So what is this several year kabuki theater about? It is global neo-cons and global neo-liberals pretending to be trying to do an FDR national infrastructure that has nothing to do with progressive job creation and public infrastructure building. IT IS KABUKI THEATER FOLKS! They both are waiting to pass Trans Pacific Trade Pact with the goal of handing a trillion dollars of Federal funds to global corporations to come to the US to do this work which under TPP would allow them to operate in the US as they do overseas and bring their nation's workers.. THAT IS WHAT WE HAVE BEEN LISTENING TO SINCE OBAMA CAME TO OFFICE.
This is the public private partnership to end all public private partnerships because literally-----it will privatize all that is public.
This is to where state public private partnerships are leading and Maryland is one great big corporate public partnership. O'Malley made this policy his entire terms in office. No one privatized more than Martin O'Malley....the best Republican Maryland has ever had!
Obama had thought he would have TPP signed by nations around the world sooner than this so he has led this mantra and Congress pretended to delay it with infighting when all of them will pass this funding as soon as Congress adopts TPP.
Think about what major national events are coming into play------the bond market collapse and economic crash------this TPP heading for FAST TRACK in Congress-----and a Presidential election. The bond market crash is designed to sink Federal, state, and local governments into deep debt----TPP is designed to allow global corporations to come to US -------there's the funding for infrastructure----and a new President is going to pretend to have to bring those global corporations into the US to fund and own our national infrastructure because of the bond debt. It's a mirror of Bush leaving office with the subprime mortgage loan fraud and economic crash and handing Wall Street trillions of dollar in 'bailout'.
January 20, 2015
Obama, Congress agree on infrastructure need, if not fix
President Barack Obama and the Republican-controlled Congress he addressed Tuesday night agree they need to fix the country’s infrastructure funding problem before the money runs out on May 31. But so far, they’ve found little agreement on how to get there.
Construction on the Capital Beltway at Tysons Corner, Virginia, April 5, 2012. MCT
By Curtis Tate - McClatchy Washington Bureau
Barack Obama and the Republican-controlled Congress he addressed Tuesday night agree they need to fix the country’s infrastructure funding problem before the money runs out on May 31. But so far, they’ve found little agreement on how to get there.
Though the national infrastructure funding crunch predates Obama’s presidency, it hasn’t improved under it. The American Recovery and Reinvestment Act in 2009, known as the stimulus, provided $27 billion in funding for road and bridge repairs. That provided a temporary boost, while leaving the overall infrastructure challenges unaddressed.
Since 2008, Congress has shifted more than $50 billion in general funds to the Highway Trust Fund to make up for declining federal gasoline tax revenue. Last year, the U.S. Department of Transportation warned states that it would begin rationing payments to states if Congress didn’t approve new legislation by Aug. 1.
Congress did approve a 10-month, $11 billion extension before the deadline, but states could face the same predicament again in four months if Congress doesn’t act.
States have used creative approaches to bridge the gap. They’ve entered public-private partnerships, they’ve turned to tolls, they’ve raised their own gas taxes and enacted special sales taxes. But states can only gain so much mileage that way.
“They’re using them as best they can within their political climates,” said Andy Herrmann, past president of the American Society of Civil Engineers. “They’re trying.”
On average, according to the American Road and Transportation Builders Association, states rely on federal funds for 52 percent of their highway and bridge spending.
“If the new Congress is serious about proving to the American people it can govern and if the president wants to accomplish something that has been on his agenda for years,” said Pete Ruane, the trade group’s president and CEO said in a statement Tuesday, “then new investments in surface transportation are an area ripe for bipartisan consensus and action.”
The federal gasoline tax of 18.4 cents a gallon for regular gasoline and 24.4 cents a gallon for diesel fuel, are unchanged since President Bill Clinton’s first year in office. Gasoline prices are lower now than they’ve been in years, raising talk, even among some Republicans, of increasing the tax and tying it to inflation.
But Obama has been cool to that approach, and didn’t endorse it Tuesday. Instead, renewed his call to fund infrastructure investment through corporate tax reform.
Last year, he proposed a four-year, $302 billion infrastructure bill, about half of which would come through the closing of tax loopholes. But it’s not a long-term solution. Even the White House’s own fact sheet called the money “one-time transition funding.”
On Friday, Obama proposed a change in the tax code to encourage the private sector to invest in infrastructure through low-interest municipal bonds.
The AAA motor club, which supports a gas-tax increase, welcomed the president’s ideas, but said they don’t go far enough.
“The president’s proposal to leverage corporate tax reform or private investment structures to support transportation funding would provide a welcome shot in the arm for our nation’s infrastructure,” said AAA CEO Robert Darbelnet in a statement Tuesday, “but this will not provide a sustainable fix to the looming funding crisis at hand.”
