The following is an excerpt from today’s issue of The Bond Buyer. To read the entire article click here.
Improving economic conditions are likely to put new stresses on the nation’s roads, airports and ports in 2011, but congressional gridlock could stymie efforts to pass already delayed funding packages for capital investments in surface transportation and the air-travel network.
A long-term highway bill could be stuck until 2013, and airport bond proposals that have been circling for years may not be cleared to land in 2011 either, market participants said in recent interviews about the outlook for next year.
The only multi-year transportation reauthorization bill pending was introduced in 2009 by House Transportation Committee chairman James Oberstar, D-Minn., who will leave Congress in January after having lost his reelection bid in November.
Even if Rep. John Mica, R-Fla, who is set to take the reins of the committee in January, or Senate Environment and Public Works Committee chairwoman Barbara Boxer, D-Calif., introduce bills next year, sources said it is unlikely any transformative bill would clear Congress before the next presidential election cycle starts.
The sector will be “in a holding pattern,” said Jack Basso, director of program finance and management for the American Association of State Highway and Transportation Officials.
But a few potential game changers could occur in 2011 for transportation financing.
Mica has indicated he is already working on a bill that could include an extension of the Build America Bond program. Spokesman Justin Harclerode said in an interview last week that Mica may introduce the bill early next year.
Mica said BABs should be considered as a means of providing funds for transportation projects, given that lawmakers are loathe to increase the gas tax, which currently provides revenues for the highway trust fund.
The BAB program, created in 2009, resulted in states and localities borrowing nearly $169 billion as of this month to pay for transportation projects. The funds went toward highways, transit, parking, ports, and airports.
However, BABs became a lightning rod for a few fiscal conservatives this year due to the federal subsidy they provide to issuers, equal to 35% of interest costs.
The top Senate Republican negotiator for the tax law, Jon Kyl of Arizona, railed against the program, claiming it led state and local governments with lower credit ratings to borrow more because they get higher subsidies. To read the entire article click here.