By David Shepardson

WASHINGTON (Reuters) – U.S. President Donald Trump’s administration told state and local officials on Wednesday that it will use its infrastructure plan to create incentives for the private sector to finance or take over public entities like bridges, tunnels and highways.

Transportation Secretary Elaine Chao and White House budget director Mick Mulvaney told about 150 transportation officials at the White House the administration wants the private sector to play a bigger role in managing and financing public infrastructure.

Mulvaney said the administration wants to give states and cities “incentives to move stuff you might own off of your books and into the private sector.”

He said that would result in states and cities “getting more money to do new stuff.”

The administration has said it wants to spend $200 billion on infrastructure over 10 years, an amount the administration hopes will encourage another $800 billion in infrastructure investment by the private sector, but has not offered a detailed plan. The administration will need congressional approval, and some members of Congress in both parties do not expect to take up the issue until 2018.

“The largest piece of the package is going to be wrapped around incentives,” Mulvaney said.

He said the incentives will work well in densely populated urban areas in airport, bridge, tunnel, port and other projects. It is harder for rural areas to have private sector-backed projects, citing the lack of potential “cash flow,” Mulvaney said. For example, a bridge in a rural area would have less traffic and potentially less likely be a candidate for private funding.

He said the administration plans to target some funds solely for rural infrastructure projects that may not work as private sector-backed projects.

Chao said the plan is not yet final but said states and cities that secure some private-sector financing “will be given higher-priority access to new federal funds.”

Democrats want more direct federal spending. Senate Democratic Leader Charles Schumer has pointed out that the Trump budget unveiled in May cuts $206 billion in infrastructure spending across several Cabinet departments, including $96 billion in planned highway trust fund spending.

“$200 billion is a lot – but it is not $5 trillion, so you still want to be smart with it,” Mulvaney said.

The three-prong infrastructure plan will also include backing for big “transformative” projects, Mulvaney said. Trump wants to look at new ways to build bridges, tunnels and ports.

“The president is very interested in trying to find that transformative, infrastructure technology, that is this close to being ready for market,” Mulvaney said.

(Reporting by David Shepardson; Editing by Jonathan Oatis)