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Paving The Way For Smarter Roads
Decaying roads, rising traffic congestion, and voters distrustful of government and extraordinarily leery about increased gas taxes. What are political leaders to do?
The "hot" new idea is "monetizing" toll roads and bridges - leasing them to a private operator in return for a big upfront payment or guaranteed year-by-year payback.
Chicago Mayor Richard Daley was a pioneer with a 99-year lease of the eight-mile Chicago Skyway toll road to Spanish and Australian investors for $1.8 billion. Next came Indiana Gov. Mitch Daniels' 75-year lease of the 157-mile Indiana Toll Road for $3.85 billion. There have also been smaller toll-road leases, again to foreign investors, in Texas and Virginia.
Now, Pennsylvania's Gov. Ed Rendell is aggressively pushing the idea of a 30-year lease of the Pennsylvania Turnpike. And New Jersey Gov. John Corzine is looking into possible lease of the New Jersey Turnpike and Garden State Parkway.
Global finance firms are salivating over the prospect of long-term revenue streams from toll-road deals. Forty-eight firms have submitted "expressions of interest" in the Pennsylvania Turnpike, reports transportation expert C. Kenneth Orski.
So critics are clearly right in asking: Are the leases a good deal? The long-term proceeds of the Indiana Toll Road lease to its investors, according to one independent analysis, could run as high as $11.83 billion, not a bad return on their upfront $3.85 billion.
One thing's certain - the voters are turning highly suspicious. Take the case of Indiana's Daniels. He's been obliged to abandon his high-powered campaign for yet another toll road - a new privately built, $1.5 billion, 75-mile roadway plowing through rural territory south and east of Indianapolis.
Daniels claimed the road would spur rural development but found literally thousands of people turning out at meetings to decry loss of farmlands and the idea of using the state's eminent domain powers to enrich a private firm. Transportation expert Robert Dunphy at the Urban Land Institute predicted it would be a sprawl magnet: "Building an outer belt is so 1970s."
A new harsh fact surrounding the issue is heightened voter suspicion about taking land; a recent statewide poll in Ohio, for example, showed 65 percent opposition to using eminent domain "to take private property for public use projects like roads."
Opponents also claim it's a bad idea to lease roads to private firms whose interest is their own profits - not serving the public interest. Private firms, they allege, will "cherry pick" profitable routes, leaving government to support other roads. Truly smart governments, they contend, could raise just as much money as private concession leases.
But go and tell that to governors such as Rendell and Corzine. Their states are fiscally strapped; structuring lease deals for guaranteed annual payments (instead of big upfront payouts) will cover major parts of their statewide road-maintenance costs. Agreements will be designed to keep toll increases in check. Plus, both Pennsylvania and New Jersey are eyeing toll-road leases much shorter (30-35 years) than the amazingly risky Chicago and Indiana terms.
The private financiers, notes Orski, can produce bank loans and major equity capital far more easily than governments can raise taxes. And they can also outdo governments in introducing road-building innovations and on-time construction performance.
But can we do better in this century than a patchwork of road funding and repair fixes? Robin Chase, CEO of Massachusetts-basedMeadow Networks, advocates a big leap forward. She recommends abandoning all gas taxes and shifting to wireless technology. A small, low-cost computer on board every vehicle would report (in real time) miles actually traveled, allowing a realistic government user charge. Fees could be adjusted for roadway congestion pricing (premiums to travel on peak roads at peak times), by wear and tear related to vehicle weight and footprint, and by the vehicle's emissions (a carbon tax to encourage vehicles with reduced greenhouse gas emissions).
Indeed, says Chase, there could be a local government bonus - a percentage of road-user fees returned to the county, city or neighborhood through which the vehicle traveled, compensating for the burden of emissions, noise and congestion.
Sound too rational? It would require smart government. We'd still have to debate the whether and where of new roads. But the payers, at least, would be the users. The monitoring technology is already available. Why not a smarter leap forward than the mishmash of taxes, grants, and mortgaging our roadway futures to Wall Street, Australia and Spain?
14 Comments so far
Show AllWe've already paid for these roads and bridges with our tax dollars now we're expected to pay again to use them? Where does it end?
