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Can Public–Private Partnerships Fill the Transportation Funding Gap?

Posted by Content Coordinator on Tuesday, January 17th, 2012

THE HERITAGE FOUNDATION

Abstract

Given tight federal budget restraints and shrinking transportation trust fund revenues, states and the federal government need to find alternative financial resources to finance needed transportation infrastructure projects, especially maintaining and expanding the capacity of the Interstate Highway System. Increased use of public–private partnership contracts (P3s) promises to help finance some of the needed infrastructure projects, but the federal government needs to allow states more freedom to use P3s, and states need to adopt the policies and practices needed to use P3s effectively. P3s are not the solution to every transportation infrastructure challenge, but they can be used to address some of the challenges.

Talking Points

• Limited growth in federal fuel tax revenues has left the highway trust fund in deficit and dependent on general revenue supplements to meet commitments.
• With little political support for raising the federal fuel tax, surface transportation advocates are searching for non-tax sources of revenues to address funding shortfalls.
• Public–private partnership contracts (P3s) offer the promise of providing additional funds by attracting money from private investors.
• In recent years, P3s have been implemented in several states and have raised hundreds of millions of dollars for surface transportation investments, most notably in the $2 billion Capital Beltway HOT lane project now nearing completion.
• While P3s can be a promising approach for generating additional funds for transportation investments, experience indicates that they are a valuable tool, not a panacea. Only a fraction of the transportation projects under consideration would be suitable for the P3 approach.

Download Full Article (PDF): Can Public–Private Partnerships Fill the Transportation Funding Gap?

About The Heritage Foundation
http://www.heritage.org

“Founded in 1973, The Heritage Foundation is a research and educational institution—a think tank—whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.”

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