Word: sectoral
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...tolls. Today Pennsylvania finds itself in a similar bind, with the money it needs for roads and bridges far outstripping the money it gets from the gas tax and other revenue streams. So Governor Ed Rendell is turning back the clock, proposing a slew of deals with the private sector, starting with a long-term lease of the 359-mile (578 km) Pennsylvania Turnpike, which could bring the state an estimated $12 billion to $18 billion up front. "We have to be as creative as heck to get out there and fund our infrastructure needs," says Rendell...
Money from the private sector could help fill that gap, but there is more than one way to get it. Deals like the Chicago Skyway and Indiana Toll Road, which lease existing assets, may tap the private sector's operating prowess and political immunity in raising tolls, but critics see them as long-term mortgages to solve short-term fiscal problems. "People are giving public-private partnership a bad name by running around the countryside trying to entice cash-strapped states and municipalities to participate in these monetizations," says Tim Carson, vice chairman of the Pennsylvania Turnpike commission...
Carson argues that the public sector can wring plenty of cash out of toll roads by essentially behaving like the private sector and charging market rates for usage. The express lanes of State Road 91 in Southern California, for example, carry some of the highest tolls in the nation--at peak hours, nearly a dollar a mile--which may annoy drivers but help pay for the state's transportation needs. The Pennsylvania Turnpike commission has produced a plan to raise turnpike tolls and attach tolls to other roads in the state...
Deals in which the private sector actually builds new infrastructure are usually a better bargain for the public. The state or city gets a new stretch of highway or a bridge or a tunnel, and it shifts risk to its private partner--a genuine benefit. If construction costs spike or expected traffic doesn't materialize, that's the company's problem. "We've had some governments say to us, 'I don't really need to be in that business,'" says Mark Florian, who oversees infrastructure deals for Goldman Sachs. These so-called greenfield projects are starting to catch...
...same sympathetic mood. "As usual, the ordinary worker being taken hostage by a minority of people who've decided they come first," complains an accountant who would only give her first name, Chantal. "I didn't strike when they reformed my pension plan," she said, referring to private sector pension schemes was passed...