Policy Study

The Role for Public-Private Partnerships in Modernizing and Expanding Nebraska’s Transportation System

Platte Institute for Economic Research/Reason Foundation Policy Study

The global environment for transportation policy is entering a new paradigm. Like many states, Nebraska finds itself at the convergence of two intersecting trends that demand attention. First, growing transportation needs are outstripping available capacity, and second, the need for maintenance and renovation of existing systems is eating up available financial resources. A failure to address these twin challenges will lead to even greater congestion in various forms and lowered reliability of service in the future. By any measure, these realities impact Nebraska’s economic competitiveness and its citizens’ quality of life.

Nebraska has made major strides in improving its highway system in recent years, but the state’s looming transportation funding gap threatens to unravel these gains. Further, absent new funding and procurement mechanisms, Nebraska would be faced with having to close the infrastructure funding gap without some of the tools available to other states. The transportation challenges are confronting a state that is unable to deal with them outside of the traditional means of gas taxes, vehicle fees, and government subsidies, which challenge the ability of the state to keep the overall transportation system ahead of the curve.

To keep Nebraska moving forward and position itself for the modern economy, the state will need to adopt successful transportation strategies from other states and strive to innovate in ways that will best serve Nebraskans. Even though the vast majority of transportation projects around the country continue to be funded from traditional sources—gas and vehicle taxes—a new funding paradigm is rapidly emerging. State and local transportation agencies are increasingly looking to supplement these sources with private investment through public-private partnerships (PPPs). PPPs are just one “tool in the box,” but this promising and valuable option available to policymakers has been relatively untapped in Nebraska.

PPPs offer a way to leverage private capital and expertise to provide a public service, and states are increasingly using them to deliver needed new transportation capacity while stretching limited taxpayer dollars. Although often thought of simply as “private toll roads,” transportation PPPs actually allow for many options to finance, construct and/or maintain new and enhanced transportation facilities. PPPs come in many forms, including the development of new infrastructure, the maintenance of existing infrastructure, and the operation of existing services. PPPs are never going to completely replace the traditional means of funding transportation, but they are a very promising method in which to augment traditional transportation revenue sources and provide more transportation project delivery options and cost savings to Nebraskans.

Nebraska currently lacks broad enabling legislation for these partnerships. Over the last two decades, over half of the states have now adopted legislation authorizing the use of PPPs for the design, construction, financing, and operation and maintenance of transportation facilities. Workable legislation is generally needed to entice private sector investment. The reality is that transportation projects are going to states like Virginia, Florida, and Georgia that have created a solid legal foundation for PPPs—where the law facilitates PPPs and where private investment and participation is welcomed and embraced.

Nebraska policymakers should embrace the considerable potential of the emerging PPP paradigm for highway funding and operations. Policymakers are no longer forced to choose between increasing costs to taxpayers or reducing services to motorists. PPPs, when implemented properly and carefully, can benefit both the State and its citizens. Op-portunities for PPPs exist in Nebraska in many important facets of transportation, including constructing new highways, building new bridges, and competitive contracting for additional local and state road maintenance and operations. In fact, PPPs may offer a viable means of financing some of the state’s large-scale capital improvement projects that currently lack a funding source, such as the $175 million Highway 2/Lincoln South Beltway project and the $145 million Highway 34/75 Missouri River Crossing.

Embracing PPPs would represent a new way of thinking for Nebraska and can help the state address its looming transportation funding shortfall in order to keep people and goods—and ultimately the state economy—moving forward.

Attachments

Shirley Ybarra is a former senior transportation policy analyst at Reason Foundation, a nonprofit think tank advancing free minds and free markets.

Ms. Ybarra served as Secretary of Transportation for the Commonwealth of Virginia from 1998 to 2002, overseeing a budget of $3.2 billion and a staff of 13,000 people. Between 1994 and 1998, Ybarra was Virginia's Deputy Secretary of Transportation.

Ybarra also served as senior policy advisor and special assistant for policy for U.S. Secretary of Transportation Elizabeth Dole from 1983 to 1987. In that role, Ybarra managed the transfer and privatization of Dulles and National Airports to the Washington Metropolitan Airport Authority.

Ybarra authored Virginia's Public-Private Transportation Act of 1995, considered the model public-private partnership legislation in the United States.

In 2001, Ybarra received the American Road and Transportation Builders Association's "Public-Private Ventures Entrepreneur of the Year Award" for her leadership in designing innovative infrastructure financing.

She holds a Master's degree in Economics and a Bachelor's degree in Business Administration from the University of Nebraska, Lincoln.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.