Ranking Member, Senate Committee on Environment and Public Works
Full Committee hearing entitled, "Innovative Project Finance."
Tuesday, September 28, 2010 10:00 a.m.
As I've said here before, I believe in federal infrastructure spending and see it as one of the primary purposes of government. Given our enormous infrastructure needs it is difficult to imagine that the next highway bill could ever meet all of these needs-especially since the highway trust fund is in dire condition. 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.
This hearing is on innovative financing, which really accomplishes both: getting the most out of each federal dollar and leveraging non-federal funds. The two forms of innovative financing I'm most excited about are public-private partnerships and the TIFIA program.
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 raise private capital and transfer risks to the private sector, making challenging and unaffordable projects possible. This is a way to unleash an enormous amount of private investments in public infrastructure. This financing source is as important to helping us address our infrastructure crisis as a robust federal highway bill.
Another way to leverage non-federal funds is a loan program contained in the current highway program called TIFIA. Although it took some time to really get going, TIFIA now is very popular and recently received applications for 10 times the amount it can lend. It is used in many situations, including as a component of PPP financing or by states to supplement more traditional financing. Clearly, this is a successful program that must be dramatically expanded.
I will end on a final note about infrastructure banks, which is a very hot topic these days. First of all, we have government infrastructure banks for transportation: at the federal level we have TIFIA and at the state level we have State Infrastructure Banks which are capitalized by the federal government. What most proponents of a new infrastructure bank want is a mechanism to give out more grants. Banks don't give out grants; they give out loans. There is also currently a mechanism for giving out federal transportation grants-it is called the highway bill. I don't believe an infrastructure bank will increase total transportation investment-it will only take money away from what would otherwise go through the existing highway and transit programs. The only thing you are going to do is move decision making from States to US DOT officials in Washington-an outcome I do not support.
I look forward to the testimony from our witnesses. Thank you.