Brief

Trump's budget proposal a mixed bag for the construction industry

Dive Brief:

  • President Donald Trump has unveiled his proposal for the 2018 budget, and, as-is, it includes both potential positives and negatives for the construction industry.
  • Proposed cuts include a 13% reduction in the Department of Transportation's budget, an elimination of the Transportation Investment Generating Economic Recovery (TIGER) grant program — which pays for discretionary road and rail projects — as well as a $1 billion reduction for the Army Corps of Engineers and a halt to the Federal Transit Administration's capital investment program, kicking funding responsibilities for projects with only state or regional benefit back to those localities, according to CNBC.
  • One construction program that could benefit from the budget is the U.S.–Mexico border wall. Trump has requested $1.5 billion dollars for the project for this year and $2.6 billion in 2018, although there is no mention of Trump's oft-touted plan for Mexico to ultimately pay for it.

Dive Insight:

The budget proposal must now go through the Congressional appropriations process, which will undoubtedly see some items change. Administration officials said the cuts to the transportation budget were necessary to pay for the more comprehensive $1 trillion plan promised by Trump during the campaign.

One of the most devastating elements of the budget to the construction industry could be the obliteration of the FTA's capital investment program. According to Trump's proposal, any project that has not secured a full funding agreement will not receive much-needed cash. Many, if not all, of the projects requesting FTA funding would find it difficult to move forward without it.  

There are more than 50 projects at risk of losing anticipated FTA funding, including the Los Angeles Purple Line extension, the Peninsula Corridor Electrification Project, Chicago's Red Line expansion, the Minneapolis Southwest LRT, the Boston Green Line LRT and the Maryland Purple Line project. Some of these projects, however, do appear on Trump's list of high-priority infrastructure projects.

Brian Turmail, senior executive director of public affairs for the Associated General Contractors of America, told Construction Dive in an email that the AGC is waiting to see Trump's broader infrastructure plan before rendering an opinion on the budget. "In the absence of that, it is hard not to look at proposals to eliminate programs like the TIGER Grants and wonder how such cuts don’t contradict the President’s oft-repeated pledge to invest in infrastructure," he said.

The good news for construction is that the proposed budget keeps the FASTLANE grant program with a proposed 2018 budget amount of $900 million. That program funds highway and freight projects. A recent recipient of a $165 million FASTLANE award was Virginia's $1.4 billion Atlantic Gateway I-95 corridor project.

While Trump's border wall project has drawn the interest of hundreds of construction companies, the broader industry is more focused on his massive infrastructure funding plans. However, amid political infighting over how to fund the program and other legislative priorities taking over, Trump's team could reportedly push the the infrastructure plan until 2018

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Filed Under: Economy Infrastructure Legal/Regulation