FAST LANE TO THE FUTURE: THE PRIVATIZATION ROUTE

Privatization, or public-private partnerships, is becoming increasingly necessary in transportation in the United States. This report begins with a discussion of the primary goal of public-private partnerships - cost savings, the reasons why cost savings are possible, the types of public-private partnerships, and an evaluation of public-private partnerships from the public sector's perspective. A review is then made of the demand for public-private partnerships in transportation. Here it is pointed out that the nation has been suffering from underinvestment in its public infrastructure systems for more than two decades. The evolution of highway financing is traced, and new developments in highway financing are discussed. The changes in the legal and regulatory framework for transportation decision-making, that have created a new framework for transportation planning and finance, are examined, followed by a discussion of the increase in funding flexibility, the innovative management of federal funds, flexible matching funds, leverage tools, and innovative ways to generate income. The next two chapters address, respectively, financial barriers to public-private partnerships and future developments in highway finance. The concluding chapter points out that transportation policies, the Intermodal Surface Transportation Efficiency Act (ISTEA) and its upcoming reauthorization, and the National Highway System Act all provide opportunities for encouraging greater private sector involvement in highway development and operation, while, at the same time, existing financial barriers still discourage private investment in highway facilities. Actions the federal government should take under these circumstances are suggested.