I have to admit, I was barely able to keep my eyes from glazing over when I scanned the White House's budget proposal for transportation. It's not that I don't buy the argument that infrastructure investment is important and necessary for economic growth. It's just that I've heard it too many times from the White House to get excited about it.
Then I talked to a guy who makes his living on it, and he's really excited about this year's budget proposal. D.J. Gribbin heads U.S. Government Advisory and Affairs for Macquarie Capital, an Australian firm that does business with state transportation agencies on major infrastructure projects all over the country. For the first time, Gribbin said, Obama is proposing lifting the cap on private activity bonds, which are issued by local or state governments for the purpose of financing projects through a private investor. Currently, there is a 25 percent limit on the use of this kind of bonding for land acquisitions and an annual cap their use to finance water infrastructure projects.
Gribbin says the lifting the caps would open a host of new possibilities for private-sector investment in infrastructure, in essence leveling the playing field for companies like Macquarie that want to get in on ground floor financing big local projects, but are limited in the amount they can invest. The bond proposal has been a priority for many people who get in the weeds on public-private partnerships, like Rep. Bill Pascrell, D-N.J., who applauded the provision in his response to the president's budget.
But let's face it, it's not front-page news.
No one questions Obama's commitment to infrastructure, but his repeated calls for an immediate $50 billion stimulus that won't go anywhere in are starting to look like lip service. "In the past, [the White House] was sort of focused on grander gestures, like the national infrastructure bank," Gribbin said. Now, the administration is proposing highly doable, highly leverageable changes that could actually make a difference. "That hasn't been out there before."
Has the administration gotten more sophisticated on its approach to infrastructure? Does easing the bonding restrictions make it easier for state transportation departments to make deals for major projects? Are there areas where this kind of bonding doesn't work? How should advocacy groups approach the president's budget if they like this idea? Is this a big step in the White House's endorsement of public-private partnerships?