Texas state leaders have unveiled a plan to create a Transportation Finance Corporation “or similar entity” that would allow the state’s public pension funds to invest in a Texas-focused transportation infrastructure fund, according to a legislative memo made public last week.
“Essentially, this is the leadership agreeing to long-term funding solutions to transportation,” said a spokeswoman for Texas State Governor Rick Perry. She cautioned that “ultimately the recommendations laid out in the letter would have to be approved by the [Texas] legislature”, which will next convene in January 2009.
The need for long-term funding solutions came about as a result of a projected funding shortfall for the Texas Department of Transportation (TxDOT). As early as November last year, an internal TxDOT memo warned engineers of an impending shortfall in road construction and maintenance funds due to inflation and diversion of state and federal transportation dollars.
Texas is not alone in experiencing such difficulties. In recent years, budgetary constraints have moved several US states – including Indiana, Pennsylvania, Virginia and Florida – to consider monetising their toll road assets via long-term concessions to private investors. Texas, which in 2006 signed a long-term concession of its Trans-Texas Corridor to a Cintra-led consortium, has also participated in this trend.
However, diverting public pension monies into an intra-state infrastructure investment fund represents a new approach to an old problem. Governor Perry's spokeswoman pointed out that the state's public pension funds, like the $112 billion (€76.3 billion) Teachers’ Retirement System of Texas (TRS) or the $23 billion Employees Retirement System of Texas, are looking for competitive returns and investing in the state's infrastructure “would give them an opportunity to do that”.
“TRS invested in casinos last year, so why not let our retirement funds invest in infrastructure?” she asks.