Political Roadblocks Still Slowing PPPs

Published July 1, 2008

Questions about the proper role of the private sector in infrastructure development persist, according to proponents and critics of public-private partnerships (PPPs).

A two-year moratorium on PPPs in Texas has been a vivid reminder of the continued opposition to tolling and private-sector involvement–even though it has not stopped as many as 21 local toll projects from moving forward.

A more recent example has been the failure of bills in the California legislature (AB 2600, for example) to establish an Office of Public-Private Partnerships to promote PPPs among local agencies, and to permit the use of such partnerships in infrastructure development.

Opposition to PPPs is motivated by a belief that the public interest demands strong public oversight over investment decisions about public infrastructure. Advocates of this point of view argue the national road system is “a public good” that should be provided and maintained by the public sector to serve the public interest.

They contend a series of private toll concessions would lead to a patchwork of uncoordinated facilities and undermine the integrity of a national system. They are particularly critical of long-term leases or private concessions of existing toll facilities and diversion of upfront lump-sum lease payments for non-transportation purposes.

Favoring Beltway Control

Opposition to private-sector involvement is motivated by more than just an altruistic desire to protect the public interest. It is fueled by a complex mix of motives including concerns a widespread use of PPPs would weaken the federal role and shift more power over infrastructure development to the states; fear among congressional lawmakers that PPPs would erode congressional control over investment decisions and reduce opportunities for earmarking; and a worry by Beltway interest groups and lobbying organizations that private-sector involvement would lessen their ability to influence the transportation program.

Thus there are well-founded speculations there may be attempts next year to assert congressional oversight over public-private partnerships and place conditions on private toll road concession agreements, ostensibly “to protect the public interest.”

How that issue will be resolved may determine whether the private sector will become an active participant or remain on the sidelines in the national efforts to renew and expand the country’s aging transportation infrastructure.

C. Kenneth Orski