TEXT-Fitch: U.S. infrastructure discussion needs fiscal details

Oct 26 - The discussion around infrastructure development during the U.S.
election has been centered on job creation, while, in Fitch's view, a
sustainable fiscal framework to pay for the infrastructure development remains
the crux of the issue.

Deferred maintenance on the country's infrastructure has accumulated
significantly while state budgets (particularly departments of transportation)
have narrowed. Some combination of new federal and, increasingly, state funding
will remain essential to manage national and local interests. We also believe it
is important that targeted infrastructure development initiatives, such as the
credit-enhancement programs provided under the Transportation Infrastructure
Finance and Innovation Act (TIFIA), play a role. Taxes, user fees, state
infrastructure credit-enhancement programs and banks, the creation of new,
limited-scope, publicly managed enterprises, and the use of private sector
risk-taking through public-private partnerships are all critical to maximizing
the level and quality of investment.

The Ohio River Bridges Project, shared by Kentucky and Indiana is a good example
of a combination of federal, state, and private funding. In June 2012, the U.S.
Federal Highway Administration approved the use of federal transportation funds
for the project. On Oct. 16, the financing terms for the $2.5 billion project
were agreed to by the two states. Under the agreement, Kentucky is in charge of
financing and constructing the Downtown Crossing and Indiana will oversee the
East End Crossing. Federal aid formula funds will be matched by a combination of
State highway funds and toll credits in Kentucky and by state funds in Indiana.
Kentucky's project will be managed as a public enterprise and secured under a
demand-based toll structure, and Indiana's will be managed by the private sector
using a P3 availability payment structure. Both projects are seeking TIFIA
funding.

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expressed are those of Fitch Ratings.