DALLAS — A bipartisan group of 11 U.S. Senators has joined 50 House members to support a proposed national infrastructure bank funded with $50 billion of taxable bonds with a one percent interest rate.
The Partnership to Build America Act introduced Jan. 17 in the Senate would leverage the $50 billion of bond proceeds to provide up to $750 billion of loans and loan guarantees to states and local governments for transportation, energy, education, communications, and water infrastructure projects.
The Senate measure, S. 1957, is in line with the H.R. 2084, filed in the House in May by Rep. John Delaney, D-Md. The Senate version was introduced by Sen. Michael Bennet, D-Colo., with Sen. Roy Blount, R-Mo., as the chief co-sponsor. Congress has failed recently in its duty to maintain public infrastructure, Bennet said when he filed his bill.
"This bill will help us improve and expand the infrastructure we need to compete in the 21st century, while also providing an opportunity for American companies to bring money back home that is sitting on their balance sheets overseas," Bennet said.
Delaney said the infrastructure bank would bolster the dwindling federal Highway Trust Fund, which is expected to run dry as soon as August, and bring home billions of dollars now held overseas by U.S. corporations to avoid taxes.
The fund would be capitalized by purchase of taxable bonds that bear interest of no more than 1% and would not be guaranteed by the federal government, Delaney said.
For every $1 of bonds invested in the 50-year bonds, U.S. corporations would be able to repatriate up to $6 of oversea earnings without federal tax liability, he said.
"My bill would create an American Infrastructure Fund, a large-scale financing capability that could act like a bond insurer or bank for state and local governments," Delaney said.
At least 25% of the projects financed through the proposed infrastructure bank must be public-private partnerships, with at least 20% of a P3 project's financing coming from private capital. The $50 billion of bond proceeds could be leveraged 15 to 1 to create a $750 billion infrastructure financing capability, he said.
"Over 50 years, the American Infrastructure Fund could finance $2 trillion worth of infrastructure and create more than 3 million jobs," Delaney said.
The House bill has 50 co-sponsors, Delaney said, split equally down party lines with 25 Republicans and 25 Democrats.
As the HTF balance drops, Democrats on the House Ways and Means Committee, spearheaded by Rep. Earl Blumenauer, D-Ore., have asked Chairman Dave Camp, R-Mich., to hold hearings on financing options for transportation projects as soon as possible.
The current two-year, Moving Ahead for Progress in the 21st Century or MAP-21 surface transportation funding law expires Sept. 30 at the end of fiscal 2014.
"At that time, we will face the prospect of a dramatic reduction in transportation resources because the nearly $21.2 billion that was invested in the highway program through MAP-21 will have been expended," the committee Democrats said in a Jan. 16 letter to Camp.
The Highway Account of the HTF could post a $100 million deficit by August, the Department of Transportation said last week. The account held $8.5 billion in late December 2013.
Transportation programs will be affected by the fund's decline by this summer when the highway account's available cash balance drops below the minimum of $4 billion needed to meet week-to-week obligations, the letter said. "Below this amount, reimbursements to states will be delayed, construction projects will be curtailed, and jobs will be lost throughout the economy," the Democrats warned. "We have fewer than nine months to find a funding solution for our infrastructure system."
Blumenauer introduced a bill late last year to bring the federal tax on a gallon of gasoline, which goes into the HTF, to 33.4 cents from the current 18.4 cents. The 15 cent-per-gallon increase would be implemented over three years.
The HTF needs almost $15 billion a year of new revenue to keep pace with current federal highway funding,
