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  November 17th, 2016 | Written by

Transportation and Infrastructure—Likely Policy Developments

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  • Infrastructure projects may be among the early winners of the Trump administration.
  • Trump's challenge: turn his infrastructure plan into federal policy and legislation.
  • Trump pledged to advance a $1-trillion infrastructure plan during his first 100 days in office.

Infrastructure projects may be among the biggest early winners of President-elect Donald Trump’s White House victory.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, [and] hospitals,” Trump declared, in his speech following his election victory. “We will rebuild our infrastructure. Which will become second to none, and we will put millions of our people to work as we rebuild it.”

“His challenge now,” notes a policy report from the Washington law firm and lobbying group Squire Patton Boggs, “is to turn this statement into federal policy and legislation, with the help of the Republican-controlled Congress.”

Trump’s pledge is put advance a $1 trillion, ten-year infrastructure plan during his first 100 days in office. But any infrastructure bill musst answer the same question: How to pay for it?

According to the Squire report, Trump plans to offer an 82-percent tax credit designed to attract greater private equity investment in infrastructure projects and reduce project finance costs. “The proposal relies on increased tax revenues from two revenue streams generated from the new infrastructure projects to offset the tax expenditure,” the report notes, “additional wage income from construction workers and contractor profits.”

The proposal does not rely on the establishment of a national infrastructure bank, a Democratic Party favorite. The Trump plan does include support for Build America Bonds, tax credit bonds that have been supported by the Obama Administration and congressional Democrats and which would presumably open infrastructure projects to a broader pool of investors.

However, this approach is not without its challenges. “House and Senate tax writers have been unable to reach agreement on a repatriation approach,” noted the Squire report, “and, as recently as during last year’s consideration of the FAST Act, have not embraced the notion of using revenue gained from repatriation to pay for infrastructure spending.”

Also on the transportation docket will be the reauthorization of Federal Aviation Administration (FAA) programs, extensions of which expirie in September 2017. Congress will have to enact an FAA reauthorization or pass another extension. Hanging in the balance is the modernization of the nation’s air traffic control (ATC) system, which, thus far, is being accomplished incrementally and without programmatic support from Congress.

The Squire report expects the Water Resources Development Act (WRDA) to be passed by the lame duck session of the 114th Congress, but lawmakers will likely turn back to a 2018 water resources legislation in 2017, as the current legislation returns Congress back to a two-year WRDA cycle.