More than a year after he first touted it in his campaign, President Donald Trump on Monday announced his infrastructure initiative, which he said would use $200 billion in federal money to spur a total of at least $1.5 trillion in spending on new highways, water systems and other construction projects.
“We’re going to have a lot of public-private (cooperation), and that way it gets done on time, on budget,” Trump said at a news conference announcing the plan. He also said it would create “thousands and thousands of jobs.”
Locally, the plan could ease financing to expand O’Hare International Airport, but could also mean more tolls and taxes for residents of Illinois and other states.
Transportation experts who have examined the proposal wonder how it will be funded — the plan requires most of the money for projects to come from states, local governments and private companies, with the rest coming from the federal government. Ordinarily, the local-federal split is the other way around for big road projects.
There’s also the question of where the federal dollars will come from, given that the Highway Trust Fund, which pays for road projects, already has a shortfall.
Here are five things the Trump proposal could mean for Chicago and the rest of Illinois:
1. A higher gas tax. If Illinois wants to qualify for federal funding for projects under a plan that requires a higher local match, it will need to increase transportation revenues, said Audrey Wennink, transportation director for the Metropolitan Planning Council. One way to do that is a hike in the gas tax, which is 19 cents a gallon and has not been raised since 1991.
“It has gone so long without being raised or indexed (to inflation), and we have a lot of catching up to do,” Wennink said. A total of 31 other states have approved plans to raise additional transportation revenues since 2012, mostly through gas tax increases, including neighboring Indiana and Iowa, according to Transportation for America, a national transportation advocacy group.
2. A new kind of transportation tax, such as a vehicle miles traveled tax. Such a tax, being tried on a limited basis in Oregon, would charge cars a fee based on how many miles they travel in the state, which ensures that users of increasingly popular electric vehicles get charged for their use of the roads. The idea of putting transponders in cars to tax per mile was first floated in Illinois in 2016 but faced opposition due to privacy concerns. Democratic governor candidate J.B. Pritzker discussed the concept last month. Expect this to be unpopular in rural and suburban areas, where people have to drive longer distances to get around.
3. More tolls. The Trump initiative looks to leverage more private investment in transportation projects, but this does not work well for rural roads and bridges or for transit, because those kinds of projects don’t pay good returns on investment. It can work for projects with ongoing user fees, like toll roads. The Illinois Department of Transportation is already considering tolling new lanes on the Stevenson Expressway. IDOT also has discussed the possibility of toll lanes on the Eisenhower Expressway, which was first built in the late 1950s and early 1960s and carries more vehicles than it was designed to handle.
4. O’Hare funding. The infrastructure proposal could help with the expansion of O’Hare through growth of the Transportation Infrastructure Finance and Innovation Act loan program, also known as TIFIA, said Elizabeth Coolidge, regional head of public finance for the Midwest for UBS Wealth Management.
TIFIA provides low-interest loans and could be used to help pay for a multibillion-dollar renovation of the airport. “It’s definitely a lower-cost way of borrowing,” Coolidge. She noted that the proposal would also eliminate a tax penalty on certain private activity bonds — used for some public-private projects. That could attract more investors.
5. Less money and less construction. Another possibility under the Trump initiative is that the state will get less federal money than it has in the past, and will get less built, said Illinois Democratic Rep. Mike Quigley.
Quigley says “this could grind crucial construction programs to a screeching halt” while Democratic Rep. Dan Lipinski, the senior Illinois member on the U.S. House Transportation Committee, said that the plan as proposed “will not work” but hopes it will spark a discussion about funding “to fix our ailing infrastructure.”