A new report, How to Shape U.S. Infrastructure Policy, by the American Council for Capital Formation Center for Policy Research (ACCF-CPR) looks at the reasons for infrastructure investment and sets the stage for steps that are crucial for successful infrastructure projects.
Particular attention is paid to ways to use existing funds more effectively and to increase participation by the private sector. The paper concludes with alternative methods for financing and funding the country’s much needed infrastructure.
“President Trump has proposed a $1.5 trillion investment in our nation’s infrastructure. While lawmakers agree on the need, financing solutions for long-term sustainable remains a major challenge,” ACCF-CPR Chief Economist Dr. Pinar Çebi Wilber said. “Increasing financial constraints make it painfully obvious that infrastructure investment has to be based on long-term goals and planning, rather than short-term political cycles. This report outlines multiple options that should be on the table.”
The ACCF-CPR report highlights specific steps for identifying needs and expectations, improving the project selection process and optimizing portfolios, planning specifics of selected infrastructure projects, and how to execute those projects.
Public spending through programs like the Highway Trust Fund are reviewed as are multiple financing options that leverage or securitize future funding sources. This could include municipal bonds and public private partnerships (PPP).
The report takes an in-depth look on ways to increase the share of PPP in the U.S. including legislation to broaden their use by establishing a legal framework to give investors a clear guide on project timelines.
Several sector-specific approaches to infrastructure challenges are also highlighted in the ACCF-CPR report including:
- A set of policy recommendations put forth by the American Society of Civil Engineers and the Eno Center for Transportation to increase the use of life cycle cost analysis (LCCA) in infrastructure projects. Taking a long-run view while evaluating infrastructure projects could save significant sums of money both at the federal and local levels during the life of a project.
- The best procurement practices that will not only stretch the limited funds available, but also encourage innovation through competition. This includes the importance of bidding and other policy recommendations on pavement selection. Setting the proper stage on roadways and pavement management could improve infrastructure project outcomes.
- Potential solutions for shoring up the Highway Trust Fund, which faces insolvency by 2020. Various methods for financing the dedicated funding for highways and mass transit in the U.S. are explored including a fuel tax increase, freight charge, vehicle miles traveled tax, and a sales tax.
“Reframing our infrastructure puzzle is an opportunity the country cannot miss. If the government sets the right framework, the financing of these infrastructure projects could be an attractive investment opportunity for the private sector,” Wilber concluded. “This could be an effective way of delivering certain projects better, faster, and at a lower cost. It could also help economic growth by increasing productive capacity and creating jobs, thereby increasing the competitiveness of the nation.”