NEW YORK (Reuters) - As U.S. policymakers focus on aging infrastructure, they must also consider creating new vehicles for financing public works, including a national bond fund partnering with Social Security, public pension and private equity funds.
Richard Little of the Keston Institute for Public Finance and Infrastructure Policy told the Reuters Infrastructure Summit that his idea for such a fund seemed odd a year ago to officials in Washington.
Now, officials are giving it a second look in the face of the trillions of dollars in infrastructure work the United States may require in coming decades at the same time as liabilities from federal entitlement program will swell, Little said on Wednesday.
“I don’t see anyone having a sustainable (funding) model in place for general government, let alone infrastructure,” Little said. “Why not create a vehicle where the federal government could issue infrastructure bonds?”
Debt issued through a national infrastructure investment fund would be backed by fee revenues from state and local government projects.
The fund would have an independent board with the fiduciary responsibility for ensuring selected projects live up to expectations.
Such a fund could prove popular with Americans, playing both on patriotic sentiment and frustration over public works now many decades old and in many cases obsolete, Little said.
The bonds could prove especially attractive to individual investors if available in $500 and $1,000 lots, and their fee-backed projects would be appealing to investors concerned about financial hardship in statehouses and city halls from declining tax revenues that could tarnish general obligation bonds, said Little.
The general public may not be as enthusiastic. According to Little, as infrastructure projects shift to fee-supported systems from tax-supported structures most of the nation’s interstate highway system will have to charge tolls.
Little noted that toll roads in his home state of California are already viewed as the “work of the anti-Christ.” The institute is a unit of the University of Southern California.
In any case, an aggressive push on infrastructure, with funding from either traditional or novel methods, may be stalled by a lack of labor, even amid rising unemployment.
A top concern of construction and engineering companies has been and will remain too few skilled workers, Little said.
He noted that welders are in such great demand they can often stake a greater claim to seats on corporate jets than top officers of construction and engineering companies.
Vocational education has to be a top priority for the United States in coming years if the public works now under consideration, including high-speed rail systems linking major metropolitan regions, are to be realized, Little said.
“We haven’t talked this up,” he said. “We do that at our peril.”
(For summit blog: blogs.reuters.com/summits/)
Reporting by Jim Christie; editing by Jeffrey Benkoe