Trump infrastructure plan is 25% rural, but states and localities would bear most financial burden for projects

Working on a water line near Torrey, Utah (Photo from National Rural Water Association)

President Trump announced his long-awaited infrastructure plan today, calling for federal investment of $200 billion, $50 billion of it designated for rural areas. But most of the money would have to come from state and local governments. UPDATE, Feb. 14: "Hardly anyone believes that $200 billion federal dollars will produce an additional $1.3 trillion investment from non-federal sources, especially when state and local budgets are being squeezed by rising costs for education and health care," writes William Galston of the Brookings Institution.

"The bulk of the dollars in the Rural Infrastructure Program will be allocated to state governors, giving states the flexibility to prioritize their communities’ needs," the plan says. "The remaining funds will be distributed through rural performance grants to encourage the best use of taxpayer dollars." The plan calls for "reducing regulatory barriers" to infrastructure projects, including faster permitting, with a “one agency, one decision” structure for environmental reviews, which could last no longer than two years.

The plan says it is designed to spur investment of $1.5 billion in infrastructure, the great majority of it from state and local governments and private sources. "Critics say that will lead to higher state and local taxes, and an increased reliance on user fees, such as tolls, water and sewer fees, transit fares and airline ticket taxes," David Schaper reports for NPR. "Half of the funding, $100 billion, will be used as incentives to entice cities, counties and states to raise at least 80 percent of the infrastructure costs themselves. . . .That's a radical departure from the way many projects are funded now. Funding for federal-aid highways, including interstates, is usually allocated in an 80-20 federal-state split."

Schaper reports, "Critics worry that would lead to only projects that could generate revenue, such as toll roads or bridges, getting funded." Revenue-generating projects are usually in urban areas; rural areas tend to rely more on direct government support. The plan also has a subsidy for the Rural Utilities Service, a Department of Agriculture agency that funds broadband, electric, water and wastewater projects, and new mineral-lease revenues to fund projects in national parks and on other public lands infrastructure. It also opens the door to sales of assets by government-owned utilities: the Tennessee Valley Authority, the Southwestern Power Administration, and the Bonneville Power Administration in the Northwest, The Daily Yonder reports.

Schaper adds, "Senior White House officials who briefed reporters over the weekend say the plan is aimed at fixing the current system of funding infrastructure that they say is broken in two ways. The first is that the country has been under-investing in infrastructure, leading a state of growing disrepair. The American Society of Civil Engineers gives the nation a grade of D+ for the condition of transit, highway, bridge, rail, water and other infrastructure, and says the country is in need of an investment of $2 trillion more than is currently budgeted. The second way the White House says the system is broken is in the lengthy federal permitting process, which officials say can take five to 10 years or longer, driving up costs."