Creating and maintaining a modern and efficient system of transportation will be one of the keys to the future prosperity of Connecticut’s economy. However, Connecticut ranks near the bottom nationally in quality of infrastructure, which in turn makes it that much more difficult to attract business and create jobs. At the same time, the state’s continued fiscal restraints pose an
ongoing impediment to repairing crumbling infrastructure. Thus, there is a need to find new ways to fund infrastructure projects that minimize the impact on our already stretched state budget and our taxpayers. The creation of a Connecticut Infrastructure Bank (CIB) could be one solution.
The CIB is a public-private partnership that would accelerate investment and provide resources to improve and create infrastructure throughout the state. It will also have the added benefit of fueling economic growth and creating jobs. Numerous other states including Rhode Island and New Jersey already successfully utilize an infrastructure bank for state, regional, and local infrastructure projects.
Here’s how it would work: The CIB would have a portion of its operating capital and equity funded by the state each year and then that funding could be leveraged up to seven to 10 times.
For example, if $10 million were funded by the state in year one and it was leveraged up to 10 times with investments of private capital from banks and institutional investors, up to $100 million would be available to finance infrastructure. This money could then be used to fund state, regional and municipal projects including roads, highways, airports, bridges, railways, ports and ancillary transit oriented development projects.
The CIB could eventually be self-sustained and funded through revenue producing projects and an ongoing public-private partnership. These assets would continue to be owned by the state or the municipality. We would not need to “privatize” our roads. It should also be noted that this model can be utilized both with or without tolls on our highways.
An important additional advantage is that as a separately capitalized entity, the CIB could be excluded from the indebtedness of the state, reducing pressure on Connecticut’s budget and bonded indebtedness and existing outside of the restraints of the statutory bonding and volatility caps. The CIB would supplement our existing programs of bonding for transportation infrastructure, providing an additional option for funding specific projects and also potentially tapping into available federal funding streams that Connecticut does not currently utilize. By doing so, we provide an alternative to the current strained system where our only existing options are to simply tax, spend or borrow more as a State for our transportation infrastructure.
While the concept of an Infrastructure Bank may seem novel, the model already exists right here in Connecticut with the Connecticut Green Bank (CGB). As currently proposed (SB 70), the CIB would be established as a parallel entity to the CGB with a shared services model and common support functions to deliver greater efficiency. Additionally, the Green Bank’s mandate could be expanded to address other environmental infrastructure. Together, the CIB and CGB could help to finance the next generation of green infrastructure in Connecticut.
Our state faces two distinct dilemmas relating to transportation – crumbling outdated infrastructure and strained finances. An Infrastructure Bank can help to solve both and the time to move our state forward on this is now.
Jason Doucette represents the 13th District (Manchester and Glastonbury) and is Vice Chair of the Banking Committee.
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