A monitoring system would also be another way to track our movements. Another invasion of privacy, if you ask me. If toll roads are profitable for private investors, doesn't it make sense for state governments to build their own?
Yeah sure. Abandon all gas taxes for a users tax. In about 10 years the gas tax will be back, in addition to the users tax when everyone forgot why they abandoned the gas tax in the begin with.
You're right, it would require "smart government". But whose gov you talking about. Surely not ours?
With $416 Billion dollars a;ready spent in Iraq it's no wonder states are having to hold "Liquidation Sales" on infrastructure to get by.
Just pretend it's all OK
With $416 Billion dollars already spent in Iraq it's no wonder states are having to hold "Liquidation Sales" on infrastructure to get by.
Just pretend it's all OK
No to privatizeing roads. Just another insult to injury. Look what it did for power in California. Does the name Enron ring a bell.
I think going the other way. Nationalizing resources like they are doing in South America.
What's funny though is D.C. has only one toll road - to Dulles, The rest of the roads are all free, and as someone who grew up in DC and moved to Chicago the annoyance of Toll roads was instant. They are a nightmare, and they'll never be free again.
Road construction costs too much, maintenance is ignored until it is so sever they are forced to do something and it slows everything down. The smartest road is no road at all, promote light rail, telecommuting, and phased work shifts. more roads will neither solve congestion or pollution.
Another proof that stupidity is an infinate resource.
Is it just me or am I the only person in america who thinks that building more roads and parking lots when we are having to fight wars to seize oil might be a bad idea?
Has anybody else heard of Peak Oil? For those folks with their head in the sand the reason that we are trying to fuel cars with ethanol is because their is a severly limited supply of oil in our future.
Has anybody else heard of Climate Change? If you want to cut the CO2 emissions of your transport sector DON'T ENCOURAGE MORE DRIVING!!!
Is there some requirement that your neurons must be non-operable before you qualify for public office? Just asking?
This whole idea of privatizing public infrastructure is outrageous. Governments that do this are abdicating their responsibility to serve the public interest and laying the groundwork for a corporatocracy, which is really nothing but fascism.
So some state leases its turnpike to a foreign investment firm for 99 years. Great. Now who do you go to about potholes? Fuggedaboutit. They aren't going to give a crap about you.
And let me ask the obvious: If a private for-profit firm can run a toll road at a profit, why can't the owner of the road operate the road just as well? And why should the profitable tolls go into offshore wallets when it should be used right at home?
The whole idea is criminal. Politicians who propose this kind of thing should be voted out of office pronto. Those who ink deals should be impeached.
All government that is not monarchical, totalitarian, or just plain corrupt, is a social contract. Concentrated wealth has successfully trashed this idea in America. Now we are all just individuals. But their are individuals and their are INDIVIDUALS.
I'm with DClose - don't want anymore Big Brother. But this doesn't even come close to addressing everything that is wrong with the idea that Mr. Pierce wonders may be too rational. How about instead everyone gets a two-month gas allotment card for an amount (at the outset) slightly lower than the average current per-capita consumption? Use more than your allottment and you pay prevailing rate plus an "excess tax." Could promote sale of more efficient cars, reduce unnecceary trips, and relieve some congestion. This is just a musing I had and I can think of at least a dozen serious drawbacks to such an idea.
Sorry about the mis-spellings - hit Submit to quick.
And soon they will put transpoders under our skin and monitor our movements across the earth, taxing us annually for our wear and tear on the ground beneath.
Oh, and don't forget that carbon dioxide tax.
"Every move you make, every breath you take I'll be watching you." -- The New World Order
Consider what happened in the U.K. when it privatized the national railroad to different companies. Strikes and breakdowns in one part led to chaos in others. Not pretty. Privatizing roads already paid for is a way government tries to take public attention away from its over-spending and lack of responsibility. What do you think we can do to make them more accountable? After all, when you get a bank loan, if you go into the red later, you can't demand tolls on your street or for passing through your driveway. Bankrupt governments will have to find more responsible people and cut back on services and wars they can't afford.
I'm with you Pangolin.
Out in So Cal there are toll roads which are an alternative to more congested freeways. You pay (or carpool) to use these alternatives. Is that a good idea? I'd much rather see more public transportation and less roads putting money in some private corporation's pocket.