Does New Federal Transportation Funding Criteria Pave the Way for Wasteful Projects?
The Fiscal Times' Josh Boak reports on the new rules established by the federal transportation bill for the rapidly expanding, and increasingly important, TIFIA (Transportation Infrastructure Finance and Innovation Act) credit loan program. "A project's potential economic benefits are no longer among the standards for awarding loans and loan guarantees, which will now be decided primarily by creditworthiness. And applicants must now be considered on a first-come, first-served basis, instead of competing against each other for a pool of money that Congress has increased tenfold to $1.7 billion for the next two years."
Some worry the change ceded too much of the Administration's control over the program in granting projects with a better ability to pay back loans first dibs at TIFIA financing. This will allow projects like self-financing toll roads to take preference over mass-transit, changing the way the federal government prioritizes transportation projects.
"Critics note that the government might no longer be able to get the biggest bang for its buck," reports Boak. "Federal officials would disburse loans to state and regional authorities that got their applications to the government the fastest, rather than to programs that could do more to fuel economic growth." Still, supporters of the changes hope they will help to jumpstart financing for construction and make the program more responsive to applicants.