Not only are state and local governments discussing public-private partnerships, the federal government also is getting into the act.
Yesterday, U.S. Transportation Secretary Mary Peters met with Pennsylvania Gov. Edward G. Rendell to discuss the role P3s can play in meeting the state’s transportation funding needs.
“Pennsylvania’s turnpike proposal has enormous potential because it recognizes that fresh capital will lead to stronger roads and bridges, delivered faster and maintained better,” Peters said during her meeting with Rendell.
Earlier this year, Rendell proposed leasing the Pennsylvania Turnpike in a public-private partnership to help alleviate the state’s $1.7 billion transportation funding gap. Rendell has estimated that such a lease could generate anywhere from $3 billion to $30 billion.
Rendell is just one of many state officials Peters has met with this year to discuss P3 options for local governments. She has visited several states, including Texas and Tennessee, where she has discussed potential P3s with state officials.
“Partnerships can provide states with flexible options to deal with tough issues like traffic congestion and funding limitations without having to rely on Washington, D.C.” Peters said yesterday. P3s are a “common sense solution to a problem that will not fix itself,” she said.
Last week, Rendell announced that the state had selected Morgan Stanley to be its financial adviser on transportation funding options, which could include the leasing of the Pennsylvania Turnpike.
Morgan Stanley’s six-person team consists of both muni bankers and investment bankers. On the municipal side, Stratford Shields, William Daley, and Tim Wilschetz will be heading up the team. Kent Hitchcock, global head of the transportation and infrastructure group, will lead the investment banking side. Robert Collins, head of infrastructure mergers and acquisitions, and Emmett McCann, vice president of the investment-banking group, will report to Collins.
Pennsylvania Department of Transportation spokesperson Rich Kirkpatrick noted that Peters was not in Pennsylvania specifically to endorse Rendell’s proposal, but rather to promote the administration’s support for P3s in general. “She is parading a message around the country that this concept is something that the states need to look at.”
According to Kirkpatrick, the American Association of State Highway and Transportation Officials came out with figures this past week stating that revenue coming in to the federal Highway Trust Fund would be reduced by $800 million by federal fiscal year 2009. By 2010, dollars coming to the states would be reduced by a colossal $18.2 billion, he said.
“The federal government’s Highway Trust Fund that pays for roads and bridges will go negative as early as 2009 because we are spending far more money than we are taking in each year,” Peters said.
It’s a “daunting challenge to try to manage transportation funding,” Kirkpatrick said. “Figuring out how to pay for the kind of improvements people expect” is a common conundrum across the country, he added.
