POLITICS
06/17/2011 01:00 pm ET Updated Aug 17, 2011

Durbin Introduces Bill To Slow Road, Airport Privatization

WASHINGTON -- Sen. Dick Durbin (D-Ill.) announced the introduction of a bill that could make it considerably more difficult for cash-strapped states and cities to lease their transportation assets to private investors.

The bill would require states and cities to repay any federal funds they used to build or maintain the assets, such as toll roads or airports, as a condition of leasing them, likely thwarting many deals before they happen. It would also call for more transparency in the negotiation of such deals.

In recent years some local governments, such as the City of Chicago and the State of Indiana, have traded their right to collect money on toll roads to foreign investors in exchange for billion-dollar up-front payments. Critics say such deals are short-sighted budget gimmicks that could end up burdening generations down the road. Chicago's Midway Airport, where spoke today, was nearly leased for $2.5 billion two years ago, but the deal fell apart.

"I'm really trying to stake some ground here on a principle and position that we ought to reflect on," Durbin told HuffPost. "The federal government is in debt. We are borrowing money to sustain our operations, and we're sending some of that money to states and localities for investment in infrastructure. We're making quite a sacrifice. If a decision is made by a local unit of government to privatize that public infrastructure, federal taxpayers should have a seat at the table."

As states and cities across the country face grim budgets, more and more are looking to stem their shortfalls by leasing existing assets, such as roads, lotteries or government buildings. The City of Harrisburg, Pa., may soon lease its parking meters to a private investors, as Chicago has already done for a 75-year period starting in 2008. Durbin remarked that he's already watched the cost of parking soar in Chicago since that city's deal was inked.

"It's a caution to all of us," Durbin said. "When we look at privatization, we have to look at the long-term."

In recent months Ohio Gov. John Kasich (R) has voiced his support for leasing the Ohio Turnpike to investors, and his transportation director recently went on a tour to discuss the prospect with Ohio leaders.

Durbin's bill would pertain only to transportation assets, and it would attach a federal lien on any transportation project that has received more than $25 million in federal money or is valued at more than $500 million.

If passed, the law would likely bring to an end the proposed privatization of Amtrak. This week House Transportation Committee Chairman John Mica (R-Fla.) rolled out a plan to privatize the rail service in the Northeast, claiming trains would run smoother between Washington and Boston if they were in the hands of private entities. Rep. Mica's office could not immediately provide comment.

Many Democrats, including Durbin, strongly oppose Mica's plan.

"I hope they understand they're privatizing a federal investment," Durbin said.

The senator can expect considerable pushback not only from privatization boosters on the Republican side but the banks that finance such deals. Durbin said he expects little love from Wall Street on the bill. "They hate it," he said.

Phineas Baxandall, an expert on infrastructure privatization at U.S. PIRG, a federation of public-interest groups, says the bill would help slow a dangerous trend in which states and cities leverage their existing assets in short-sighted deals.

“This bill would finally bring some sanity to the Wild West of infrastructure sell-offs going on right now," Baxandall said. "In addition to making taxpayers whole for the investments they’ve already made, the bill will provide transparency and ensure that deals must make financial [sense] for the long term. This is protecting the taxpayers, pure and simple.”