Last week the Congressional Budget Office (CBO) released a report weighing the potential benefits and/or drawbacks of the proposed infrastructure bank.
An infrastructure bank, the CBO says, could play a limited role in enhancing investment in surface transportation projects by doing the following:
- Providing new federal subsidies (in the form of loans or loan guarantees) to a limited number of large projects, and
- Allowing the benefits of potential projects to be more readily compared in a competitive selection process.
A potential advantage of such a bank is that it could encourage sponsors of projects to charge users for the benefits they receive, which would mean that the subsidies to such projects could be a small percentage of total costs. A second potential advantage is that the selection process could overcome certain barriers to the financing of multijurisdictional or multimodal projects.
A key limitation of providing funding through a federal infrastructure bank is that only some surface transportation projects would be good candidates for such funding, because most projects do not involve tolls or other mechanisms to collect funds directly from project users or other beneficiaries.