A guest post by House Transportation Committee Chairman Rick Geist, re-printed with permission from www.citizens4rebuildingpa.com
As Pennsylvania struggles to maintain, rebuild and expand a deficient transportation infrastructure that is deteriorating by the day, a harsh reality has set in: the needs far surpass the public sector’s ability to fund them.
According to a 2010 study by the State Transportation Advisory Committee, an additional $3.5 billion a year is needed to fully meet Pennsylvania’s transportation infrastructure needs. Those needs include the most structurally deficient bridges of any state in the nation - more than 5,000, or 26 percent of the state-owned inventory – and roughly 8,000 miles of roadway in very poor condition.
A problem of this magnitude and urgency requires us to explore innovative financing and project delivery alternatives. I am convinced it is time for Pennsylvania to follow the lead of 32 other states and Puerto Rico in enacting legislation that will enable this Commonwealth to partner with the private sector and engage its financial resources and efficiencies to help rebuild our transportation infrastructure.
I am sponsoring legislation that will do just that. House Bill 3 provides a broad-based framework that enables the Commonwealth to explore and implement transportation-specific public-private partnerships, where feasible and where beneficial to the Commonwealth. In every case, protecting the public interest is paramount.
A public-private partnership, or P3, is a contractual arrangement between a public agency and a private entity to deliver a public service. These partnerships, which have been successful in other states and around the world, provide an infusion of private-sector capital that accelerates the maintenance and improvement of roads, bridges and other infrastructure. Under a P3, the public entity maintains ownership of the asset, but contracts with a private entity to develop, construct, manage, operate and/or finance a given project. The private entity gets a return on its investment over time, most commonly through tolling.
Under my legislation, all revenue received by the Commonwealth through a P3 will be placed in a secure fund to be used exclusively for the improvement of Pennsylvania’s transportation infrastructure now and into the future.
Enacting P3 legislation is one of the major recommendations of Governor Corbett’s Transportation Funding Advisory Commission, which issued its report Aug. 1. The Governor’s Commission recognizes, as did a previous commission convened during the Rendell Administration, that P3s are a key component of a comprehensive transportation funding plan. P3s alone will not solve Pennsylvania’s transportation infrastructure problem, but having this innovative financing and project delivery tool in the toolbox is imperative.
Providing a safe and reliable transportation infrastructure is one of the core functions of government. Why? Because Pennsylvanians’ safety and mobility, as well as Pennsylvania’s economy, depends on it.
An efficient transportation system is the backbone of a thriving economy. The business community understands this and that is why virtually every regional Chamber of Commerce in the Commonwealth supports P3s and House Bill 3.
P3s are not about selling public assets. Rather, they are partnerships in which the private sector teams with government to create mutual economic development. According to the latest estimates, $250 billion of private equity and pension fund money is available domestically to leverage P3 opportunities in the U.S.
The AFL-CIO and the American Federation of Teachers are leading a push for unions to invest billions from their pension funds into P3 infrastructure projects. Last month, the two unions made a groundbreaking Commitment to Action to encourage union pension managers to invest up to $10 billion of public employees’ pension assets in infrastructure projects. It is a classic “win-win-win”: The unions get a better return on assets for their retirement funds, invest in projects that will put their workers back to work, and as a result the infrastructure is improved.
I have championed P3s and enabling legislation for nearly a decade. Now, we are as close as we’ve ever been to enacting this legislation. The Senate, House and Administration all have indicated their support for P3s, and all agree that the issue of transportation funding is a top priority. So, a logical next step would be to enact House Bill 3 in the weeks ahead. My legislation mandates nothing, but it enables the Commonwealth to harness the power of P3s where it is advantageous to do so.
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