Infrastructure Bank Will Not Happen, Mica Says at Congressional Hearing

WASHINGTON — President Obama’s proposal for a $10 billion national infrastructure bank is “dead on arrival,” the chairman of the House transportation committee said last week, and other Republicans on the panel said the bank was unnecessary because its goals could be achieved through other means.

“A national infrastructure bank, as proposed . . . is dead on arrival in the House of Representatives,” Rep. John Mica (R-Fla.), chairman of the House Transportation and Infrastructure Committee, said at an Oct. 12 hearing of that panel’s highways subcommittee.

Obama proposed the bank in early September to “leverage private and public capital and to invest in a broad range of infrastructure projects of national and regional significance, without earmarks or traditional political influence,” the White House said.

Congress has not passed a new transportation spending authorization bill since the previous one expired in September 2009 and instead has passed seven extensions, the most recent last month. House Republicans and Senate Democrats have proposed vastly different bills for a long-term reauthorization.

“The White House plan already duplicates the plan in the Transportation Infrastructure Finance and Investment Act,” Rep. Howard Coble (R-N.C.) said, referring to an existing Department of Transportation program, known as TIFIA, which provides loans and loan guarantees for highway projects.

“It makes no sense . . . to create a completely new bureaucracy, costing upwards of $270 million, when the [TIFIA] already accomplishes that goal,” he said.

The infrastructure bank, part of the proposed American Jobs Act, is modeled after the Building and Upgrading Infrastructure for Long-Term Development Act, introduced by a bipartisan group of senators in March (3-28, p. 5).

The bank would provide direct loans and loan guarantees to state and local governments for various infrastructure projects, not only in transportation. Supervised by a board of seven selected by the president, the bank would get an initial capitalization of $10 billion.

“I think the infrastructure bank . . . could make an excellent addition to our armory of tools to address our infrastructure needs,” Rep. Jerrold Nadler (D-N.Y.) said.

The House highways panel also heard from experts on transportation financing, and all but one of them spoke in opposition to the proposal.

“The concept that a new government corporation and federal authority will somehow enhance the ability to finance infrastructure seems untimely and entirely unnecessary,” said Gary Ridley, Oklahoma’s secretary of transportation, “especially when considering that many of the ideas encompassed by the authority already appear to closely parallel provisions of other existing federal financing programs.”

Oklahoma is one of 33 states that have their own infrastructure banks. Ridley said Oklahoma started its bank in the 1990s, but the state has found no projects for it.

“Most of [the states], like the federal government, don’t have the monies to finance infrastructure banks,” Mica said, “so rather than create a national, new bureaucracy — another agency — I think we can utilize the existing infrastructure banks.”

Mica’s proposal for highway reauthorization would provide funding for the state banks, Mica said in July (7-11, p. 1). His proposal also would increase TIFIA funding.

Furthermore, while a national infrastructure bank could take more than a year to organize, funding to the state banks could be used almost immediately, Mica said.

But opponents of the president’s proposal also focused on its similarities to TIFIA.

“Why not just add to TIFIA, size it to meet the demand that has not been met, and clear out the backlog [of applications] now,” asked Geoffrey Yarema of Nossaman LLP, a law firm that represents state and regional transportation agencies.

The only witness supporting Obama’s proposal, Scott Thomasson, economic and domestic policy director at the Progressive Policy Institute, argued that Republicans opposed the plan “simply because the president proposed it.”

“The bipartisan infrastructure bank will not be a sprawling federal bureaucracy that entangles states in regulations and red tape,” Thomasson said. Rather, “it will be an optional financing tool . . . staffed by financial professionals, not bureaucrats.”

American Trucking Associations largely agrees with House Republicans, Darrin Roth, director of highway operations, told Transport Topics.

“There isn’t much of a need for a national infrastructure bank when you already have TIFIA, which essentially fulfills the same role,” he said. “You may have a need for additional resources and better staffing, but it seems that the goals of the national infrastructure bank can be fulfilled without creating a new bureaucracy.”

But financing options will not change the need for more money for states, Roth said.

The Associated General Contractors of America has been pushing for an infrastructure bank for years, as a way to consolidate a variety of existing financing programs, such as TIFIA and the Railroad Rehabilitation & Improvement Financing program, AGC spokesman Brian Turmail told TT.

“We see it as an important component” of a financing system that includes traditional funding, he said.

The bank would not be immediate, he cautioned, and should not be seen as “something that’s a replacement for the existing federal approach to investing in infrastructure, which is through the federal aid program.”