Senate Commerce Committee Discusses Innovative Financing Options for Transportation Infrastructure Investment

AASHTO Journal, 27 September 2013

One day before a Senate Committee on Environment and Public Works hearing on the concerns regarding the Highway Trust Fund (see related AASHTO Journal story here), the Senate Committee on Commerce, Science, and Transportation held a hearing Tuesday on leveraging innovative financing to supplement federal investment for infrastructure projects.

“It is well documented that pension funds, private equity funds, and other alternate sources of capital are able and willing to put billions into infrastructure projects in this country,” said committee Chair Jay Rockefeller (D-WV) in his opening statement. “Now, more than ever, we as policymakers should be creating an environment and providing tools to incentivize these pools of funding into infrastructure projects.”

Ranking Member John Thune (R-SD) reminded the panel of the HTF’s shortfalls in 2015. The Congressional Budget Office has said that the HTF will need an additional $15 billion in revenue to maintain current spending levels (plus inflation).

“That is why it is important to consider new and innovative infrastructure funding mechanisms,” Thune said. “In doing so, however, we must take into account the needs of the entire nation, including rural states like South Dakota, which have unique challenges. That being said, I have always viewed innovative financing as additive and not a replacement for the federal government’s role in ensuring that our nation’s transportation network is maintained and improved.”

The committee heard from panelists Norm Mineta, former Secretary of Transportation and former Secretary of Commerce; Jack Basso, principal of Peter J. Basso and Associates and former American Association of State Highway and Transportation Officials finance director; J. Perry Offutt, Morgan Stanley managing director of infrastructure banking for the Americas; and Matt Connelly, transportation vice president at United Parcel Service.

Topics ranged from increasing usage of current financing programs such as the Transportation Investment Generating Economic Recovery (TIGER) grants and the Transportation Infrastructure Finance and Innovation Act (TIFIA) loans; a national infrastructure bank; and public private partnerships.

Mineta said there were many challenges stakeholders face in discussing what role a national financing authority should have, such as past unsuccessful communication about innovative financing models within the community, managing political risk, the fact that private investors have money “that is too expensive… can’t compete with other forms of financing,” and long timelines that deter investors from diving into projects.

Basso said that while federal funding is important, the innovative financing tools available to transportation agencies are necessary supplements.

“Funding is critical to address the needs but financing through innovative tools such as TIFIA, the introduction of budget infrastructure bank proposals and state actions to engage in P3s as well as private sector access to larger pools of capital is an essential ingredient to making significant progress in really expanding all areas of infrastructure investment,” Basso said.

Additional information on the hearing is available here.

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