Region officials involved in the South Shore Line's major capital projects are staying the course as the pace of federal budget and infrastructure policy making has quickened in recent days, with Congress agreeing to a two-year federal spending framework and President Donald Trump releasing a 2019 budget proposal and 10-year infrastructure plan.
The administration's budget blueprint, released Monday, incorporates recent tax cuts and higher defense spending with echoes of last year's proposal to cut domestic spending. This includes phasing out the Capital Investment Grant program that would fund half the cost of the South Shore's West Lake Corridor and double-tracking projects.
Work in each house of Congress during the past year has continued nonetheless to include support for the Federal Transit Administration's CIG program. A budget deal Congress approved last week — and which Trump signed — includes an increase in domestic spending, which would create more financial space for infrastructure.
The framework deal included fiscal 2019 in an effort to end the cycles of temporary resolutions and government shutdowns that have come to define federal budget-making. The deal set a March 23 deadline to shore up funding for the rest of fiscal 2018.
“As Congress has reached an agreement for a temporary budget template, I will continue to work diligently so that by March 23, all agencies of the federal government, including the Department of Defense and the Federal Transit Administration, can implement plans of work for the current fiscal year that began on Oct. 1, 2017," U.S. Rep. Pete Visclosky, D-Gary, said Monday. "I also will continue to do everything possible to support the applications for investments in the South Shore rail line.”
The Trump administration's budget blueprint did not come as a surprise locally.
"It's exactly what they did last year," South Shore President Michael Noland said. "It's exactly what I expected."
Noland said work in Congress suggests the CIG program retains support in that body, which ultimately sets the country's financial course.
"The bipartisan action that came out last week was positive for our way of thinking the Capital Investment Grant program is going to continue," Noland said.
As work on funding the rest of fiscal 2018 continues in coming weeks, "we're following closely to see what happens to those projects that are ahead of us in the pipeline," he said.
The South Shore Line's projects in the CIG pipeline include the $665 million West Lake Corridor rail line from Hammond to the Munster-Dyer line, and the $312 million double-tracking project between Gary and Michigan City to add a second set of tracks and make other improvements.
The impact of a new infrastructure funding program — the second Trump policy proposal announced Monday — remains uncertain. The plan contemplates a new "Infrastructure Incentives Program" that would provide $10 billion per year to a competitive grant process. The grants would fund at most 20 percent of infrastructure, with local, state and private money necessary for the other 80 percent.
That commitment is well above the 50 percent match that transit agencies have planned for through the CIG and other programs. If the 20/80 match were to apply "it would create significant difficulties for infrastructure projects across the country," Noland said.
But the infrastructure plan, presented as a "Legislative Outline for Rebuilding Infrastructure in America," also suggests the use of "value capture financing" as a prerequisite for participating in future CIG funding. Among a variety of sources of "value capture" are special taxing districts and transit-oriented development.
The Northwest Indiana Regional Development Authority is coordinating creation of transit development districts as allowed by the state in 2017 legislation.
"The language there is very close to what we already have in law," Regional Development Authority President and CEO Bill Hanna said of the administration's plan. "We have value capture already set up in a pretty unique design."
Both of Indiana's senators, Democrat Joe Donnelly and Republican Todd Young, have supported the South Shore projects, and said they'll continue work on a federal infrastructure plan.
"I am hopeful that Congress will work in a bipartisan way to develop and pass a comprehensive infrastructure bill that helps improve our roads, airports, transit, waterways, and drinking- and waste-water systems," Donnelly said.
"Modernizing and investing in our infrastructure system is critical for us to remain competitive," Young said. "I look forward to robustly studying this proposal with my colleagues on the Senate Commerce, Science and Transportation Committee in the coming weeks.”