Posted on May 02, 2011 2:38 PM
America Fast Forward -- A New Way of Financing Transportation?
A recent Los Angeles initiative to accelerate the construction of transportation projects is now garnering bipartisan support and national attention as a potential model for how federal and local governments might leverage investments for expensive infrastructure work. “America Fast Forward,” which has support of both the U.S. Chamber of Commerce and the AFL-CIO, would allow state or local entities to quickly access low interest federal loans for projects.
The plan was initiated by Los Angeles Mayor Antonio Villaraigosa. Originally known as the “30/10 initiative,” it aims to build a dozen new highway and transit projects in an accelerated 10 (rather than 30) years, using an increase in local sales tax revenue as collateral for access to low interest federal loans. The concept would require a significant shift in the way of doing business, in that the federal government would provide flexible funding to regions that are already “taxing themselves.” A recent Policy Updates post highlighted this overall concept, which was explained in a Brookings Institution piece by Robert Puentes.
Specifically, the legislative proposal would include Qualified Transportation Improvement Bonds and enhance the Transportation Infrastructure Finance and Innovation Act program (TIFIA). America Fast Forward would amend the TIFIA to allow the U.S. Department of Transportation to “make upfront conditional credit commitments for certain large projects or programs of related projects that satisfy national infrastructure investment goals,” according to this fact sheet. Funding for the TIFIA program would also be increased, with credit limits raised for projects receiving assistance.
America Fast Forward was announced jointly on March 30, 2011, by the U.S. Chamber of Commerce, the AFL-CIO, Sen. Barbara Boxer (D-CA), Rep. John Mica (R-FL, chairman of the House Transportation and Infrastructure Committee), Mayor Villaraigosa, and Mayor Scot Smith of Mesa, AZ. The plan would leverage public and private investments, according to Chamber president and CEO Thomas J. Donahue, who said, “The bang for the budgetary buck is tremendous: One dollar in federal resources can leverage $10 in investment, and $30 when other sources of funding and financing are added.” Read more about the plan in the Los Angeles Times.
GO TO 2040 strongly supports strategic investment in transportation infrastructure, whose economic benefits have often been quantified. For example, using an economic model developed by the Regional Economics Applications Laboratory of the University of Illinois at Urbana-Champaign, a GO TO 2040 Strategy Report calculated that $2 billion investment in transportation infrastructure will result in $2.2 billion (a benefit to investment ratio of 1.1) in long-term economic output. These outcomes (which do not include the short-term benefits of construction) were shown to benefit nine different economic sectors, particularly services, trade, and nondurable goods.