The Reason Foundation has recognized former Indiana governor Mitch Daniels’ (R) efforts to save taxpayers money and increase the efficiency of public services, awarding Daniels with the first annual Savas Award for Public-Private Partnerships.
The award recognizes individuals and organizations who improve the cost-effectiveness of public services by partnering with private organizations.
‘A Great Deal’
The award’s namesake, E.S. Savas, a professor at Baruch College and former assistant secretary of the U.S. Department of Housing and Urban Development, says Daniels’ implementation of private-public partnerships (P3s) greatly benefitted consumers and taxpayers.
“When he was governor of Indiana, one major thing that he did which got a great deal of national and even international attention was leasing the Indiana Toll Road,” Savas said. “He leased that; in other words, he created a concession or a franchise, and a private organization paid the state $3.8 billion upfront for a five-year lease to run the toll road. A private company invested $458 million for improvements in the first few years, so this was a great deal for the people of Indiana.”
Taxpayers Came Out Ahead
Savas says taxpayers ended up winning, even though the private company filed for bankruptcy in 2014.
“Now, the curious footnote to that, as a matter of fact, is that that company went bankrupt last year, after eight years,” Savas said. “However, bankruptcy cost the people of Indiana absolutely nothing.
“The bankrupt company rebid the thing and was able to rebid the remaining 66 years of the lease, and another company bought that with a much better financing arrangement so that they’re not in any great danger,” Savas said. “Again, the people of Indiana lost nothing, and they still had their $3.8 billion upfront and the nearly half a billion dollars of improvements that were made by the original concessionaire.”
Demonstrating Leadership on P3s
Reason Foundation Director of Government Reform Leonard Gilroy says Daniels’ leadership on P3s deserves recognition.
“It really comes down to his demonstrated leadership on public-private partnerships, as a practitioner,” Gilroy said. “To be successful at this sort of thing, you need competence and leadership, and he really demonstrated those qualities while pursuing those various initiatives.”
Gilroy says P3s are an example of creative problem solving in government.
“Governments are facing fiscal pressure, so they need to find creative ways to do more with less,” Gilroy said. “Public-private partnerships are a creative way of doing that, whether you are talking about something that is a more traditional contracting-out, outsourcing type of initiative or you dial that up to something where you’re hiring a private company to finance and build new highways, water systems, bridges, and other types of major infrastructure.”
Bringing ‘Lots of Innovation’
Finding new ways to use taxpayer money more efficiently is an increasingly important goal for elected officials, Gilroy says.
“The key takeaway for any taxpayer in the United States is that when you craft public-private partnerships well, you can really save money and bring lots of innovation to things that the public is used to getting in terms of public services,” Gilroy said. “At a time when you’re facing fiscal threats and long-term challenges, you really need to dig into that toolbox to find creative ways to cut costs and continue the delivery of the services that citizens rely on.
“That’s why people like Gov. Daniels are so important, because they really set a precedent for others to follow,” said Gilroy. “We’re going to need more and more and more of these, not less.”
Amelia Hamilton ([email protected]) writes from Traverse City, Michigan.