
DeKalb337363
Montgomery334851
Harrison328542
Knox327839
Miami309843
Steuben306340
Adams295235
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Jefferson250738
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Scott216937
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Washington177118
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Jay162821
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Fulton159229
Carroll152115
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Rush149918
Perry147227
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Parke12908
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Pike113625
Blackford107522
Pulaski95237
Newton89421
Brown85530
Benton84310
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Martin70013
Warren6587
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Union6113
Ohio4677
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Ohio Coronavirus Cases

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Cases: 826754

Reported Deaths: 10200
CountyCasesDeaths
Franklin97493705
Cuyahoga821781012
Hamilton61350439
Montgomery41700399
Summit33399726
Lucas30111597
Butler29721228
Stark24811400
Warren18917139
Lorain18086212
Mahoning16758335
Lake15365135
Clermont15160104
Delaware1382177
Licking12679132
Trumbull12401302
Fairfield1218480
Greene11631133
Medina11128165
Clark10608264
Wood9964154
Allen9511126
Portage8867105
Miami886573
Richland8790116
Marion7319113
Tuscarawas7142174
Columbiana7085124
Pickaway702850
Wayne6781164
Muskingum671242
Erie5886118
Hancock537890
Ross530287
Scioto519662
Geauga483555
Darke457589
Ashtabula439068
Lawrence432651
Union430628
Mercer424287
Sandusky421862
Seneca413555
Auglaize412759
Huron410338
Shelby410221
Jefferson403366
Belmont395640
Washington372040
Putnam364672
Athens36369
Madison339329
Knox336522
Ashland331738
Fulton325943
Defiance319278
Crawford313268
Preble311534
Brown296619
Logan292729
Ottawa282134
Clinton279043
Williams270166
Highland262418
Jackson256943
Guernsey241725
Champaign240927
Fayette225529
Morrow22294
Perry221318
Holmes218662
Henry210247
Hardin204133
Coshocton197420
Van Wert196644
Gallia190926
Wyandot190549
Adams165615
Pike164116
Hocking163423
Carroll149516
Paulding139021
Noble117840
Meigs103221
Monroe95629
Harrison8568
Morgan79128
Vinton67113
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