Louisiana Transportation Infrastructure Bank, Amendment 2 (2015)

• Text of measure
• Background
• Support
• Opposition
• Media editorials
• Path to the ballot
• Louisiana profile

Amendment 2
Type	Amendment
Origin	Louisiana Legislature
Topic	Banking
Status	Approved a

The Louisiana Transportation Infrastructure Bank, Amendment 2 was on the October 24, 2015, ballot in Louisiana as a legislatively referred constitutional amendment, where it was approved. The measure invested public funds in establishing a state transportation infrastructure bank, which are tasked with utilizing public funds for transportation projects.

The amendment provided the constitutional basis for House Bill 767.

A similar measure, titled Amendment 4, was defeated by voters in 2014. Amendment 4 differed from 2015's proposed amendment in that Amendment 4 would have allowed the transportation infrastructure bank to loan, pledge, guarantee or donate public funds to transportation projects. Amendment 2 allowed the bank to use public funds solely for transportation projects.

The measure was introduced into the Louisiana Legislature by Rep. Karen St. Germain (D-60) as House Bill 618.

Election results

Louisiana Amendment 2
Result		Votes	Percentage
a Yes		528,863	52.9%
No		471,636	47.1%

Election results via: Louisiana Secretary of State

Text of measure

Ballot title

The ballot text was as follows:

“

Do you support an amendment to authorize the investment of funds for a state infrastructure bank to be used solely for transportation projects? (Amends Article VII, Section 14(B))

”

Constitutional changes

See also: Article VII, Louisiana Constitution

The proposed amendment amended Section 14(B) of Article VII of the Louisiana Constitution. The following underlined text was added and struck-through text was deleted by the measure's approval:

Amendment to Section 14(B) of Article VII of the Louisiana Constitution

§14. Donation, Loan, or Pledge of Public Credit (B) Authorized Uses. Nothing in this Section shall prevent (1) the use of public funds for programs of social welfare for the aid and support of the needy; (2) contributions of public funds to pension and insurance programs for the benefit of public employees; (3) the pledge of public funds, credit, property, or things of value for public purposes with respect to the issuance of bonds or other evidences of indebtedness to meet public obligations as provided by law; (4) the return of property, including mineral rights, to a former owner from whom the property had previously been expropriated, or purchased under threat of expropriation, when the legislature by law declares that the public and necessary purpose which originally supported the expropriation has ceased to exist and orders the return of the property to the former owner under such terms and conditions as specified by the legislature; (5) acquisition of stock by any institution of higher education in exchange for any intellectual property; (6) the donation of abandoned or blighted housing property by the governing authority of a municipality or a parish to a nonprofit organization which is recognized by the Internal Revenue Service as a 501(c)(3) or 501(c)(4) nonprofit organization and which agrees to renovate and maintain such property until conveyance of the property by such organization; (7) the deduction of any tax, interest, penalty, or other charges forming the basis of tax liens on blighted property so that they may be subordinated and waived in favor of any purchaser who is not a member of the immediate family of the blighted property owner or which is not any entity in which the owner has a substantial economic interest, but only in connection with a property renovation plan approved by an administrative hearing officer appointed by the parish or municipal government where the property is located; (8) the deduction of past due taxes, interest, and penalties in favor of an owner of a blighted property, but only when the owner sells the property at less than the appraised value to facilitate the blighted property renovation plan approved by the parish or municipal government and only after the renovation is completed such deduction being canceled, null and void, and to no effect in the event ownership of the property in the future reverts back to the owner or any member of his immediate family; (9) the donation by the state of asphalt which has been removed from state roads and highways to the governing authority of the parish or municipality where the asphalt was removed, or if not needed by such governing authority, then to any other parish or municipal governing authority, but only pursuant to a cooperative endeavor agreement between the state and the governing authority receiving the donated property; (10) the investment in stocks of a portion of the Rockefeller Wildlife Refuge Trust and Protection Fund, created under the provisions of R.S. 56:797, and the Russell Sage or Marsh Island Refuge Fund, created under the provisions of R.S. 56:798, such portion not to exceed thirty-five percent of each fund; (11) the investment in stocks of a portion of the state-funded permanently endowed funds of a public or private college or university, not to exceed thirty-five percent of the public funds endowed; or (12) the investment in equities of a portion of the Medicaid Trust Fund for the Elderly created under the provisions of R.S. 46:2691 et seq., such portion not to exceed thirty-five percent of the fund.; or (13) the investment of public funds to capitalize a state infrastructure bank to be utilized solely for transportation projects.

