My friend Kent Starwalt of the Tennessee Road Builder’s Association sent out a legislative update this morning about the tension between Obama Administration and the Republican controlled Congress on infrastructure investment.
According to the Stateline article, the divisions over transportation investment include high-speed rail, roads, bridges and access to high-speed internet:
The president is trying to make the case that improving the country’s entire physical infrastructure—including roads and railways but also high-speed Internet connections—will make America more competitive and generate jobs in the short term. But GOP lawmakers, whose numbers surged following the November elections, want to scale back federal spending across the board, and they are especially suspicious of Obama’s emphasis on rail and transit.
A blog post by another friend, Evan Caplicki, earlier today may provide a feasible alternative to the debate above. In his post on Public-Private Partnerships (PPPs) for Transportation, Evan discusses a Toolkit for Legislators released by the National Conference of State Legislatures.
It is no secret that states are struggling to meet their growing infrastructure needs with limited funds. Some states like Tennessee have a "pay as you go" program and will not borrow funds for roads and bridges projects. But the Toolkit for Legislators suggests leveraging existing resources through the use of PPPs. In its simplest form, PPPs agreements allow private companies to take on traditionally public roles in infrastructure projects, while keeping the public sector ultimately accountable for a project and the overall service to the public. According to the NCSL report, 29 states and Puerto Rico have legislation addressing transportation PPPs and more than $46 billion has been invested in these projects over the last 20 years.
Can PPPs and other alternative financing programs revive highway and bridge construction? As always … it depends. Here are my thoughts:
- PPPs can reduce the initial public investment through accelerated or more efficient delivery.
- PPPs don’t create new money, but instead rely on the private sector and other resources to help develop the infrastructure. However, public funds will eventually be a part of the equation to pay back the private investment.
- PPPs can provide a feasible alternative to states contemplating investment in infrastructure, provided all the right pieces are in place (i.e., financing package, design and construction teams, legislative authority).
Thus, if the legislative framework is in place to support a PPP for transportation investment, then there will be opportunities for new highway and bridge projects to go forward. Indeed, contractors with PPP experience are situated in the perfect spot as the debate of infrastructure investment continues on Capitol Hill.
Image: Elliott P.