NACo Legislative Conference 2018

Thank you, Greg [Greg Cox – 1VP of NACo]. 

This may be my first opportunity to formally address NACo as Secretary of Transportation, but I have had the opportunity to cross paths with many of your members – including your former President Bryan Desloge.  We met last year at a White House infrastructure event. 

I want to give a shout out to my fellow Kentuckians who are NACo members, including:

• Judge Gary Moore of Boone County, and Chairman of the NACo Transportation committee who paid a special visit to Washington to invite me to attend,
• Brian Roy, CEO/Executive Director of the Kentucky Association of Counties;
• David L. Nicholson, Jefferson County Circuit Court Clerk and President of the Kentucky Association of Counties;
• Ellen Williams, of the Kentucky Association of Counties. 

To you, and everyone else in the Kentucky delegation, it is good to see you.  And Mitch sends his greetings!

The short film you played was a perfect set up for the importance of counties in rebuilding and renewing America’s infrastructure.

As the film says, counties own and maintain 46 percent of this nation’s public roads, 38 percent of its bridges and more than a third of its public airports.  They help pay for 78 percent of the public transit systems, have invested more than $22 billion in sewage and waste water, and operate more than 900 public hospitals.

And as you know, our infrastructure is aging, and in many cases, cannot keep up with the pace of new technology.

That’s why 12 government departments have been working on the President’s initiative to revitalize our country’s infrastructure.  The plan involves more than transportation infrastructure.  It also includes energy, drinking and waste water, rural broadband, and veterans’ hospitals.

The goal of the President’s proposal is to stimulate at least $1.5 trillion in infrastructure investment, which includes a minimum of $200 billion in direct federal funding. 

The guiding principles include: 1) use federal dollars as seed money to incentivize infrastructure investment; 2) provide for the needs of rural communities; 3) streamline and speed up project delivery; and, 4) reduce unnecessary and overly burdensome regulations.  And, as a former Secretary of Labor, I’m pleased to note that this Administration’s infrastructure plan also has a workforce component, to help workers access the skills needed to build these new projects.

In addition, a key element of the proposal is to empower decision making at the state and local level, because you know best the infrastructure needs of your communities. Half of the Federal funds would go towards incentivizing new state, local, and private sector investments in infrastructure.  These will be competitively awarded.

25% of the Federal funds will be dedicated to addressing rural infrastructure needs, as prioritized by state and local leaders like you.  Since 70 percent of America’s counties are rural, this is good news.  $40 billion of this amount will be allocated by formula, while $10 billion will be performance-based grants to reward states that produce the best results. 

Some estimates say our country’s infrastructure needs as much as $4 trillion in investment.  We cannot fund these infrastructure needs by only federal government funding, deficit spending or by floating bonds or borrowing.  Doing so could result in dislocations in the private markets, hinder growth and job creation.  The President’s plan allows the private sector to help in the building of our public infrastructure.  In the last year, many parts of the federal government have been in discussions and consultations with the private sector on ways to help finance our infrastructure needs. 

America has the largest and most robust capital markets in the world.  Many private pension funds, for example, want conservative investments like public infrastructure, which have collateral that will not walk away.  There are different ways for the private sector to participate and provide alternative forms of financing, including Private Activity Bonds, operations and maintenance, long-term leasing of assets, and asset recycling.  In addition, the private sector helps allocate risk.  If a project is NOT successful, the private sector bears the first loss instead of the taxpayers. But, in many states, private pension and investment funds are restricted in their ability to invest in public infrastructure. The Department recognizes there is no one-size-fits-all solution, and that different regions require different solutions. But private sector investment should be an allowable option where appropriate. 

Many other nations, including Australia, France, and England have worked with their private sectors to build and operate infrastructure that has improved lives and led to economic growth. Historically, America’s first infrastructure was built with private sector participation. 

There are many successful models to tap.

For more background on the Infrastructure Plan, there are copies available of the booklet entitled, “The President's Initiative for Rebuilding Infrastructure in America.” It contains more details of the Infrastructure proposal and its goals.

The other key parts of the President’s plan to revitalize our infrastructure and create jobs are streamlining the permitting process and reducing the regulatory burden on job creators

These changes will also make more projects available quicker for private sector investment dollars.  If the permitting process is shorter, it offers less risk to potential private sector investors.  When we say streamlining the permitting process, we are not compromising on the environment but rather finding common sense ways in which permitting can be allowed to proceed faster.  For example, reducing redundant or duplicative processes; allowing sister agencies to share information rather than require them to each conducts its own studies; encouraging concurrent rather than sequential approvals.  These practices are commonly found in European countries.   

The Department is already making progress in reducing red tape.  It is vigorously implementing the President’s “One Federal Decision” initiative that was announced last August.   All the departments involved are working on a new process to handle the permitting of complicated, multi-agency projects within the President’s new expedited time line.  This means less paperwork, and more timely improvements that will better protect the environment and our quality of life.

The Department has also made progress in reducing regulatory burdens that delay infrastructure projects, raise costs, and hinder job creation. In 2017, the Department decreased regulatory costs by $312 million and is on track to reduce the cost of regulations by more than $500 million in 2018. 

In addition, the Department is working to make the TIGER and INFRA grant programs more effective and reflect the President’s priorities.  The Department received 450 applications, which were due in October, for the FY2017 TIGER grant program.  Those award announcements will be going out very soon.  The INFRA award announcements will follow afterward. 

As noted earlier, eliminating unnecessary red tape will not only speed up the delivery of infrastructure, it will also help prepare the way for exciting new technology.

As you know, our country is on the cusp of a transportation revolution.  New technologies could transform the way we travel and connect with one another.  Autonomous – or self-driving – vehicles, drones and other transportation innovations have the potential to improve safety by addressing human error, which is a factor in 94 percent of traffic fatalities.  They also can help increase access to transportation for underserved communities—including the elderly and people with disabilities, giving them back their mobility and freedom!

But as you may know, there are also concerns over these technologies, regarding safety, security and privacy.  74% of Americans are hesitant about common usage of autonomous vehicles.  And, for policy makers, we need to be responsible when we issue regulations.  The Department issued the voluntary guidelines, AV 2.0 – A Vision for Safety – last September 2017, which superseded the previous version which was issued September 2016.  Technology is changing so rapidly that work is already underway on AV 3.0 which we hope to release as early as this summer.  This new AV guidance will be multimodal, and include various surface transportation systems, such as mass transit, rail, and trucking.

Drone technology is also changing the aviation industry. Companies are increasingly interested in adapting them for all kinds of commercial and humanitarian applications.

On January 10, 2018, a major milestone was reached with more than 1 million drones registered in the U.S.  And there has been a significant increase in the number of drone pilots, with more than 75,000 now certified to conduct commercial operations. That’s why the Department has launched a new Drone Pilot program that is, like the Infrastructure plan, oriented to state and local government.

This program will accelerate the safe integration of unmanned aircraft into our national airspace by creating new partnerships between state and local governments, the Department, and private sector drone operators.  By 2020, our national airspace will have over 1 billion travelers/passengers and how to integrate increasing drone activity into this airspace will be a great concern. 

The Department’s approach to innovation will be technology neutral - not top down, command and control. It’s important for policy makers to foster an environment that promotes safety without hampering innovation. 

The Department and this administration look forward to being partners with you in revitalizing and rebuilding our country’s infrastructure and preparing for the future.    Counties – or parishes, if you are in Louisiana – are the fundamental units of our government.  By working together, we can rebuild and renew our country’s infrastructure, and help ensure that our economy remains competitive and continues to create good jobs.

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