TBK Response to Bevin on P3’s

Published on 28 March 2016 by in News

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The governor’s points on his P3 video attempt to alleviate our pain and fear, but instead expose his lack of fundamental understanding of the issues.

1. The Governor defines a P3 as the public sector working in conjunction with private companies to develop certain projects.

This definition is broader than the term really dictates, thus sounding more friendly. We currently maintain tons of contracts that work with private sectors to develop projects.

One of the key differences is shared later in the statement about letting companies “take over responsibilities” of state parks and resorts. Another key difference that was not even so much as mentioned in getting financing through the said private company, and paying them back over a term of future years.

Somehow someone decided to not mention the fact that private financing is more expensive than public financing, so the premium paid for an extra line of credit may be cost-prohibitive.

In sum, all government money is from the people. Any dime spent on any project is taxpayer money, whether it’s funneled through a private company or the local or state government. Who decided that we all of a sudden need more projects when we can’t afford them.

2. The governor next decided to cite the UK dorms as a beacon of success, adding that “it doesn’t come at any cost to taxpayers, and it provides a service that is desired.” UK dorms have a huge cost to taxpayers. Students are required to live in the dorms, but then the cost is more than a townhouse anywhere in Lexington. Where does the extra cost shuffle off to? Parents, increased student loans, future debt service. Why was there no mention that the taxpayers got relief, perhaps by UK voluntarily making its 9% cut due to the removal of one component of its overhead?

3. The next selling point for the Governor was “resources in state parks” because “parks aren’t doing as well as they could be.”

Is anyone wondering why? Nobody has made them a focal point of the state budget. If we make and spend 10 billion/year, and the total bill on all parks is 240 million, that means we could make a 2.4% cut one year and get them all in perfect condition.

Where have we seen this before…getting into dire circumstances and then crying out, “we need more money!”? As Sen. Webb said on the floor, it’s just a matter of priorities. We’ve let them get this way. It’s our job to fix it if we want them fixed, not sell out to some payment scheme and adding to overall spending of government (public) money.

4. The Governor also says that this year we have an opportunity to get P3 passed.

What is he talking about? How fast it sailed through the democrat-controlled House as usual?

What the governor did not mention was that once it hit the Senate where it was expected to hit some speed bumps, he started doing the heavy lifting to guarantee its success.

5. The Governor accurately describes P3 as a door that does not need to be swung open to new taxes:

“We should not use P3 legislation as a way for the private sector to be able to tax those of us who are taxpayers. They should not have the ability to have access to our wallets through the government.”

While it sounds nice to be against new taxes, nobody has explained how this bill avoids getting people spending or promising the public money to the private partner for payments. In fact, that is the very definition of how this bill would work, as detailed by the Sponsor on the Senate floor. Having a “financing mechanism” requires payments to be made over time. How will they be paid, if not by some version of tax (public) money?

Furthermore, if we’re not looking to spend any taxpayer dollars, why are we authorizing up to 25 million in UNBUDGETED money per project, while placing no limit on the number of projects either?

6. The Governor did not pretend that P3s are without problem. His biggest concern was tolling, although his solution was lackluster to say the least:

“I’m strongly opposed to the idea of tolling roads where people don’t want them tolled, where private companies have the ability to claw back against the taxpayer. That is not something that is a concern for this legislation.”

HB 309 does not provide any mechanism for allowing public input to tolling authorities before they start the planning or implementation of a P3 project. If the governor is that strongly opposed to tolling road that people don’t want tolled, he needs to get that in writing. We saw with the life insurance case this year that good intentions never outweigh technical details. The toll authority currently in the bill will be there long after this governor leaves office, long after Sec. Landrum is retired, and long after anyone remembers this video. If the checks and balances are all in our heart or our head, they might as well not be there at all. A court will not care what we hoped or thought, only what was written:

“For a public-private partnership, require approval of the cabinet before any action may be taken or any changes may be made [re: the amount and duration of per-vehicle tolls] by the public-private partnership…Tolls shall not be subject to supervision or regulation by any other department, division, authority, board, bureau, or agency of a local government or the Commonwealth.”

Where are the local people involved here? Nowhere. The Finance Cabinet is the only one making the decisions on tolls. Anyone concerned?

CONCLUSION: If the governor could have addressed his concerns by lobbying for solutions in writing, this bill might look night and day different from its original form. Instead, we’re doing things like creating a Local Government P3 Board, giving unprecedented power to special interests (heavily weighted in favor of P3 approval) in the name to “protecting” taxpayers and utility ratepayers. Not only will the special-interest groups be directly appointing members to the Board (the governor’s prerogative in basically every other instance in state law), but they will also have veto authority over the Finance Cabinet’s regulations:

“There is established within the cabinet the Kentucky Local Government Public-Private Partnership Board, composed of eleven (11) members as follows:…

Two (2) individuals appointed by the Kentucky League of Cities…
Two (2) individuals appointed by the Kentucky Association of Counties…”

“The proposed administrative regulations shall be approved by the Kentucky Local Government Public-Private Partnership Board established by subsection (11) of this section…If the secretary fails to timely promulgate administrative regulations pursuant to this subsection, local governments may then act pursuant to this section including compliance with the process outlined in subsection (12) of this section, in the absence of administrative regulations.”

After hearing the report about Kentucky being in the top 10 of states for corruption, and capital construction projects being at the top of the list of most corrupt entities, the boards are more likely to be used as a shield for questionable projects, rather than to protect the average Joe and Jill from being ripped off.

Fantasy pontificating on what the bill should or could do is a different world than the clear reading of the statute. We ask Governor Bevin to put the brakes on this bill as written, issue a veto if necessary, and make concrete plans to fill in the serious holes he has exposed.

Call 502-564-2611 and tell Governor Bevin to reconsider his stance on Public Private Partnerships.

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One Response to “TBK Response to Bevin on P3’s”

  1. John Tierney says:

    I believe that it would be a tragic mistake to privatize state parks. As a person who is very familiar with state parks, not only in Kentucky, but in state park systems in many other states, those systems that have privatized eventually return to state management (i.e. Alabama, West Virginia, Ohio, maryland–just to name a few). If you think that state parks have problems now, just wait until private industry starts taking shortcuts to make them profitable. Parks were not designed to be profitable. They were designed to stimulate tourism and local economies outside the parks.

    I also have concerns about private enterprise having no intellect about conservation, preseervation and protecting the resource from exploitation

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