Section III of this report explained that state and local authorities use PPPs to reduce costs, accelerate project delivery, allocate risk more effectively and encourage innovation. These benefits alone, however, do not explain why state and local authorities have been turning to PPPs with greater frequency over the last few years.
The unprecedented use of PPPs described in Section IV is also, in large part, a response to the failings of traditional approaches to transportation funding and procurement. The primary failings include continuous growth in congestion and system unreliability over the last three decades and the difficulty that all levels of government are having satisfying the demand for transportation investment. These failings are exacerbated by the misallocation of transportation resources for political or special purpose spending; by a steadfast reliance on fuel taxes to fund transportation infrastructure despite bipartisan efforts to promote fuel economy, energy independence and reduced emissions; and by lengthy project development cycles which increase costs and make it tougher to respond to priorities.
Recently, for example, a special Transportation Finance Commission established by Massachusetts issued "a call to action," which recommended, among other things, that Massachusetts consider PPPs as an alternative to status quo funding approaches.87 Explaining the necessity for reform and new sources of revenue, the commission declared that the current system is "frighteningly underfunded and ill prepared to meet the needs of the Commonwealth." The Commonwealth's funding gap was conservatively estimated at $15 billion to $19 billion over the next 20 years. The commission declared that: (i) Massachusetts transportation agencies are running deficits and resorting to quick fixes that hide systemic financial problems; (ii) the condition of Massachusetts' roads, bridges and transit is in broad decline; (iii) revenue is being squeezed from all sides; and (iv) there is no money for improvements without sacrificing existing systems and exacerbating the Commonwealth's problems.88
In Idaho, the Idaho Forum on Transportation Investment89 released a report in January 2006 which identified a $20 billion funding gap over the next 30 years.90 The group concluded that: "Idaho's current transportation revenue structure will not meet the pressing transportation funding needs over the next 30 years;" that "[i]ncreased transportation funding must be addressed now;" that "[s]olutions to Idaho's transportation funding challenge will require innovative and non-traditional revenue sources and means of collection;" and that "Idaho must recognize the eventual transition from motor fuel (gasoline, diesel, etc.) to alternative fuel vehicles and prepare accordingly."91 One of the policy recommendations made by the report is to promote partnership opportunities, including PPPs, and remove the legal barriers to PPPs wherever possible.92 As did the Massachusetts Transportation Finance Commission, the Idaho Forum specifically contrasted its recommendations to explore non-traditional solutions to filling the looming transportation funding gap with the State's current reliance on traditional fuel taxes and a variety of vehicle-related fees to fund its transportation needs, which is not sustainable.
Michigan is the most recent state to launch an investigation exploring alternatives to the current transportation funding system. On December 27, 2007, Michigan Governor Jennifer Granholm approved legislation creating a task force and a citizen's advisory committee to explore alternatives to the current system of funding transportation in Michigan.93 The task force will consider replacing or supplementing the State's 19-cent gas tax with alternative strategies for funding transportation, including direct user fees. The task force will issue a preliminary report by October 31, 2008 and a final report by April 1, 2009.
The failings of the traditional transportation funding system, which are leading Massachusetts, Idaho and Michigan to search for alternatives, are evident across the United States at all levels of government.94 PPPs are a preferred alternative because they address these failings.
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87 Transportation Finance in Massachusetts: Volume 2, Building a Sustainable Transportation Financing System, Recommendations of the Massachusetts Transportation Finance Commission, Massachusetts Transportation Finance Commission, September 17, 2007 (the "Massachusetts Report").
88 The Massachusetts Report, pg. 1.
89 A group of 57 individuals convened by the Idaho Transportation Board consisting of representatives from public agencies, transportation service providers, stakeholders, elected officials and citizens.
90 A Forum on Transportation Investment, Report & Recommendations, January 2006, pg. 3.
91 A Forum on Transportation Investment, Report & Recommendations, January 2006, pp. 9-13.
92 A Forum on Transportation Investment, Report & Recommendations, January 2006, pg. 16.
93 State of Michigan, 94 th Legislature, Regular Session of 2007, Act No. 221.
94 See Maryland Report, pg. 19, which asserts that "States around the country face serious funding gaps between the level of highway service demanded by citizens and businesses and the funding available to finance, construct, operate, and maintain the highway system."