I have shown research data and reports over and over again that shout for decades that public private partnerships are not working in the public interest.....data shows it is this outsourcing of municipal works and services that created the systemic fraud and government corruption where we lose trillions of dollars in government revenue at all levels each year.
The data also shows the quality of work is poor------the conditions for labor are poor----and global corporate profit from outsourcing is soaring. So, as we see below----we have global corporate pols-----neo-con and neo-liberal----
WHO DO NOT CARE AT ALL-----THEY WORK FOR GLOBAL CORPORATIONS AND THEIR POWER AND WEALTH.
I had someone tell me on a Baltimore Elections page that public private partnerships are controlled by our city hall-----our state assembly-----our Congress----when in fact these policies are what have our politicians working for those corporations in these partnerships----THIS IS THE POLICY TAKING OUR POLITICIANS ---NOT CAMPAIGN FINANCING. Do you ever hear an organization or politician promoting campaign finance reform ever mention ending public private partnerships to get corporations out of politics??????
SEE HOW YOU KNOW WHEN A POLICY IS PROGRESSIVE POSING?
For those not knowing----the corporate tax reform that Obama and Clinton neo-liberals have had on their plate since they came to office will pose progressive by making it seem corporations will contribute funds toward this building plan----when the goal with corporate tax reform is to take it so low as to disappear.
The White House
Office of the Press Secretary
For Immediate Release
July 17, 2014
FACT SHEET: Building a 21st Century Infrastructure: Increasing Public and Private Collaboration with the Build America Investment Initiative
Today, the President will deliver remarks at the Port of Wilmington in front of the I-495 Bridge in Delaware. With 90,000 cars moving over it per day before repairs began, this bridge is a key example of the importance of infrastructure, which keeps the economy moving, spurs innovation, and bolsters our national competitiveness. At the port – and in this Year of Action – the President will announce a new executive action to create the Build America Investment Initiative, a government-wide initiative to increase infrastructure investment and economic growth. As part of the Initiative, the Administration is launching the Build America Transportation Investment Center – housed at the Department of Transportation – to serve as a one-stop shop for cities and states seeking to use innovative financing and partnerships with the private sector to support transportation infrastructure.
The President’s visit and announcement today are a part of the Administration’s continued push to highlight the importance of investing in our nation’s infrastructure so that we can build on the progress our economy is making by creating jobs and expanding opportunity for all hardworking Americans. The steps announced today continue the momentum the President has made using his executive authority – his pen and phone – to invest in modernizing our infrastructure, including speeding up the permitting process for major infrastructure projects to create more jobs.
The President supports the steps that Congress is taking in the short-term to avoid a lapse in the Highway Trust Fund, and he will continue to push for long-term solutions for our nation’s infrastructure and the American economy.
Investing in a 21st century American infrastructure is an important part of the President’s plan to build on the progress our economy is making by creating jobs and expanding opportunity for all hardworking Americans. Modern and efficient infrastructure – whether moving goods to our harbors and ports or connecting people to services or gigabits to our offices and homes – helps small businesses to expand, manufacturers to export, investors to bring jobs to our shores, and lowers prices for goods and services for American families.
The President has been very clear that we need to do more to improve our infrastructure in order to create jobs, provide certainty to states and communities, help American businesses, and grow our economy. He has put forth a long-term proposal that would do just that and pay for it by closing unfair tax loopholes and making commonsense reforms to our business tax system, while providing the certainty of reliable federal funding to states and communities.
And while the President is encouraged that Congress is heeding these calls by taking action in the short-term to prevent transportation projects across the country from grinding to a halt, the President will continue to act on his own to promote American economic growth where there is need or opportunity. And right now, there is a real opportunity to put private capital to work in revitalizing U.S. infrastructure.
That is why today, the President will sign a Presidential Memorandum to launch the Build America Investment Initiative, a government-wide initiative to increase infrastructure investment and economic growth by engaging with state and local governments and private sector investors to encourage collaboration, expand the market for public-private partnerships (PPPs) and put federal credit programs to greater use. Starting with the transportation sector, this initiative will harness the potential of private capital to complement government funding.
- Ø As part of the Initiative, the Administration is launching the Build America Transportation Investment Center: Housed at the Department of Transportation, this center will serve as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects. Additional details are below.
- Build America Interagency Working Group: To expand and increase private investment and collaboration in infrastructure beyond the transportation sector, a federal inter-agency working group, co-chaired by Cabinet Secretaries Lew and Foxx, will do a focused review with the best and the brightest from the public and private sector. This group will work with state and local governments, project developers, investors and others to address barriers to private investments and partnerships in areas including municipal water, ports, harbors, broadband, and the electrical grid. The effort will include a particular focus on improving coordination to accelerate financing and completion of projects of regional and national significance, particularly those that cross state boundaries.
