Saturday, May 19, 2007

Highway Toll on Taxpayers

The 99-year taxpayer boondoggle
by Henry Lamb Posted: May 19, 2007 World Net Daily

American roads are the hottest commodity in the international marketplace. State and local governments are falling all over themselves to sell off highways, bridges and all sorts of other revenue-producing infrastructure to international financiers who are eager to snap up structures Americans have already paid for – and for which they continue to pay maintenance costs through endless taxes.

The Chicago Skyway, for example, brought $1.83 billion from a Spanish-Australian partnership. The 157-mile Indiana Tollway brought $3.85 billion from the same partnership. And the state of Texas has recently concluded a deal to sell a Trans-Texas Corridor for $7.2 billion to the same Spanish company that partnered with a Texas construction company.

What's going on here? Why are government officials so eager to sell off our infrastructure? Because it's a win-win deal for everyone – except the people who pay taxes and use the highways. Governments get a pot full of cash up front, and the "public-private" partnerships get a long-term cash cow. The taxpayers and highway users get ______ – well, you fill in the blank...

Actually, these "sales" are long-term leases, which is much worse than an outright sale. The Chicago Skyway deal is for 99 years. The Indiana Tollway is for 75 years. In what condition will these important roads be when they are returned to government? The folks who celebrate the deals today – and spend the billions – will be pushing up daisies by the time a new crop of government officials will have to explain why the roads have crumbled.

The roads that exist today were bought with taxes and tolls. They are maintained with taxes and tolls. Neither taxes nor tolls will be reduced when these roads are sold to public-private partnerships. In fact, taxes are likely to increase, and the tolls are certain to increase. Tolls for commercial use on the Indiana Tollway were scheduled to double during the first three years of the deal. Auto tolls would remain flat for the first three years, and then "catch up" with the commercial rate.

When the taxpayers and highway users get slapped in the budget by these increases and complain to their elected officials, the elected officials can do nothing but say "We're sorry; it's out of our hands for the next 99 years." When the roads begin to crumble and potholes begin to appear, elected officials can do nothing but say, "We're sorry; it's out of our hands for the next 99 years."

See our previous highlight of the issue of leasing PA highway scheme

Outsource Giveaway: PA Toll Roads & NAFTA Superhigh-jack


Selling Our Toll Road: Good or Retrograde Idea? Neal Pearce

Pennsylvania Must Join Private Sector, Boost Infrastructure
Public-private partnerships can facilitate shift towards 21st century transportation network
By Geoffrey Segal
Patriot News Jan. 21, 2007

Spinning toll roads' asphalt into goldPennsylvania and New Jersey are considering leasing them to firms. The states could get billions. But at what cost?
By Paul Nussbaum
Inquirer Staff Writer

What is a turnpike worth?
The answer to that billion-dollar question is critical in Pennsylvania and New Jersey, where venerable state-owned toll roads now are being viewed less as ribbons of commerce than as streams of revenue.

Political leaders in both states are considering leasing the toll roads to private operators. What the states receive is clear: lots of cash. What they lose is the subject of intense debate.

Estimates of the roads' value vary wildly - from $2 billion to $30 billion for the Pennsylvania Turnpike and from $12 billion to $38 billion or more for the New Jersey Turnpike and the Garden State Parkway. Because there are few examples to look to for guidance, the two states are essentially guinea pigs in their own experiments.

"We're all feeling our way along here," said Tim Carson, vice chairman of the Pennsylvania Turnpike Commission. "A lot of people will be looking to Pennsylvania and the kind of decisions we make because the impact will be felt for generations."

The states, eager to get money for transportation projects or debt relief, see their toll roads as potential cash cows.

In a leasing arrangement, the state gives the right to operate the road - and collect tolls - to a company. In exchange, the company pays the state a lump sum, or a cash payment plus periodic shares of the revenue.

So the crucial issue, for motorists and potential investors, is how high could tolls go? The higher the tolls, the more valuable the turnpike. So states find themselves with competing interests - to get as much money as possible or to keep highway users happy. And state residents also may be conflicted - as owners of the toll roads and as payers of the tolls...

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