Skip to Content
Streetsblog USA home
Streetsblog USA home
Log In
Brookings Institution

Brookings: Revive State Infrastructure Banks to Stretch Transpo Dollars

In these days of stagnant gas taxes, state and local governments are scrambling for new ways to finance infrastructure. Rahm Emanuel has his $7 billion Chicago Infrastructure Trust, and Antonio Villaraigosa has his America Fast Forward. Even John Kasich in Ohio is trying to sell advertising at rest stops to shore up ODOT.

Image: ##http://www.nawc.org/newsflow/081407-nl/government/government.html## National Association of Water Companies##

In a new report, the Brookings Institution offers another potential answer: state infrastructure banks. These financing agencies offer local governments low-interest loans for important infrastructure projects, and they can attract additional private capital.

“With Washington gridlocked and retrenching, the new state banking models offer a hopeful counterpoint to national dysfunction,” said Brookings' Mark Muro in a press release.

State infrastructure banks aren't a new tool. The first ones were created with an infusion of federal cash in the early 1990s. Today, 33 states have an infrastructure bank or a state revolving fund. These institutions have financed about $9 billion in infrastructure spending for 1,200 projects. About 88 percent of the total spending, however, went to road projects.

Republicans wanted to include federal funding to recapitalize SIBs in the transportation reauthorization, but MAP-21 did not offer any changes to the way these institutions are structured. The bill didn't include a national infrastructure bank either, which Republicans oppose.

Robert Puentes, director of Brookings' Metropolitan Infrastructure Initiative, emphasized that while SIBs can address some funding problems, they are no substitute for a national infrastructure bank. SIBs can be inappropriate funding mechanisms for projects of truly national significance or that cross state lines.

"They are similar in name only, " Puentes said. "They would fulfill very different functions."

Indeed, SIBs vary greatly in their effectiveness. Of the existing 33 SIBs, 10 are inactive. The major factors that determine success, according to Brookings, are pretty simple: The SIBs must have sufficient capital, and they have to apply market discipline when selecting projects, prioritizing those that offer multiple benefits and strong economic returns.

Many times, however, the most competitive projects are toll roads. It's often hard for transit to compete when the overriding interest is in direct return on investment from users, rather than public benefit.

Stay in touch

Sign up for our free newsletter

More from Streetsblog USA

Tuesday’s Headlines Need a Camera to My Eye

Reminding which lies have I been hiding — like that I was driving illegally in the bus lane or bike lane.

May 28, 2024

OPINION: Reject New Jersey’s Misguided War on E-Bikes

A new bill in New Jersey would make owning an e-bike as costly as buying a new vehicle every single year.

May 28, 2024

Rep. Earl Blumenauer Thinks Biking Is About To Have Its Big Moment

..and he hopes to catalyze that revolution as he leaves the halls of Congress.

May 28, 2024

Friday’s Headlines Depend on How You Phrase It

How to reduce emissions through taxes is pretty clear, but to sell it to the public, you can't make lower-income people pay.

May 24, 2024

Register Your Bike. It’s Easy, It’s Free, and It Helps Everyone

Bike Index, a free national bike registry, just launched an iOS app to make it even easier.

May 23, 2024
See all posts