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Editorial: Talent has plan for highway bonds

Monday, June 2, 2003

U.S. Sen. Jim Talent of Missouri criss-crossed the state last week with an interesting idea, stopping in Cape Girardeau to talk about it with a roomful of people in the know.

He was in front of various businessmen and entrepreneurs talking about how to upgrade the roads in Missouri -- and the rest of the nation -- and make them more conducive to travel.

He calls the plan "Build America Bonds," and it works the same way as many private companies and states do business: They sell bonds to raise cash for major construction projects.

This would be a one-time sale for financially struggling states to pay for roads, rail lines and transit systems through funding that would generate $50 billion.

Of course, Talent would fight to make sure Missouri gets its fair share of that pie.

A government-chartered, not-for-profit organization would issue 30-year bonds, which would be purchased by individuals and businesses. Some proceeds would go into a trust fund to be invested in federal agency bonds or other high-grade investments.

An intriguing component of the proposal is that bondholders would receive tax credits instead of interest, and those credits could be applied against their annual federal income-tax bills.

As the money is invested in the bonds -- and, subsequently, road projects -- the economy would improve due to the created jobs and increased payrolls. Better transportation would smooth the way for travel and the improved movement of goods.

All of this money would be in addition to the federal funds states receive each year for their roads, which, Talent, a Republican, assured the group last week, would not be diminished by his plan. A Democrat, U.S. Sen. Ron Wyden of Oregon, is co-sponsoring the bill, helping to ensure bipartisan support.

A possible drawback of the proposal is a required 20 percent match by states.

Even at that level, Missouri and some other cash-strapped states might be hard-pressed to come up with the money to get the federal help. But spending 20 cents to get a dollar of transportation funding would be a bargain in just about any state.

And let's hope states wouldn't be tempted to give up current funding for promised projects in order to come up with matching funds for this new pot of federal funding.

In addition, since Missouri's larger cities have the most transit systems and rail lines, much of that bond money might go to urban areas, even though rural highways desperately need attention.

Missouri's share of this new program is estimated to be $1 billion.

The proposal's merits outweigh the challenges that must be addressed. Talent has come up with a good idea that deserves further consideration.


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