Going it alone in the Sunflower State

Kansas is Midwestern through-and-through. Just not in regard to the infrastructure asset class.

Unlike pioneering Chicago, with its Chicago Skyway toll road concession or present-day Chicago infrastructure Trust,  Indiana or Ohio – all of which have helped to solidify the region as a US market leader in embracing privatisation – Kansas has so far been a non-starter in regard to transportation-related public-private partnerships (PPPs).

If that seems perplexing, it needs to be understood that Kansas’s lateness to the privatisation game doesn’t stem from some stodgy lack of industry awareness. It’s just old-fashioned political will. And in this case, Kansas will argue, it’s justifiable. 

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“There’s no aversion [in Kansas] to PPPs,” stresses Jerry Younger, deputy secretary for the Kansas Department of Transportation (KDOT). “Yes, it’s certainly on our radar screen. From our point of view, we always felt like they [PPPs] were another tool in the toolbox. Whether it’s a tool in the top tray or not, or whether we have a location or a project that’s a candidate, well, we’re not quite there yet”.

Younger’s a veteran engineer who began working for KDOT in 1986. His Topeka, Kansas-headquartered department appointed a new secretary, Mike King, in March when he replaced Deb Miller. Miller, who became secretary in 2003, was critical of US Department of Transportation (USDOT) federal transportation funding – and Younger himself admits to leeriness regarding a bipartisan Capitol Hill and its impact on financing.

“We’re just as concerned as anybody else is. We need to get to a point where we have a long-term federal funding programme,” he says. “I remain optimistic. I have to believe that ultimately doing what’s right will win out—and it’s been shown that investing in infrastructure will pay off in the long run. The hard part is coming up with a way to support it. The revenue side is what’s controlling it”.

Though clarity on federal funding might remain elusive, Younger credited his state’s legislature with running a tight funding ship on a local level (“a well-funded, robust, transportation programme,” according to Younger). The first significant round of funding, Younger recalls, went into effect in the late 1980s. A second round, a decade-long spell, he points out, began in 2000.

In 2010, KDOT started “T-Works,” a bold $8 billion, 10-year program “focused on preserving what we created,” he says. KDOT, Younger emphasises, is inclined to spend the bulk of its money on “preservation,” with the rest going toward “modernisation”.

“The state in general understood the economic impact and opportunity that can come from a good transportation system…getting commerce from point A to point B,” Younger explains, clarifying that of the roughly $800 million a year T-Works, half is home-grown funding.  Overall spending, Younger says, is “based on the amount of federal aid we receive”.

As a result of having a local government that engaged in the maintenance of the state transportation system, Kansas – unlike Chicago and Indiana, which have actively sought tolling (“we’ve considered it,” Younger insists) as well as metered on-street parking – has avoided PPPs.

“When I look across the country and see PPPs, what it would appear to me is the lack of funding I see in that state, a lack of public funding to do what you need, either for preservation or for capacity,” Younger says. “We’ve had people [in government] who’ve decided that we want to remain a state publicly funding our infrastructure”.

“Political will” is considered a certifiable deal-killer in the infrastructure industry. To Younger, department and state control of its infrastructure in Kansas is wholly viable and, because of that, common sense – for now at least.

“To be quite honest, there hasn’t been a really big appetite for PPPs here, from our legislature…to enter an agreement or lose control or the ability to manage a transportation asset,” he says. “At least, that’s been my perception.”