As Congress takes up the next surface transportation bill, lawmakers should keep in mind the importance of tax-exempt private activity bonds for state transportation departments looking for tools to finance their infrastructure projects.
That was the message from Russell McMurry, the commissioner of Georgia's transportation department and vice president of the American Association of State Highway and Transportation Officials, who testified Wednesday before the Senate Committee on Environment and Public Works.
The hearing kicked off the committee's work on the next surface transportation bill as the current law, the Infrastructure Investment and Jobs Act, expires in September 2026.
"The state DOTs continue to support a role for federal financing tools given their ability to leverage scarce dollars that allow needed projects to benefit communities sooner," McMurry told senators in his opening remarks. He highlighted the importance of PABs and Transportation Infrastructure Finance and Innovation Act loans and the 2009 Build America Bonds program to states.
"AASHTO's members appreciate the ability to access capital markets and many states already rely on various forms of financing ranging from traditional tax-exempt bonds, tax-credit bonds, state infrastructure banks, and private equity, among other financing options," he said. He noted that Georgia is in the midst of a
"Paired with private equity, the private developer will utilize TIFIA and PABs to help finance this $4.6 billion design and construction cost," he said. "A new PAB allocation and a TIFIA loan from the USDOT Build America Bureau are vital for this project and other planned express lane projects in Georgia."
The comments came as
The Senate EPW hearing examined the challenges and successes of the IIJA, with Republicans advocating for more formula and less discretionary funding next time around, and Democrats warning of current projects being slowed or halted amid the Trump administration's
"We want to continue what is working, but discontinue what isn't working," said committee chair Sen. Shelley Moore Capito, R-W. Va. She said the law's increased formula funding has "provided states with certainty, and with the flexible project eligibilities to address the transportation needs of Americans across the country."
But the process of standing up and distributing the discretionary grant has dragged, Capito said.
One of the results of the slowdown been the so-called August redistribution, a complicated funding bottleneck in which annual unused obligation is sent to states in August, giving them only a few weeks to allocate the money. In 2024, the August redistribution totaled $8.7 billion, Capito said.
The issue was raised throughout the hearing and McMurry said
McMurry agreed that the IIJA's "core formula programs" have proved the most successful for Georgia and that the discretionary programs have presented challenges. "I say 'thank you' because we never had the ability to use federal dollars [for some of those uses] but it's been hard to deploy because they're new programs," he said.
Democrats posed questions around the Trump administration's recent move to freeze federal funds and begin widespread layoffs, saying the administration is creating uncertainty as states and cities are trying to advance their capital projects. They also criticized the administration's DOT priorities,
"When a state or local government signs a contract with the federal government for an infrastructure project, they expect, and rely on, the federal government to honor that contractual obligation," said Ranking Member Sen. Sheldon Whitehouse, D-Del. "They do not expect to receive a notice telling them that the signed contract has been unilaterally canceled, paused, or changed by the federal government," he said. "This kind of uncertainty keeps shovels from ever touching the ground."
