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The Source for Public Transportation News and Analysis October 4, 2013
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America's Infrastructure: Ways to Finally Get Rolling?

There’s never been a better time to build the highways, rail lines, bridges, fiber-optic networks, and other varieties of infrastructure we need for a successful America.

Interest rates for long-term borrowing are at record lows, meaning the future payback costs for borrowing will be millions or even billions less than they might be otherwise.

Contracting firms are hurting for business and can often offer their services at the best rates in decades. Costs for steel and concrete are down too, at least compared to what they would be in a stronger economy.

That’s the argument my journalist colleague Alex Marshall makes in a Governing magazine analysis—supportive of many other calls from the Obama administration and others for a national infrastructure bank and companion capital-opening steps.

The case is backed up by the points that infrastructure projects put thousands of people to work and create the basic facilities for the long-term health and prosperity of any city or state.

The quickest but unlikeliest cure is for Congress to wake up and enact a new transportation bill raising the current federal gas tax stuck, notwithstanding significant inflation, at 18.3 cents a gallon for 20 years. But that’s unlikely now. As James Oberstar, former House Transportation and Infrastructure Committee chairman, notes, politicos of all stripes (even President Obama) have flinched at the idea of proposing an increase.

The impasse is sad. Presidents from Dwight Eisenhower to Bill Clinton favored appropriate gas tax increases, and Congress approved—often by voice votes. Even a five-cent increase now, Oberstar argues, would raise over $8 billion in revenue and create 600,000 construction jobs.

So could the 50 states, from their own resources, correct the gap? Theoretically, yes—though their legislatures generally match Congress’ cowardice on the issue.

Yet there are current signs of state-level change, heralded by a range of experts ranging from analyst Kenneth Orski and former Pennsylvania Gov. Edward Rendell to Obama’s new transportation secretary, Anthony Foxx.

State gas taxes are going up in Maryland, Vermont, and Wyoming; Virginia is raising added revenue with a switch to sales taxes on the wholesale price of fuel; Arkansas is dedicating a half-cent sales tax increase to transportation.

Most of today’s state infrastructure advances, though, are based on public-private partnerships, inducing private investors to ante up the lion’s share of costs for new projects.

Theoretically, this is a great idea. As Fawn Johnson writes for National Journal: “If market-based motives operate as capitalism dictates, the private sector should be able to come up with new and innovative ways to solve complex traffic problems at a lower cost for a city or state.”

But she notes that this is not guaranteed. Private investors, unlike government, are looking to reap a profit. Texas Gov. Rick Perry faced withering criticism for the terms of a deal he made with a Spanish infrastructure firm to build a 4,000-mile network of tolled highways. The federal Transportation Department refused to sanction the project and the Texas Legislature then actually outlawed it.

Former Indiana Gov. Mitch Daniels successfully completed a public-private deal to finance the 157-mile Indiana Toll Road, but critics allege that truck tolls could increase more than 3,000 percent over the 75-year deal. Hiked toll charges by a private firm can trigger driver or citizen complaints on any privately financed roadway. The private firm building a new Hampton Roads tunnel connecting Portsmouth and Norfolk, Va., has legal rights to increase tolls as much as 3.5 percent a year for 56 years.

That said, the reality of the times is a switch—as Emil Frankel of the Bipartisan Policy Center sums it up—“from federal funding to federal financing.”

A prime example: the federal credit and credit enhancement program called TIFIA—the Transportation Infrastructure Finance and Innovation Act that provides federal credit assistance (loans or standby lines of credit) to finance nationally significant highway, transit, railway, or port projects. The most recent federal transportation authorization bill increased total dollars available to TIFIA loans eightfold.

Then there’s Obama’s continued call for a national infrastructure bank. Congress won’t act on the idea, but there does seem to be bipartisan support for a Brookings Institution proposal to allow corporations and individuals to “repatriate” overseas profits they’re now sheltering in such tax haven locations as the Cayman Islands—just as long as they agree to put their gains into an infrastructure bank.

At roughly $1.5 trillion, the repatriated funds would be enough, Brookings claims, “to deliver job creating and economy building projects for decades to come.”

The bottom line is clear: The dollars can be found. But if we don’t apply them soon, the United States will fall more and more behind today’s global infrastructure—and competitiveness—standards.
Contact Neal Peirce.
©2013, The Washington Post Writers Group

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