WASHINGTON The U.S. Department of Transportation wants to start using innovative financing methods similar to the revolving loan fund program that is Currently used to help finance water treatment plants a department official said Friday.

Speaking at a National Association of Independent Public Finance Advisors conference, Stephen Martin. director of financial development at the Transportation Department, said the department's method of delivering money to the states is not the most efficient way to use federal dollars.

Since 1991. when Congress passed the Intermodal Surface Transportation Efficiency Act, it opened up a whole dialogue on how to finance transportation projects, Martin said. The department has been soliciting ideas from local governments, banks, and other financiers on how to better use federal money, he said.

"There's a long way to go" in implementing the new ideas, but at least the tide has turned toward identifying those areas where states can get beyond financing all transportation projects with grants, Martin said.

"There's a difference between funding and financing," Martin said. Funding is someone putting out a dollar getting reimbursed for pan of it. bu! financing is the whole process from beginning to end, he said.

"There's a lot of energy. There's basically ideas growing all over the landscape," he said.

One of the alternatives to straight federal grants is the state revolving loan fund concept, Martin said. One such revolving fund program was created by Congress in 1987 to help states finance wastewater treatment facilities under the Clean Water Act.

A second revolving fund program is included in legislation Congress is currently considering that would renew and extend the Safe Drinking Water Act. States use the revolving loan funds to leverage federal funds by issuing tax-exempt bonds.

There are barriers to alternative financing methods, Martin said. Some barriers, such as the tax code and the federal budget process, are going to take years to work around, but there will be remedies, he said.

Martin referred to his speech as a "heads up" for the public finance group, so they will be prepared when the new financing methods become available. No decisions will be made tomorrow, he said, but "the next six months to a year will be big for infrastructure."

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