From Infra Americas News Service
Author: Eugene Gilligan
While Senate and House leaders work to reconcile their respective tax reform bills, some industry participants worry that the resulting deficit could hit infrastructure investment.
President Donald Trump has said he wants to spend USD 200bn of federal funds to incentivize USD 1trn of infrastructure investment, with a significant piece of that from private investment.
The Joint Committee on Taxation in a 30 November report estimated that the bill would cause a USD 1trn budget deficit over the bill’s 10-year window, after accounting for the economic growth the tax cuts are expected to generate.
Scott Goldstein, policy director at Transportation for America, said it is difficult to see how the US will increase infrastructure spending after passing tax reform legislation that “substantially increases the debt.” He expressed concern that a growing deficit could lead to significant cuts to federal transportation departments, as those programs have been a frequent target of budget cutting in the past.
Marcus Lemon, chair of the infrastructure and P3 practice at Polsinelli, said he still believes an infrastructure bill will be signed into law.
“We need to wait and see what happens in reconciliation on the tax package, and then see how the infrastructure bill would be financed,” Lemon said. “These two items would be key to any effect on the deficit.”
Neither the Senate nor House bill addresses revenue issues with the federal gas tax. The 18.4 cent federal fuel tax funds the Highway Trust Fund (HTF), which helps pay for highway, bridge and mass transit projects.
The FAST Act, which President Barack Obama signed into law in 2015, funds the HTF through FY2020. But the Congressional Budget Office has estimated that revenues credited to highway and transit fund accounts will be insufficient to meet the fund’s obligations by 2021, with the cumulative shortfall growing to USD 80bn by 2026.
Paid subscribers can view the full article here