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OCR for page 87
RESOURCE PAPER
Institutional Framework for Innovative
Transportation Finance
James T. Taylor II, Bear, Stearns & Co., Inc.
O
ne of the purposes of this resource paper is to complement and enhance existing federal grant reim-
stimulate discussion of the long-term implica- bursement programs. These techniques can be grouped
tions of innovative transportation finance into four basic "innovative finance" strategies:
strategies. Are we creating financing mechanisms that
will facilitate continued and timely investment in our · Modify rules and regulations governing federal aid
nation's transportation infrastructure over the next 40 to allow states to make more efficient use of existing
to 50 years, or are we simply addressing our most resources,
pressing short-term capital needs? As a starting point, · Facilitate debt financings that leverage future
the following highlights some of the new financing federal-aid reimbursements,
vehicles and partnership structures developed under · Encourage development of new toll facilities and
the umbrella of "innovative finance" and questions other revenue-generating assets, and
where they might be leading us. · Provide state and federal credit assistance to
The second half of the paper examines certain insti- sponsors of eligible projects.
tutional factors that may have influenced the types of
financing approaches taken to date or that could inhibit
further innovation. By acknowledging and addressing Innovative Management of Federal Funds
some of the tensions within and among the key players,
transportation policy makers may be able to craft more What Is This Strategy Intended to Accomplish?
effective strategies for fostering collaboration and
increasing the overall level of transportation investment. The federal government has traditionally supported the
financing of the nation's highway network by providing
grants to reimburse state governments for a portion of
IMPLICATIONS OF KEY FINANCING INITIATIVES the funds they spend on certain types of projects. This
basic approach was established in federal legislation
In the late 1980s, with the Interstate highway system enacted between 1912 and 1922 and reaffirmed in the
essentially completed, the focus of federal surface trans- landmark legislation that created the Highway Trust
portation policy shifted from expanding the nation's Fund in 1956. Over the years, a complex set of rules
highway network to developing a more efficient and regulations governing the distribution of the federal
national transportation system with improved linkages aid has been established to provide for an equitable
between highways, rail, transit, ports, and airports. apportionment of the funds among the states, to ensure
This broader mandate has been coupled with a con- accountability, and to direct or encourage certain
certed effort to develop new financing techniques to expenditures desired by Congress.
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