Enormous payments made to contractors when work will never be completed. Shell companies running toll roads while blueprinted for bankruptcy. Massive projects built at taxpayer expense without a clear established need. Toll projections at odds with common sense. Contracts more than 700 pages long shifting risk to taxpayers.
A Halloweenish transportation nightmare?
This was what Virginia was waking up to when Aubrey Layne was appointed secretary of transportation in 2014, and could see contract terms in greater detail for such deals as the U.S. Route 460 toll road — the road to nowhere — for the first time.
Although Layne believes firmly in market forces and the benefits of public-private partnerships, also known as P3s, Virginia’s transportation mess still isn’t fully appreciated.
Or cleaned up.
“We’re doing some scrubbing,” Layne said shortly after he assumed office, referring to the contracts inherited by Gov. Terry McAuliffe’s administration. Since then, new legislation in the General Assembly, new approaches in the secretary of transportation’s office and media awareness of spectacular failures have brought the situation into the public eye.
Although people of different political backgrounds support market forces and genuine competition for state work, as well as the innovation often found in the private sector, recent toll road controversies have tarnished the image of what might otherwise seem a good idea. In Australia, for example, two state governments have fallen after the public became aware of details of such partnerships. In Texas, the winning gubernatorial candidate promised to stop privatizing the state’s highways. In Indiana, the poster child for privatizing transportation infrastructure, the $3.8 billion Indiana Toll Road went belly-up — another in a lengthening line of American toll road failures.
In Virginia, after taxpayers threw almost $300 million down the 460 rat hole, the governor called Norfolk’s Elizabeth River Crossings “the worst contract ever” and felt compelled to spend another $78 million to bail out drivers.
“The 1995 PPT Act in Virginia was never meant to be a default procurement,” Layne said more recently. “A P3 is a financing and procurement alternative. We should have fiduciary responsibility, and I think that line got crossed with ideological things [in the previous administration].”
Layne, a businessman himself, has always understood the importance of proper financial management, but was still surprised by the actual state of the partnerships when he took office.
Most Virginians have now heard the U.S. 460 story and the McAuliffe administration’s attempts to recover the lost cash. When they work correctly, partnerships actually should be transparent, and possibly even save taxpayers money. The Federal Highway Administration says it this way: “Early involvement of the private sector can bring creativity, efficiency and capital to address complex transportation problems facing state and local governments.”
Some look at U.S. Route 460 and see a wasted chance to increase port traffic through Virginia — although the new highway could never be built because of wetland mitigation issues. Others see millions of dollars that never will be recovered. Some look at Norfolk’s new Elizabeth River Crossings tunnel and see congestion relief, while others are worried about lining the pockets of financiers and a relatively new construction technique. Some look at the Capital Beltway Express and see new lanes for overwhelming traffic. Others see toll revenues at a fifth of what taxpayers and bond buyers were promised.
Layne continues to believe in private-public partnerships. “I’m for level playing fields — not giveaways,” he says. “It’s about transparency and competition. It’s about risk assessment. Risk is not Democratic or Republican.”
I’m not sure what to believe about such partnerships. After criticizing them for several years, I’m glad we now have a secretary of transportation who I believe genuinely cares about fiduciary responsibility, and is holding the contracting process accountable on behalf of Virginia taxpayers, whether projects use such financing or more traditional bidding formats. He wants competition and market forces to work for Virginians.
Before this administration, the partnerships were clearly not working for Virginians. But this makes me wonder if they were really the problem. Proprietary contract terms and risk assignment were in fact problems, bad decision-making was a huge problem and misguided ideology was the biggest problem of all. And those factors, I acknowledge, have less to do with the partnerships and more to do with leadership and responsibility.
Although I remain skeptical of the projects based on their history of fiscal failure, the real issue a few years ago was failed leadership. Those currently in power are trying to seal leaks and conduct damage control. And it’s a good thing they are. Virginia taxpayers already have lost hundreds of millions of dollars — and who knows how far it might have gone.
Just think if the current administration’s leaders hadn’t taken the course that they did, one that I applaud them for. Now that’s a really scary thought. … S
Jack Trammell works at Randolph-Macon College, and was one of the two professors running to fill Eric Cantor’s seat in Congress. He can be reached at firstname.lastname@example.org.
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