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A new Office of Public Benefit proposed by a congressional rewrite of highway and transit policy could severely limit states' use of much-needed private-sector funding, several key governors warned at a Feb. 21 session of the National Governors Association.  A draft surface transportation reauthorization championed by House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) would create the office to oversee the financial agreements between states and private companies.

Such public-private partnerships take many forms but often involve an up-front cash payment to the state in exchange for the company's authority to toll an existing road.  Indiana Gov. Mitch Daniels (R), who pioneered a 75-year lease of a portion of the state's Interstate highway that brought the state $3.8 billion, said the office would essentially “strangle” any private-sector funding. 

“It would pretty much disincentivize private investment forever,” Pennsylvania Gov. Edward Rendell (D) told the crowd, which included a handful of governors and Transportation Secretary Ray LaHood. Rendell, a co-chairman of the Building America's Future coalition that lobbies for increased infrastructure spending, said that giving the office “veto power” over proposed deals could spell “the end of private sector investment.” Noting the dire financial situation most states find themselves in, Rendell said, “private funding has to be a part of the puzzle.”

The Office of Public Benefit, as proposed in Oberstar's bill, would have to give approval before any public-private agreements can be entered into. The legislation also would set standards for such agreements, require public input before any toll plan takes effect, and gives the office authority over toll rates and other issues once agreements are reached.  But the fate of Oberstar's bill has not yet been decided.

It was approved by a House Transportation subcommittee last summer, but the bill remains stalled amid congressional and administration reluctance to take up the politically thorny issue of how to pay for the massive $500 billion measure.  Current highway and transit policy is set to expire Feb. 28, but Congress is expected to grant yet another extension this week.

Oberstar and other House leaders continue to press for action this year on his bill, but the Senate so far has been less ambitious about when such a bill could come up.