A call for establishing a national transportation infrastructure bank

We wrote last week that if the U.S. infrastructure is not exactly, it is in need of rebuilding and rehabilitating. This may be news to some, but not to a small group of civic, political, and corporate leaders who have been calling for an increased federal role to improve, modernize, and maintain infrastructure. Few listened to them.

What needs to be done, and how much will it cost? There are two key sources for transportation investment needs: the American Society of Civil Engineers’ (ASCE) “Report Card for America’s Infrastructure” and the U.S. Department of Transportation’s (DOT) “Status of the Nation’s Highways, Bridges and Transit: Conditions and Performance Report to Congress” (known as the C&P report). Oxford Analyticafofers some of the highlights from these two documents:

1. Independent estimates. The ASCE estimates that $1.6 trillion is needed over a five-year period to bring infrastructure to good condition. This group relies substantially on DOT figures.

2. Government figures. DOT’s estimates are the most authoritative:

—Roadways. DOT estimates that the maximum investment level required to eliminate the project backlog for bridges, and implement proposed highway improvements, is $131.7 billion per year for the next 20 years. The cost per year to maintain current highway and bridge conditions is estimated to be approximately $78.8 billion.

—Transit. The estimated average annual investment required to maintain the same physical conditions and operating performance of transit systems is $15.3 billion. If conditions are to be improved, DOT puts the annual cost at $24.0 billion. Most of these needs are estimated to be in urbanized areas of over one million people.

—Railways. Freight rail funding comes from private sources. There is concern that the railroad companies are not spending enough on infrastructure.

The task of articulating national investment needs is almost impossible for anyone other than the DOT, so there are few other sources for original data. The basis for the C&P report is a model called the Highway Economic Requirements System(HERS). The Federal Transit Administration uses the Transit Economic Requirements Model(TERM) to estimate future transit capital investment needs. Trouble is, these broad needs statements are not divided clearly among the governments responsible for investment. Therefore, it is unclear whether they are the responsibility of federal, state, metropolitan, or local governments, or the private sector. Concerns about who should finance infrastructure rebuilding projects have spawned two national commissions to devise a better method for apportioning and continuing the legacy of federal investment. The U.S. Government Accountability Office (GAO) also recently added transportation financing to its annual list of high-risk areas suggested for oversight by the current Congress.

There are inovative ideas circulating about funding infrastructure projects, and one of them is a national transportation infrastructure bank. Indeed, only hours before the Minneapolis bridge collapse, Senator Christopher Dodd (D-Connecticut) and Senator Chuck Hagel (R-Nebraska) introduced the National Infrastructure Bank Act of 2007. The main points:

— The bank would use a sliding scale method to evaluate project proposals

— The bank would be the window through which states and groups of states and localities would request financing or grants for a range of infrastructure

— Such an entity could, over time, replace the existing dedicated highway and aviation trust funds

— The bank might also help prioritize projects that are critical to competitiveness

Oxford Analytica says that the Dodd-Hagel bill “needs to be polished. However, the proposal might serve as a good starting point for a push toward fundamental reform.”