Maryland Commission's Report Makes Case for More P3s

WASHINGTON — Increased reliance on public-private partnerships to fund construction of roads, rail, water, sewers, public buildings and other projects could save Maryland millions of dollars annually and create thousands of jobs, according to a state legislative commission report.

The Joint Legislative and Executive Commission on Oversight of Public-Private Partnerships presented its report to the General Assembly Tuesday. It analyzes Maryland’s infrastructure needs, recommends how to structure P3s and projected how their use can benefit the state.

“Through well-structured public-private partnerships we can increase investment in our infrastructure, ensure accountability and create more jobs,” said Lieut. Gov. Anthony Brown, who chaired the panel.

The report cited a 2011 study by the Maryland Blue Ribbon Commission on Transportation Funding that said the state needs an additional $870 million annually in new transportation revenues just to address current needs.

Initial estimates by Maryland agencies overseeing capital projects have found that more use of P3s could contribute between 6% and 10% — or $205 million and $315 million — of Maryland’s $3.1 billion annual capital budget while creating as many as 4,000 jobs, according to the study.

“Creating jobs and putting Marylanders back to work is our highest priority,” Brown said, “and investing in infrastructure projects is one of the most effective ways to spur job creation and encourage economic growth.”

P3s typically involve a private firm that provides much of a project’s startup and construction costs while expecting to later turn a profit on tolls, rents or user fees. P3s account for a small but growing number of infrastructure projects in the country.

A Congressional Budget Office study released Monday warned that public-private partnerships don’t always save money compared to traditional public finance, especially because P3s often overestimate the revenues that will be available from tolls and other users fees.

The report stressed the need for P3 projects to be structured and carefully analyzed to avoid that pitfall, stating that “each proposed P3 requires careful and comprehensive evaluations of the fiscal, management and policy implications.”

Maryland already has a more robust P3 environment than many states. It has entered into several pacts, including one that spans 50 years between Maryland and Ports America Chesapeake to operate the Seagirt Marine Terminal, a major cargo handling facility in the Port of Baltimore.

Half the states have not completed a single P3 project, the report said.

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Transportation industry Maryland
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