Jeff Bingaman United States Senator from New Mexico

WASHINGTON – U.S. Senator Jeff Bingaman today participated in the writing of legislation that will invest in public transit and help finance highway infrastructure improvements in New Mexico and across the country.

The Senate Finance Committee today approved the Highway Investment, Job Creation and Economic Growth Act of 2012, a bill that raises the revenue needed to invest in the country's transportation infrastructure needs while creating good-paying jobs.

"This bill creates jobs by investing in basic infrastructure improvement projects across the country.  But it also invests in our future by supporting transit and ensuring our highway, road and bridge systems are in good shape," Bingaman said.

Bingaman was able to add a provision to the bill that will allow small and municipal governments raise the capital they need to finance local infrastructure projects – including school and road construction, and to meet other ongoing needs.

Under current law, banks are incentivized to purchase municipal bonds only from municipalities that issue $10 million or less in debt each year.  The American Recovery and Reinvestment Act, which passed in 2009, incorporated a provision pushed by Bingaman to raise that limit to $30 million, but that measure was allowed to expire at the end of 2010.   The bill that cleared the Senate Finance Committee today includes a Bingaman provision that reinstates the $30 million limit until Jan. 1, 2013.

When the limit was $30 million, many municipalities across the country were able to place bonds directly at financial institutions, including community banks.  When municipal governments work directly with community banks, they achieve considerable savings on interest and transaction costs.

The cities of Gallup and Artesia, and the school districts of Hobbs, Los Alamos, Las Cruces, Roswell, Bloomfield and Eunice all benefited from the increased bonding levels.

"New Mexico communities and school districts benefitted tremendously under the $30 million limit.  We were able to make necessary infrastructure improvements while creating good jobs," Bingaman said.  "I'm glad we're reinstating the $30 million limit, if only temporarily."

A second Bingaman provision was incorporated into the bill.  This one would eliminate an expensive federal subsidy for public roads that are privatized through a long-term lease of many decades.

Currently, the tax code allows a private highway operator to depreciate, or write off, the portion of a highway lease attributable to infrastructure if the lease is sufficiently long – generally, longer than the 45 years highway infrastructure is expected to last.  Once a lease beats that hurdle, the depreciation write-off occurs over 15 years – that is, the lessor's entire investment is recovered over only one-third of the highway's expected life.  And regardless of the lease's actual length, the lessor can write off the right to collect tolls over 15 years write-off schedules amount to a generous tax subsidy and are driving exceptionally long leases.

The Bingaman amendment would revise the tax code's cost-recovery schedules so that private lessors can write off their investments on a schedule that is consistent with what the Bureau of Economic Analysis says economic reality would dictate.