- Infrastructure Investment Summit: As part of the drive toward innovative infrastructure solutions and to highlight the opportunities for infrastructure investment, the Treasury Department will host a summit on Infrastructure Investment in the U.S. on September 9, 2014. This session will bring together leading project developers and institutional investors with state and local officials and their Federal counterparts, and will focus on innovative financing approaches to infrastructure, and highlight other resources that support project development.
Build America Transportation Investment Center: Housed at the Department of Transportation, this center will serve as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects. This center will provide:
- ‘Navigator Service’ for the Public and Private Sector: Through hands-on support, advice and expertise, the center will make DOT credit programs more understandable and accessible to states and local governments and leverage both public and private funding to support ambitious projects. The center will also provide private sector developers and infrastructure investors with tools and resources to identify and execute successful PPPs.
- Improved Access to DOT Credit Programs: The center will encourage awareness and efficient use of existing resources at the Department, including the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. TIFIA provides long-term, flexible financing to highway and transit projects that feature dedicated revenue sources. Each dollar of Federal TIFIA funding can support about $10 in loans, loan guarantees or lines of credit. In many cases, the lower cost of capital and flexible terms offered by TIFIA are critical factors in determining whether a PPP is a viable and cost-effective option for a project. The center will also focus on the use of key DOT programs including the Private Activity Bond program (PABs), and the Railroad Rehabilitation and Improvement Financing Program (RRIF).
- Technical Assistance: The center will share best practices from states that are leading the way on private investment to states that have not yet adopted innovative financing strategies, encouraging a more robust national market. Today, the top six states for PPPs have nearly two-thirds the value of all U.S. PPP projects. Twenty states have no PPPs in transportation at all. The center will provide technical assistance to help remove barriers to ensure the public and private sector can come together to complete projects that make sense. Through a website and on-demand technical assistance, the center will provide information about DOT credit programs, case studies of successful projects and examples of deal structures, standard operating procedures for PPP projects and analytical toolkits. It will also help interested investors better understand how DOT credit and grant programs can be used together to support project development.
- Information to Reduce Uncertainty and Delays: The center will work in partnership with the interagency Infrastructure Permitting Improvement center to provide visibility for local and state governments, project sponsors and investors on the permitting process.
The Build America Investment Initiative taps into the opportunity to increase the pipeline of effective public-private-partnerships and other innovative financing mechanisms:
- High Demand: Institutional investors, both domestic and international, recognize the strength of our economy and want to invest in America. In 2013, the U.S. was the top destination for foreign direct investment with over $230 billion. The global investment community has over $83 trillion dollars with a growing appetite for infrastructure. That is potentially hundreds of billions of dollars to fund the building of U.S. public-private infrastructure.
- Proven Approaches: Some states and communities have established successful PPPs and have developed strong institutional knowledge of how these projects are best structured and managed. Expanding that know-how to other states has the potential to increase the flow of capital by tens of billions of dollars over the next few years. Today, for example, the top five states in PPPs have nearly twice the per-capita value of projects as the next 20 best states – and if those states caught up, it could mean up to $30 billion worth of infrastructure projects.
Case Study: Colorado FasTracks Project
Denver, Colorado is a community that has shown how transformative, multi-modal public infrastructure projects can be brought to fruition by integrating multiple financing sources. Denver was able to utilize a PPP as part of the FasTracks development – combining light rail, bus rapid transit, development of Denver Union Station, parking, and other improvements – alongside state and federal funding.
The FasTracks Eagle project in Denver is a $2.2 billion public-private partnership to construct two new commuter rail lines. The project combined several DOT funding and financing mechanisms – Federal Transit Administration’s New Starts, Private Activity Bonds, and a TIFIA loan – in addition to other Federal, State, and local resources and private investment.
The Eagle project is using a “design-build-finance-operate-maintain” contract under a 34-year concession. Denver will retain ownership of the assets, set fares and fare policies, and keep all project revenues. Denver will make payments to the private investor and operator (“concessionaire”) based on performance metrics.
Case Study: Florida
Florida has been leading the way on PPPs since 2001. In 2007, the State of Florida established the Office of Public-Private Partnerships; since then the state has completed over $6 billion in innovative projects.
Florida is now using a public-private partnership to complete the $1.1 billion Port of Miami Tunnel Project that will link the Port of Miami with the MacArthur Causeway and I-395 on the mainland. The project, like many PPPs around the country, took advantage of DOT’s TIFIA loan program for a $340 million loan, which in turn leveraged private dollars – a great example of the kinds of partnerships that the new Build America Transportation Investment center will bolster.
THE GROW AMERICA ACT
The Highway Trust Fund – which funds a significant portion of the construction and capital repairs of our surface transportation system – is projected to be insolvent by the end of the summer barring Congressional action. In addition to preventing the Trust Fund from expiring in the short term, the President has clear that we need long-term action and predictable funding to provide certainty to states and communities, help American businesses, and grow our economy.
