Draft Infrastructure Bill Circulated in the U.S. House
Chairman of the House Transportation and Infrastructure Committee, Bill Shuster (R-PA) circulated a draft bill that would, among other things, tackle the funding issue for the Highway Trust Fund (HTF). The bill may be a catalyst for discussion on transportation issues, but no action is expected anytime soon.
The bill would increase the gas tax by 15 cents and by 20 cents for diesel fuel until 2028. Consistent with a goal to make all users of the transportation system pay for the system, the bill imposes a 10 percent tax on the wholesale price of electronic batteries for vehicles and bicycle tires and eliminates the reduced user fees on fuels for intercity and local public buses and certain passenger trains. Other highway taxes also are extended to 2028. A Highway Trust Fund Commission would be created to find a long-term solution to the solvency issues of the HTF. A voluntary pilot program would test whether a per-mile user fee could fund the HTF.
The bill also contains a pilot program for the General Services Administration to complete three to five federal building projects as a public-private partnership (P3) under the current Office of Management and Budget (OMB) scoring rules. Long term P3s do not score well under current OMB rules. When a federal agency leases office space under a ten-year lease, the OMB rules provide that this is an operating lease that requires the agency to include only the next year?s lease payments, plus any fee to break the lease, to be included in the following FY budget. If a federal agency enters into a P3 agreement under which a private partner finances the construction or rehabilitation of a building for which the federal agency would rent the space for 20 years, after which the agency would either take ownership or otherwise pay back the private partner for the financing, the OMB rules consider that a capital lease. The federal agency would have to budget the present value of the entire 20-year lease in the next FY budget. If this provision is enacted, it would test P3s and how they can operate under current OMB rules.
The bill also addresses accelerating project delivery by requiring the federal transit agencies to make a decision on a permit within two years and creating a pilot program to test innovative approaches to environmental permits.
The bill authorizes $3 billion over the next five years for a new National Infrastructure Investment Program to make grants for transportation projects, 30 percent of which must be in rural areas. There will be incentive grants to applicants that have leased an infrastructure asset to the private sector if the applicant certifies that the proceeds from that lease will be used to make other infrastructure investments. The proposal also contemplates a $10 billion revolving fund to construct and renovate federal buildings. There no funding mechanism for these new programs.
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SFAA submitted comments to the California Department of Insurance (Department) to address proposed rules that would allow surety bonds to be posted to collateralize up to 20% of the funds required to be set aside for the California deductible under a workers’ compensation deductible policy. We questioned the requirement for the surety to have a rating of at least an “A” from A.M. Best, Fitch Ratings, or Standard & Poor’s, or at least an A3 rating from Moody’s Investor Service as sureties already are subject to financial regulation and licensure from the Department. The rating requirement needlessly restricts the sureties that can provide the bond.
