[mikelizard860]

Originally Posted by JayCT

Looks like Governor Malloy's transportation funding panel is looking at all ways to make the improvements needed. Interesting, what do you all think? Should we turn some of our roads over to private companies to rebuild and run? Jay

State mulls using private companies to fix roads, rail and bridges - Connecticut Post

It generally costs more when you privatize. Think of it this way. Let's say you have a fleet of 100 vehicles. What's cheaper, having your own employee mechanic or contracting out(ie sending the vehicles to the dealer) every time they need service?

[JayCT]

Originally Posted by mikelizard860

It generally costs more when you privatize. Think of it this way. Let's say you have a fleet of 100 vehicles. What's cheaper, having your own employee mechanic or contracting out(ie sending the vehicles to the dealer) every time they need service?

Unfortunately this is not true. Studies have shown private companies can save money by doing things more efficiently than the government time and time again. Still that does not mean I want to privatize government activities. Jay

[BPt111]

after 12 AM FFC traffic

[mikelizard860]

Originally Posted by JayCT

Unfortunately this is not true. Studies have shown private companies can save money by doing things more efficiently than the government time and time again. Still that does not mean I want to privatize government activities. Jay

Why not try to make government more efficient and fix the actual problem then simply privatizing which costs more? It's like having a bad mechanic employee in the example I used above. You don't simply scrap the entire thing and send all your buses to a dealer. That would cost a fortune compared to the cost saving of using your own mechanic. The best fix is to streamline the government. Even private companies can be totally inefficient.

[Mr_250]

Originally Posted by mikelizard860

Why not try to make government more efficient and fix the actual problem then simply privatizing which costs more? It's like having a bad mechanic employee in the example I used above. You don't simply scrap the entire thing and send all your buses to a dealer. That would cost a fortune compared to the cost saving of using your own mechanic. The best fix is to streamline the government. Even private companies can be totally inefficient.

I understand your logic and the overall idea is solid.

The difference between an inefficient company and an inefficient government is that the ineffecient company goes out of business while the inefficient government raises taxes.

There are a couple projects in Florida doing the P3 (Private-Public Partnership) concept. They are large projects overall cost is $3Billion. The idea is that that is a lot of money to front by the government. So in order to reduce the risk on the government put more risk on the contract team.

Not to be political, but if Malloy is saying he has this large transportation plan yet he is only contributing $32m more than last year going forward seems like he has champagne taste on a beer budget. If he wants to get serious about this, add tolls. It's the only way to gain more revenue.

The more I think about it the more I don't think P3 will work in Connecticut. Before we start making deals with private industries we should try and repair what we have, get that engine running and if we still need some fine tuning try that route. (road puns )

[MrGompers]

Selling Govt assets is always a bad idea IMO.

For the moment lets assume CT does sell the "toll rights/road" like other states have. If Ct received $500 million how fast do you think CT will spend that money ? Much better to have a revenue stream year after year instead. That's much easier to budget.

What I find funny is politicians who say Govt should be run as a business, but selling your biggest assets isn't something a business would do. You need to have a revenue stream to stay in business year after year. Govt's also are not looking to turn a profit vs private industry. There will be strong incentives to cut corners in order to make those profits in private industry.

Road projects that include tolls can be financed with revenue bonds which are basically gold in the bond market. Since Govt has the power to raise taxes/fees/tolls/etc in order to make the interest payments on those bonds. Private industry doesn't have that power.

Now if we are talking about road projects WITHOUT tolls we may have to consider some private partnerships. I would be very against any type of partnerships or business contracts that involves wall st investment firms though. They have done enough damage already and any contract they come up with will always benefit themselves first.

[JayCT]

I do not know that the idea is to sell an asset. I believe they are talking about turning over the highway to a private company that agrees to reconstruct and operate it for a set number of years. The company accepts all financial risks for project so the state does not have to bond a multi-billion project which could affect their credit rating. Jay

[MrGompers]

Originally Posted by JayCT

I do not know that the idea is to sell an asset. I believe they are talking about turning over the highway to a private company that agrees to reconstruct and operate it for a set number of years. The company accepts all financial risks for project so the state does not have to bond a multi-billion project which could affect their credit rating. Jay

This would essentially be a very fancy lease. As I previously said, a private company will also have very strong incentives to cut corners to save money and show a profit. Even more so if that company is listed on the stock exchange and they need to make their "quarterly numbers." I wouldn't trust wall st with projects like this.

I won't bore you with details about revenue bonds, but I can tell you that revenue bonds are perfect for projects that involve tolls. Considering the potential cost of rebuilding i-84 thru Hartford, I don't see how CT can do it without tolls. Even with the Fed Govt kicking in some cash too, I don't see how CT can afford to issue 1+billion dollars worth of bonds.

I'm not a fan of tolls, but as of right now I don't see an alternative. Perhaps someone can convince me otherwise. One bright spot is we have the lowest interest rates in history right now, so maybe we can use that to our advantage.

[GIANT_ENEMY_CRAB]

Originally Posted by mikelizard860

Why not try to make government more efficient and fix the actual problem then simply privatizing which costs more? It's like having a bad mechanic employee in the example I used above. You don't simply scrap the entire thing and send all your buses to a dealer. That would cost a fortune compared to the cost saving of using your own mechanic. The best fix is to streamline the government. Even private companies can be totally inefficient.

No such thing as an efficient government. There's no incentive for the government to improve it's ways, it just has to meet the job requirements. Private contractors though have incentive to improve and evolve cause there's competition

[JGBigGreen]

Sounds good in theory but you can be sure the private company is not going to accept any real risk. Any contract is going to be full of adverse-action clauses that will ensure the investors have little true risk. If people don't like the idea of tolls, they definitely won't like tolls on a private highway. Further, any deal like this locks the asset up for 75-100 years generally and IMO provides little incentive for efficiency because of this. Further, it can potentially hamper infrastructure development close to the highway.

IMO, there are just some functions that should be performed by the government.

Originally Posted by JayCT

I do not know that the idea is to sell an asset. I believe they are talking about turning over the highway to a private company that agrees to reconstruct and operate it for a set number of years. The company accepts all financial risks for project so the state does not have to bond a multi-billion project which could affect their credit rating. Jay