"These nutty experiments in privatization are predestined to fail."
BY JOHN BENDEL
Asbury Park Press
Sell New Jersey's toll roads? Toll road privatization is all the rage in state capitals around here.
Pennsylvania speculates it could net from $3 billion to $10 billion from a Pennsylvania Turnpike lease to a private operator. Delaware is considering a lease of the Delaware Turnpike for as much as $4 billion. Indiana actually did it, recently leasing the Indiana Toll Road — its Turnpike — to an Australian/Spanish consortium for 75 years for $3.8 billion.
Here in New Jersey, Gov. Corzine expects to net up to $10 billion for New Jersey's toll roads. It's part of his plan to reduce property taxes, he says.
Privatization advocates claim toll road sales or leases raise cash for new infrastructure and that private ownership will be more efficient. Private owners will run roads like businesses, they say.
Well, private owners might try, but these nutty experiments in privatization are predestined to fail. The reason is simple: Politics always trumps economics.
A privately owned New Jersey Turnpike or Garden State Parkway will lead first to higher tolls, then to lower maintenance and perhaps public subsidy. Ultimately, the state will be compelled to buy back what it should never have sold in the first place. The cost in the end will be enormous.
The future should be clear to anyone willing to look beyond the numbers on the table today.
First, it will be impossible for any privately run toll road to gain and maintain public support. Proponents of private toll roads acknowledge that operators will raise tolls — something politicians haven't the nerve to do. That's the point, they admit with a grin.
But tolls will always have political consequences, no matter who imposes them. In this age of regular E-ZPass statements, the cost of tolls is very visible to all. No public relations strategy, no brilliant marketing plan, no free coffee, no toll-plaza lottery will ease resentment of higher tolls and the company that exacts them.
As tolls rise, we will see more traffic on alternate roads. Look at the record here: after steep Turnpike toll hikes pushed truck traffic onto alternate roads in the early 1990s, New Jersey towns urged the state to impose truck restrictions. Trenton obliged in 1999.
Those rules were overturned by a federal court last February, but the state is now vetting new truck-restriction regulations designed to pass constitutional muster.
That ongoing effort reflects serious political might. Those same local governments will fight overload on "their" roads — even if the traffic is not primarily big trucks. They will push for lower tolls, or at least for tighter control over increases.
On their side of the equation, toll operators will trim expenses. That's what private businesses do. That's how private owners are expected to generate a profit.
But we're talking about fewer employees and less maintenance. Even if maintenance stays the same qualitatively — a questionable proposition — toll payers will perceive cutbacks in every overflowing trash can, tire-busting pothole and snow-covered traffic lane.
How long will it be before accidents are blamed on cutbacks — real or perceived? The bereaved will demand maintenance standards. Editorial writers and commentators will be right behind them. Toll road operators, no matter what they do, will become public villains.
Of course, if tolls and maintenance standards are imposed by law, the private toll road operator will demand subsidies. Talk about a politically distasteful turn of events.
But even if subsidies are not provided, state government will find itself over time pressed to buy the roads back — at a substantial profit for the owners, of course.
What makes politicians, of all people, believe that privately owned public toll roads will function beyond the reach of politics? Nothing is beyond the reach of government — certainly not highways that people perceive to be public property. No contract, no lease, no deed will change that central, altogether reasonable assumption.
Despite what the governor or the lawyers say now, legal agreements cannot protect private toll road operators from future political interference — not even the most ironclad franchises and absolute guarantees.
When a toll road deal goes bad politically — as it has to — politicians in power then will change the law. And if they can't do that, they will find ways to harass toll road owners to achieve the same ends. You'd be amazed how creative politicians can be when it comes to the exercise of power.
No private toll road operator will be able to blow off the Legislature and/or a determined future governor. In the real political world, it will be very popular for an elected official to move against an unpopular toll road operator.
Could there possibly be any other kind?
John Bendel is a former newspaper reporter who covered transportation issues. He is a former member of the Island Heights Borough Council.
© 2007 Asbury Park Press: