CAWP News 3-10

Governors Warn of Private-Sector Funding Obstacles in Proposed Highway, Transit Bill

A new Office of Public Benefit proposed by a congressional rewrite of highway and transit policy could severely limit states’ use of much-needed private-sector funding, several key governors warned at a February 21 session of the National Governors Association.

A draft surface transportation reauthorization championed by House Transportation and Infrastructure Committee Chairman Jim Oberstar (D-Minn.) would create the office to oversee the financial agreements between states and private companies. Such public-private partnerships take many forms but often involve an up-front cash payment to the state in exchange for the company’s authority to toll an existing road.

Indiana Gov. Mitch Daniels (R), who pioneered a 75-year lease of a portion of the state’s Interstate highway that brought the state $3.8 billion, said the office would essentially “strangle” any private-sector funding.

“It would pretty much disincentivize private investment forever,” Pennsylvania Gov. Edward Rendell (D) told the crowd, which included a handful of governors and Transportation Secretary Ray LaHood.

Rendell, a co-chairman of the Building America’s Future coalition that lobbies for increase infrastructure spending, said that giving the office “veto power” over proposed deals could spell “the end of private sector investment.”

Noting the dire financial situation most states find themselves in, Rendell, said, “private funding has to be a part of the puzzle.”

Source: Construction Labor Report, February 25, 2010