Trump’s Infrastructure Plan Unlikely to Succeed Without PPPs

Commentary

Trump’s Infrastructure Plan Unlikely to Succeed Without PPPs

Wall Street Journal account of a meeting between President Trump and members of the House Ways & Means Committee revealed discouraging and unexpected remarks by the president toward infrastructure public-private partnerships (PPPs), calling them “more trouble than they’re worth,” and citing the PPP involving the Indiana Toll Roll as unsuccessful.

As Reason Foundation’s Bob Poole notes, the president’s remarks are troubling for several reasons. In addition to contradicting most everything the Trump Administration has said with respect to infrastructure PPPs, abandoning the use of PPPs will almost certainly curtail the administration’s ability to meet up to its envisioned $1 trillion infrastructure plan.

Meanwhile, state and local governments will continue to enter into infrastructure PPPs with the recognition that they are not, in fact, “more trouble than they’re worth.” Just miles from the White House, the Virginia Department of Transportation alone oversees multiple PPP road transportation projects—the Dulles Greenway has operated as a PPP for over two decades; while high-occupancy toll (HOT) lanes on the Virginia portion of the D.C. Beltway provide a congestion–free means of navigating one of the busiest stretches of highway in the country, an option VDOT looks to provide elsewhere in the D.C. area by adding HOT lanes on I-66, a project still in its early stages.

Elsewhere, Colorado recently approved a $1.2 billion PPP agreement to expand I-70 and Pennsylvania entered into a PPP to repair and replace 558 aging bridges in an expedited manner, while states such as Florida and Texas have been operating in infrastructure PPP agreements a years, to give a few examples.

As for the Indiana Toll Road, while the private consortium initially leasing the road did go bankrupt, it has been taken over by a private consortium that has added a quarter–billion dollars in improvements in just a couple of years. Foreseeing the possibility of a bankrupt toll road operator, Reason Foundation’s Len Gilroy noted in 2013 how taxpayers would—and ultimately did—avoid risks associated with operator bankruptcy.

One hopes that Trump’s remarks are more reflective of a tactical shift than signal of a fundamental change in the administration’s policy approach to infrastructure PPPs. The response from the White House quoted in the WSJ article suggests more the former than the latter, which is encouraging, but much remains to be seen.

Austill Stuart is a policy analyst at Reason Foundation, a non-profit think tank advancing free minds and free markets.