Background

The U.S. Department of Transportation classifies transportation infrastructure banks as "State Infrastructure Banks" or "SIBS." Thirty states and Puerto Rico have SIBS. These banks are owned by states and offer loans and credit to public and private transportation infrastructure projects.

Support

Rep. Karen St. Germain (D-60) and Rep. James K. Armes III (D-30) sponsored the measure in the Louisiana Legislature.

Arguments in favor

Rep. Karen St. Germain

Rep. Karen St. Germain, one of the bill's sponsors and chairwoman of the House Committee on Transportation, Highways and Public Works, argued:

“

These amendments would authorize using existing state revenues to build new roads and bridges and repair the ones we have. Neither amendment would create a new tax or raise an existing one; nor would the money be spent on anything but transportation infrastructure. Both amendments would, however, allow for increases in what the state spends on roads and bridges. Constitutional Amendment No. 1 would permit a portion of the mineral revenues currently going to the Budget Stabilization Fund — often called the Rainy Day Fund — to be utilized for roads and bridges once the rainy day fund was completely full. Constitutional Amendment No. 2 would authorize the treasurer to invest state funds in the state infrastructure bank that was created this past session. The treasurer already invests these funds on Wall Street, but this amendment would allow him to invest in Louisiana roads and bridges. If approved, these dollars could be invested in the infrastructure bank, which would in turn make loans to local and regional governments for transportation infrastructure.

”

Christopher G. Humphreys, president of the Louisiana Section of the American Society of Civil Engineers, argued:

“

Louisiana’s roads and bridges are in deplorable condition. Nearly four years ago, the American Society of Civil Engineers released the 2012 Report Card for Louisiana’s Infrastructure indicating that the condition of our roads and bridges is dismal, receiving a grade of D and D+, respectively. Over the last two decades, chronic underfunding of Louisiana’s infrastructure has led to an alarming rate of deterioration. Using a simple metaphor, we no longer are facing a leaking roof; we are facing a roof replacement. Our road and bridge network no longer provides the required basic services. Most Louisiana citizens believe our infrastructure is the backbone of our economy, yet few believe it is meeting our needs. Our capacity and maintenance needs have outgrown the state’s ability to maintain the system. The result is slower economic growth and fewer jobs. Louisiana voters have an opportunity to help in the Oct. 24 election. Amendments 1 and 2 will provide additional revenue for infrastructure projects without raising taxes: Voting “yes” on Amendments 1 and 2 will increase much-needed investment into the state’s transportation network.

”

The U.S. Department of Transportation listed "potential advantages" and "potential limitations" to state transportation infrastructure banks in general. The list of "potential advantages" included:

“

Accelerate State-approved projects by providing direct loans and other credit assistance. Create a permanent additional revenue/financing source based on SIB interest income and other program income earned (revolving fund concept). Provide credit assistance with flexible and reasonable terms (including interest rates, repayment schedules, and maturity). Provide opportunity to local governments to advance their high-priority projects (through local funds or by borrowing against their State’s allocations of Federal aid). Provide opportunity to private sector borrowers to advance desired projects (as long as they are willing to provide a revenue source). Can be used to support or leverage other borrowing (e.g., issuing its own debt or guaranteeing other entities’ debt).

”

The League of Women Voters of Louisiana published an analysis with the following arguments supporting the amendment:

“

Increasing funding sources for the Bank will enable more transportation projects to be financed. Use of State funds is preferable to funding from private entities, as they are more likely to require better returns from their investments or contributions, such as tolls or other fees.

