January 30, 2017

Make Infrastructure Pay for Itself

Tracy C. Miller

Senior Policy Research Editor

One of Donald Trump's key campaign promises, emphasized in his victory speech, was increased infrastructure spending. It's clear that we need upgrades and better maintenance of our roads, highways, bridges, airports and water and sewer systems. But is simply spending more the answer? We would be better off if the federal government stopped spending general fund money on infrastructure and encouraged greater reliance on user fees, private funding and state and local government funding of infrastructure.

Highways as well as public transportation are currently funded with money from the federal Highway Trust Fund, and by state and local governments. States generally make decisions about which highway projects to pursue and then receive federal matching funds. Local agencies are responsible for managing public transportation systems, which receive a percentage of Highway Trust Fund money, distributed partly through a system of discretionary grants to local transit agencies.

Money from the fund has strings attached that raise costs and limit state and local governments' ability to choose which projects have priority. These strings include prevailing wage laws, which require contractors receiving federal money to pay unionized wages even if they could attract qualified workers willing to work for less. High-profile projects chosen by politically powerful congressmen can easily take priority over projects that would generate greater benefits for their constituents.

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