What does the leaked White House infrastructure plan tell us?

An early draft of the White House’s proposed infrastructure improvement plan leaked last week. The draft reveals some details of a plan to revitalize U.S. water infrastructure, as well as improve transportation, land revitalization and Veteran’s Affairs facilities.

First reported by Axios, the leaked six-page document titled “Funding Principles” appears to outline components of a more detailed infrastructure plan the White House is expected to release in the coming weeks.

President Donald Trump is also expected to offer an update on his administration’s infrastructure investment and improvement initiatives in his State of the Union address this week.

Much of the ‘Funding Principles’ outline appears to align with comments Trump Administration officials have said previously about the plan, such as dividing new federal dollars into four “buckets” that include grants for state and local infrastructure projects, rural projects, a “transformative projects program” and boosting funds for existing federal infrastructure assistance programs.

The leaked outline indicates that the majority of the plan’s funding would go to projects that bring the largest amount of non-federal revenues to the table. Other parts suggest overhauling the U.S. EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) program to expand eligible projects to include Superfund and Brownfields cleanups and other activities.

RELATED: Water sector groups support bill to extend WIFIA

The new document, however, does not include a topline dollar figure, although last year White House staff said the plan would offer $200 billion in new direct federal spending. In more recent comments, administration staff said the plan would leave it to Congress to make decisions about how to pay for new federal infrastructure spending.

Last week’s leaked outline proposes setting aside half of the eventual federal investment for an “infrastructure incentives initiative” that encourages state, local and private investment in water and other infrastructure projects by giving preference to potential projects that demonstrate the availability of “new, non-federal revenue” for initial construction and ongoing operations, maintenance and rehabilitation. Federal grants offered for this class of projects would be limited to no more than 20 percent of the project’s total cost, and the government would solicit applications every six months.

If the document proves to accurately reflect the administration’s plans, awarding infrastructure assistance based largely on the degree of non-federal funds generated by applicants would mark a departure from how the federal government has typically aided community infrastructure investments.  This proposal would not consider the necessity or public health benefits of a project, though an application would receive an additional five percent weight if it demonstrates how it “will spur economic and social returns on investment.”

Other parts of the document suggest that 25 percent of new funds would go to rural projects, ten percent to transformative projects and just over seven percent to expand existing infrastructure programs, including WIFIA.  But the plan also proposes to expand WIFIA beyond only water infrastructure, by making Brownfield and Superfund cleanups, as well as flood mitigation and navigation projects, eligible for funding.  The draft would also allow communities to tap WIFIA loans to support water system acquisitions and restructurings.  It further suggests eliminating the requirement under WIFIA for borrowers to be community water systems, even though no such requirement exists in the current statute.

Another proposal included in the leaked outline is the expansion of private activity bonds (PABs), a common tool used to finance infrastructure projects. The memo suggests allowing entities to issue advance refunding bonds to refinance private activity bonds. But including this in an infrastructure plan would put the package at odds with the recent GOP overhaul of the tax code, which repealed the tax exemption for new advance refunding bonds. The House tax bill proposed eliminating PABs, but the final bill retained the financing tool. (It is possible that the undated leaked draft predates the passage of the tax law).

According to The Hill, a White House official last year said the administration had a 70-page memo for infrastructure that would serve as a building block for lawmakers working to draft a package.

Trump Administration staff have suggested the detailed infrastructure plan could be unveiled within weeks of the Jan. 30 State of the Union address.

Some information in this news was first reported by Axios, The Hill and the Association of Metropolitan Water Agencies (AMWA).

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