Policy Options for Intermodal Freight Transportation Special Report 252 (1998) / Chapter Skim
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5 Public Finance of Intermodal Freight Projects
5 Public Finance of Intermodal Freight Projects
Pages 77-90
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From page 77... ...
Debates over public involvement in intermodal freight transportation infrastructure stem from two concerns. First, the public sector may 77
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From page 78... ...
With hindsight, intermodal freight projects with government involvement generally can be classified into one of three categories: · Successful, legitimate projects that yield worthwhile benefits, including important public benefits, and for which the government contribution was essential. They may involve a subsidy, or the government may fully recoup its initial outlays through user fees or other revenues.
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From page 79... ...
The first two sections of this chapter address policy issues that are relevant to state and local governments deciding on finance arrangements for individual projects: · Who should pay for a project, and · Innovative finance mechanisms. The following four sections deal with policy questions relevant to the federal government, which influences project finance decisions through its aid programs and tax laws.
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From page 80... ...
, the local public (through subsidies from local general tax revenues or tax concessions) , the national public (through use of federal grants or taxexempt bond finance)
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From page 81... ...
Such an accounting often is difficult in complex finance packages that include loan guarantees and tax-exempt bond finance. INNOVATIVE MECHANISMS FOR RAISING CAPITAL AND OPERATING FUNDS Most state and local government funding of transportation facilities serving freight is for road construction.
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From page 82... ...
. SIBs and similar innovative finance techniques have the potential for increasing and accelerating funding of transportation projects by providing attractive financing terms for private-sector partners, providing for debt finance of local government projects that otherwise would probably be financed only on a pay-as-you-go basis, stimulating development of revenue sources like special tax districts and tolls, and providing a structure and models for public-private joint development.
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From page 83... ...
. This case shows how private-sector participation, underused revenue sources like tolls and special tax districts, and a combination of federal, state, and local government support can be brought together to accelerate completion of worthwhile transportation projects.
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From page 84... ...
The policy options for Congress are as follows: · Preserve and reinforce the mechanism as trust fund defenders advocate, by spending down balances and curtailing diversions; · Maintain the status quo under which a major portion of spending is for the direct benefit of user fee payers but revenues are also used for other purposes, including budget-balancing; and · Abolish the trust funds. Abolishment would not necessarily entail abolishing user fees.
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From page 85... ...
Projects can be financed through user fees without maintenance of a trust fund, but the trust fund feature probably makes pricing for public services more politically acceptable than if user fees were treated as general revenues. The federal trust funds all carry unspent balances.
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From page 86... ...
Federal legislation was considered in 1997 that would create a pilot program to permit tax-exempt bond finance of highway projects with major private participation and that would be transferred ultimately to public ownership (AASHTO Journal 1997)
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From page 87... ...
· The subsidy affects the overall efficiency of the economy, since it biases the capital market in favor of certain government-selected investments. The diversion of capital may be good or bad depending on whether the favored projects generate public benefits sufficient to justify public support.
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From page 88... ...
On the whole, competition among jurisdictions in the United States in providing residents with services and economic opportunities probably improves the efficiency of government and increases the ability of citizens to obtain the level of public services they want and are willing to pay for. However, interstate economic rivalry will be detrimental to national freight system efficiency if it leads to subsidized overcapacity.
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From page 89... ...
For example, the rules of the federal surface transportation aid programs determine what kinds of projects can be funded with federal aid, and federal law determines what activities are eligible for tax-exempt government bond financing. Tightening restrictions on the use of federal funds and tax-exempt bonds will curtail state economic development assistance and interstate rivalry, whereas liberalizing the rules will expand state efforts.
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From page 90... ...
1996. State Infrastructure Banks.
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