Infrastructure Insights: Issue #3

In this issue:
By: Braithwaite Communications

• Deciding what to include in Infrastructure Investment Legislation is partially to blame for timing uncertainty
• Administration reaffirms support of ATC Spinoff
• Legislation to Repurpose Tampa Bay Area Transit Authority Faces Session Deadline
• Pennsylvania Governor, lawmakers considering charging Locals for State Police protection
• Natural Gas Fueling Stations opening in PA under Public/Private partnership

Deciding what to include in Infrastructure Investment Legislation is partially to blame for timing uncertainty

Two major questions are contributing to the still uncertain timing of the introduction of a massive $1 trillion infrastructure investment plan: 1) Whether, as President Donald Trump suggested recently, to attach the infrastructure proposal to another piece of legislation, thereby giving both a better chance of approval; and, 2) determining how sweeping the infrastructure initiative should be, i.e., whether to include investment in broadband deployment and VA hospitals, for instance.

“At the start of the session, the legislative agenda stacked up with the repeal of Obamacare, then tax reform and then infrastructure,” said Buchanan’s Charles J. Kolling Jr., Senior Principal - Government Relations. “Now there is no order and that is contributing to the uncertainty in the timing of all of them.”

DJ Gribbin, special assistant to the president for infrastructure policy, said at a recent Wall Street Journal event that the timing of the initiative was still “up in the air.” This while, Transportation Secretary Elaine Chao, said that the unveiling of a plan -- which would include broadband, and VA hospitals -- will come in late May.

For their parts, the highway, bridge and tunnel contractors are working to keep the focus of the plan solely on transportation infrastructure. One official within the industry said that they believe adding broadband and other areas will lessen the bill’s chances in Congress.

One constant from the White House and from Republican congressional leaders lies in the financing of the plan. Both the president and Speaker Paul Ryan (R-WI) have repeatedly said that the bulk of the money should come from the private sector, motivated by tax incentives and the establishment of public private partnerships.

President Trump’s budget director, Mick Mulvaney, recently said that the $1 trillion plan would use $200 billion in taxpayer money to upgrade U.S. roads, bridges and airports.

This would put the ratio of private sector dollars to federal funding at 5-to-1.

In addition, there has been talk in some circles that the administration will pay for the $1 trillion effort by offering a one-time repatriation tax-reduction holiday, through which Washington would allow US companies to bring cash overseas back home at a reduced tax rate.

In Congress, key players are Pennsylvania Republican Bill Shuster, Chairman of the House Transportation and Infrastructure Committee, and Senator John Thune (R-S.D.), Chairman of the Commerce, Science and Transportation Committee.

Shuster’s committee will almost certainly be the main House panel holding hearings on Trump’s infrastructure bill and marking up the legislation, which may be the best opportunity for lawmakers to help mold the plan.

Besides chairing a powerful Senate committee, Thune is also a member of GOP leadership.

In the wake of the House’s failure to repeal Obamacare, some have said that Trump’s infrastructure plan should start in the Senate, a development that would give Thune an even greater role in the debate. 

And in the House, Lou Barletta (R-PA) has repeatedly called for a long-term transportation infrastructure bill, arguing that private industry and local governments need a reliable funding source to plan projects and hire workers.

Barletta has said that he believes taxpayers will support a user fee to pay for improvements to roads and bridges as long as they know where the money will be spent. He has said that money spent on transportation infrastructure projects goes directly into local economies and helps to create jobs.

Administration reaffirms support of ATC Spinoff

At a recent meeting with business leaders, U.S. National Economic Council Director Gary Cohn reaffirmed the administration’s plans for improving America’s infrastructure, singling out the country’s air traffic control (ATC) system as a sector with significant upside potential.

The United States is dropping further behind other nations in its ATC modernization efforts (NextGen) and multiple reports have faulted the Federal Aviation Administration (FAA).

In his budget blueprint, President Trump called for spinning off air traffic control from under the FAA and placing it with a private non-profit entity. Sixty other nations have their ATC systems in private hands.

Adding pressure and increasing the proposal's chances is the fact that Congress must approve a FAA reauthorization bill before the end of September.

“It’s a must-pass bill,” said Buchanan’s Terry Heubert, Senior Advisor, Government Relations.  “And one of the most compelling things about it is that it has a revenue piece to it.”

Rep. Bill Shuster (R-PA), Chairman of Transportation and Infrastructure Committee, and many in the industry have long pushed for spinning off ATC.

“Taxpayers have spent over 30 years and billions upon billions of dollars on our air traffic control system,” Shuster said. “We have spent well over a billion dollars on next generation technology that was studied and scrapped without any use. We are literally throwing away taxpayer money.”

