Infrastructure is defined as the “connective tissue” that supports America’s economy. Infrastructure comprises roads, ports, bridges, railways, transit systems, water and sewer systems, telecommunications, and energy grids. The American Society of Civil Engineers in its “Report Card on America’s Infrastructure” gave the US infrastructure a failing grade (D-). Upgrading the infrastructure benefits the economy in a number of ways. Government spending increases economic output and jump-starts the economy, and the efficiencies realized by upgrading the infrastructure adds further to the economic bottom line of the country. For example, upgrading the energy grid results in energy savings and efficiencies that make the US economy more productive. Similar savings are achieved when transportation upgrades cause the delivery of goods and services to be transported more efficiently. Infrastructure investments also provide jobs for construction companies and, therefore, this Ahlers & Cressman blog has been closely tracking infrastructure investment since its inception (see posts dated http://www.ac-lawyers.com/blog_article.php?article=310
The State of Washington has a Public Works Trust Fund (akin to an infrastructure bank) which provides low interest loans and technical assistance to local governments that have significant public works needs. The Public Works Trust Fund Construction Loan Program provides construction loans to local governments with critical infrastructure needs. The concept is that a pool of money has been set aside by the State of Washington to fund essential public infrastructure projects. Public works entities can borrow from the Public Works Trust Fund for the capitol needs of their projects and repay those loans back to the Public Works Trust Fund. Public Works Trust Fund through interest and taxes grows and provides a constant source of future infrastructure financing. In 2010, 83 projects totaling $386 million were approved and that recommendation used all the anticipated construction funds in Public Works Assistance Account for the 2011-2013 biennium. A map showing in which counties the funds are being expended is provided on the Public Works Trust Fund website click here: http://pwb.wa.gov/ReportsandStudies/2012%20Program%20Information%20Sheet.pdf.
The Public Works Board expects that, since its inception in 1986, the Public Works Trust Fund has lent $2.3 billion to various infrastructure projects around the state which has generated $12.5 billion in economic stability and created 122,533 jobs. Regrettably, in past years the governor and legislators have “raided” the Public Works Trust Fund to close budget gaps, thereby reducing the amount of money available for infrastructure needs; a short-sighted cure for the budget problem with a long-term detrimental affect on the state’s economy.
On July 20, 2011, a number of private capital investors testified before a U.S. Senate panel about creating a U.S. infrastructure bank to attract private capital for public works investments. The bank would provide a project with its base capital that would then attract outside private investors for the remainder of the funding. The idea is to cure infrastructure woes by creating Private Public Partnerships (PPPs) to finance large $100 million plus size infrastructure projects. The PPPs structure envisions that a private company leases and maintains a road for decades. The private companies will collect tolls and receives tax credits for the road’s depreciation. Investors in PPPs are pension fund or other private infrastructure fund groups that put money into projects around the country. The largest source of transportation revenue in the U.S. is the gasoline tax, which is chronically short and the President has indicated that he will not raise the gasoline tax while the economy is shaky. The infrastructure bank would likely not bring the U.S.’s crumbling infrastructure to a C+ (up from the D-) but it would at least be a step in the right direction.