State legislators and legislative staff involved with NCSL have been tracking the trends in transportation funding and finance, including PPPs, for several years. In early 2008, the debate sharpened, with influential members of Congress expressing concern about protecting the public interest in PPP arrangements. States were caught in the middle of an escalating debate as they sought innovative yet effective funding and project delivery mechanisms to maintain and expand transportation infrastructure. NCSL's policy regarding PPPs, adopted as part of its Surface Transportation Federalism Policy in July 2008, asserts that all funding and financing options must be available to states and that PPPs should remain state mechanisms. Further, the level of private sector participation is best determined by state and local authorities, and state legislators understand and will protect the public interest.3
To contribute a balanced, informed perspective that also would help protect states' ability to use PPPs as appropriate, NCSL formed a working group of state legislators, legislative staff and representatives of private sector entities to assemble reliable information and to identify effective tools for considering PPPs in the context of overall transportation funding decisions. (See Appendix A for a list of project participants.) The NCSL working group met, deliberated and gathered information for 18 months, analyzing legislators' needs and hearing from a variety of invited experts. It developed nonpartisan, balanced and absorbable materials to aid the legislative process, both in their respective states and when considering state-federal relationships.
The key focus of this report is the formulation of nine principles to help state legislators as they consider and perhaps adopt a procurement and financing approach involving PPPs. Roles and responsibilities of various policy actors- legislative branch, executive branch, private sector-also are described. The emphasis of this report is on transportation, although use of PPPs could be appropriate for a variety of other governmental endeavors as well.
This report begins with definitions and identification of key characteristics of PPPs. The range of PPP approaches- according to mission, method and money-is delineated. The next section frames the debate in terms of potential PPP-related benefits, concerns and controversies. State-federal relations and the federal role in PPPs are discussed, followed by a description of state legislative and executive agency roles and responsibilities. The centerpiece of the toolkit is the nine principles that promote a sound public policy approach to the consideration of PPPs. A key assumption of this approach is that the states are and should be primarily responsible for PPP policy and implementation decisions and that solid, balanced, comprehensive state enabling legislation is the key to thorough consideration of PPP proposals and protection of the public interest.
•••••••••••••••••••••••••••••••••••••••• Thoughts from the NCSL Partners Project… On PPPs as a Tool, not a Panacea Bill Graves, Former Governor, Kansas •••••••••••••••••••••••••••••••••••••••• | PPPs can be valuable options for states that are seeking innovative approaches and funding to repair crumbling infrastructure and build new projects. Supporters and opponents would both agree, however, that PPPs are best viewed as only one piece of the funding puzzle, as states address overall transportation needs. They can supplement overall public infrastructure investment and, when used, usually are combined with an extensive procurement and financing package on a given project. They are best suited to large-scale infrastructure assets that have ongoing maintenance requirements.4 |
It should be noted that PPPs can offer alternative project delivery methods or financing mechanisms, but, in the long term, do not provide new money for infrastructure. Revenues to repay the private investment must come from the same sources of public financing-tolls, fees or taxes. Thus, state decision makers will want to consider PPPs in terms of whether they provide better value or overall public service than could otherwise be purchased by those revenue streams.