- In spring 2014, President Obama transmitted to Congress his vision for a long-term solution. The GROW AMERICA Act, a $302 billion, four-year transportation reauthorization proposal provides increased and stable funding for our nation’s highways, bridges, transit, and rail systems, ends the cycle of short-term, manufactured funding crises and builds confidence in the public and private sector.
- The Administration’s proposal is funded by supplementing current revenues with $150 billion in one-time transition revenue from pro-growth business tax reform. In other words, the President’s proposal is fully paid for without increasing the deficit. The President’s proposal will also keep the Trust Fund solvent for four years and increase investments to meet the transportation priorities and economic needs of communities across the country.
- The proposal also contains a series of legislative proposals to improve the return on transportation spending and improve safety, including a title on improving project delivery, and the federal permitting and regulatory review process.
Keep in mind research and data has shown public private partnerships AND Enterprise Zone policies as implemented NOT IN THE PUBLIC INTEREST SO YOUR POLS KNOW THIS. I sit at Maryland Assembly committee meetings listening to Legislative Services telling our pols this same this every year and they still use them because----THEY WORK FOR GLOBAL CORPORATIONS AND NOT THE AMERICAN PEOPLE.
Cities like Baltimore were loaded with bond debt fraud just for this reason. Now, when someone pretends that a state or local government agency controls these policies----we look at the quasi-governmental organization Baltimore Development Corporation ----one of these first public private partnerships that now call everything PROPRIETARY and closed door beacause of the sensitive nature of corporate deal-making. The Baltimore and Maryland public has no voice in public policy and appointed committees talk with only those corporations in all operations and planning only to tell the public what was decided.
NONE OF THIS IS PUBLIC---AND IT IS TIED TO THIS TRANS PACIFIC TRADE PACT WHERE GLOBAL CORPORATE TRIBUNAL CONTROLS ALL WRITING OF PUBLIC POLICY---NO PUBLIC ALLOWED.
'There’s a growing cadre of academics, activists, and state and federal auditors who question these public-private deals, but their voices aren’t always heard. At that Senate hearing, for instance, none of those dissenting views was represented on the panel. Nor did the hearing highlight what the governments’ own accountants say about P3s—namely that they are unlikely to solve the country’s infrastructure funding gap and, in some cases, may carry risks for state and local governments'
Public-Private Partnerships Are Popular, But Are They Practical?
Public-private partnerships have become a trendy way to finance transportation projects. But there are big questions to ask before entering into a P3.
by Ryan Holeywell | November 2013 Governing
This spring, the Washington newspaper Politico published a column touting steps the federal government could take to solve the funding crunch that’s led to underinvestment in infrastructure. Invoking imagery of Lincoln’s railroads, Eisenhower’s highways and Kennedy’s space program, the authors concluded that governments must allow the private sector to play a greater role in building public infrastructure, lest America fall behind the competition. To illustrate the concept, the authors highlighted a deal the Puerto Rican government made with a private consortium to operate San Juan’s airport for 40 years. “It’s time,” they wrote, “for government at all levels in the United States to partner with the private sector to bring our transportation infrastructure back to world-class levels.”
A similar boost for public-private deals came this summer when a Senate subcommittee held a hearing on “innovative financing.” Four of the five featured witnesses were there to press the feds to do more to facilitate public-private deals. Several of the witnesses discussed the daunting price tag for upgrading the country’s infrastructure to a decent condition—$3.6 trillion by 2020, according to the American Society of Civil Engineers.
The message was clear: America’s infrastructure is struggling, but the private sector can help. “No one wants another bridge to collapse, as did the I-35W Mississippi River Bridge,” testified a Morgan Stanley official. That tragedy, which killed 13 people, underscores the need for expanded new, federally subsidized financing tools, he told Congress.
Public-private partnerships (P3s) are clearly on a roll. Last year’s congressional highway authorization vastly expanded the scope of federal mechanisms that provide low-interest loans for projects that typically involve privatization. In addition, the number of states that have passed legislation to enable privatization is on the rise. Many people see P3s as a game-changer: the best, and possibly only, way to repair and replace the country’s public works. “The only way we will be able to advance our system is with public-private partnerships,” said Jeff Austin, a member of the Texas Transportation Commission, at a recent event in Washington.
Little, however, is said about the downside. The Politico column, for instance, did not point out that the airport deal was opposed by the governor and deemed so one-sided that critics have called it a “giveaway.” (It also failed to mention that the authors’ employer, Highstar Capital, was a partner in that very deal.)
There’s a growing cadre of academics, activists, and state and federal auditors who question these public-private deals, but their voices aren’t always heard. At that Senate hearing, for instance, none of those dissenting views was represented on the panel. Nor did the hearing highlight what the governments’ own accountants say about P3s—namely that they are unlikely to solve the country’s infrastructure funding gap and, in some cases, may carry risks for state and local governments. “Whenever I see advocacy [for P3s], I look for real economic analysis that justifies privatization,” Cate Long, a municipal finance blogger for Reuters, recently wrote. “It’s never there.”
Increasingly, it seems the discussion of P3s isn’t about whether it’s wise for governments to enter the deals; it’s about how governments can best facilitate them. Although former Congressman Jim Oberstar, who chaired the House Transportation Committee from 2007 to 2011, argued that P3 deals would trample the public’s interest, today criticism from most lawmakers “has almost disappeared,” says Robert Puentes, a P3 expert at the Brookings Institution. “It’s not even political anymore.”
To be sure, plenty of P3 projects are seen as successes. For example, Virginia’s High Occupancy Toll lanes, which opened last year just outside Washington, D.C., were financed, designed and built by private firms, which will now operate them and collect tolls from drivers. Working with private partners allowed the state to complete the project far more quickly than it could have on its own, say advocates. Similarly, the $1 billion Port of Miami tunnel project, set to open next year, has been viewed as a largely successful public-private deal.
Still, there’s a long list of P3s that turned out to be very bad for governments, cases in which public leaders failed to ask the right questions to ensure they were getting a good deal. These instances, in which governments ended up losing tens or hundreds of millions of dollars, provide a cautionary tale for anyone considering a P3. Given that history, and given the current enthusiasm for public-private partnerships, there’s a basic question that states and localities ought to be asking: Are the deals accomplishing all they claim to?
When governments want to build a road, they typically use a process called design-bid-build: Engineers, working for the government or on a contract, design a project, and then construction firms bid for the right to build different pieces of it. Governments sell municipal bonds that allow them to borrow money cheaply to pay for the work. The system—at least theoretically—is intended to ensure that governments get the lowest price for building infrastructure.
THE COMPLEX FINANCIAL INSTRUMENT OF CONSTRUCTION
With a P3, the design, financing, construction, operations and maintenance of a project can be rolled into one transaction. The deals are therefore incredibly complex. They are most common on major highway projects that cost hundreds of millions of dollars. Bidders are typically consortiums made up of major construction and financial firms.
Advocates for P3s say they make sense for four reasons. First, the contractors are involved in the engineering stage of a project, which means they can design features that will promote savings over a project’s lifetime. Second, investors have their own money in the game, so they have a major incentive to come in on budget since every overrun eats into their profits. Third, because the deals include long-term maintenance components, they remove the temptation of governments to defer upkeep when times get tough. Fourth—and perhaps most important—governments can transfer risks to the private sector, such as the possibility that construction costs are higher or toll revenue is lower than expected.
The deals gained traction in Europe and Australia before they became prominent here, largely because their citizens are used to higher taxes in general and toll roads specifically. Moreover, the deals are easier to pursue in other parts of the world, where governments have more central authority. And finally, the U.S. is somewhat unique in that it allows municipalities to borrow money extremely cheaply on their own.
But the big firms involved in P3s abroad have been gaining a foothold in the United States. A few projects emerged here in the early 1990s. But the deals really got attention in the mid-2000s, when Indiana and Chicago took upfront payments in exchange for long-term concessions that gave private-sector firms the ability to collect tolls for decades. Today, those types of deals are less in vogue. It’s now considered by many to be fiscally imprudent to sacrifice stable, long-term revenue for a one-time payment used to fund short-term needs. Instead P3s are typically used to build new roads or lanes, generally through arrangements where private companies pay for construction and maintenance, and in exchange collect toll revenue.
A slew of factors have made the deals all the buzz among transportation wonks and public officials. Warnings about the deplorable shape of America’s roads and bridges have convinced the public of the need to build. But in the wake of the recession, state and local governments continue to struggle financially. Raising taxes is a nonstarter in many places, as is the notion of taking on additional debt through bonds. P3s have been portrayed in some cases as a solution to this dilemma, a source of “new money.” “Politicians are at the point where people are crying out for enhancements to infrastructure, but they don’t want to hear any proposals for new public revenues,” says Phineas Baxandall, a senior budget policy analyst at the nonprofit U.S. PIRG. “So anything that makes it sound like the money’s coming out of thin air is a win-win.”
The Council for Public-Private Partnerships, which acts as a clearinghouse for P3 advocacy and counts as its members such P3 players as CH2M Hill, Deloitte and United Water, phrases it this way: “By establishing public-private partnerships, government authorities have achieved goals that would otherwise go unmet because of budget limitations.” The language taps into a state or local official’s greatest concern—that they lack the wherewithal to build infrastructure. “It’s perceived as free money,” says Puentes of the Brookings Institution. “That perception has to be dealt with,” largely because, Puentes and others say, the capital often comes at a cost that can exceed the expense of typical municipal borrowing.
