WASHINGTON — Municipal bonds have a big role to play in House Transportation and Infrastructure Committee Chairman Peter DeFazio's plans, the Oregon Democrat said Wednesday.
DeFazio, a first-year chair since Democrats took control of the House in the November 2018 elections, spoke to The Bond Buyer following his remarks at the American Association of State Highway and Transportation Officials' Washington Briefing.
DeFazio said he is waiting to hear back from the U.S. Department of Transportation on some data to determine how much money he needs for his Penny for Progress Act and how that would alter the amount of state and local bonds that would need to be issued in concert with federal funding. DeFazio introduced his bill, which would index gas prices to inflation to provide $500 billion in infrastructure investment, in the previous Congress but has not done so yet during this legislative session.
“My proposal, which I will submit to Ways and Means as soon as the DOT gets me some data that I’ve been asking for, would require substantial bonding,” DeFazio told The Bond Buyer. “I’ve recommended to the White House that we’d look at a new form of infrastructure bonding with a revenue source to pay for it.”
Funding infrastructure has become an increasingly tricky proposition for lawmakers because the federal gas tax hasn't been raised since 1993 and the Highway Trust Fund into which that revenue flows is facing a steep structural deficit and according to some estimates may be insolvent by 2022. Some municipalities issue bonds backed by federal disbursements of that money.
DeFazio and the committee's ranking Republican Rep. Sam Graves, R-Mo.want to pass an infrastructure bill through the committee by May. ,The plan is to have a draft out of the House of Representatives by August, Graves said Wednesday. Time is beginning to run out since the current funding legislation will expire in 2020.
“Everybody wants to get something done,” Graves said. “I do think we have a fairly short timeline. If we don’t have something done at least out of the House of Representatives by August, I don’t believe it’s going to happen simply because of the election and everything that comes along with that.”
Infrastructure is one of the top two or three big policy matters overall, Transportation Secretary Elaine Chao said at the AASHTO luncheon.
“The effects of our infrastructure, the state of our infrastructure is incalculable in terms of the quality of life that our citizens and residents have,” Chao said.
Chao added she looks forward to working with lawmakers, including DeFazio and Graves.
“We want to reach out to everyone that is involved in making our infrastructure better, to craft a bipartisan approach because as the president noted in his recent State of the Union address — infrastructure is the backbone of our nation’s economy,” Chao said.
While waiting on federal funding, some states have become more reliant on their own funding.
North Carolina increased its state gas tax to keep up with funding, so it doesn't depend as much on the federal government, said Michael Holder, a vice president and principal of transportation services in engineering firm Gannett Fleming's Raleigh office.
“The state is taking care of its own house and taking care of its own funding for the most part,” Holder said.
However, gas tax revenue will continue to decrease as cars become more efficient, meaning less funding for infrastructure, which Holder said needs to be addressed and a new taxing revenue mechanism put in place.
“We’re going to have to do something different because the fleet is transitioning from gas-powered vehicles to more electric,” Holder said.
He referred to the gas tax as a “workhorse for the near term,” but added that another plan is needed for the future.
