President Donald Trump said that the Administration could release an infrastructure plan as early as mid-May that is expected to focus heavily on public-private partnerships for funding.
Steven Roth, Co-Chairman of the President’s Infrastructure Task Force, said recently at a Bloomberg panel discussion in New York that the Administration is looking “very carefully” at the Australian model of public-private partnerships to fund infrastructure improvements.
Proceeds from privatized Australian road and other public utilities are put into additional infrastructure and participating states receive a 15 percent bonus from the national government to spend on infrastructure, according to John Schmidt, a former associate U.S. attorney general, who also sat on the panel.
Although NATSO has long supported enhanced investment in surface transportation infrastructure, direct federal spending -- rather than simply private sector capital -- is necessary to do it effectively. Legislation that relies on private investment and tax credits could lead to undesirable revenue schemes, such as tolling and rest area commercialization, which NATSO opposes.
Ironically, Schmidt pointed to Indiana, a state where residents and businesses are actively fighting efforts to add new toll roads, as an example of how public private partnerships could work.
The Indiana General Assembly in late April substantially scaled back a provision in its comprehensive transportation legislation that would have put the state on track to toll I-70 in the near future.
Federal law prohibits the tolling of existing interstates except for three slots under the federal Interstate Reconstruction and Rehabilitation Pilot Program. Federal law requires each of those states seeking a slot in this tolling program to pass a law affirmatively permitting tolling before they can toll an existing Interstate.
The original version of H.B. 1002 contained explicit permission for the state to toll. However, amid strong opposition from NATSO, the Alliance for Toll-Free Interstates, and other like-minded businesses and Indiana residents, the final legislation does not include this permission, but rather directs the Indiana Department of Transportation to further study tolling before the legislature reaches a final decision on whether tolling is in the best interest of the state.
Furthermore, Indiana already is home to the bankrupt Indiana toll road.
The Indiana Toll Road Concession Company paid $3.8 billion in 2006 -- in a deal that included Cintra, a Spanish highway builder, and Australia’s Macquarie Bank -- for a 75-year lease from the Indiana Finance Authority under which it agreed to operate, maintain and make improvements to the road in exchange for the right to collect tolls. The operators of the Indiana Toll Road later filed for bankruptcy to get out from under $6 billion in debt after traffic volumes on the toll road were lower than expected.
A 2014 analysis by the Congressional Research Service, which provides policy and legal analysis to Congress, said that traffic was 11 percent lower in 2013 than in 2007, because of the economic recession that began in 2007 and because the company raised toll rates on trucks.
In issuing that analysis, CRS said, “The financial problems of the Indiana Toll Road concessionaire provide more evidence that P3s could be of only limited help in solving the transportation funding problems facing federal, state, and local governments.”
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