Why is America falling behind in global competitiveness? This simple infrastructure spending chart shows why

March 12, 2013 at 4:52 pm

(via Wall Street Journal)

Bridging the investment gap

The U.S. spending on transportation (and infrastructure in general) has flatlined (or some argue that it has declined considerably) over the decades while other countries around the globe, especially in Asia, have ramped up their investment in large-scale infrastructure projects such as building highways and railroads.  So, how does it look when we match our spending versus the other nations.  This chart from Wall Street Journal shows show you how badly we are behind in this race to stay competitive. Recommend reading the related article on WSJ that shows how funding for infrastructure projects may be coming from new sources as ‘wealth advisers are steering clients into infrastructure deals. Let’s not forget that we have already a crazy amount of things to fix and on top of that we have to spend on projects that can cater to the growing need for transportation as the population explodes.  But do we really have the money to fix the broke and embark on starting new projects? With a dwindling highway trust fund account and a political gridlock in Washington, even the basic of needs for keeping the country economically superior seems to be a bigger challenge than ever.

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Tallying the toll of transportation privatization

May 6, 2009 at 6:37 pm

(Source: MSNBC)

Image: Indiana Toll Road

Photo: Joe Raymond / AP file. In 2006, the 157-mile-long Indiana Toll Road was leased to a private operator for 75 years for $3.8 billion. Novel approaches to funding offer insights on how the U.S. will fund, build and manage its transportation infrastructure for years to come.

Call it a tale of two airports.

In Missouri, a plan to open the nation’s first privately developed and operated commercial airport will come to fruition when the built-from-scratch Branson Airport opens on May 11.

In Illinois, a plan to lease Chicago’s Midway Airport that was seen as a model for privatization has collapsed in the face of the global credit crunch.

Two airports, two unique approaches and two completely different outcomes. Yet each in its own way may offer insights on how the U.S. funds, builds and manage its transportation infrastructure for years to come.

Crumbling infrastructure, creative financing
According to the American Society of Civil Engineers, the nation’s infrastructure is in such dire shape that it would take $2.2 trillion over the next five years to reverse decades of underfunding and neglect. The shortfall for transportation infrastructure alone is pegged at more than $800 billion.

State and local governments are simply unable (or unwilling) to fill the gap. The proposed solution: sell or lease public assets to private companies that would provide money upfront in return for the right to run the operation and keep most of the revenue.

In aviation, the Midway proposal — a 99-year lease in exchange for an upfront payment of $2.5 billion — would have constituted the first privatization of a public airport in the U.S. under an FAA pilot program announced in 1996. “It was going to be the grand demonstration of the viability of privatization,” says Joseph Schwieterman, a professor at DePaul University and proponent of public-private partnerships (P3). “But the consortium overbid, got cold feet and the thing unraveled.”

Which is not to suggest that airport privatization is dead (although there are currently no active projects in the FAA program). Instead, say proponents, future deals will likely revolve around smaller, lower-profile projects that are structured to ensure that public assets aren’t being sold off for one-time cash payments. “You have to give the public some value for their dollars,” says Steve Steckler, chairman of Infrastructure Management Group, a P3 advisory firm, “and not just take it from future users.”

Meanwhile, Branson Airport is getting ready to receive its first commercial flights next week. As a brand-new project built without government funding, it presents a completely different proposition, yet it also presents an intriguing option as the nation confronts its transportation needs. “Branson is unique,” says Schwieterman, “but the model is one that will surely be tried in other places.”

Turnpikes, tollways and the road ahead

In the interim, most travelers’ experience with privatized transportation systems will continue to come via the tolls charged on various highways and turnpikes. According to a recent report by the U.S. Public Interest Research Group (U.S. PIRG), 15 roads in the U.S. had undergone some form of privatization by the end of 2008, with another 79 projects currently under consideration.

Four years ago, Chicago once again proved to be a leader in the field when it leased the eight-mile Chicago Skyway to a private operator for 99 years in exchange for $1.8 billion. A year later, the 157-mile-long Indiana Toll Road was leased to the same group for 75 years for $3.8 billion. (Conversely, a proposal to lease the Pennsylvania Turnpike for 75 years for $12.8 billion fell apart last fall.)

Whether such deals are good for consumers remains controversial. According to proponents, privatization leads to more efficient operations and better maintenance. It also “provides cover” for local governments unwilling or unable to raise tolls on their own. (Historically, toll increases have lagged the cost of living, one reason most tollway deals allow operators to raise fees in step with inflation or GDP.)

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