Category Archives: Infrastructure

America’s schools are crumbling – what will it take to fix them?

Source: Michael Addonizio, The Conversation, March 5, 2019

….Indeed, miserable conditions like these are not only hard on the children. They seriously impair school districts’ ability to retain their most valuable asset – their teachers. Teachers leave their jobs for a variety of reasons, but facility quality is a key factor.

Addressing the infrastructure needs of America’s public schools will be costly. However, continuing to ignore them would be even more costly. The educational impact of substandard facilities on students cannot be overstated…..

….Funding for public education, including school facilities, is primarily a state and local matter. But while most states have tried to help poor local districts with basic operating expenses – such as paying teachers and buying supplies and materials – state support for school infrastructure has been much less reliable.

Local districts vary widely – usually along lines of race – in their ability to build or renovate schools. Property-poor districts, including most big city districts, are left behind……

How electric cars could make America’s crumbling roads even worse

Source: Jay L. Zagorsky, The Conversation, February 25, 2019

…. To fix the potholes and crumbling roads, federal, state and local governments rely on fuel taxes, which raise more than US$80 billion a year and pay for around three-quarters of what the U.S. spends on building new roads and maintaining them. ….

….If sales continue at this breakneck pace, electric cars will become mainstream in no time. In addition, governments in Europe and China are actively steering consumers away from fossil fuels and toward their electric counterparts.

In other words, the time will come very soon when the U.S. and individual states will no longer be able to rely on fuel taxes to mend American roads…..

U.S. Transportation Infrastructure 2019 Sector Outlook: Mostly Stable, Despite Expected Slower Growth And Unlikely Investment Package

Source: S&P Global Ratings, January 17, 2019
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S&P Global Ratings’ 2019 outlook for business conditions and credit quality across most U.S. public transportation infrastructure sectors, including airports, ports, federal grant-secured, and parking, is stable. We are maintaining our positive outlook for the toll road and bridge sector and revising our outlook for the mass transit sector to negative from stable.

Infrastructure: Elixir for Long-Term Pension Liabilities?

Source: Daniel Bauer, PA Times, January 4, 2019

Two primary drivers critically impacting both budgetary considerations and public policy processes for the foreseeable future regardless of revenue and service selection are pension liabilities and infrastructure. One tends to be historical in context while the other is futuristic in its scope. Both pension liabilities and infrastructure face headwinds. Both issues transcend interest groups. Both issues potentially advocate fairness and social equity across a broader spectrum of citizens arguably more so than others.

In this continuing series of articles exploring public infrastructure, the combination of unfunded liabilities for both public pension funds (estimates range from US$1-$3 trillion) and infrastructure (estimates ranging from US$1-$5 trillion) conjure up public policy and financial dilemmas constraining even effective discourse. Over the long-term, as difficult as it is to imagine, maybe one unfunded liability poses an opportunity to resolve the other unfunded liability. Can infrastructure be an elixir for long-term pension liabilities? ….

Infrastructure Investment and the Federal Government

Source: CRS In Focus, November 19, 2018

The condition and performance of infrastructure are generally thought to be important for the nation’s health, welfare, and economy. More contentious are the optimal level of infrastructure investment, the effectiveness of this investment, and the appropriate role of the federal government. The current federal role in infrastructure investment is important but limited in size and scope.

Large, established toll road systems are better positioned for the next recession

Source: Maria Matesanz, Eriq Alexander, Kurt Krummenacker, Moody’s, Sector In-Depth, July 17, 2018
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Large road systems will experience more stable traffic and revenue trends in a recession than smaller or less well established systems, based on our analysis of their performance during and after the last recession. From a financial and operational standpoint, we expect larger toll roads to maintain steady traffic growth and performance with minimal negative credit effects associated with typical traffic and toll revenue drops seen during recessions. We define large, established toll roads as those that operate multiple assets and have been in operation more than 15 years….

Water Infrastructure Financing: The Water Infrastructure Finance and Innovation Act (WIFIA) Program

Source: Congressional Research Service, CRS Report, June 11, 2018

The Water Infrastructure Finance and Innovation Act (WIFIA) program provides financial assistance for water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment systems. Congress established the WIFIA program in the Water Resources Reform and Development Act of 2014 (WRRDA 2014, P.L. 113-121).

The WIFIA concept is modeled after a similar program that finances transportation projects, the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Proponents of the WIFIA approach, including water utility organizations, cite several potential benefits
• WIFIA provides credit assistance to large water infrastructure projects that may otherwise have difficulty obtaining financing.
• WIFIA provides credit assistance, namely direct loans, at U.S. Treasury rates, potentially lowering the cost of capital for borrowers.
• WIFIA assistance has less of a federal budgetary effect than conventional project grants that are not repaid, because only the subsidy cost of a loan (representing the presumed default rate on loans) is required to be appropriated.
• WIFIA support limits the federal government’s exposure to default, because projects must be found creditworthy with a revenue stream for repayment to be eligible for assistance.

On the other hand, opponents of the WIFIA approach, including organizations that represent state environmental agency officials, have cited several concerns
• Federal funding for a WIFIA program could have a detrimental effect on federal support for established State Revolving Fund (SRF) programs that provide the largest source of water infrastructure assistance today.
• If WIFIA funding resulted in a decrease in SRF assistance, smaller projects may face financing challenges.
• The Congressional Budget Office has warned that the future costs of a WIFIA program to the federal budget may be underestimated.

Between A Budget And A Hard Place: The Risks Of Deferring Maintenance For U.S. Infrastructure

Source: Anne Selting, S&P Global Ratings, May 15, 2018
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State and local governments are deferring maintenance on critical infrastructure assets they own and operate. Due to a lack of standardized reporting, it’s difficult to quantify the extent of the maintenance backlog, but it could be significant. ….

Infrastructure Reality Check

Source: Sarah Crane, Regional Financial Review, Volume 28 Number 7, March 2018
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This article assesses the magnitude of needed U.S. infrastructure spending and compares it to current proposals. Further, it assesses the multiplier effect of such spending and finds that it is stronger during a recession and the immediate recovery period when there is considerable idle resources in the economy.