Photographer: Patrick T. Fallon/Bloomberg

Chao Warns Governors: Paying for Big Transport Plans to Be Hard

  • Trump has pledged to spend $1 trillion on U.S. infrastructure
  • Administration wants to tap private sector funds for projects

The White House is working on plans for improving U.S. transportation and other key structures, but agreeing on how to pay for expensive new projects won’t be easy, Transportation Secretary Elaine Chao told the nation’s governors.

There’s a number of ways to fund critical upgrades and no consensus across the political spectrum, so there needs to be national agreement on getting a plan approved, Chao said in her first public appearance since taking office on Jan. 31.

“Everybody wants a better transportation system, but very few people want to pay for it, so that’s a big conundrum,’’ Chao said Sunday at the National Governors Association’s winter meeting in Washington. “There will be a lot of discussion about pay-fors, and that’s going to be a tremendous challenge.”

President Donald Trump pledged during his winning presidential campaign to spend $1 trillion over 10 years rebuilding U.S. roads, bridges, airports, schools and other infrastructure, but he hasn’t said how his plan would be funded, what types of projects will be covered, or other details.

Chao said the administration is open to ideas, and that Trump looks forward to hearing from the governors on their ideas.

Private Sector

Trump and wife Melania will host the “Governor’s Ball” Sunday night. Governors are also scheduled to have a meeting at the White House Monday morning, according to the NGA’s agenda.

The president has said he wants to tap the private sector for investment in U.S. infrastructure, and he plans to use corporate profits returned from overseas, known as repatriation, to help fund improvements, Gary Cohn, Trump’s chief economic adviser, has said.

While Republican congressional leaders favor private funding to avoid increasing the debt and deficit, Democrats and some Republicans are pushing for more direct federal spending on highways and other projects. They argue that the private deals won’t work in low-density rural areas and for projects that lack a revenue stream.

Chao told governors that public-private partnerships will be one tool but “not the answer for everything.”

Such partnerships generally involve the private sector paying the costs for design, construction and operation of a public asset in return for tolls or other user fees collected once the assets -- such as a new highway -- are operational, or regular payments from a government entity.

Unpopular Fees

Chao noted that tolls are often unpopular with the public, so innovative ways to fund and finance infrastructure work must be considered. She made the comments in response to a question about the Brent Spence Bridge from Republican Governor Matt Bevin in her home state of Kentucky. A project to replace the aging span between Cincinnati and northern Kentucky has stalled because of a reluctance by residents in the Bluegrass State to pay tolls.

“All of us have a responsibility to take a look at all the pay-fors -– and none of them are attractive -– and find new, innovative ways to supplement, augment that which is available and in so doing, educate the public,’’ Chao said. “If our population, if our states, are not with us, we are limited in what we can do.’’

The president plans to talk more about the infrastructure plan in his joint address to Congress on Tuesday and in the budget he’s expected to release in March, press secretary Sean Spicer has said.

Chao attended a session with corporate chief executives at the White House on Feb. 23, where discussions included raising the federal gas tax or indexing it to inflation as a way to raise more money for infrastructure.

    Before it's here, it's on the Bloomberg Terminal.