A Partnership for Infrastructure Investment
Nearly everyone agrees that a well-maintained infrastructure system could put Americans back to work, spur our economy, enhance our global competitiveness, reduce congestion, improve safety, and show that America can still get big things done. But in an era of deficits and budget shortfalls, how are we supposed to pay for it?
One way is through more public-private partnerships (P3s). P3s can help get projects started and completed faster, easing the strain on state budgets and making room to use taxpayer money on projects that can’t attract private investment. There is as much as $250 billion of global private capital available for P3s, and we need to put that money to work.
One example of a successful P3 is the new high-occupancy toll lanes on Virginia’s Beltway, a vital road system surrounding Washington, D.C. They were funded, built, and are now operated by a private company. The company benefits by collecting toll revenue from Virginia drivers who voluntarily use the lanes to save time. The traditional approach would have been to widen current lanes, costing tens of billions of dollars and 10 years’ time.
Despite the clear advantages, these types of partnerships are far too rare in the United States. Thirty-three states have passed legislation allowing P3s, but only some have taken full advantage of it. And even fewer have established offices dedicated to facilitating P3s.
How can we get other states to widely embrace P3s? For starters, all 50 states should pass legislation permitting P3s by the end of next year. The private sector needs to educate state and local officials about the benefits of these projects. Government officials must understand that the private sector is not donating money for free. Sorry, there is no free lunch! Lenders should get their principal back with interest, and investors should expect to make a rate of return.
P3s aren’t the sole solution to our infrastructure funding challenges. We need more public investment through a modest, phased-in increase to the gas tax, which hasn’t been raised in 20 years. We need to rid infrastructure spending of waste and inefficiency so that taxpayers know their money is being spent wisely and on worthy projects. We need to eliminate the bureaucracy and lawsuits that delay or kill infrastructure projects and raise costs.
America’s infrastructure system has delivered enormous benefits to our economy, our country, and our way of life for generations. And it can continue to do so if we take good care of it.