Trump’s Comment on P3s Makes Tolling an Even More Essential Tool

In an unexpected comment, late last month to members of the House Ways and Means Committee, President Donald Trump may have stepped away from public-private partnerships as one of the cornerstones of his Administration’s forthcoming $1-trillion infrastructure plan.

P3s are “more trouble than they’re worth,” Trump reportedly told Reps. Brian Higgins (D-NY) and Richard Neal (D-MA), citing the original agreement behind the Indiana Toll Road (ITR) as an example of an outcome he would want to avoid.

Eno Center for Transportation Senior Fellow Jeff Davis came back with a thoughtful defense of the ITR project, which coincidentally, was recently honored as a recipient of IBTTA’s Toll Excellence Award. But the conversation, reported separately September 26 by the Washington Post and the Wall Street Journal, points toward a possible funding regime in which tolling becomes even more essential for the jurisdictions that shoulder the greatest share of the financing for urgently-needed infrastructure improvements.

Getting Projects Done Without P3s

The first question stemming from Trump’s comments is how the country will pay for the infrastructure projects it needs to begin working down an $836-billion infrastructure deficit. The Post had some insights on that score.

“House officials have struggled to decide how to finance many of the projects they envision to rebuild America’s roads, bridges, and tunnels.” And “the previous strategy—a push that has taken a back seat to other Republican priorities in Washington—was aimed at luring private investors with promises of federal backing. Some of that thinking appears to be changing,” the paper reported.

“Now the Administration wants to force states and localities to foot most of the bill,” while falling back to direct federal spending that “would probably limit the scope of the initiative to a fraction of what the president has described.”

Whichever level of government ends up leading any given project, one of the things that cities, states, and the federal treasury have in common is that none of them can afford to pay for the scale of work on their immediate priority lists. Even if P3s are out of bounds, governments will still need private sector support to get the job done.

“As always, the tolling industry has the experience and know-how to step up, whenever and wherever we’re needed” said IBTTA Executive Director and CEO Patrick Jones. “It’s entirely appropriate for elected representatives to set the terms, and not unexpected for those terms to shift and change over time as legislative proposals are drafted. We know the details will settle out, and we’ll be ready when they are.”

Indiana: A Success Story Worth Building On

Responding to Trump’s comments on the Indiana Toll Road, Eno’s Davis pointed to aspects of the project that made it a positive example for future projects.

“Financially, the agreement has worked as intended (so far) for the State of Indiana—they got their $3.8-billion check, cashed it, and built roads with it,” he wrote.

“Whether it works for Indiana in the future depends on how much Indiana might need to build a road competing with the toll road between now and the year 2081, but will be forbidden to do so by the P3 lease agreement, and how well the private operator maintains the toll road.” While the ITR venture was problematic for the original P3 partner, the asset was successfully transferred to a new group of investors.

And at IBTTA’s 2017 Annual Meeting in Atlanta, ITR received the association’s Toll Excellence Award for Administration and Finance. Its 80/90 PUSH project, the biggest investment the road had seen since it opened in 1956, was massive in scope: It involved upgrading 292 lane miles (73 linear miles), nine interchanges, and 53 bridges, and installing a fiber optic backbone along the corridor as a step to implementing an Intelligent Transportation System.

What’s Next

As we noted in Thursday’s blog, a decisive word on any given policy issue is not always the final word.

The Administration’s plan is still taking shape. There’s plenty of time left before it will be finalized, since it stands behind health care and tax reform on the Congressional priority list. So, it’s not at all inconceivable that the scene will shift, then shift again, before details are officially released.

Through it all, an effective presence in Washington means keeping an ear to the ground and an open communication channel. For the last five years, through its Moving America Forward campaign, IBTTA has been building precisely that ability. The next few months might be the moment we’ve been preparing for all this time.

Click here for more on IBTTA’s Moving America Forward campaign.

Photo via https://www.flickr.com/photos/whitehouse/36550024310/ via wikipedia.