Trump's Infrastructure Plan "Wrapped Around Incentives"
Trump’s administration announced an update on its infrastructure plan, a large portion of which will be focused on creating incentives intended to encourage the private sector to take on a bigger role in financing public assets.
Last week, U.S. President Donald Trump’s administration announced an update on its infrastructure plan, where they told state and local officials that $200 billion will be invested toward infrastructure over the next 10 years.
More notably, a large portion of that plan will be focused on creating incentives intended to encourage the private sector to take on a bigger role in financing public assets such as bridges, roads and airports.
“We’re looking at breaking this up into pieces,” Mick Mulvaney, the director of the Office of Management and Budget, said at the White House event on Wednesday. “The largest piece of the package is going to be wrapped around incentives.”
He said the administration wants to give states and cities "incentives to move stuff you might own off of your books and into the private sector."
Public-private partnerships involve private companies financing, constructing or managing public infrastructure (highways, tunnels, etc.) in exchange for those companies getting their money back plus more from tolls, fees or any other type of revenue generated by the structure.
Using $200 billion in federal funding, the administration hopes to leverage about $1 trillion worth of overall infrastructure investment. This means they will have to prioritize federal funding for projects that already have significant revenue secured, either from the private sector or local sources, although a detailed plan has yet to be offered.
An example would be a project that is close to being complete, but could use an injection of federal resources to help “get it over the edge,” Mulvaney said.
Incentives may also be provided to encourage state and local transportation agencies to sell under-used public entities to the private sector.
The second portion of the infrastructure plan will focus on targeting certain funds specifically for rural infrastructure projects. Incentives will work well in densely populated urban areas, but it is harder for rural areas to have private sector-backed projects due to the lack of potential "cash flow,” Mulvaney said.
“We’re talking about targeting some of the money just for rural projects,” he said. “A lot of the loans programs we have in place work.”
The rest of the money in the proposal will be funneled towards the “transformative stuff,” such as new ways of building roads, tunnels and bridges.
The American Society of Civil Engineers
estimates that it will take $4.6 trillion to maintain and upgrade infrastructure throughout the United States.