TDOT to Try Own Stimulus, Take Bonds to Do it

The state Department of Transportation may deviate from its historical policy of pay-as-you-go and take out 350-million dollars in bonds to help stimulate the economy. At the governor’s budget hearings today, transportation commissioner Gerald Nicely said he wants to issue “garvee” bonds.

“Garvee” stands for Grant Anticipation Revenue Vehicle. Commissioner Nicely says he wants to take out bonds against an annual stream of 40-million dollars from the federal government. That money is meant to fund repairs for some 300 bridges in the state. Nicely says the bonds would allow the work to begin now.

“We could in effect eliminate about 65 to 70 percent of those structurally deficient bridges in two-and-a-half to three year period. We’d have them either under construction or completed. And yes indeed, it would obviously provide a lot of jobs.”

Governor Phil Bredesen says he supports the bond proposal and acknowledges the break from policy. It would take legislative approval. Bredesen also says he’s confident the state would find buyers for the bonds since federal money would back them.

Some in Congress are proposing an infrastructure stimulus on the federal level. TDOT expects the state could receive some 268-million dollars for road projects if such a bill passes. Chief Engineer Paul Degges says the department has a list of projects ready to go if the money comes down. :20

WEB EXTRA:

At least 22 states including New Jersey and California have used GARVEE bonds, which are relatively new to infrastructure financing. In Tennessee’s case, the state would pay them back over a 12 year period. But increasingly, the credit markets have become an issue. As recently as October, the Idaho DOT delayed a $116 million GARVEE bond sale scheduled for this month to wait out the credit markets.