Growing infrastructure requirements, particularly transportation related projects, far exceed currently available funding resources. Pennsylvania continues to see growth in travel demand that exceeds the rate of providing new transportation facilities, particularly highways. This trend is consistent with what is seen in other states. With a state gasoline tax that ranks fifth highest in the United States, Pennsylvania reflects a strong commitment to state-based transportation funding. This commitment was recently exhibited by an increase in toll rates on the Pennsylvania Turnpike. These financial tools, while substantial, do not fully address the funding level and flexibility needed on a statewide basis.
Public Private Partnerships (PPP) can be defined as an arrangement of roles and relationships in which two or more public and private entities coordinate in a complimentary way to achieve their separate objectives through the joint pursuit of one or more common objectives. With PPPs, the private sector aids government in identifying new private sector financed profit making facilities and seeks out new projects that would otherwise have to wait until government funds become available.
PPPs, with their use of the private sector, include greater efficiency in the use of public resources. PPPs are also means of increasing investment in infrastructure. On large projects, they require a consortium of designers, builders, financiers and other disciplines. PPPs are in use worldwide and provide for greater efficiency and cost savings by bringing private sector discipline to project construction, operation and financing.
PPPs typically involve the use of private capital to design, finance, construct, maintain and operate a project for public use for a specific period of time during which a private consortium collects revenues from the users of the facility. It has been estimated that state and local governments experience 10-40 percent cost savings through the use of PPPs.
The process of addressing transportation needs in today's economic environment relies heavily on the availability of a variety of options. These options can be either limited or supported by legislation and policy at the state level. Changes in policy can drive future financial investments in transportation, provide needed flexibility in implementation and operation and create opportunities for partnerships among all levels of government and between public and private sectors. Recently, the City of Chicago sold the Chicago Skyway to a private consortium for $1.82 billion. The Skyway is a 7.8 facility, and the private consortium will maintain and operate it for 99 years.
Over the last several years, a number of state transportation agencies have established processes for soliciting and accepting proposals for private firms to develop, operate and maintain transportation services and projects. They include:
Other states are in the early stages of such a process.
Additionally, on March 8, 2004, the Pennsylvania House of Representatives approved House Resolution 581 "to examine the quantity and efficiency of its state highway system; and establishing a select committee to consider toll roads." The Resolution states "the select committee at a minimum specifically examine the financing of transportation projects, the savings of public funds, the safety and maintenance features and the economic development opportunities at public/private transportation and private tollway facilities and recommend alternatives to public funding of highway, road and overland transportation facilities including commuter and intercity rail through highway tolls."