Infrastructure Rupture
Well, here we are at the Memorial Day holiday and whether you are flipping Impossible, Beyond Meat turkey or only regular burgers, we still do not have an infrastructure bill. This is a theme you will contemplate at the grill.
Now there is some progress being made. The administration has lowered its request to $1.7 trillion and allegedly the Republican recommendation is being increased towards the $1 trillion mark. The latter is reported to be released at some point today. I would have waited for details, but you will have already embarked on your trip by the time any plan is released.
The two main points of contention are what is to be included in the bill as infrastructure and the basic consideration of how to pay for all the improvements to follow. I continue to think that a narrower bill just makes good sense. The rest of the recommendations that would be left out could be passed by the rule of 51 in a bill away from this one. This approach would certainly give bipartisanship a better chance for this key policy area.
The reality of how to pay may require that there be higher taxes and select user fees. It does not appear feasible that such a large program could go it alone with only user fees without some support from broad based taxes.
We only must look to the reauthorization of the Transportation bill that is due by the end of the federal fiscal year. In previous reauthorizations, there has been tremendous debate about raising the federal gas tax that has not been done since the 1990’s to no avail. So, what was the fix to plug the hole? Securing an appropriation from the general fund was the answer. This solution has troubled many.
I believe that both revenue sources are required. To satisfy the fee for service crowd, we should do more than experiment with a VMT (Vehicle Miles Traveled) approach. Given the improvements in technology, this approach should be more attainable than when it was first launched.
I appreciate that the truckers out there are sensitive to the levels of tolls and the price of fuel. Most of our freight is still delivered by truck. Electric trucks are on the way but there are any questions to be answered about whether they will be practical for the long hauls in the near term.
The inclusion of broadband in the expanded definition of infrastructure makes rational sense. Everyone depends on the internet today and there are good reasons that the access should be improved in rural and harder to reach regions of the nation. After all, we use the internet for health and education as well as for commerce and many other purposes.
It is becoming essential that both sides need to compromise on these key policy areas. We could tolerate a modest gas tax increase even though fuel is already on its seasonal uphill climb. Higher taxes could put a mild damper on what is turning out to be a strong recovery. GDP estimates are in the high single digits. A modest tax increase should not serve to undo the rapid growth in the economy.
As you embark on your holiday journey, contemplate what should be achievable. Perhaps, we will have something constructive on this topic by Labor Day. Whatever can be accomplished needs to be completed before we head into the Mid-Term elections. We know that the rhetoric will be strong.
The municipal market needs the supply that may ensue. Matching fund requirements should serve to boost issuance even if it does not hit the market until the last quarter.
John Hallacy
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