Good analysis of the problem, with a public/private solution offered for consideration—being done elsewhere with some success—and when you remember how quickly our own C.C. Myers repairs roads and bridges that fail, it gives weight to the solution.
PUBLIC WORKS
How to Keep Our Bridges Safe
Private investors can manage critical transportation infrastructure.
BY STEVEN MALANGA
Sunday, August 5, 2007 12:01 a.m. EDT
The tragic bridge collapse in Minneapolis is a stark reminder that too much of our transportation infrastructure is not well-maintained and requires extensive, costly investments to be fixed or even, in some cases, completely replaced.
Nearly a fifth of America's roads are now considered in poor shape and about 1 in 4 bridges is rated "structurally deficient." The U.S. Department of Transportation estimates that the cost to fix these problems is a staggering $460 billion. The tab grows far larger when you add in the hundreds of billions to build the new transportation infrastructure that's needed to handle the country's growth.
Part of the problem is that big increases in state and local spending for politically popular programs, especially Medicaid and education, as well costly public employee pensions and benefits, have crowded out infrastructure--even as some traditional sources of financing for roads and bridges, such as the proceeds from gas taxes, haven't kept pace with demand.
It's unlikely that public funds alone will supply what's needed. Rising gasoline prices have made it politically unpalatable to increase fuel taxes, while some state and local budgets are already groaning under the weight of decades of borrowing, making massive new debt offerings more and more difficult. More federal transportation money? The problem is that 98% of our bridges and 97% of our roads are owned and operated by state and local governments--and that these governments have often used past increases in federal transportation aid simply to replace their own infrastructure spending.
Instead, a few states and cities are now creatively turning to the private sector for help. They are partnering with private investors to build from scratch new toll roads, bridges and other infrastructure that the private owners--not government--will finance and operate. A few cash-strapped cities and states are also replenishing their transportation trust funds--so that they can pour more money into repair and maintenance-- by auctioning off existing toll roads and bridges to private operators, who are bidding far more for these assets than most experts would have predicted.
Tapping private investors to build and operate public roads and bridges is nothing new around the rest of the world. Starting with 1955 legislation which allowed the government to select local groups to build toll roads, France licensed private investors to construct and operate some 5,500 kilometers of inter-city autoroutes.
In Britain, Margaret Thatcher's privatization movement in the 1980s spurred both the sale of existing government assets and public-private construction projects. Later, the fall of the Soviet Union produced a vast round of privatization of public assets in formerly Eastern bloc countries. The U.S. Department of Transportation estimates that world-wide there have been more than 1,100 public-private deals in the transportation field alone in the last 20 years, with a value of some $360 billion.
Only recently have a few intrepid U.S. politicians tested the waters, with startling results. Confronting a $3 billion transportation-funding shortfall, Indiana Gov. Mitch Daniels in 2006 auctioned off the rights to operate the Indiana Toll Road to a private consortium for a staggering $3.85 billion…
… Using traditional means of valuing a public asset--which is to calculate how much in municipal financing could be raised by floating bonds backed by the road's tolls--Indiana pegged the road's value at $1.8 billion. Instead, the nearly $4 billion that Indiana got has replenished the state's transportation fund and allowed the state to embark on an aggressive program of new building and maintenance.
