GAO report: no free lunch for PPPs

The Trucker Staff

2/12/2008

WASHINGTON – In a recently released report the federal Government Accountability Office (GAO) called for a “fundamental reexamination of federal programs” for highways and highway funding and took a hard look at public-private partnerships and their ramifications.

“The federal programs for highways are particularly ripe for reexamination. The Interstate Highway System has been completed, yet the basic structure of the federal-aid highway program has not changed,” the report stated.

It noted that while there are some benefits to the public from public-private partnerships (PPPs), there is no “free” money. And, the report added, “it is likely that tolls on a privately operated highway will increase to a greater extent than they would on a publicly operated toll road” and a risk that tolls would “exceed the costs of the facility, including a reasonable rate of return, should a private concessionaire gain market power because of the lack of viable travel alternatives.”

While citing Federal Highway Administration (FHWA) figures that predict highway miles traveled will more than double from 3 trillion to 7 trillion in the next 50 years, the GAO advocated the use of “up-front public interest evaluation tools” to make sure the public interest is not overlooked before public-private partnerships are a done deal.

Other countries, such as Australia, have developed systematic tools to gauge how the public might be impacted by such programs and require them when considering private investments in public infrastructure, the report stated.

Public-private partnerships are not risk free, “and concerns have been raised about how well the public interest has been evaluated and protected,” it added.

Applauding the report was American Trucking Associations President and CEO Bill Graves, who said it was “an important development to have the GAO acknowledge that such funding mechanisms are not in the best interest of the American taxpayers.”

An ATA news release said the report “confirmed ATA’s position” that utilizing public-private partnerships to fund infrastructure “ultimately can be more costly to the motoring public than traditional funding solutions … .”

The GAO said it was asked to review the benefits, costs and trade-offs of PPPs; to review how well public officials have protected the public interest regarding PPPs; and to review the role the federal government has played in PPPs and how that role might change.