A report earlier this year from the Department of Transportation’s inspector general shows that the FAA has struggled to implement NextGen, which would establish a precise satellite-based surveillance system and digital data communications for air traffic controllers and pilots. The report also said that the agency still isn’t prepared to handle major air traffic control outages despite promises to update plans.

The FAA has been working on new contingency plans since a fire at control facility in the Chicago area in 2014 led to widespread flight cancellations and delays for more than two weeks.

“This report adds to the sea of evidence supporting the need for real reform in modernizing and managing air traffic services, and letting the FAA focus on its safety mission,” Shuster said.

Legislation to repurpose Tampa Bay Area Transit Authority faces session deadline

Supporters of legislation that would reconfigure the Tampa Bay Area Regional Transportation Authority (TBARTA) to consolidate public transportation planning in the Tampa region are working to get the bill through the Florida Legislature before May 5, the scheduled end of session. 

“We’re racing against time,” said Rhea F. Law, chair of Buchanan’s Florida offices, and chair of the Tampa Bay Partnership, a consortium of area business leaders pushing for the change.

Law said Tampa Bay is one of the few metropolitan regions in the country that lacks a focused, consolidated plan.

“Our system is still county focused,” she said. “It limits our transit options and inhibits our residents’ access to jobs, and our businesses’ access to workers.”

The proposed changes stem from a white paper the Tampa Bay Partnership commissioned from the Eno Center for Transportation.

The research found that Tampa Bay has made no significant changes to its county-focused transit agencies since they were established in the 1970s. At that time, the region was composed of the separate and distinct communities of Tampa, St. Petersburg and Clearwater, with just over 1 million residents. Today, the region has become a single, multicounty urbanized area, and home to over 3 million residents.

The bills (SB 1672 and HB 1243) introduced by Sen. Jack Latvala, (R-Clearwater), and Rep. Dan Raulerson, (R-Plant City), would make significant progress toward putting these regional structures in place. Law said that by giving TBARTA a more focused mission to plan, implement and operate regional transit, TBARTA could create and manage the now-missing linkages between core business and residential centers that span county service areas.

Pennsylvania Governor, Lawmakers considering charging Locals for State Police protection

In budget-strapped Pennsylvania, Governor Tom Wolf and some lawmakers, Republican and Democrats among them, are proposing that local governments, with no police forces, reimburse the State Police (PSP) for the cost of policing their areas.

The proposal will be subject to hearings as the budget negotiations heat up ahead of the June 30-end-of-fiscal-year deadline for budget approval. 

Meanwhile, a recent analysis by a bipartisan legislative research committee, the Legislative Budget and Finance Committee said too much revenue raised from the state gas tax is being used to cover State Police operating expenses.

The study by the committee concluded that the State Police payments from the Motor License Fund are $220 million more than they should be. The Motor License Fund consists of revenue from taxes paid at the gas pump along with vehicle registration fees. The money is supposed to primarily fund road and bridge repairs but a portion has been getting directed to state police to compensate their highway safety work.

The findings of the study were applauded by those who worked for the 2013 law (Act 89) that increased the gas tax at the wholesale level to pay for road and bridge repairs. At the same time, the study is fueling the debate over alternative ways to fund the State Police.

Over the last few decades many municipalities, facing budget constraints, have either merged their police departments with other, area departments, or dropped their forces all together.

It’s estimated that over 1200 local government rely on the PSP for law enforcement. 

A PSP spokesperson said that troopers responded to more than 505,000 calls for service in communities without a local police force in 2015.

In all, the Department estimates that it costs roughly $234 per person to provide services to municipalities without local coverage. On average, communities with both full- or part-time departments pay roughly $160 per person, according to data collected in 2014 by the state Department of Community & Economic Development.

Natural Gas Fueling Stations opening in PA under Public/Private partnership

The first of 29 Compressed Natural Gas fueling stations planned in Pennsylvania opened in Johnstown last week under a Public Private Partnership (P3) with Trillium CNG, a subsidiary of Love's Travel Stops & Country Stores, Inc.

“This innovative P3 is allowing us to help transit agencies save money and take advantage of plentiful supplies of natural gas produced right here in Pennsylvania,” Governor Tom Wolf said in a statement.

“We applaud Trillium for reaching this first milestone and look forward to continued progress on this initiative.”

Through the $84.5 million statewide project, Trillium will design, build, finance, operate and maintain CNG fueling stations at 29 public transit agency sites through a 20-year P3 agreement. Additional stations will be constructed over the next five years and Trillium is also making CNG-related upgrades to existing transit maintenance facilities.

CNG fueling will be accessible to the public at six transit agency sites, with the option to add to additional sites in the future. The CNG station in Johnstown is available to the public, including for trucks.

PennDOT will receive a 15 percent royalty, excluding taxes, for each gallon of fuel sold to the public, which will be used to support the cost of the project. The team has guaranteed at least $2.1 million in royalties over the term of the agreement.