By: Robert Elder
Austin American-Statesman
March 26, 2008
Original article
Senate Finance Committee Chairman Steve Ogden said Tuesday that the state should consider creating a public-private partnership to invest in roads and other infrastructure in Texas, possibly using the vast resources of the state's major pension funds.
Referring to deals the state has made with private contractors to build and operate roads such as Texas 130 near Austin, Ogden, R-Bryan, said the idea for infrastructure investing "was predicated on the fact we had people throwing (billions of dollars) at us for the right to build a turnpike."
The concept could be "a pretty good win-win idea" for the state, said Ogden, who floated the idea during a joint meeting of the Finance and State Affairs committees on the financial strategies of public pension and investment funds. "My purpose is to air some of the issues around this, and where I hope we're heading is legislation, and possibly a constitutional amendment, next session to address the issue," Ogden said.
Ogden said the state's two largest pension funds – the teacher and state employee retirement systems, which together oversee $130 billion in assets – could loan money for infrastructure projects on their own accord or invest alongside private entities through a newly created partnership.
"Our trust funds are now investing in infrastructure in other states and other countries," Ogden said, so it may make sense for the funds to invest in Texas.
Pension fund officials agreed but said any investment must earn a competitive return with similar deals.
Britt Harris, the chief investment officer of the Teacher Retirement System of Texas, said infrastructure investing could make sense if the deal was "equal to or better than something we can get in another (investment) vehicle."
The pension fund's "ultimate loyalty is to the members," Harris said, not to target investments based on geography or politics.
The State Affairs Committee chairman, Sen. Robert Duncan, R-Lubbock, said a more coordinated approach to infrastructure investing could be a good alternative to "what we're doing today, which is (the Texas Department of Transportation) marketing these on a deal-by-deal basis."
A similar idea is pending in Congress. U.S. Sens. Chris Dodd, D-Conn., and Chuck Hagel, R-Neb., last year proposed a nonpartisan National Infrastructure Bank that would help pay for big-ticket regional and national projects.
The national bank would issue long-term bonds for projects costing more than $75 million proposed by state or local governments.
Harris said the market for infrastructure investment is vast, whatever the funding mechanism: "The big picture is, global infrastructure is in disarray." He said the teacher fund's investment division will deliver a report on infrastructure investing to the system's trustees at their April 10 meeting.
relder@statesman.com; 445-3671
