PRESIDENT-ELECT Donald Trump has proposed a $1 trillion plan to fix
America’s infrastructure. It relies on public-private partnerships as
its primary source of financing.
Our country’s complex transportation network needs an overhaul, but private investment is not the answer, mainly because of the returns that investors expect.
Public-private partnerships can be an excellent procurement tool, but selecting the right project is key.
Virginia has been a national leader in such deals since the General Assembly passed the Public Private Partnership Act in 1995. The law was designed for the partnerships to be used as an option for certain projects if taxpayers could get a better deal. They were not meant to be a default funding method. Virginia can finance projects less expensively with such deals, thanks to our AAA credit rating and tax-exempt status.
Over the years, Virginia officials fell into a misguided ideology that such partnerships were the transportation solution. They lost sight of the taxpayers’ best interests. The assumption was that the private sector would always deliver better results than government. It’s true in some cases, but not in all.
In the Trump plan, the private sector would get $140 billion in tax credits for equity invested in projects. This would yield a revenue-neutral $1 trillion program. However, private sector teams expect to get a rate of return on the money they invest. The revenue stream to make this possible comes primarily from tolls. Tolls do not work for the vast majority of transportation projects in which funds are needed to repair or upgrade existing facilities. Only a limited number of projects in the United States would support a revenue stream necessary to entice private investment.
http://pilotonline.com/opinion/columnist/guest/aubrey-layne-trump-s-infrastructure-plan-is-no-magic-bullet/article_80f91c83-9581-5722-a3d5-d07adec1c852.html
Our country’s complex transportation network needs an overhaul, but private investment is not the answer, mainly because of the returns that investors expect.
Public-private partnerships can be an excellent procurement tool, but selecting the right project is key.
Virginia has been a national leader in such deals since the General Assembly passed the Public Private Partnership Act in 1995. The law was designed for the partnerships to be used as an option for certain projects if taxpayers could get a better deal. They were not meant to be a default funding method. Virginia can finance projects less expensively with such deals, thanks to our AAA credit rating and tax-exempt status.
Over the years, Virginia officials fell into a misguided ideology that such partnerships were the transportation solution. They lost sight of the taxpayers’ best interests. The assumption was that the private sector would always deliver better results than government. It’s true in some cases, but not in all.
In the Trump plan, the private sector would get $140 billion in tax credits for equity invested in projects. This would yield a revenue-neutral $1 trillion program. However, private sector teams expect to get a rate of return on the money they invest. The revenue stream to make this possible comes primarily from tolls. Tolls do not work for the vast majority of transportation projects in which funds are needed to repair or upgrade existing facilities. Only a limited number of projects in the United States would support a revenue stream necessary to entice private investment.
http://pilotonline.com/opinion/columnist/guest/aubrey-layne-trump-s-infrastructure-plan-is-no-magic-bullet/article_80f91c83-9581-5722-a3d5-d07adec1c852.html
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