INFRASTRUCTURE REVOLVING FUNDS: A FIRST REVIEW

This paper examines eight alternative financial configurations for a National Infrastructure Fund (NIF). While these cases can be helpful in comparing different financial structures, they are less suitable for predicting the outcome of particular options because they rely on 30-year projections of economic conditions, and take no account of loan defaults either by the state infrastructure funds or by individual projects. A NIF would typically be financed with a federal loan or grant and, in turn, would make loans for particular infrastructure projects, presumably at below-market interest rates. Under most options, a pool of permanent capital could be created to be used for future infrastructure loans. As a result, the NIF represents a significant change from current infrastructure programs. An important similarity between existing government programs and any NIF proposal, however, is the economic cost both place on society. While a revolving fund does not reduce the cost of financing public investments, the share of these costs to be borne by federal and state and local governments can vary widely, as shown by the case studies we have examined. Three major conclusions can be drawn from these case studies. Charging interest on NIF funds lent for projects would increase the number of projects that could be built for any given level of federal expenditure. Charging interest on federal funds provided to the NIF would reduce federal costs significantly, but would aslo reduce the fund available for project investment. (There would be very little change in the ratio of projects built per federal dollar.) As federal costs are reduced, state and local costs would increase at any level of project investment. (Author)

  • Corporate Authors:

    United States Congress

    Congressional Budget Office
    Washington, DC  United States  20510
  • Authors:
    • Wishact, J
    • Mudge, R
    • Bodde, D L
    • Ehclich, E M
  • Publication Date: 1985-5

Media Info

  • Features: Appendices; Tables;
  • Pagination: 25 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00395948
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Sep 30 1985 12:00AM