CHICAGO (Reuters) - A Senator on Monday proposed legislation to allow private investment in public infrastructure, saying it would create around $100 billion for projects cash-strapped governments can ill afford.
The proposal by Senator Mark Kirk, an Illinois Republican, ran counter to legislation offered last week by Senator Dick Durbin of Illinois which would create hurdles to the privatization of infrastructure by requiring some of the proceeds go to repay federal funding that helped build it.
In recent years, several municipal and state governments have reached deals on long-term leases of airports, highways, and parking facilities to reap billions of dollars.
Some of the leases have drawn criticism as one-time budget fixes at the cost of valuable assets and raised questions about private operators running infrastructure used by the public.
Kirk said the challenge was to build and maintain infrastructure at a time of spending cuts by deficit-ridden governments at all levels.
The answer, he said, is to relax regulations and create public-private partnerships akin to how former President Abraham Lincoln launched the 19th century transcontinental railway.
"In these times of deficits and debt, we could let America grind to halt or we could give new life to Lincoln's economic legacy by building roads, airports and railroads using public-private partnerships," Kirk said in a video his office released.
Kirk said up to 15 percent of new infrastructure in Australia is funded by public-private partnerships.
In Illinois, Chicago is among the leaders in privatization of infrastructure. But the city's lease of its parking meter system was heavily criticized for underestimating its value, raising costs for residents, and wasting a revenue source while the city spent nearly all of the proceeds.
The city also had a $2.52 billion deal to privatize Chicago's Midway Airport, but it fell apart during the credit crisis.
Kirk's proposed Lincoln Legacy Infrastructure Development Act would require that proceeds from privatization leases or sales be reinvested in infrastructure projects. The legislation comes as Congress prepares to debate the reauthorization of existing transit and infrastructure funding.
Durbin, the Senate's second-ranking Democrat, said his proposal would also require the federal government to reinvest in transit projects any money that is repaid when infrastructure is sold.
Before privatization deals are finalized, Durbin's legislation would force governments to assess the impact such as on workers' pay.
(Reporting by Andrew Stern; Editing by Andrew Hay)