Innovative financing tools for transportation projects — including an array of different types of bonds — should be expanded and grouped into a centralized department at the federal level, state and local officials told House panel members yesterday.
“As we look to rebuild our infrastructure, we need a Marshall Plan” for transportation, Phillip A. Washington, general manager and chief executive officer of the Denver Regional Transportation District, said during a hearing held by the House Transportation Committee’s highways and transit panel. “Whether it’s public-private partnerships, whether it’s rehabilitation loans, whether it’s [Transportation Infrastructure Finance and Innovation Act credit assistance].”
The hearing came as committee chairman James L. Oberstar, D-Minn., is pressing for new programs in a $450 billion reauthorization bill and also has called for $130 billion of Treasury notes to be deposited in the highway trust fund, which provides money to states for roads, bridges, transit, and other surface transportation projects. The highway trust fund has been partly capitalized with general funds during the past two years, as its user fee revenues have lagged behind outlays.
The hearing also was a platform for committee members, the Obama administration, state and local officials, and the private sector to argue for reforming financing and creating new so-called innovative finance tools. Committee members grilled Chris Bertram, the Department of Transportation’s assistant secretary for budget and programs and chief financial officer, on administration proposals, including a national infrastructure fund that would be capitalized with $4 billion of federal money.
Highways and transit subcommittee chairman Rep. Peter DeFazio, D-Ore., suggested using the $4 billion instead to augment the oversubscribed TIFIA program, which provides low-interest loans and credit assistance to mostly user-fee projects.
“Maybe all of it should just go into the TIFIA program,” he said.
There are 11 innovative financing tools now available to state and local governments, Oberstar said during the hearing. Among them are several flavors of municipal debt, including private-activity bonds, tax-exempt bonds, and grant anticipation revenue vehicles, or Garvee bonds, which are backed by future federal grants.
Witnesses told the committee that the current structure for providing federal grants to states via a highway trust fund capitalized mostly by fuel taxes should be retained. However, the next multi-year transportation law needs to include some reforms and restructuring, they said.
“Have a range of tools available, and then have a one-stop shop” to help state transportation officials “walk through the alternatives,” said Eugene A. Conti, North Carolina’s transportation secretary. “We would be very supportive of that.”
Conti said his state has benefited greatly from Garvee bonds. But states need to see more transparency in competitive programs, including the TIFIA low-interest credit assistance program, he said, “so we can understand how these decisions are made and what our financial liability may be.”