The most attractive aspect of a P3 for many lawmakers is that the borrowed money may not count as debt the same way a municipal bond does. The distinction is hard to grasp since the same citizens ultimately pay for the project, either through tax dollars or tolls. A recent report from New York state Comptroller Thomas DiNapoli says that the deals can be viewed as a form of “backdoor borrowing” that helps lawmakers get around laws requiring voter approval for issuing certain types of debt. They can also act as an end-run around a jurisdiction’s debt limit, imposed by statute or simply by the political realities of their state.
“A lot of the time public officials say, ‘We don’t have any money, let’s do a P3,’” says Joshua Schank, head of the Eno Center for Transportation, a think tank. That’s a misperception, and one that is fueled by private-sector firms who want to pump up the concept, but also, Schank says, “by public officials who want to escape the reality that if they want better infrastructure, somebody’s got to pay for it, and that somebody’s got to be taxpayers.”
Yet a recent report from the U.S. Department of Transportation’s inspector general said unambiguously that P3s are unlikely to reduce the infrastructure funding gap, since they don’t increase funding levels. The only way P3s could be seen as generating revenue for state and local governments, the report concluded, is through whatever savings they might achieve through lower construction costs. But even those aren’t certain.
“There are people who say P3s create money. That is largely not true, but it’s not entirely untrue,” says Geoffrey Yarema, a partner at the law firm Nossaman, who has served as an adviser on some of the country’s largest public-private partnerships. “They don’t produce funding, but they can reduce costs significantly.”
But reduced costs aren’t a certainty, according to the Congressional Budget Office (CBO). In a 2012 report, the CBO found that P3s have built highways “slightly less expensively and slightly more quickly” than the traditional approach, but the relative scarcity of data and uncertainty of existing studies on the topic “make it difficult to apply [those studies’] conclusions definitively to other such projects.”
William Reinhardt, editor of the Public Works Financing newsletter, generally believes in the promise of the deals, simply because the public sector has a poor record when it comes to on-time, on-budget construction of major projects. But even he says it’s hard to prove which method is best for a given project. “All my life I’ve been looking for the perfect example to compare one to another,” Reinhardt says, “and you can’t.”
The challenge lies in how governments analyze potential P3 deals. To do so, they estimate the cost of traditional procurement compared to a hypothetical P3 offer. But the analysis can include some factors that are subjective, and it may not consider factors that can’t be easily quantified. A recent California Legislative Analyst’s Office (LAO) study of two P3 deals—one for the Presidio Parkway in San Francisco and one for a new courthouse in Long Beach—found that state officials were making assumptions that favored privatization. By the LAO’s own estimates, traditional procurement would have saved $300 million on the two deals.
Julie Roin, a University of Chicago law professor, also questions whether the “risk transfer” argument carries any weight. Ostensibly, for the private sector to turn a profit, a deal only makes sense if the government overestimates its risk and underestimates the project’s revenue potential. “It’s not as if any investor is going to accept risk without demanding compensation,” Roin says. “You’re just paying for the risk in a different way.”
Watchdogs note that in entering into the deals, governments actually may take on all kinds of new risk they didn’t face before—like the implications of entering into long-term deals that can constrain lawmakers’ policymaking options for decades. In a famous case, the California Department of Transportation used a P3 to build and operate express lanes that opened in the center of California State Route 91 in Orange County in 1995. When the government wanted to expand parts of the roadway to alleviate congestion, it was blocked by a “non-compete” clause in the 35-year contract. Following litigation, the government ultimately bought out the private partner. Just seven years after the express lanes opened, the county’s transportation authority paid $207.5 million for the $130 million project. That’s a worst-case scenario, of course. Those who study P3s say governments have learned their lesson about non-compete clauses. But “compensation” or “stabilization” clauses—in which governments owe the contractor money for taking actions that could reduce toll revenue—continue.
Chicago got $1.15 billion when it leased its parking meters for 75 years, but whenever it temporarily closes a street the city must compensate the private partner for the lost revenue. When Indiana faced flooding in 2008, tolls were waived to evacuate people quickly, but the state had to pay the Indiana Toll Road’s private concessionaire $447,000 for the lost revenue. Carpooling is generally viewed as a good thing—it reduces pollution and congestion—but Virginia could owe millions of dollars to a contractor if too many carpoolers use its tolled high-occupancy express lanes. “These reimbursements make governments the contractor’s insurer and guarantor,” says Ellen Dannin, a law professor at Penn State University. Moreover, provisions like those may give states a strong monetary incentive to avoid actions that would ordinarily be considered smart public policy. If governments face fines for doing what they think is best, there could be serious implications for the way they govern.
Indeed, governments are not typically known as incredibly nimble actors. But skeptics say these deals have the potential to make them even less able to adapt to changing needs. When governments are locked into long-term deals, it’s hard for them to adjust their priorities. “Sixty years from now, we may totally want to redesign cities,” says Donald Cohen, executive director of In the Public Interest, an organization that questions privatization and is funded by foundations, unions and individuals who generally oppose privatization. “But we’re contractually tied with some entity ... to consider their interests first in many ways.”
