WASHINGTON — A coalition of state departments of transportation have banded together to urge the House Republican leadership to avoid including any language in a transportation bill that would remove “important optional financing tools” for some public-private partnerships.
Nine state DOT leaders signed their names to a letter to House Speaker John Boehner, R-Ohio, asking him not to allow any House multi-year transportation bill to contain the provision that was added to the two-year, $109 billion Senate bill by Sen. Jeff Bingaman, D-N.M.
That provision would prohibit private-activity bonds from being used as a financing option for publicly built highways that are leased to private companies for long periods of time. It would also disallow depreciation and tax write-offs currently available to such roads, and ensure the roads have no opportunity to receive federal aid.
In first proposing the idea last year along with Sen. Chuck Grassley, R-Iowa, Bingaman said the restrictions would protect American taxpayers from paying for the same road over and over.
“If states enter into long-term highway leases to raise revenue, they should not expect American taxpayers to subsidize the deal,” he said at the time. “Taxpayers have already paid construction costs. They should not be required to pay a second time by subsidizing a private sale.”
Currently, the tax code allows a private highway operator to depreciate or write off the portion of a highway lease attributable to infrastructure if the lease is sufficiently long — generally, longer than the 45 years highway infrastructure is expected to last.
Bingaman has cited the Chicago Skyway and Indiana Toll Road, which were leased to private operators for 99 and 75 years, respectively.
But transportation leaders from Arizona, Pennsylvania, Florida, North Carolina, Indiana, Texas, Kansas, Virginia, and Ohio aren’t happy the provisions in the Senate bill take away flexibility to find new ways to pay for roads at a time when traditional financing methods are insufficient.
The Congressional Budget Office said recently that the Highway Trust Fund, a federal pool of money primarily drawn from gasoline tax revenue, could reach insolvency within months. The tax hasn’t been increased or indexed for inflation since 1993. The advent of more fuel-efficient vehicles has also taken a toll on the revenue stream. State leaders are increasingly considering use of nontraditional financing, such as P3s.
“The changes made by these provisions are detrimental to those states that choose to utilize innovative P3 agreements,” the state regulators said in their letter. “DOTs should be rewarded for going above and beyond while finding solutions to challenges and not punished for them.”
A finance expert who lobbies on behalf of state DOTs said he worries the Bingaman provisions create a slippery slope that will allow federal lawmakers to use the same reasoning to withhold money from a wide variety of projects, such as public roads that feature tolled express lanes. Congress approved a 90-day extension to the current highway law last week, just before it was set to expire at the end of March.
