"Public interest has been sacrificed for the almighty dollar."
Feb. 18, 2007
By BILL GRAVES
Fort Worth Star-Telegram
I have a photo, from 1956, of a truck making its way through a Kansas Turnpike toll plaza. The truck, emblazoned with the Graves Trucking logo, belonged to my father's company.
As it turns out, 1956 was the year that the Kansas Turnpike opened. The project predated the Federal-Aid Highway Act -- President Eisenhower's historic initiative. In those days, a toll road was one of very few options available to states to build a freeway. Fifty years later, toll roads are surging in popularity -- but as a quick fix for state financial woes.
With state budget shortfalls and a general unwillingness to raise taxes, state politicians are flocking to private investors for the highway equivalent of the payday loan.
In 2005, Chicago leased Interstate 90 to the Australian Macquarie Infrastructure Group and Spanish Cintra for $1.83 billion to pay off city debt and fund nontransportation projects. In 2006, Indiana leased the Indiana Toll Road to the same firms for $3.85 billion. Gov. Ed Rendell recently asked for expressions of interest to lease the Pennsylvania Turnpike for as much as $16 billion. Other deals are in the works.
(Cintra and Zachry Construction of San Antonio are proposing to use $6 billion in private investment to build a 316-mile, four-lane toll road -- the Trans-Texas Corridor-35 -- from Dallas-Fort Worth to San Antonio and pay a $1.2 billion concession to the state. Cintra-Zachry would collect tolls for 50 years.)
It is easy to see why this new scheme is tempting to politicians. The nation's highway system needs to grow and be maintained, but states are facing crushing debt loads. Funds to relieve these problems must come from somewhere.
But the United States cannot maintain a national highway network if key segments are leased to the highest bidder. More than money is at stake. Leasing roadways allows states only to postpone, not solve, their budget problems -- and without understanding the long-term implications.
Privatization is dismantling the nation's interstate highway network. It's happening with the support and encouragement of the U.S. Department of Transportation and, until recently, without congressional review.
Alternatives exist. Since the interstate system's inception, fuel taxes have footed the bill. Trucking pays nearly $15 billion in highway user fees annually to the $35 billion Federal Highway Trust Fund. Fuel taxes can be uniformly administered, are based on verifiable measures of highway and vehicle use, are relatively simple to collect and not readily evaded, and do not create impediments to interstate commerce.
Privatization, on the other hand, lets operators increase tolls rapidly, robs the public of a degree of control and does not guarantee service and safety levels. A year ago, highway privatization was a little-understood niche financing scheme. It is fast becoming the financing of choice, as public interest has been sacrificed for the almighty dollar.
We must consider the impact of privatization on toll rates. A private company is usually allowed annual increases of a minimum of 2 percent to a maximum of the average rate of change in gross domestic product per capita (the accepted standard). Based on historical figures, annual increases could hit 6.2 percent, and privatized highways could soon become "Lexus highways," unaffordable for those on limited incomes. Those who can't afford higher tolls may use smaller, local roads that are inherently less safe.
And will a private operator ultimately act in the public's best interest? Many targets of privatization are crucial links in our freight and military logistics chains. Congress has a constitutional obligation to protect interstate commerce and our national defense, which makes it a necessary partner in the decision-making process.
Private operators may be reluctant to expand highways if forecast increases in traffic levels could not produce sufficient revenue increases. Congestion may go untreated if contracts have noncompete clauses that prohibit or discourage construction that would reduce traffic on the private highways.
This is not to say that public-private partnerships have no place in helping to solve the problem of how to fund our nation's infrastructure needs. Private financing can play a role, especially where it creates new capacity.
Having served two terms as governor of Kansas, I understand the pressures that our leaders face to find immediate solutions to complex problems. But I also know that constituencies expect their leaders to have the political will to do what's right rather than what's easy.
I challenge our leaders to find that will on this issue.
Just last year, America celebrated the 50th anniversary of the Dwight D. Eisenhower System of Interstate and Defense Highways. It would be a shame to see this system, the best in the world, be transformed during the next several years into a patchwork quilt of privately operated toll roads.
Former Kansas Gov. Bill Graves is president and CEO of the American Trucking Association. www.trucking.org
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