Opening Statement of Senator James M. Inhofe:
I believe in federal infrastructure spending and see it as one of the primary purposes of government. Given our enormous needs, however, it is difficult to imagine that the next highway bill could ever meet all of them if we follow the traditional way of paying for transportation. According to the Administration, our backlog of deferred road and bridge maintenance is $600 billion and growing. Clearly, we need to think about how we can do things differently. Not only do we need to get the most for our federal highway dollar, but we also need to encourage state and local governments and the private sector to invest as much as possible in roads and bridges.
SAFETEA was a 38 percent increase over TEA-21 and was one of the largest non-defense spending measures ever passed. But as I've often said, it wasn't enough money to even maintain our existing roads and bridges-let alone improve them. We can't expect to spend our way out of this crisis with federal dollars alone; we need a true public-private partnership if we are going to accomplish what needs to be done.
One of the most frequently discussed ways to leverage non-federal investment is through public-private partnerships, or PPPs. With PPPs, state or local governments enter into an agreement to transfer risks to the private sector and raise private capital. This is a way to unleash an enormous amount of private money, especially from pension funds. Investors are attracted to PPPs because they offer stability over long periods -often 75 or 95 years. I must point out that although these long-term concession agreements can work, as evidenced by the Indiana Toll road, there are many different applications for PPPs that we are just beginning to understand. We can no longer overlook this financing source to help address our infrastructure funding shortfall.
In addition to the private sector playing an active role in a project, there are ways the federal government can lower borrowing costs. These include capitalizing state infrastructure banks, increasing opportunities for bonding, and federal loan programs, such as those made possible by the Transportation Infrastructure Finance and Innovation Act ("TIFIA") program. To date, all of these have been initiated at the state or local level.
I am interested in hearing from our witnesses today on how changing the structure of the federal program can encourage more transportation investment at the state and local level.
I look forward to the testimony.