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The Infrastructure Funding Gap: Solutions in Brief

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Read the full report here.

Democrats and Republicans agree that American infrastructure funding must be a priority. Our infrastructure is in desperate need of repair, but government at every level has failed to take meaningful action.

In recent years, the U.S. has only paid about half of its necessary infrastructure bill, the funding gap is widening and all Americans are picking up the tab. We spend 42 hours in traffic and $599 in damage to our vehicles each year from driving on roads that need repair.

The President and Congress have failed to make progress on the details of an infrastructure funding package because they cannot agree on where the money should come from. There is a major ideological difference between the two parties: Democrats prefer a plan that would increase tax revenues to generate new public funding while Republicans prefer to only slightly increase public funding in hopes of incentivizing private investment.

Both sides have a point, and The New Center believes they could align behind the following grand bargain, discussed in more detail in the newly released paper “The Infrastructure Funding Gap”:

  • Require states to evaluate all potential funding options, including public-private partnerships, to become eligible for federal funding
  • In the short term: Increase the federal fuel tax for the first time since 1993 and index it to inflation, but in the long-term: transition from a fuel tax in the short term to a vehicle miles traveled fee in the long term to account for the increasing prevalence of hybrid and electric vehicles
  • Implement an overland freight tax on heavy-duty trucks and rail cars to account for the extra wear these large vehicles impose on our infrastructure
  • Implement a capital budgeting system for federal infrastructure projects to account for spending that delivers economic return and operating expenses separately
  • Revive the Obama Administration’s Build America Bonds program to stimulate the purchase of municipal bonds and generate extra funding for public infrastructure projects
  • Lift burdensome regulations on Private Activity Bonds, which are valuable financing tools for projects that benefit private entities while serving a public purpose

“The Infrastructure Funding Gap” is available for download here.