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Wednesday, December 7, 2016

North Carolina voters’ anger about privatized infrastructure projects should serve as a warning to policymakers [feedly]

North Carolina voters' anger about privatized infrastructure projects should serve as a warning to policymakers
// Economic Policy Institute Blog

Donald Trump's preliminary plans for an infrastructure spending bill include a heavy role for private sector financing. We have argued elsewhere that this raises troubling questions. If our arguments have not yet persuaded policymakers on the dangers of wholly outsourcing infrastructure investment to private developers, perhaps they will be convinced by the result of a public-private partnership (P3) in North Carolina—an exercise in privatization that may have helped swing that state's gubernatorial race.

Prior to the election, there was some speculation about whether or not an unpopular public-private partnership (P3) infrastructure deal in Charlotte would affect its outcome. The Charlotte Observer explains why initial indications suggest that this unpopular toll road did indeed likely sink the incumbent Governor McCrory's bid for reelection. The issue is simple: North Carolina voters saw that the P3, which was sold on the basis of having a more innovative and competitive private sector direction, instead just became pure crony capitalism. The company got profits and excessive control in dictating what should be publicly-accountable decisions about public investments. North Carolina residents got tolls and are likely on the hook for taxpayer-funded bailouts. All in all, it is a clear cautionary tale about relinquishing control of infrastructure investments.

The Charlotte P3 financed the building, operating, and maintaining of new tolled express lanes on I-77. With mayors and governors usually hoping that ribbon-cutting on new infrastructure projects will be a boon to their campaigns, it may be surprising that additional lanes to alleviate congestion in a growing region would help sink a campaign. However, as is always the case with P3s, the devil is in the details.

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