Opinion
US Infrastructure Financing Needs to Change Track
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What is necessary is getting agreement on how to set up infrastructure projects at market rates, so they can be financed and we can get on with them.
By Roy C. Smith
The American Society of Civil Engineers recently awarded the US a minimally passing grade of D+ for its crumbling infrastructure, and identified $3.6 trillion of unfunded requirements.
This is because US public infrastructure (highways, bridges, airports and so on) is paid for by user taxes and tolls that politicians are loath to raise, or by direct government grants that are equally unpopular. Thus it is continually under-depreciated, under-maintained, and under-financed.
The New Jersey Turnpike (constructed in 1951) is in poor shape and needs to be improved and renovated. In 2007, the governor of the state, Jon Corzine, proposed a $30 billion sale/leaseback arrangement, but the New Jersey legislature would not approve it because doing so was feared to involve job losses and wage cuts, as well as an increase in the tolls.
Read full article as published in Financial News
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Roy C. Smith is the Kenneth G. Langone Professor of Entrepreneurship and Finance and a professor of Management Practice.
This is because US public infrastructure (highways, bridges, airports and so on) is paid for by user taxes and tolls that politicians are loath to raise, or by direct government grants that are equally unpopular. Thus it is continually under-depreciated, under-maintained, and under-financed.
The New Jersey Turnpike (constructed in 1951) is in poor shape and needs to be improved and renovated. In 2007, the governor of the state, Jon Corzine, proposed a $30 billion sale/leaseback arrangement, but the New Jersey legislature would not approve it because doing so was feared to involve job losses and wage cuts, as well as an increase in the tolls.
Read full article as published in Financial News
___
Roy C. Smith is the Kenneth G. Langone Professor of Entrepreneurship and Finance and a professor of Management Practice.