A new report by EPI Budget Analyst Hunter Blair finds that non-traditional financing of infrastructure projects such as public-private partnerships (P3s) and a federal infrastructure bank will not save taxpayers money. Instead, because interest rates remain low, the federal government should continue financing infrastructure through simply borrowing and spending.

In No free bridge, Blair examines various forms of infrastructure financing and compares the costs and benefits of traditional borrow-and-spend financing and proposed financing ideas. Ultimately, while the upfront financing may vary, Blair writes that all infrastructure projects have to be funded through either user fees or tax revenues.

“Public-private partnerships are not a free lunch. If we want infrastructure investment, it will eventually be paid for with taxes or tolls,” said Blair. “Meanwhile, with interest rates still low, there’s never been a time when traditional infrastructure financing has looked easier or better.”

When used for financing, private partners provide some of the necessary upfront cash in return for equity returns from the project. As a result, fewer municipal bonds are issued for P3s than for traditional financing, which proponents claim as an advantage. Blair explains that P3s can reduce construction costs, but largely because they ignore labor regulations like paying workers prevailing wages, which would mean lower wages for workers.

The largest problem with P3s is private partners’ tendency to renegotiate the terms of their contracts, shifting losses onto the public partner. As a result, governments are often forced to bail out private firms when they run into financial problems after doing a poor job of forecasting the revenue streams from user fees.

A federal infrastructure bank, Blair notes, could provide some potential advantages to public investment decision-making. However, the lack of funding is still key. Similar programs already exist, and yet Congress continues to cut their resources.

“While little can be said with certainty because the details of President Trump’s infrastructure plan are lacking, the proposal seems to be worse than a simple expansion of P3s. It is simply a tax credit that may apply to past investment or investment that was going to happen anyway,” said Blair. “So, his plan’s ability to induce net new infrastructure investment is uncertain.”