July 1, 2008

Could California use private money for public works?

California has immense needs for investment in highways, flood control projects and other public works that cannot be met from public funds alone, and could benefit from an infusion of private capital through "public-private partnerships" or "P3s," according to a white paper published by the American Council of Engineering Companies of California, an engineering and construction trade group.

"It's clear to us that California's economic future relies on our state's ability to create a climate favorable to investment in new infrastructure and the upkeep of existing infrastructure," said ACEC California President Bill Green. "If the state fails to do this, it can potentially jeopardize the safety of the California's citizens and almost certainly have a negative impact on the state's economy.

"For example, the new white paper revealed that Australia has already estimated it is experiencing $6 billion a year in lost production as a result of a lack of public spending on infrastructure over the last 60 years. Given California's gross domestic product is roughly three times that of Australia, and given the similar shortfall in spending here in the last few decades, it wouldn't surprise us if California is losing $15 billion or more a year in production as a direct result of its clearly inadequate infrastructure."

The ACEC publication is the latest salvo in a years-long political war over how much of the state's infrastructure business - especially design work - should be shifted from civil service workers to private contractors. Professional Engineers in California Government and other public worker unions have stoutly, and largely successfully, thwarted privatization although the concept has enjoyed support from Republican Gov. Arnold Schwarzenegger.

The white paper, entitled "Public-Private Partnerships: Creating Tomorrow's Infrastructure," surveys what's happening on the P3 front elsewhere in the United States and in other countries to make its case for the approach in California. It's available here.

Posted by Dan Walters on July 1, 2008 10:10 AM