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Tolling Points

All Solutions Count in Drive to Clear the Infrastructure Funding Gap

Bill Cramer

When you have a trillion-dollar infrastructure funding gap to clear, every funding option should be considered.

IBTTA has long taken the position that no single funding or financing mechanism is right for every road, bridge or tunnel and every jurisdiction. Tolling is one proven tool in the highway funding toolbox. There’s a vast difference in characteristics and needs between a congested corridor in Atlanta, a freight corridor in Pennsylvania, and a rural interstate highway in Wyoming, and funding only works if it has the flexibility to accommodate them all.

But as federal legislators in the United States begin considering the dimensions of what could be a very large national infrastructure plan, we’re beginning to see a new level of customization take shape. Things are getting so specialized that a familiar acronym—P3s—suddenly has two different definitions.

You’ve heard of public-private partnerships. But what about public-public partnerships?

It’s All About Trust

The conversation about a menu of financing channels for long-term infrastructure investment began with some of the reaction to the White House infrastructure plan.

The Trump Administration has shown consistent interest in relying on private capital to finance the lion’s share of the work, leading to a predictable reaction from stakeholders who are traditionally suspicious of profit-making entities investing in public works. When that’s the dominant view, it makes sense for public agencies to raise their own project capital, taking advantage of tax-exempt financing in exchange for what they see as an acceptable increase in long-term public debt.

It’s a model that describes the majority of existing toll operators in the U.S., from state departments of transportation to autonomous state chartered entities, and the group includes many of the industry’s earliest pioneers. For those agencies, and for newer ones established through the interstate period, what we’re calling public-public partnerships are a well-established, proven model that works.

But the opposite is also true. Some jurisdictions are traditionally cautious about incurring public debt of any kind, for any reason. They may see public agencies as unfair competition for private enterprise. Or they might just be focused on historically low interest rates as an opportunity to tap into the massive pools of capital that are out there, just waiting to be invested. For those communities, public-private partnerships are clearly the way to go.

No Right or Wrong Answer

It’s a question with no universal right or wrong answer. What matters most is to come up with the solution that works best for each project, recognizing the basic needs that all jurisdictions hold in common.

Most if not all U.S. communities have backlogged surface transportation projects that badly need to be complete

They all need financing to cover the up-front costs of construction or rehabilitation.

They’ll all need a continuing revenue stream to pay for maintenance and upkeep.

And they share a sense of urgency that is growing, not diminishing, with each passing day.

In any jurisdiction, political priorities might shift over time. But the need for adequate funding and financing rarely does. Which brings us back to the importance of a full toolbox of funding options for paying for the mobility services and infrastructure that citizens in all of those communities need every day.