Senator wants privatisations to reimburse federal investments

Illinois Democrat Dick Durbin has proposed a bill that would require more disclosure around lease or sales of public assets and mandate that federal investments be repaid when a transportation project is privatised.

US Senator Dick Durbin, an Illinois Democrat, has introduced a bill that would prevent leases of large-scale transportation projects unless the federal government receives a reimbursement for its investments in the privatised project.

The bill, called the “Protecting Taxpayers in Transportation Asset Transfers Act”, would establish a federal lien on all projects that have received more than $25 million in federal funding or that are valued at over $500 million, so that a privatisation could only occur if the federal government were reimbursed for whatever funds it had invested in the project. The US Department of Transportation would be responsible for generating a formula to value the depreciation of the federal investment.

In a statement, Durbin cited Chicago’s Midway Airport as an example. Under the proposed legislation, any deal to privatise Midway would have to include a reimbursement to the federal government for the depreciated value of about $375 million that the federal government had invested in the airport.

Durbin said the federal government provides billions of dollars to state and local governments to build transportation projects, and that “any deal to sell or lease these assets should be closely examined and include a return on federal taxpayer investment”.

The legislation, if passed, would also require more public disclosure of the details of transportation privatisations, and would require that state or local governments undertake assessments to prove that the asset would be worth more in private hands than under public control. It would also require that any funds repaid to the federal government be used for future infrastructure development.

Durbin argued that “the federal taxpayer is often left holding the bag” when private operators take over long-term leases of transportation assets. He said the bill aimed to prevent state or local governments from making “rash, short-term decisions that lease transportation infrastructure for generations just to solve temporary shortfalls”.

The bill, which currently has no co-sponsors, is one of several transportation-related bills proposed by US Congressmen in recent weeks. Illinois Republican Senator Mark Kirk has proposed legislation that would remove federal restrictions on public-private partnerships, while Florida Republican John Mica, who chairs the House Transportation and Infrastructure Committee has proposed legislation  that would allow private operators to bid on services currently run by state-owned passenger rail carrier Amtrak.