Soon after the advent of the automobile, federal, state and local governments combined to fund the bulk of highway building and upkeep in the U.S., with government funding of transportation starting in the early 1920s. Over the past couple of decades, however, state and local governments, facing increased commitments to health care, pension and other costs, have found making commitments to highway funding more difficult. During the same time period, the federal government’s budgetary commitment to highway funding has also dwindled—from a 1965 peak of about 3.5 percent of federal outlays to 1.5 percent in 2016, according to the Eno Center for Transportation.
As state and local governments increasingly face fiscal challenges in making improvements to existing highways, adding highway capacity, and ensuring projects are sufficiently maintained to avoid deferred maintenance problems, public-private partnerships (or P3s) are emerging as a policy tool to help ensure efficient project delivery as well as maintenance and upkeep of highways over their design life.
While common in much of Europe and elsewhere, highway P3s remain a newer phenomenon in the U.S., and one not always well understood by both advocates and critics alike. This document answers some of the common questions individuals often pose about highway P3s, while clearing up some of the common misconceptions made about P3 agreements.