A joint report released by the Hobby School of Public Affairs at the University of Houston and the LBJ School of Public Affairs at the University of Texas highlights opportunities to spur growth and reinvigorate the economy. The report — “A Playbook for Resiliency: Creating Opportunity for All Texans” — included a specific recommendation to “[a]llow for more private capital to be utilized to build infrastructure through comprehensive development agreements (or CDAs).” [A CDA is a type of public-private partnership used to support highway construction].
This is a view shared by the most prominent conservative organizations in the policy arena. In testimony to the Texas House Transportation Committee, the American Legislative Exchange Council Action (ALEC-Action) wrote: “P3s improve operational efficiency and environmental performance; promote public safety; attract private investment; minimize governmental liabilities; and allow necessary funding for other critical projects to be completed on time.”
Texas had traditionally been a leader in this area — at least in transportation — and should assume that mantle again. One of the primary reasons to widely adopt the P3 model is that the approach puts private capital to work on infrastructure that benefits the general public. This is evidenced across vital industries such as telecommunications and pipelines.
West Texas could realize these benefits if the state of Texas utilized public-private partnerships (P3s) for priority projects identified by TxDOT in major metropolitan areas of the state. Private infrastructure investment in our metro areas would free up public funds for the Ports-to-Plains Trade Corridor, a sentiment shared and expressed by Rep. Four Price.
When finally brought to fruition, the Ports-to-Plains Trade Corridor will connect Texas' key economic areas: trade, energy, and agriculture. Given the growth of South and West Texas, the corridor will also support these vital communities as an international, national, and state transportation corridor.
According to a feasibility study required by the 86th Texas Legislature and conducted by the Texas Transportation Commission (TxDOT), "upgrading the entire Ports-to-Plains Corridor to an interstate will result in significant economic benefits and stimulate the economic prosperity of the region, the state of Texas and the nation."
Many major road projects are funded by companies that realize returns through optional tolling and managed lanes. Private capital has also been used to fund small water treatment plants and massive flood infrastructure, such as dams and levees. Private investment in infrastructure isn’t new, and when projects run into problems there is ample state oversight to protect residents and taxpayers from financial risks. Even more fundamental is that infusing private capital to develop infrastructure places a permanent asset on the ground that, with sufficient protections, could revert to government control if necessary.
Importantly, P3s alleviate pressure on the tax base. For example, the massive amounts of money shifted from general revenue to the State Highway Fund (SHF) still cannot keep pace with our transportation infrastructure needs. P3s could help maintain our current roadways and build the new capacity needed to support Texas’ booming population growth, and inject new vitality in our area of Texas. State government must identify and leverage reliable funding sources — such as P3s — for current and future needs in our major cities.
The role of government includes creating an environment to support a thriving and growing economy of which infrastructure is a critical component. We must maximize private capital to build and maintain that critical infrastructure while lowering the risk to taxpayers. It’s time to complete the Ports-to-Plains Corridor and strategically placed P3s are our path forward.
Ron Simmons is a businessman and former member of the Texas House of Representatives. He serves as Chairman of Advisory Board of the Invest Texas Council.