The good, the bad and the P3s

Another major milestone went unnoticed last month as the Tappan Zee Bridge ”“­ the bane to all who have to cross it daily ”“ marked its 55^th birthday.

The bridge is the poster child ”“ perhaps unfairly ”“ for New York state”™s flagging infrastructure. We say unfairly because of the billions of dollars in maintenance and rehab that has been heaped upon it over the years it remains standing. Much older, at 128 years, is the Brooklyn Bridge, but it never receives the same scorn as the Tappan Zee.

We bring this up because in the opening sentence of state Comptroller Thomas DiNapoli”™s report on the infrastructure crisis, he states: “New York has a growing backlog of unmet public infrastructure needs, with limited public funds to pay for them. The replacement of the Tappan Zee Bridge, for example, seems to be held up due to an estimated $16 billion price tag.”

Well, yes, that is a lot of money.

DiNapoli goes on to say his office in 2009 said that $250 billion was needed for infrastructure statewide over the next 20 years. How do you go about finding money for infrastructure when businesses and residents are clamoring for a tax cap? Perhaps public-private partnerships, aka P3s.

Other states have utilized them, Illinois (Chicago Skyway) and Indiana (Toll Road), for two, and have saved millions of dollars.

But DiNapoli says hold on before you go selling off state land, bridges and other properties. He and his staff created a hypothetical chart showing how tolls could rise dramatically under a public-private partnership, with the public once again getting the short end of the stick.

Taking into consideration the rate guaranteed by the Skyway and Indiana Toll Road contracts, DiNapoli”™s crew crunched the numbers and determined the New York State Thruway”™s tolls would have increased 2,514 percent from the time the highway opened on 1954 until 2009. Tolls actually went up 254 percent during the same time period. That $5 toll on the Tappan Zee doesn”™t look so bad now does it?

But for Illinois and Indiana, the privatization deals reaped immediate benefits, according to a 2007 study report co-authored by academics at the Indiana University of School of Public and Environmental Affairs. The move to privatization resulted in upgraded bond ratings, which generally mean lower borrowing costs for governments.

So why is DiNapoli throwing a wet blanket on P3s here?

Maybe he fears the state would be throwing the baby out with the bath water if it were to hand over highways and bridges and water supplies to private concerns to manage.

He said there are four main pitfalls: failure to get the full value of public property, unfavorable pricing, unrealistic expectations and budget gimmickry.

DiNapoli is worried about the trade-offs that come with a P3.

Maybe we should too, not just in New York, but as a nation.

Last week, the U.S. and China launched a public-private partnership on health care. As that was occurring, House Republicans in Washington voted to repeal President Obama”™s health care law.