For years, we’ve heard the same false claims behind the push to use public-private partnerships to build new infrastructure, like toll roads and prisons.
Private equity firms and Wall Street banks say public-private partnerships are cheaper, which is flat-out wrong. State and local governments can borrow money using low-cost municipal bonds. Why should they pay extra to make private investors rich?
They say they’re “free money,” which is false, or that they’ll require “no tax increases,” which is also often dishonest. Public-private partnerships are complex contracts that put taxpayers on the hook often for decades. The money has to come from somewhere, whether new taxes or cuts in spending on education, public safety, or other public services.
Now we’re hearing these same claims about using public-private partnerships to build the centerpiece of many communities nationwide: public schools.
Stamford is facing a mold crisis at half of its public schools. Its director of administration wants to use a public-private partnership to build and maintain five new school buildings. He just so happens to be a former Wall Street banker who once worked for a hedge fund that was busted for insider trading. (He was never himself accused of wrongdoing.)
The underlying math, or at least the little that’s been publicly released so far, appears shady. But regardless, a public-private partnership isn’t the answer. Not only will it be more expensive, but it could also hand over public control to private contractors.
Alberta, Canada, signed a public-private partnership to build 18 schools in 2007, only to find out later that costs had tripled from the original estimated budget. The contract also strictly limited access to the new school facilities. Community groups learned after the ink was dry that the schools couldn’t be used for after-hours uses, like child care and sports leagues.
Who knows what will be in Stamford’s deal if they decide to roll the dice? We may not find out until years into the estimated 45-year contract.
Let us know if you hear about your local school district or government considering a public-private partnership. Keep your ear to the ground.