CBO Report on Infrastructure Bank for Surface Transportation

President Obama has proposed a federal infrastructure bank in his budget for 2013.  On July 12, 2012 the Congressional Budget Office (CBO) released its report outlining the parameters of such an infrastructure bank.

For each of the past three years the country has spent approximately $200 billion on surface transportation infrastructure--highways, mass transit, and passenger rail .  Of this, about $50 billion has come from the federal government, with the bulk coming from state and local government.  Private rail investment has contributed about $12 billion annually.  This is not enough.  We need additional funding to maintain our current systems, and we need significantly more to meet future needs.  How will this infrastructure be funded?

The proposed federal infrastructure bank is designed to close the gap of needed financing for major surface transportation projects that will primarily be  funded with user fees, such as tolls, and value capture (e.g. tax increment financing).  A perceived benefit is that a federal infrastructure bank could make decisions of funding based on merit from a pool of applicants, relatively isolated from political pressures, and it could focus on projects that cross jurisdictional boundaries.

The report compares funding under the currently enacted Department of Transportation Infrastructure Finance and Innovation Act (TIFIA) program.  The main difference is that TIFIA money is primarily handed out in the form of grants.  The source of TIFIA money is federal gas taxes and other federal tax revenues.  The report notes that the most recent authorization for federal transportation programs includes an expansion of the TIFIA program.  The infrastructure bank would be targeted on projects with a dedicated revenue stream.

To the extent that a public infrastructure bank could depoliticize the funding of programs and work across multi-jurisdictional lines, that would seem to be a good development.  While they are at it, efforts should be made to streamline EIR review for multi-jursidictional projects.  Do it once, do it right, and build it!