”

The Public Affairs Research Council of Louisiana found the following arguments supporting the measure:

“

The state already has created the infrastructure bank. This amendment just takes the prudent step of providing another option for financing it. With this amendment, the state could use its own funds to invest in itself and loan money for roads. Every means should be sought to provide options for the new infrastructure bank. New financing options are needed to address Louisiana’s many needs for road improvements and infrastructure that would provide safer and less congested driving conditions and stimulate the economy. The state has deteriorating roads and a severely underfunded infrastructure. The current fuel tax, based on the volume of fuel sales, is not keeping up with the growing costs and needs of highway work. Local governments would save money with infrastructure bank loans by avoiding the more expensive interest rates and fees that come with normal state bonding costs. This would allow them to stretch their limited infrastructure dollars further. Other states, such as South Carolina, have used a similar program to great advantage. According to a 2012 Brookings Institution report, 23 states have active infrastructure banks.

”

State Treasurer John Neely Kennedy

The Council for a Better Louisiana argued:

“

Earlier this year, the Legislature created the Louisiana Transportation Infrastructure Bank. Modeled after programs in 30 states, the bank is allowed to lend money to local governments at lower interest rates to pay for local transportation projects. The state constitution, with some exceptions, prohibits the state from making such loans. Amendment 2, which CABL supports, would add an exception for the transportation bank.

”

State Treasurer John Neely Kennedy, who supported both Amendment 1 and Amendment 2, said:

“

We have to do something about infrastructure. The advantage of both of these amendments is that it would generate additional money for roads without raising taxes.

”

Jason El Koubi, president and CEO of One Acadiana, argued:

“

Charleston’s architecturally stunning Arthur Ravenel Jr. Bridge is a great example of what can be achieved with a focused strategy, innovative partnerships and persistent leadership across the public and private sectors. At a total cost of $632 million, the Arthur Ravenel Jr. Bridge represents one of the largest single transportation infrastructure projects completed in South Carolina’s history. It was financed through an innovative transportation funding mechanism — the South Carolina Transportation Infrastructure Bank. Without a $325 million commitment from the Infrastructure Bank matched by about $75 million in local revenues from a dedicated sales tax, the project would not have secured the federal match to move forward. Since its inception less than 20 years ago, the Infrastructure Bank has leveraged approximately $2 billion of its funding to complete more than 100 projects totaling about $5.3 billion in infrastructure investment across the state. As Louisiana faces a $12 billion — and growing — infrastructure backlog, we must pursue new ways of financing our key priorities in order to sustain and accelerate our economic development. For example, the completion of Interstate 49 South, with an estimated cost of nearly $3 billion, remains the top infrastructure project for the Acadiana region and would provide a new, continuous interstate corridor from Shreveport to New Orleans. Along with the excitement created by the recent kick-off of the planning and design of the Lafayette Connector portion of I-49 South, we must also acknowledge the funding challenges that lie ahead. As we consider Charleston’s model of progress, Louisiana voters have the opportunity to put a similar funding mechanism in place by voting “yes” on Constitutional Amendment No. 2. That amendment will provide the constitutional authority to fund a Louisiana State Transportation Infrastructure Bank without raising taxes or fees. While the State Legislature created the Louisiana State Transportation Infrastructure Bank, voters still have to provide constitutional authority for the State Treasurer to invest existing state funds into the bank.

”

Opposition

Arguments against

The U.S. Department of Transportation listed "potential advantages" and "potential limitations" to state transportation infrastructure banks in general. The list of "potential limitations" included:

“

Need to allocate resources to manage ongoing SIB lending and repayment functions. State-monitoring responsibility for duration of SIB activity is longer than typical grant assistance timeframe. Brings possibility of default and/or failure to make timely debt-service payments. May cause reduction in Federal-aid funds available for other transportation program purposes (to extent Federal aid is used to capitalize SIB).

