Should We Privatize Our Highways?

Highway privatization is the latest buzzword to hit government. The Bush administration is a huge promoter of infrastructure privatization and has placed into key positions bureaucrats that will work toward his agenda. One administrator engaged in such anti-taxpayer efforts is Mary Peters, Secretary of Transportation. Ms Peters has been most vocal about her encouragement and support of privatized highways. Governors and congressmen put out a steady barrage of press releases extolling the virtues and dollar-generating capacities of selling our freeways. The average citizen wonders, "Will this be good for my community?"

Why is this happening-and why now? As we suffer a thinly-veiled recession and falling wages, most states are facing huge budgetary problems: revenues simply don't cover the growth inherent in government programs. We all know government is becoming increasingly hard to control-particularly spending. There are always earmarks, pet projects, special interests and legislator 'legacies' to consider. Further, government has learned over the years that they can rob Peter to pay Paul for years before being called to task. Indeed, most taxpayers don't even know the mis-appropriation of specific funds is happening, year after year right under their very noses. The theft of the Social Security Trust Fund is one such example. The diversion of the Highway funds runs a close second.

The Highway Trust Fund was established in 1956 to provide for earmarked funds to build and maintain the Interstate Highway System. Taxes on fuels such as gasoline and diesel, taxes on heavy trucks and truck-related items such as tires were all slated to go into this fund. As highway-related needs increased, fuel taxes went up. An additional monkey wrench was thrown into the works with Revenue Sharing where all moneys went to the federal government and were doled out to states according to a formula not related to how much was paid in from that state. This creates inequities in the distribution of funds and many states get back less from Washington than they send.

At the same time, not content with just spending the Social Security Trust Funds on other things, the President, Congress and the States greedily eyed the transportation funds as a handy pot of cash to fund their pet projects. The interstate system was nearly finished; the highways were new and in relatively good shape and taxes were providing what they saw as excess funds. So, they did what politicians do: they spent them! Other projects became attached to the Highway funds, starting with mass transit subsidies, hiking trails, bicycle paths, 'rails to trails', pedestrian walkways, parks, EPA and nearly every other use that can be imagined. A most telling list of funds diversion was printed in the San Antonio Express-News last year that listed earmarks for Texas transportation funds totaling over 10% of the projected highway budget to include: Police, Medicaid Match, Texas Education Agency, Auto Theft Prevention, salary increases, client transportation, Health and Human Service Commission, Texas Transportation Institute, Texas Workforce Commission client transportation, Gross Axel Weight fees, State Office of Administrative Hearings, Council for the Arts, Attorney General-Mineral Rights Litigation, Historical Commission, Regulation of Controlled Substances, Silver Alert for Senior Citizens and the Lufkin Tourist Information Services. This is just one state-similar things happen in all states.

Now, the time has come to pay the piper: our highways are in dire shape. Traffic on many of them has increased 400% over what the highways were designed to carry. Bridges are old and need replacement. Much heavier truck traffic has worn the highways down to critical condition in some areas. The highway infrastructure is the country's lifeblood. With increased global trade, they become more important to the economy than ever, Now, when we need it, the money is gone.

The collapse of the highway bridge in the Twin Cities area last year should have shown a spotlight on the dire conditions we are facing. Instead, we saw blame passed around like a hot potato. Claims ranged from too much weight from repair materials to increased truck traffic. This is disingenuous logic of the worst kind. For one thing, the materials were hardly enough additional weight to have caused the collapse of a healthy, well-maintained bridge. Second, this portion of I-35W is a 'no trucks' route and only local delivery traffic is allowed on this portion of the highway. It definitely was not increased truck weight. The bridge was sub-standard, had been sub-standard for several years and warnings about its condition had been ignored and shoved under the rug. This bridge was likely In no worse shape than thousands of other highway bridges all over the country-major repairs are needed and they are needed now.

Gov Rick Perry of Texas has tried to use the coming shortfall as an argument for more toll roads and more privatization of toll roads. There are serious problems with this as an answer. For one thing, the people have already paid for these roads and their upkeep through taxes. To force them to pay a toll is double-taxation. And it does nothing to solve the problem of legislators outspending the available revenues. The solution of leasing the toll roads is a short-term infusion of cash that will invariably be exhausted well before the 75 or 100 year leases are up. As companies who wish to lease these roads are for-profit, common sense says they will either raise tolls to a level where they can maintain a good profit or reduce maintenance in order to cut costs.

This is already evident in Indiana less than two years after the Indiana Toll Road was leased. Tolls have risen steeply, toll takers have been laid off and local residents complain repairs and maintenance has dwindled. In return, Indiana Governor Mitch Daniels got a multi-million dollar pot of ready cash for pet projects and a surprisingly large campaign war chest for his re-election. The losers are the people of Indiana and regular business travelers on the toll road. Part of the contract to lease the toll road to Cintra, a Spanish and Australian consortium includes a non-compete clause in which the state is forbidden to upgrade adjacent roads in an effort to force traffic onto the toll road. In the Indiana toll road case, these efforts even extended into Michigan with efforts to prevent truck traffic on a parallel US highway, hoping to force them onto the toll road. A similar toll road, the 407, built in the Toronto area is nearly empty of traffic even at rush hour-the tolls are too high for it to appear attractive to commuters.

Adding tolls to previously free interstates essentially places an unseen tax on both highway users and all goods transported on those highways. We not only pay to use the roads, but pay to cover the increased cost of transportation when tolls are included. Even if you ride a bicycle, you will be paying for this increased cost-without being allowed to vote on it.

When we sell the rights to our highways, we lose control of our infrastructure. We paid for these highways. Many citizens lost their properties through eminent domain to build them. We pay steadily-rising taxes which are supposed to maintain them. And it appears that, after congress and state legislatures mis-appropriated the funds to maintain them, they are attempting to float another scam on us by 'leasing' our roads with no clear directive even as to where the lease dollars would go. Certainly there are huge sums of money changing hands on all levels-the power to control roads is apparently lucrative enough that Cintra and Goldman-Sachs, their broker feel it's worth stuffing money in every available pocket to get the leases signed. As Grandma always said, "if it sounds too good to be true, it probably is" should be the guiding precept here. Leasing our toll roads is a good deal to everybody but the taxpayer. Once again, we will pay the price.