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Politics

What could Trump's $1 trillion infrastructure plan mean for California?




Foundation work begins on 350 foundation piles constructed in the ground at depths down to 175 feet below the surface for the new Gerald Desmond Bridge Replacement Project in the Port of Long Beach in Long Beach, Calif., Wednesday, Oct. 1, 2014. The Gerald Desmond Bridge will be one of the tallest bridges of its kind in the United States. With two 515-foot towers and a cable-stayed design. During the pile construction, crews maintain even pressure of holes to ensure there is no upward movement of groundwater from the deeper layers of multiple aquifers. (AP Photo/Damian Dovarganes)
Foundation work begins on 350 foundation piles constructed in the ground at depths down to 175 feet below the surface for the new Gerald Desmond Bridge Replacement Project in the Port of Long Beach in Long Beach, Calif., Wednesday, Oct. 1, 2014. The Gerald Desmond Bridge will be one of the tallest bridges of its kind in the United States. With two 515-foot towers and a cable-stayed design. During the pile construction, crews maintain even pressure of holes to ensure there is no upward movement of groundwater from the deeper layers of multiple aquifers. (AP Photo/Damian Dovarganes)
Damian Dovarganes/AP

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President-Elect Donald Trump says he wants to put a trillion dollars into rebuilding infrastructure in the United States, which is about one third of the entire revenue the federal government is expected to collect this year.

This is how he described the plan during his Election Night acceptance speech:  "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We're going to rebuild our infrastructure."
 
KPCC's Sharon McNary took a look at the plan to see what it could mean for California.
 
What do we actually know about Trump's plan?
 
It's a ten-page proposal from Economics professor Peter Navarro of UC Irvine and Wilbur Ross, the billionaire investor who is now Trump's choice for Secretary of Commerce. They released the plan in the final days of the campaign.

The main feature is a plan to privately fund construction of big public projects like roads, bridges, ports, digital communication lines, transit and so on.

That means that the for-profit sector's big construction companies would put up most of the money and do the work, receive nice tax incentives, and also collect fees, or tolls or some other revenue from the people who use the projects.

Look at the plan as an opening proposal or framework, with specifics be filled in later as the future president puts his ideas forward to be worked over in Congress.
 
Where is that trillion dollars to come from? Are the taxpayers going to be footing the bill?
 
No, the full trillion dollars does not come directly from the taxpayers.
 
The Trump plan envisions the federal government offering about one-sixth that amount -- $167 billion - as tax incentives that would entice private industry to put up the rest of the money to build one trillion dollars' worth of big construction projects.
 
The plan is supposed to be what they call, "revenue neutral," that is to say, it won't cost the federal government any money. The plan says the taxes paid by people employed by the plan plus the taxes from the profits made by the investors will end up equaling the amount of the $167 billion tax incentives put up as seed money to get it all rolling.
 
Are there already local examples of public-private partnerships that inspired this plan?

There are quite a few examples of existing projects and future projects on the books.

The 91 Express Lanes were privately financed.  The big new courthouse in downtown Long Beach was built that way. And the Orange County Transportation Authority just entered a $1.2 billion contract with private companies to build new freeway and toll lanes.
 
Caltrans identifies the 710-North project - filling in the gap between the stub end of the 710 freeway near Cal State L.A. and the 210 Freeway in Pasadena - as one possibility. If Caltrans decides to build a tunnel, at a cost of some $5 billion dollars, it's possible a public-private partnership would do that work and collect the tolls.
 
The idea behind public private partnerships is that government doesn't need to build and run or even own things the public needs, like courthouses and toll roads. Government just needs to make them available, with the revenues they produce going to pay off the costs of construction maintenance and, of course, a private profit.
 
What are specific parts of California that need fixing when it comes to our infrastructure?
 
Mostly roads.  Our highway system was mostly built between the Eisenhower and Nixon administrations. It's taken a beating from our ever-growing car-centric population and needs about $57 billion dollars' worth of repairs.
 
The state needs another $20 billion dollars' worth of other maintenance that should have been done but wasn't. That total includes levees, state buildings, universities, courthouses, community colleges.
 
The state budget that was approved earlier this year addresses just one percent of that deferred maintenance. So that list of projects are public assets that have deteriorated, and it doesn't include new initiatives.

 
What about projects like fixing pot holes or renovating previously built buildings or bridges that are crumbling? Where's the money for those projects going to come from?
 
That's one of the shortcomings critics point to with the plan for public private partnerships. These projects tend to build new things like roads, and not maintain old things like filling potholes.
 
Say a municipal water system is looking for millions of dollars to replace aging pipes. Under this kind of a deal, a private company would offer to do the work in exchange, perhaps, for new fees tacked onto customers' water bills. But cities already do this when they increase water rates to pay for upgrades to the water system.
 
Some other objections to the plan are that the private companies will be motivated  by the money they can make from the projects' eventual revenue streams. Critics argue that will focus thees projects more in affluent areas - like building new toll roads - than in poor areas - like fixing old roads. So the geography of where stuff gets built will be a big equity question.
 
Also, the idea that these projects will create new jobs generating new tax revenues is hotly debated. Some critics say the plan would result in shifting employees from private industry jobs over to public-private partnership jobs without a substantial increase in new positions or taxable wages.
 
Do we know when this plan could be implemented? Is it actually going to go through?
 
What needs to happen is for the president to put forward a plan and a budget, that Congress would then argue about and pass funding bills. Would they put $167 billion into a tax incentive pot for private builders to draw on for as-yet unknown construction projects?
 
Democrats say they were repeatedly blocked during the Obama years when trying to spend more on infrastructure, and the bulk of Republicans in Congress are not likely to suddenly turn into free-spending public construction mavens.