Chairman's Monthly Column - March 2010 - Public-Private Partnerships Could Help Solve Pennsylvania’s Infrastructure Problems

By Stanley Saylor (R-York), chairman,
Pennsylvania House Republican Policy Committee 

As you are all aware, Pennsylvania and the nation are facing very difficult economic times.  Like most Pennsylvania families, state government must live within its means if it is going to make it through this recession without raising taxes.  As lawmakers, it is our responsibility to get the most value out of every taxpayer dollar we spend. 

Nowhere is that more true than in spending on our transportation infrastructure.  As our highways and bridges get older, they begin to deteriorate.  In addition, as our transportation needs continue to grow, we will need to expand our highways in order to keep pace with demand. Furthermore, an up-to-date infrastructure and transportation system is a critical component to economic development in Pennsylvania. 

Maintaining existing infrastructure and adding new projects cost money.  If we are going to keep Pennsylvania’s roadways safe for the millions of Pennsylvanians and visitors who use them each year, we must find a way to fund these projects without putting even more of a burden on taxpayers. 

One component of a comprehensive solution is the use of public-private partnerships or P3s.  P3s leverage private money and resources to pay for public projects.  Specifically, these collaborative efforts team private industry with government in the operation, maintenance and/or construction of roads, bridges, transit systems, railroads and airports. 

This model is working well in other states.  Virginia is seeing great success with its High Occupancy Toll (HOT) Lanes project which allows vehicles with one or two occupants to pay to access lanes which run alongside existing highways.  

In Indiana, Republican Gov. Mitch Daniels’ plan to lease Indiana toll roads is also proving very successful. The transaction brought nearly $4 billion to Indiana coffers and dedicated funds for a massive 10-year investment in the state’s transportation system. 

Under the Indiana P3, the firms agreed to operate and maintain the toll road under a multi-year lease in return for the upfront payment and the right to collect the tolls. The firms also agreed to widen seven miles of congested roads, build a new state trooper post and contribute to the salaries of state troopers. 

Indiana and Virginia are not the only states using P3s.  Chicago leased the Chicago Skyway for $1.8 billion under a similar proposal. In Nebraska, the Legislature is considering leasing its toll roads this year.  In Florida the I-595 and the Port of Miami Tunnel projects are two examples of initiatives which were too expensive for government to undertake alone and would not have been possible without P3s.  A number of other states are also looking to the private sector as a source of capital for their much-needed infrastructure repairs and maintenance 

As chairman of the House Republican Policy Committee, I have conducted several hearings on P3s and we have begun developing and refining legislation that would allow for them in Pennsylvania.    I have also been working with the chairman of the House Transportation Committee to advance legislation to authorize P3s.   

The key to any P3 legislation we consider is protecting the public interest. Under a public-private partnership, a contract would be jointly agreed upon in which all the operational and capital plans are worked out for the life of the agreement.  In most cases, the private entity is permitted to charge user fees (i.e., tolls, in the case of highways) in exchange for building the asset.  The best part about public-private partnerships is that the public sector can develop contracts with the private industry that is building or improving these roads to address virtually everything that could arise during the construction phase or the life of the highway. This helps keep control in the government’s hands while using private resources as efficiently as possible. 

The reality is, all of Pennsylvania’s infrastructure needs cannot be met under conventional financing. While P3s are not a panacea for our infrastructure needs, they are one tool we should have in our tool box as we move forward in updating Pennsylvania’s infrastructure. 

For more information on P3s and other innovative ideas being studied by the Republican Caucus, visit the House Republican Policy Committee Web site at PAGOPPolicy.com. 

Rep. Stanley Saylor
94th District
Pennsylvania House of Representatives
(717) 244-9232
(717) 783-6426
www.RepSaylor.com
Contact:  Sean L. Yeakle
House Republican Public Relations
(717) 787-3406
www.pahousegop.com