It’s a Sucker Bet

So, you want your buddies to get their tax dollars so that they can buy a better boat, but you don’t want to tarnish your reputation as a good government Republican?

The solution is simple: A public-private partnership.

Your friends get their vig, and you get to pretend that you are working for the taxpayer.

Unfortunately, as Maryland Governor Larry “Governor Rat-F%$#: Hogan as demonstrated, these efforts never save a dime, and frequently cost money, as Richie Daley’s infamous Chicago Parking Meter Deal.

Well, sooner than anyone expected, Hogan’s public private partnerships are descending into chaos and litigation:

Maryland Gov. Larry Hogan differs from President Trump about as much as possible for a Republican, but they share one characteristic: Both won their offices in part by selling themselves as experienced business executives who would run government efficiently and cheaply.

Hogan has applied that approach to his two biggest transportation projects, the light-rail Purple Line and a plan to add toll lanes to the Capital Beltway, Interstate 270 and the American Legion Bridge. He brought in private companies to share responsibility with the state for the enterprises, saying they would complete the work more efficiently than the government and save taxpayers money.

If it saves taxpayers money, then how are the profits generated, particularly the ridiculously high profits that the finance types demand?

It isn’t working out that way, and the difficulties threaten to tarnish Hogan’s legacy as he approaches the midpoint of his second and final term as governor. (Maryland governors are limited to two terms.)

The construction contractor for the Purple Line quit mid-project in a dispute with the state over a reported $800 million in unpaid cost overruns. The Maryland Transit Administration has taken over hundreds of subcontracts to continue the work while the state negotiates with the consortium of companies managing the project over whether the larger $5.6 billion partnership can be salvaged.

The Purple Line problems raise fresh questions about whether the much larger toll lanes project will fare any better.


“With the Purple Line, we have basically a fiasco on our hands,” said Melissa Deckman, chair of the political science department at Washington College in Chestertown, Md. “It calls into question in some way his legacy, his promotion of having the private sector solve big public problems.”

The Purple Line project is structured as a public-private partnership (P3). The state is also pursuing a P3 for the toll lanes project. In such deals, private companies help finance and construct the projects, then receive a return over the long-term either from state payments or money earned while managing the enterprises.

The theory is that taxpayers gain more from the private investment and promised efficiency than they lose by letting the companies reap a profit.

Which never happens.  Just profits for the private sector, with perhaps a nickel on the dollar up front to the politicians.

The strategy has backfired with the Purple Line, a 16-mile light-rail line running from New Carrollton in Prince George’s County to Bethesda in Montgomery County. The construction contractor has quit and the consortium managing the project, Purple Line Transit Partners, is in a legal battle with the state over extra costs caused by more than 2½ years of delays.


Critics say the experience highlights the risk in some P3s that private companies get too much power.

“The private entity can essentially hold the government and taxpayers hostage to ask for more money,” said Jeremy Mohler, communications director for In the Public Interest, a think tank.

Meanwhile, concerns have arisen about Hogan’s ambitious plan to add four toll lanes — two in each direction — to I-270 and the Maryland portion of the Beltway and build a new, wider American Legion Bridge. Tolls would vary according to congestion, and the existing lanes would remain free.

Hogan famously promised that using a public-private partnership would mean the project, with an estimated total price of up to $11 billion, would not cost taxpayers any money. But a draft state study warned in July that the plan could require a government subsidy of up to $1 billion, depending on how toll revenue compares with construction and financing costs.



Even if both projects collapsed entirely, which seems unlikely, Hogan could point to other accomplishments in what has generally been a politically successful governorship.

He was the state’s first Republican governor in 64 years to win reelection and has consistently had one of the highest favorability ratings among the nation’s state chief executives. He has blocked tax increases — his signature issue — and acted early to stem the coronavirus pandemic.

Which is what the PPP is all about:  He wants to keep his no new taxes pledge, and doesn’t care that he will be shafting the next 2-3 generations.  

Same as Richie Daley.

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