Let the State Steer While Private Money Rows

JIM ROSAPEPE

June 02, 1993|By JIM ROSAPEPE

College Park. -- Since 1972 Maryland taxpayers have invested more than $170 million in Baltimore-Washington International Airport. Its managers propose to spend $123 million more on a new international terminal. The money comes from the state's Transportation Trust Fund. Every dollar used for BWI is a dollar taken away from local bus and subway service, highway maintenance, bike paths or sound barriers.

Moreover, because state transportation bonds are counted in Maryland's debt-affordability limits, every dollar of state bonds issued for BWI is a dollar taken away from building or renovating a local school, from cleaning up sewage that spills into the Chesapeake Bay, from building local jails to keep dangerous criminals out of our neighborhoods.

Yet the new parking garage in front of the BWI terminal -- which cost the state $30 million -- is a highly profitable structure that many private companies would have competed to finance.

Privatization of a facility like BWI would free up state funds and borrowing capacity for critical public needs that private business will not finance -- public schools, pollution treatment, open space and jails.

Privatization also could improve service for Maryland air travelers. Under public ownership, BWI is strangled with federal red tape that stops it from changing competitive rates for its runway space and requires some air travelers to subsidize others. Under private ownership, the airport could make decisions based on what's best for its customers, not what's good for special interests with influence in Washington.

The airport is far from the only candidate for public-private partnerships. Numerous road and bridge projects could be built or renovated, in whole or in part, with private financing. U.S. competitors from Mexico to Germany are building transportation projects without relying on taxpayer funds. The multi-billion-dollar tunnel under the England Channel is being built largely by private investors. There is no good reason why private investment cannot pay for transportation projects in our state, too.

Another good example is the proposed Baltimore football stadium. This project, if successful, will bring big profits to private investors -- a football team's owners.

On the College Park campus of the University of Maryland, 2,000 dorm rooms stand empty. Why? Not because the university employees don't maintain them well. And not because thousands of students don't want to live close to their libraries and classes. Nearby privately owned apartment buildings are filled with students. Dorms are empty because the campus management has refused to set rents at market levels, raising them 28 percent in four years for students who got no improvement in their residences. The result is that the campus now has a 25 percent vacancy rate.

The university is learning. It decided not to raise housing rates this year for its least attractive housing, and it is offering rooms for singles, an attractive option, at a premium price. Not surprisingly, the ''singles only'' rooms are sold out.

But more can be done. Entrepreneurial public or private management of the empty buildings could open them to student use, charging market rents and rehabbing them to the extent there is demand for such space. At no cost to the taxpayer or to other students, more students and more jobs would be on campus.

Private financing of selected major state projects would clearly free up funding and debt capacity for pressing public needs. But those are not the only potential benefits. Projects that make economic sense could be built sooner than under public financing. For example, it is extremely difficult to believe that the federal government will cough up a billion dollars or so for a new Woodrow Wilson Bridge over the Potomac River very soon. But current traffic backups provide hard evidence of market demand for more capacity. Why not give private enterprise a chance to meet this need?

In some cases, imposing the discipline of the private market may kill or shrink a project. The airport's proposed $123 million international terminal could be such a case. Under public ownership, such an expenditure is a political decision in which legislators decide among it, the Baltimore Convention Center, public school construction and other public projects. Under private ownership, it would be evaluated against potential revenues from international flights. With such flights down 6 percent in the past year and other competing airports expanding their capacity, it might well be scaled down or killed. And that might be the right decision.

Public employees understandably and correctly oppose privatization schemes designed to undercut collective bargaining agreements or to reduce living standards. And public officials must be careful to assure that private ownership or operation of public functions enhances, rather than diminishes, the quality of those services.

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