With tax reform behind him and the repeal of Obamacare off the table for 2018, Donald Trump will focus this year on infrastructure investment. In his State of the Union address, he called for $1.5 trillion in infrastructure spending in the next year. This would go a long way toward meeting the nation’s infrastructure needs, pegged by the American Society of Civil Engineers at $2 trillion. If it materializes, the $1.5 trillion in spending over the next decade will make a meaningful improvement in the nation’s crumbling infrastructure and will create a large number of blue collar jobs. But there is reason to be skeptical. The $200 billion in federal funding — which amounts to just 0.1 percent of cumulative GDP over the period — may be too small a contribution. Cash-strapped states and municipalities may not be able to raise the remaining $1.3 trillion in matching funds to fulfill the President’s pledge.

The President’s address provided no details on the selection of projects or their financing. But there are clues from the administration that suggest what the President has in mind.

Early rhetoric about the administration’s plans to shore up the nation’s deteriorating infrastructure relied on private investors such as private equity (PE) funds to finance Trump’s campaign promise of $1 trillion in spending on infrastructure projects. Devised by campaign advisors Wilbur Ross (PE magnate and now Secretary of Commerce) and Peter Navarro, their proposal was to encourage PE funds and other private investors to put up a sixth of the $1 trillion infrastructure investment and finance the rest with debt. The Ross/Navarro infrastructure plan proposed a tax credit to these investors equal to 82 percent of their equity investment as an incentive. PE firms geared up for this anticipated bonanza. In February 2017, Joe Baratta, global head of PE at Blackstone Group, the largest PE firm in the world, talked about raising an infrastructure fund with as much as $40 billion of equity. Global Infrastructure Partners raised $15.8 billion and Brookfield Asset Management Inc. raised $14 billion for equity investments in public infrastructure.

The administration’s infrastructure plan has changed in some ways since the days of the presidential campaign. A leaked version includes a substantial role for private investors, including PE funds — but a less obvious and central role than in the plan circulated during the Trump campaign.

The leaked infrastructure document put the federal government’s spending over 10 years at $200 billion, with half dedicated to an incentive fund available to states, local governments, public authorities, and non-profits. Private investors will be able to participate, but only with sponsorship from a public entity: read public-private partnerships. Cash-strapped state and local governments will be asked to compete for federal grants and will need to find new, non-federal revenue sources to cover 80 percent or more of the cost of the infrastructure project. Private investors (public-private partnerships) will be an important source of such funds. The public can also expect a large increase in tolls and user fees. A proposed change in the law that prohibits turning interstate highways into toll roads would enable states to impose tolls on these roads to raise funds for infrastructure projects. States would also be allowed to commercialize interstate rest areas. Private activity bonds — with expanded types of eligible uses of these bonds and a guarantee that they will remain tax-exempt — are a common, low-cost form of financing for some types of infrastructure investment. Maintaining the tax-exempt status of these bonds is important to localities and local agencies. However, a change in the rules governing these bonds would retain their tax-exemption even if the infrastructure built with them is leased to another entity.

Another 10 percent of the $200 billion, according to the leaked infrastructure plan, will be administered by Ross’ Department of Commerce and will be allocated to transformative infrastructure projects that are exploratory and ground-breaking. For capital projects, the federal government will put up as much as 80 percent of the cost. Projects require minimum equity investments by private investors or non-profits. The federal government would be a financial partner in these projects and would share in the project value if a project generated value.

One element of the Trump campaign’s infrastructure plan has survived – the President’s infrastructure plan will gut environmental protection requirements that date back to the 1970s. Under rubrics such as “streamlining the application process or getting projects completed more quickly,” roads, bridges, and pipelines will be constructed without the necessary protections for clean air, clean water, and the environment. Some projects would be allowed to proceed before completion of a review by the National Environmental Protection Act. Local communities would not know the environmental impacts they will face and will have little opportunity for input into project planning.