Connecticut infrastructure solutions require private sector help
Like many states, Connecticut faces numerous infrastructure problems, largely resulting from a lack of long-term provision for repair and maintenance costs. Much of the country’s infrastructure was built with design-bid-build contracts focused on the cheapest way to build projects, making long-term management more difficult and costly, leading to the “crumbling” conditions seen throughout the country.
While hindsight makes seeing the causes of America’s infrastructure problems easier, Connecticut does not need to find itself in a similar situation decades from now.
Government agencies already stretched thin before the COVID-19 crisis need not bear the full cost and responsibility of replacing and repairing these crumbling assets. Recognizing the need for dedicated resources to effectively manage infrastructure over time, states and municipalities often find success by allowing the private sector to pick up the slack.
State agencies rarely have the capacity, resources, and knowledge to successfully maintain all the infrastructure they manage, whether highways, sewer lines, schools, or bridges. Without consistently dedicating sufficient resources to each infrastructure need, maintenance of these systems falls by the wayside.
Besides being a powerful means of up-front financing for the construction of major projects, public- private partnerships (P3s) are a risk management tool being used worldwide to effectively maintain infrastructure over decades. Since the same party will be building and maintaining the infrastructure, it needs to consider not just construction costs, but the maintenance costs over time. In addition, the private party is usually responsible for ensuring the infrastructure’s condition at the end of the P3’s term is at least as good at the beginning, making “cutting corners” self-defeating.
Without the ability to contract out for major projects, agencies are left holding all the risks associated with these projects themselves, meaning fewer undertakings, and eventually, backlogs of projects. When those project “to do” lists grow, their problems only get worse, and more costly. Ultimately, taxpayers are on the hook for these added costs.
Letting the private sector pick up some of the slack while minimizing future deferred maintenance problems need not be worrisome. When a private party is on the hook, the taxpayer gets spared, even in the event of bankruptcy. The State Road 130 P3 project in Texas, despite going bankrupt, contained no taxpayer funding, and resulted in no bailout.
With public-private partnerships Connecticut could better have timely-delivered and well-maintained infrastructure through competition and contracting. Not only does a competitive bidding process for P3s yield partners capable of best meeting the state’s infrastructure goals, but P3 project agreements establish numerous performance guidelines and standards that hold contractors accountable to the agreement they entered.
Connecticut has the opportunity to further tap into the usefulness of P3s. Senate bill 920, would allow greater numbers of agencies to participate in public-private partnerships, without separate legislative approval.
Unfortunately, not everyone sees why P3s have such promise in Connecticut. In his March viewpoint piece, “Connecticut should continue protecting itself from bad infrastructure deals,” Jeremy Mohler argues that no good can come from P3s, and states should never pursue them, despite tens of billions of dollars of P3 projects already completed or under construction, in the U.S. and countries all over the world.
If there were no value in pursuing such projects, governments would not enter them. Instead of coming to grips with the fact that many P3s end up successful —over $200 billion in major infrastructure projects last year alone worldwide according to finance publication Inspiratia— Mohler and In the Public Interest are content to point to a few cherry-picked projects that had problems, without even trying to examine why those problems happened, much less learn from them.
Mohler calls for “levelheaded solutions” to Connecticut’s infrastructure problems. But the state government is often ill-equipped to do everything taxpayers demand of them. The state’s poor pavement quality is just one highly visible example of this.
P3s and contracting would help the state build new infrastructure as well as ensure infrastructure assets stay in good condition.
Denying these opportunities assumes the government is always up to the task of handling all risks that come with managing infrastructure assets itself, a mentality, while still repeated ad nauseum by In the Public Interest, continues to be proven wrong by reality.
Austill Stuart is the Director of Government Reform at the Reason Foundation.
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