The CBO notes that P3s “can end up costing the government more than it anticipates” if it has to renegotiate a deal due to disputes over control. The New York comptroller in a 2011 report said that the deals may even cause uncertainty about such basic questions as who’s responsible for snow and ice removal or accident repair. “Projects that seem worthwhile initially,” the report found, “may turn out to be less beneficial than thought.”
But Reinhardt of Public Works Financing doesn’t buy those claims. “None of these issues are hidden,” he says. “The advisers on the public side are exactly as smart as the advisers on the private side. Believe me: Nobody is getting away with nothing.” But others insist that even though governments employ consultants in the negotiations, the lawmakers themselves ultimately have to approve the deal. Legislators face a huge disadvantage since few of them have negotiated those type of deals in the course of their careers. And lawmakers focused on re-election may not be as concerned with the implications of a 50- or 75-year deal, since those implications may only be fully understood long after a lawmaker has left office.
Highway P3s are concentrated in certain regions and are relatively few in number. A 2012 Heritage Foundation paper says eight states accounted for 75 percent of the value of roadway P3s over the last 22 years. Since 2008, the P3 market has represented only about 2 percent of all highway investment. That said, P3s represent some of the biggest and most expensive projects out there. Critics and advocates alike say the trend will continue.
Where does that leave a state or local official? Schank of the Eno Center warns that the public and private sector have widely different goals that often aren’t aligned. The problem, he says, is that the private sector comes to the negotiating table with less to lose than the government, and it is also more willing to walk away. That needs to change, critics argue, and a healthy degree of skepticism is needed to ensure the best outcome for the public.
Chicago Mayor Rahm Emanuel’s approach to the potential privatization of Midway Airport is a case worth studying. Operating under the cloud of Chicago’s widely panned parking meter transaction, Emanuel took an approach that emphasized protections for taxpayers. He insisted on a shorter-term lease of 40 years. He helped develop a “Traveler’s Bill of Rights” designed to ensure reasonable parking and food prices at Midway. And he required the private partner to share profits with the city. After initially receiving interest from 16 firms, the city was left with one bidder and opted against privatization, citing lack of competition.
“It’s a tool that can be valuable but needs to be used very carefully and with a complete understanding,” says Bob Ward, New York’s deputy comptroller for budget and policy analysis. He notes that public-private partnerships aren’t the only way to do big projects. “We went to the moon without a P3.”
When Reagan/Clinton neo-liberalism killed progressive protections against corporations getting to rich and powerful-----they at the same time allowed corporations to go without paying into any Trust contributions or paying much of corporate taxes----add to that the systemic corporate frauds against government coffers----and WE JUST DIDN'T HAVE THE FUNDS TO UPGRADE OUR INFRASTRUCTURE. Meanwhile, cities like Baltimore were drawing their MASTER PLANS that included allowing all to decay and crumble just so global corporations could make this return. That is what public policy has been since Reagan Clinton.
Global pols will not stop until every asset the United States is in the hands of this less than 1%. It is the same as USSR Perestroika where all USSR public assets were handed to a few connected families---the Russian Oligarchs. SAME THING. The difference between Russia and US is----WE THE PEOPLE HAVE A CONSTITUTION AND RIGHTS AS CITIZENS THAT MAKES ALL THIS ILLEGAL AND TREASONOUS. Clinton neo-liberals are shouting ---this has gone too far to stop----well, as usual----THEY ARE LYING.
We can reverse this in just two election cycles if we get rid of global pols in both parties. EASY PEASY. Those pols in cities like Baltimore who think they are getting in on the ground floor because they have been given real estate or stocks or money has better be aware of what global corporate tribunal rule and courts will look like---they will not care less about any agreements.
This public private partnership policy was a long-range plan to move all public assets and control of government to global corporations so anybody supporting them either is a sociopath----or does not know where these policies lead.
Privatization: The Public Policy Debate---League of Women Voters
The purpose of this article is to provide a description of the evolution of the public policy known as “Privatization.” Privatization is a movement to deregulate private industry and transfer many government services, assets and functions to the private sector.
Claims and Concerns
Those promoting privatization claim that:
•the private sector can provide increased efficiency, better quality and more innovation in services than the government;
•a smaller government will reduce costs to the taxpayer; and
•less regulation will provide a better environment for business, thus creating more jobs.
Those concerned about privatization suggest the following.
•Profits: The mandate to make a profit will endanger public safety and reduce services available to the general public.
•Costs: There will be increased costs to consumers.
•Transparency and Accountability: Private companies will lack transparency, adequate oversight and accountability.
•Corruption: There will be increased corruption between government and for-profit, private companies.
•National Defense: Privatizing sectors such as ports, utilities and defense can result in foreign control and will put the country at risk in the event of war.
