Eight states indicated that they would use SIBs to help fund less than 10 percent of their transportation projects. The states’ responses are shown in figure 2. Furthermore, a longer-term anticipated benefit is that repaid SIB loans can be “recycled” as a source of funds for future transportation projects. Expedited Project Completion and Increased State And/or Local Investment Is an Important Benefit

As shown in figure 3, officials from eight states we contacted said that the most important benefit of SIBs over the next 5 years is the expedited completion of the projects. As figure 4 showed, 8 of the 15 states cited the absence of additional federal funds to capitalize a SIB as a factor that definitely diminished their likelihood of participating in the SIB Pilot Program. As previously mentioned, the appropriation provides $150 million for the SIB Pilot Program. DOT will need to decide how the funds will be allocated. Finally, some infrastructure finance experts question SIBs’ prospects for attracting private sector involvement—one of the program’s primary goals. However, some state officials expressed an aversion to debt financing and concern about whether there are enough revenue-generating projects to sustain a SIB. Summary of Selected Finance Tools

The National Highway System Designation Act of 1995, which includes the authorization for a State Infrastructure Bank (SIB) Pilot Program, also gives states additional flexibility to use innovative finance tools for highways outside the SIB Pilot Program. Scope and Methodology

In considering what role SIBs may play in helping states to expand their ability to finance highways, the objectives of our review were to (1) identify the extent of states’ interest in the pilot program and how states might use SIBs and (2) identify the benefits and barriers to states’ using SIBs.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed states' interest in establishing state infrastructure banks (SIB), focusing on the: (1) extent of states' interest in the SIB pilot program and how states might use SIB; and (2) benefits and barriers to states using SIB.

What GAO Found

GAO found that: (1) 15 states applied for the 10 slots in the SIB pilot program; (2) these states generally have large and growing populations that need additional highway construction; (3) most of the states surveyed indicated that SIB would probably be used to help fund less than 10 percent of their state transportation projects in the next 5 years; (4) officials from 8 states believe that the most important benefit of using SIB over the next 5 years would be the expedited completion of state transportation projects; (5) 8 states believe that the absence of new federal funds to capitalize SIB diminished the likelihood that they would participate in the SIB pilot program; (6) the fiscal year 1997 Department of Transportation (DOT) appropriation provided $150 million for SIB, and how the funding is allocated could affect the number of states applying for the pilot program; (7) although a primary SIB benefit is that financing will be repaid and can be recycled to future transportation projects, some states are averse to debt financing and concerned about whether there are enough revenue-generating projects to sustain SIB; (8) some infrastructure financing experts question SIB prospects for attracting private-sector involvement; and (9) states expressed varying degrees of interest in other financing mechanisms provided for primarily in the National Highway System Designation Act of 1995.