”

The League of Women Voters of Louisiana published an analysis with the following cons:

“

This amendment only addresses the investment of State funds. Although the money invested is presumably quite safe, any interest income is probably quite small, so this may not be a particularly good investment. Since the Bank is a State agency it can be funded through normal State budgeting processes.

”

The Public Affairs Research Council of Louisiana found the following arguments against the measure:

“

The infrastructure bank would cost money. Startup capital requirements could be more than $100 million before the bank could be effective. Eventually, operating expenses are expected to total $300,000 to $400,000 per year, which would be drawn from the revenue generated by the loan program. The bank’s oversight would be in the hands of a small board operating with its own criteria for selecting projects to support. That decision-making process would be separate from the legislative appropriations process and the state’s widely vetted priority plan for infrastructure spending. The state already has multiple funds and dedications to support local infrastructure projects and a bonding process to provide parishes, municipalities and other local jurisdictions access to loans. Furthermore, the treasurer may or may not find it prudent to invest state funds in the infrastructure bank. If the loans to local government are going to be affordable, then the interest rates will have to be lower than other conventional financing through bonds. That would mean investments with the bank will necessarily have a lower rate of return. Therefore, the treasurer will not earn as much interest on state money through the infrastructure bank than through more conventional bond investments.

”

Media editorials

Rolfe McCollister, publisher of the Greater Baton Rouge Business Report, urged a vote in favor of the amendment:

“

The state has already set up an infrastructure bank. This would simply create a new option for income allowing the state treasurer the ability to invest state funds in this bank. Currently, more than 30 other states have some form of this amendment. There is no requirement to invest.

”

Path to the ballot

See also: Amending the Louisiana Constitution

The proposed constitutional amendment was filed by Rep. Karen St. Germain (D-60) as House Bill 618 on April 3, 2015.

The measure needed to be approved through a two-thirds vote in both legislative chambers to be placed on the ballot. Louisiana is one of sixteen states that require a two-thirds supermajority.

On May 13, 2015, the Louisiana House of Representatives approved the amendment. The Louisiana Senate unanimously approved the measure with amendments on June 5, 2015; thus, sending the legislation back to the house. The house agreed to the senate amendments and passed the final bill on June 9, 2015.

Senate vote

June 5, 2015, Senate vote

Louisiana HB 618 Senate Vote
Result		Votes	Percentage
a Yes		36	100.00%
No		0	0.00%

House vote

June 9, 2015, House vote

Louisiana HB 618 House Vote
Result		Votes	Percentage
a Yes		89	100.00%
No		0	0.00%

State profile

Demographic data for Louisiana
	Louisiana	U.S.
Total population:	4,668,960	316,515,021
Land area (sq mi):	43,204	3,531,905
Race and ethnicity**
White:	62.8%	73.6%
Black/African American:	32.1%	12.6%
Asian:	1.7%	5.1%
Native American:	0.6%	0.8%
Pacific Islander:	0%	0.2%
Two or more:	1.8%	3%
Hispanic/Latino:	4.7%	17.1%
Education
High school graduation rate:	83.4%	86.7%
College graduation rate:	22.5%	29.8%
Income
Median household income:	$45,047	$53,889
Persons below poverty level:	23.3%	11.3%
Source: U.S. Census Bureau, "American Community Survey" (5-year estimates 2010-2015) Click here for more information on the 2020 census and here for more on its impact on the redistricting process in Louisiana. **Note: Percentages for race and ethnicity may add up to more than 100 percent because respondents may report more than one race and the Hispanic/Latino ethnicity may be selected in conjunction with any race. Read more about race and ethnicity in the census here.

Presidential voting pattern

See also: Presidential voting trends in Louisiana

Louisiana voted Republican in all six presidential elections between 2000 and 2020.

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See also

Suggest a link

• 2015 ballot measures
• Louisiana 2015 ballot measures
• Louisiana Legislature

External links

• House Bill 618
• Louisiana Constitutional Amendments For Consideration for October 24, 2015 Ballot
• Public Affairs Research Council Guide to the 2015 Constitutional Amendments
• League of Women Voters of Louisiana's 2015 proposed constitutional amendments analysis