Durbin Introduces Legislation to Protect Taxpayer Investment

[CHICAGO, IL] – U.S. Senator Dick Durbin (D-IL) introduced legislation on Thursday that would protect taxpayer investment in major infrastructure projects when local and state governments privatize roads, airports and other transportation facilities. The Protecting Taxpayers in Transportation Asset Transfers Act would also require increased transparency and public involvement before major transportation projects can be leased or sold.


“The federal government provides states and local governments billions of dollars to build, maintain and improve transportation projects around the country,” said Durbin. “The last transportation bill alone provided states with an average of $48 billion per year for upgrades to roads, bridges and mass transit systems. Any deal to sell or lease these assets should be closely examined and include a return on the federal taxpayer investment.”


Midway Airport currently holds the only slot available for a large hub airport to participate in the Federal Aviation Administration’s Pilot Privatization Program. Midway’s participation has been extended five times and will expire on July 31, 2011. If Durbin’s bill becomes law before a privatization deal is submitted, the city would be required to repay the depreciated value of the roughly $375 million that the federal government has invested in Midway Airport. The city would also be required to publicly disclose the details of the agreement and solicit public input.


The Protecting Taxpayers in Transportation Asset Transfers Act would attach a federal lien on all transportation projects that have received federal funding in excess of $25 million or federal funding and have a value over $500 million. This lien will not be released until federal funds are repaid and the parties agree to take action to increase transparency and public input in the privatization transaction.


“The private sector can play an important role in helping Illinois and our country finance the critical infrastructure we need to compete in the global economy,” said Durbin. “But as the private financiers take control of an airport, road or other transportation asset for decades – sometimes as long as 99 years – the federal taxpayer is often left holding the bag. My bill will ensure that the interests of the federal taxpayer are protected when a private company seeks to operate a public asset for a profit.”


Durbin’s bill would require local and state governments to repay federal funds used to build and maintain major transportation assets before selling or leasing them to a private entity. The Department of Transportation (DOT) would be required to establish a formula to ensure the repayment is in line with the reasonable depreciation of the asset. Repaid federal funds would be returned to the Department of Transportation and must be used to help make investments in other transportation projects.


The bill would also increase transparency and encourage public involvement before privatization deals are completed by requiring local sponsors and private operators to agree to several disclosures and transparency measures. For example, local governments will be required to conduct an assessment that demonstrates that private operation/ownership of the asset will provide at least the same public and financial benefit than if the public entity were to remain under government control. Private operators will be required to disclose anticipated changes in workforce, wages and benefits over the life of the lease and estimate an amount of savings these changes represent relative to current operations. Private operators will also be required to keep any privatized transportation asset in a state of good repair.


“All levels of government are facing serious budget shortfalls,” said Durbin. “The federal government shouldn’t incentivize local and state governments to make rash, short-term decisions that lease transportation infrastructure for generations just to solve temporary budget shortfalls. Instead, we should carefully consider any privatization deal to ensure the public understands all aspects of a transaction and that the taxpayers’ investment is protected.”