Private Sector Included In Plan To Finance Infrastructure Repairs

Transcript

STEVE INSKEEP, HOST:

In a year-ending talk on this program, President Obama said he wanted to avoid spending too much money overseas. Rather than spend another trillion dollars in Iraq, he said he wanted to tend to the sources of American strength, like education and infrastructure. His State of the Union speech tomorrow is expected to highlight a plan to fix roads, bridges and water systems. That plan relies in part on public-private partnerships. NPR's David Schaper reports this specific plan avoids increasing taxes, but eventually, the public will pay.

DAVID SCHAPER, BYLINE: Every one of us could probably point to something on our morning commute that needs to be fixed, whether it's a road full of potholes or an old bridge that is too narrow. And it's not just the nation's highways and transit systems that are in great need, but ports, water and sewer systems, even rural broadband all could use billions of dollars in upgrades. The problem?

JOHN SCHMIDT: We don't have enough money, to put it bluntly.

SCHAPER: John Schmidt is a partner with the law firm Mayer Brown in Chicago, and he works on putting together private financing packages for public infrastructure projects. Public-private partnerships are nothing new. They're used to build and operate toll roads, tunnels and bridges. Schmidt says the president is proposing to expand that kind of financing to build or repair airports, shipping ports, mass transit systems and other vital pieces of infrastructure.

SCHMIDT: It's a technical change, but would significantly enable public entities, states, cities, counties, whoever to involve private parties in helping to finance and then build and operate big infrastructure.

SCHAPER: At a time when the Highway Trust Fund is drying up and increasing the federal gas tax is a long-shot, Schmidt says creating more public-private partnerships is critical.

SCHMIDT: There's no question this is the wave of the future. The rest of the world has, in this area, been ahead of us.

SCHAPER: But Joseph Schofer, transportation professor at Northwestern University, says it's important to note that a public-private partnership is not new money. It's just a different way of borrowing from private investors who are looking for profit.

JOSEPH SCHOFER: They are expecting to get the money back.

SCHAPER: And Schofer says that will mean either higher taxes on something like gasoline, or more tolls or some other kinds of user fees because there's no such thing as a free ride. David Schaper, NPR News, Chicago. Transcript provided by NPR, Copyright NPR.