The federal tax reform law signed by President Trump on December 22, 2017, has several implications for transportation funding, most critically the question of sequestration, which may be taken up when the Government considers appropriations or another continuing resolution (the current continuing resolution expires on January 19, 2018). The uncertainty of transportation funding affects any entity that receives federal funding, and Monterey Salinas Transit will experience direct hits to their ability to cash flow projects.
While the final tax law retains the exclusion from gross income on private activity bonds, a tool that local governments use to finance infrastructure projects, it repeals the exclusion on the advance refunding of bonds.
The tax law also eliminates the tax deductibility of transportation fringe benefits provided to employees to encourage transit use and bicycling.
Meanwhile, the Administration is planning to present an infrastructure plan to Congress this month. Little is known about what the Administration will propose, save for the assumption that it will rely largely on public private partnerships and rewards to local and state governments for raising new funds for infrastructure. This is likely to be a controversial plan and much remains to be seen in how much support they can muster for a plan that is purported to invest $200 billion in federal funds over 10 years.
Finally, there has yet to be action to permanently shore up the federal Highway Trust Fund or the Transit Trust Fund, both of which face near-term bankruptcy under current levels of spending.