•Inequality: The scale of privatized programs will result in chronic high unemployment, low wages and abusive labor practices, leading to growing inequality between the wealthy and poor.
Larger than the United States
The privatization movement is an international movement. Outside the United States, prominent divestitures of government assets have included Russia’s natural gas (Gazprom), Bolivia's municipal water system in Cochabamba and the United Kingdom's British Rail. Inside the United States, privatization has taken the form of deregulation, e.g., the deregulation of the financial services industry; redistribution of the taxes “burden,” e.g., efforts to reduce individual taxes on capital gains and inheritances, and reductions of corporate taxes; and privatization, the shifting of government programs to the private sector, e.g., the prisons and highways.
In the 1970s, disillusioned with the Progressive Era vision, leadership in the increasingly global private sector became more active, asserting that burgeoning tax rates and government regulations of industry were inhibiting free trade. Efforts were launched to dismantle many Progressive programs such as restrictions on financial lending, elimination of worker’s compensation, elimination of control over food and environmental safety, and a revamping of the tax system by eliminating progressive taxes and replacing it with a flat tax.
Milton Friedman: The intellectual inspiration behind the public policies to privatize in the United States has come from the Public Choice and Property Rights schools of thought. Prominent leaders advocating these theories include Milton Friedman, the Chicago School of Economics, and Fredrick Von Hayek whose book, Road to Serfdom, warned of the growing welfare state. The basic assumptions include:
•Democratic political systems have inherent tendencies toward government growth and excessive budgets.
•Expenditure growth is due to self-interested coalitions of voters, politicians, and bureaucrats.
•Public enterprises necessarily perform less efficiently than private enterprises.
•The more individuals stand to gain from tending to their property, the better it will be tended.
John Maynard Keynes: The dominant economic theory after WWII was that of John Maynard Keynes. Keynes believed that to break a depression, the government needed to stimulate demand. It was necessary to get money into the hands of consumers to jumpstart growth. Businesses would not borrow and build if no demand was in sight, no matter how low the interest rates might go. Keynesian theories were later refuted by economist Milton Friedman and this dispute is at the core of the ongoing debate regarding how to break the current recession/depression.
Privatization in Practice
The key strategies as to how to downsize government and transfer programs to the private sector are described as:
•Privatization by attrition
Cessation of public programs and disengagement of government from specific kinds of responsibilities. Example might be the U.S. postal system.
•Transfer of assets
Direct sale or lease of public land, infrastructure, and enterprises. Examples might be federal and state parks, state-owned liquor stores and the proposed privatization of public libraries.
•Contracting out (public/private partnerships) or vouchers
Instead of directly producing some service, the government may finance private services, for example through contracting out or vouchers. Examples might be charter schools, prisons.
Deregulation of entry into activities previously treated as public monopolies. Examples might be utilities, water, waste management, air traffic control and ports.
Role of Government
The public agenda of privatization requires a close examination of the proper relationship between government, business and civil society. What should the role of government be in protecting the environment, helping the poor, defending the nation, providing justice, ensuring democracy, protecting public health, ensuring public safety, providing education, promoting a thriving economy, and ensuring safe work environments and a living wage? Our country must seek a pragmatic balance between social and economic returns.
I encourage everyone to listen to this Brookings video----Brookings is the neo-liberal think tank that has given the world all these very, very, very bad policy.
What Brookings knows is this-----the economic crash from bond market fraud is designed to send the US government at all level into so much debt that world bank---IMF----global corporations will be brought in to take control of all public assets to develop and own. So, all of that tens of trillions of dollar of corporate fraud last decade that should have been recovered these several years are sitting with these global investment firms that will send in money to fund these infrastructure programs. They are planning how they will come in once the US is pushed into financial bankruptcy. Remember, the US has now almost $21 trillion in national debt because of failure to recover corporate frauds and sending out trillions of dollars of revenue for nothing at all. These global organizations like this one in this video are the workings of global corporate tribunal rule.
There will be no government debt ---Federal, state, or local because all this debt is corporate fraud including this coming bond market collapse. We need people in office that will send all this debt away----and protect the public assets and our government structures.
WE CAN DO IT IF WE GET RID OF GLOBAL CORPORATE POLS. THIS IS FOR WHOM ALL OF MARYLAND'S AND BALTIMORE'S POLS WORK.
They are planning on making the US as indebted and impoverished as any IMF controlled developing world. You know your pols have known and worked for this goal by looking at how much public private partnerships in your state.
All of what I describe will take a decade to move forward so we have time to stop what they are simply moving towards.....the first step will be to protect city assets after this coming economic crash.
Public-private partnerships: Joining core business interests with global development
Brookings Institution YOU TUBE
Published on May 8, 2015On May 7, Brookings and Project Concern International (PCI) hosted a discussion on how public-private partnerships can contribute to future development.