Commentary on Infrastructure Financing

Abstract

Two viewpoints on infrastructure financing were expressed at a February 25, 1985 Congressional symposium. Congressman James J. Howard's Bill proposes the establishment of repayable grants to the states and territories based on population. According to this bill, states must establish an infrastructure revolving fund, and loan the funds to political subdivisions within the state. The funds could only be used for construction of water, wastewater and transportation facilities, including hard and soft construction costs. The states are prohibited from using these funds to match other federal funds or projects that would normally be carried out within 24 months of the date of the loan. Congressman William F. dinger, Jr. proposes the establishment of a National Public Works Corporation in which loans to states are financed by bonds issued with the credit of the Federal Government. The only information available on this program was provided by Congressman Clinger at the symposium. Supplying only 4% of the estimated infrastructure need, neither the Howard Bill nor the Clinger proposal will solve the infrastructure problem. However, the Howard Bill would provide a significant source of funding for projects not now fundable due to their inability to generate revenue. If subsidized by grant funds to lower interest rates in a time of crisis, the Clinger proposal could provide valuable insurance.