The Government-Owned Business
Sounds like an oxymoron, right? Maybe, but it also may be the way to respond to the new reality that discretionary federal spending for roads, bridges, railways, and ports is decreasing and is probably not coming back. A few states have taken the plunge into a business-centered view of infrastructure to fill the gap. Their activities delve into a wide world of availability payments, public-private partnerships, grants, loans, and credit enhancement programs. They look for any way they can to bring in new sources of private revenue for infrastructure. Robert Puentes of the Brookings Institution (and a contributor on this blog) calls them the "can do states."
Officials from a few of those "can do states" came to Brookings last week to talk about their experiences. A webcast of the panel discussion can be found here (moderated by yours truly).
Here is one message I took away from it: Private sector executives must understand that government bureaucrats are working inside a challenging political and regulatory environment, but that doesn't mean that they aren't eager to negotiate a deal. This is a new ballgame for most of them, and everyone needs to be patient with one another. "The public sector operating environment is way more complicated than the private sector operating environment," said Margaret Tobin, executive director of New York Works Task Force.
On the other hand, government officials need to be willing to think outside their traditional narrow silos and act more like flat businesses. Tony Kinn, director of Virginia's Office of Transportation Public-Private partnerships, said the motto for his office is "Close the deals and grow the business. ...You cannot have a state operation say. 'That's not how we do it.'"
It helps to have people inside of government who also have private-sector experience. Tobin, for example, made sure to get an MBA so she could understand complex financing mechanisms. Kinn spent most of his career in the private sector before taking the helm of Virginia's public-private partnership office. You can read more about Kinn's office in my National Journal feature on infrastructure here. (It's a long read.)
Michael Cheroutes is director of Colorado's High Performance Transportation Enterprise, an office within the state transportation agency that has a mission statement to "operate as a government-owned business." Cheroutes said the phrase is designed to allow the office "function as an enterprise exempt from restrictions" that might otherwise hem in its creative financing ideas.
What are good models for government entities that work well with the private sector? What can government learn from the private sector in developing infrastructure? What should private-sector infrastructure executives understand about government? Why is the United States so far behind in developing these relationships? How can we catch up?
