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December 2013 Policy Study, Number 13-10


Fuel Tax:  What Is a Fair System for Iowa?


Public Private Partnerships (PPPs)



Many states have taken the approach of building and maintaining their roadway with only public-sector resources. State and local governments need to embrace the greater use of the private sector concerning the delivery of transportation projects.[39] “The primary benefits of PPPs for states or other public sector entities include access to significant private capital, the potential for reduced costs and accelerated project delivery, sharing or shifting project risk, and the opportunity for more efficient management.”[40] For example, consider this:


Pennsylvania Turnpike Lease Proposal:
Pennsylvania is considering leasing the 550-mile Pennsylvania Turnpike. The state received a bid by a private consortium to lease the turnpike for 75 years for a total of $12.8 billion, including $2.3 billion for payoff of existing turnpike debt. In return, the consortium would be allowed to increase tolls by 25 percent in the first year and 2.5 percent or the rate of inflation thereafter. The revenues, net of debt retirement, would be placed in the Pennsylvania State Employees Retirement System and would yield an estimated $1.1 billion annually for expenditure on transit road and bridge projects throughout the state. The private consortium’s bid recently expired after the Pennsylvania legislature did not authorize the lease during the last legislative session, and Governor Edward Rendell has indicated the state will continue to pursue the turnpike lease next year. An alternative proposal to lease I-80 to the Pennsylvania Turnpike Commission in order to toll it was not approved by the federal government.[41]


States need to make better use of the resources that they have available and realize that the private sector is able to deliver the same product such as the management of a roadway more efficiently than the public sector can. The main issue is the need of states to make better use of all the resources they have at their disposal versus relying on a tax that just isn’t working.




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