Since the 2016 presidential campaign, President Donald Trump has been touting a $1 trillion infrastructure program that would create jobs and repair or replace elements of the nation’s roads, bridges and other public assets, but he told a group of mayors gathered at the White House earlier this week that the value of his plan could reach $1.7 trillion.
A leaked document also surfaced this week, reportedly a White House draft of the president’s infrastructure plan, according to Axios. If the information is accurate, then the administration will boost outside investment by requiring state and local agencies to contribute a larger financial share to infrastructure projects, with the federal government pledging only 20% of project costs through grant awards.
This strategy would likely force more states to seek out private-sector partners for big infrastructure projects or adopt measures similar to those in California and Indiana, where lawmakers have raised gas taxes and other motorist fees to pay for repairs and upgrades to transportation systems, schools and other public assets.
Some states like Maryland have also turned to bond financing, both municipal and private activity bonds (PAB). Like municipal bonds, PAB’s are tax-free but allow private developers to take advantage of the low-cost borrowing usually reserved for local government agencies. The Purple Line light-rail project in Bethesda, MD, being delivered under a public-private partnership (P3), benefited from more than $300 million in PABs.
