Much ado about transportation, and infrastructure bank

| 9/9/2011

President Obama is proposing to spend $50 billion on infrastructure immediately and come up with another $10 billion to start a national infrastructure bank for significant projects. While highway users applaud the positive talk about investment, they have cause for concern as to how the projects would be paid for.

Transportation infrastructure was just one part – albeit an important one – of the $447 billion “American Jobs Act” that President Obama announced during a joint session of Congress on Thursday, Sept. 8.

OOIDA leadership says it’s good to see the administration focusing on transportation infrastructure, but like other proposals that have come before, this one still lacks a “pay for” mechanism.

“There are obvious concerns about how such a package will be paid for and the specifics of the legislative proposal – all of which are supposed to come later,” said OOIDA Director of Legislative Affairs Ryan Bowley.

President Obama included a footnote with his proposal saying it will, in fact, be fully paid for and that details would be announced soon.

Highway users including truckers are concerned that the cost of travel will continue to increase.

“Additionally, this promise of an infrastructure bank as a silver bullet ignores the reality that the bank really doesn’t provide any new money and will likely increase the number of highways that are tolled,” Bowley says.

The concept of an infrastructure bank is not new. The latest proposal for a national “i-bank” is based on a bill introduced by Sens. John Kerry, D-MA, and Kay Bailey Hutchison, R-TX.

The bank would use start-up funds, possibly Highway Trust Fund dollars, to finance projects of national significance. Loans would be secured by future revenue – which for roadways most likely means tolls.

Not all lawmakers are sold on the idea of a national infrastructure bank, even though the concept is common at the state level.

“Unfortunately, a National Infrastructure Bank run by Washington bureaucrats requiring Washington approval and Washington red tape is moving in the wrong direction,” said U.S. Rep. John Mica, R-FL, chairman of the House Transportation and Infrastructure Committee.

“A better plan to improve infrastructure is to empower our states, 33 of which already have state infrastructure banks.”
Bowley says state infrastructure banks can secure their loans against future apportionments from the federal Highway Trust Fund, but a federal infrastructure bank would not operate that way.

“From a highway user’s point of view, at the state level we have a clear way to pay for these projects out of apportionments from the Highway Trust Fund, but at the federal level it becomes a lot less clear,” Bowley said.

“Where are those capitalization funds going to come from? Will they come from the Highway Trust Fund? Who will make the decisions? If that is money coming out of the Trust Fund, what projects can get paid for out of that?” are some of the questions that highway users deserve answers to, Bowley said.

The president’s speech contained some positive takeaways, he adds, but there’s still the sticking point about paying for the proposal.

“We’re waiting to see where they go with pay-for mechanisms and are those politically viable?” Bowley said. “How do you pay for almost half a trillion dollars in spending and make that budget-neutral when we continue to face budget challenges even without this.”

Following is an excerpt from President Obama’s address to the House and Senate:

“Pass this jobs bill, and we can put people to work rebuilding America. Everyone here knows we have badly decaying roads and bridges all over the country. Our highways are clogged with traffic. Our skies are the most congested in the world. It’s an outrage.

“Building a world-class transportation system is part of what made us a economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America?

“There are private construction companies all across America just waiting to get to work. There’s a bridge that needs repair between Ohio and Kentucky that’s on one of the busiest trucking routes in North America. A public transit project in Houston that will help clear up one of the worst areas of traffic in the country. And there are schools throughout this country that desperately need renovating.”

… (Abridged)

“No more earmarks. No more boondoggles. No more bridges to nowhere. We’re cutting the red tape that prevents some of these projects from getting started as quickly as possible. And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy.

This idea came from a bill written by a Texas Republican and a Massachusetts Democrat. The idea for a big boost in construction is supported by America’s largest business organization and America’s largest labor organization. It’s the kind of proposal that’s been supported in the past by Democrats and Republicans alike. You should pass it right away.”