Privatization of Infrastructure Assets

A national debate is brewing over the future of federal support for infrastructure maintenance and development, and the President’s home state of Illinois suddenly has become the center of attention. In the past several days, Illinois Senators Dick Durbin (D) and Mark Kirk (R) each have introduced separate, dueling legislative proposals that highlight the stark differences in Washington regarding the federal government’s role in infrastructure finance. Durbin’s proposed bill would establish significant hurdles to privatization while Kirk’s proposal would ease federal restrictions on privatizing transportation assets.

Sen. Durbin’s bill, the Protecting Taxpayers in Transportation Asset Transfers Act, introduced last Thursday, would require repayment of federal funds used to support local transportation infrastructure projects prior to local and state governments privatizing transportation assets. The bill would attach a federal lien on all transportation projects until the federal funds are repaid.. Sen. Durbin’s bill also would increase transparency and encourage public involvement before privatization deals are completed.

This Monday, Sen. Kirk introduced the Lincoln Legacy Infrastructure Development Act, citing President’s Lincoln’s legacy in fostering private investment in the transcontinental railroad. Sen. Kirk’s proposal would ease federal restrictions on public-private partnerships which would make it easier for local and state governments to sell and lease transportation assets to private bidders. The legislation also would support additional federal financing for infrastructure project financings.

Beyond the Durbin and Kirk bills, there are a multitude of legislative options on the table regarding infrastructure finance, not the least of which is President’s Obama’s proposal to create a national infrastructure bank. What happens in the short term? In a word, nothing, until we get past the current round of negotiations regarding the debt ceiling and entitlement programs. But looking out a couple of years to 2013, I expect to see a national infrastructure plan emerge in the first 100 days of the next presidential term – regardless of who is elected President – with additional federal support, most likely in the form of federal loan guarantees, and facilitation of public-private partnerships. There are viable solutions to our infrastructure challenge that also protect the U.S. taxpayer. Businesses that want to influence this debate need to engage now.
 

 
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