There’s been a lot of talk, both within the Trump administration and within Congress regarding infrastructure spending. Promises have been made on both sides, but where will the money come from?
While the Trump administration wants to rely in private sector money to stabilize the Highway Trust Fund, this would also likely lead to more tolls, paid by both truckers and passenger drivers alike. After all, the private companies building out our nation’s new infrastructure will need to recoup this money from somewhere.
The Administration View
In his most recent address to a joint session of Congress, President Trump expressed an interest in a “national rebuilding” of the nation’s infrastructure.
He said, “President Eisenhower initiated the last truly great national infrastructure program, the building of the Interstate highway system. The time has come for a new program of national rebuilding.”
The President also referenced a discussion he had with a friend in the trucking industry during a speech to the National Governor’s Association. He was quoted as saying his friend mentioned trucks getting destroyed on the drive from New York to Los Angeles because the roads are so bad.
Per the administration, funding for the $1 trillion-dollar program should come from both public and private sources. But is this feasible, and where exactly would the money come from?
The Current Situation
Ask anyone with an insider’s view on the situation, and they’ll tell you we need a ton of money just to keep things at the status quo. According to Joung Lee of the American Association of State Highway and Transportation Officials, $110 billion would be needed in the next ten years just to keep infrastructure development from backsliding.
With infrastructure funding nowhere near that level currently, where can we expect the Trump administration to get this money? Up until now, the Highway Trust Fund has relied heavily on gas and diesel taxes to fund infrastructure improvements. Yet, the gas tax hasn’t been raised in over twenty years. As fuel efficiency increases, the problem is compounded.
Ask the Highway Users Alliance, and they will tell you that private funding would likely come in around 10 percent or less, a paltry number when it comes to funding the entire project. Are cheap financing and tax breaks the only answer or will funding must come from increased tolls?
Are Tolls the Answer?
When it comes to recouping funds on heavily used roads and highways, private infrastructure financiers will likely turn to toll roads, as this is generally the only way to generate a revenue stream from these projects.
The Alliance for Toll Free Interstates says that toll roads are the worst of all available funding options, but is this really the case? Others see no other way out. If private companies are to step in and provide some of the funding, increased tolls may be the only answer.
Fortunately, American policy-makers need only look across the pond for examples of where robust highway systems and vibrant trucking companies co-exist. From France to Italy and Spain, toll-supported highways help operate well-maintained, top-level super highways.
Still, while increased tolls provide one answer to the problem, they can’t be the only solution. Public-private partnerships must be bolstered and money has to come from almost every possible source if a true $1 trillion is going to be leveraged to complete the nation’s infrastructure upgrade needs.
The fact is, whether it’s significant federal investment through taxes, borrowing or increased tolls, it is neither wise nor feasible to say that there is one single silver bullet that will solve this problem. What will happen next is a matter for time to tell.