Renting our highways
20 March 2008
The privatization or leasing of roads into private hands has been the unfortunate trend some states and provinces fall back on for fast money
SC&RA began nearly 60 years ago as a national division of the American Trucking Associations (ATA). Although the current nature of our respective associations requires us to focus our energies on many different priorities, we often and ourselves working toward the same goal.
Th at clearly is the case with our strong mutual opposition to the privatization or leasing of roads, bridges or tunnels. Increasingly, states facing budget crises look to their highways as a potential source of quick cash.
About a third of the states are considering putting toll roads and other assets into private hands to help pay down debt and free money for other needs. The trend started two years ago, when Chicago Mayor Richard M. Daley (D) pushed through a 99-year lease of Chicago's 8-mile Skyway to Australia's Macquarie Infrastructure Group for over $1.8 billion.
The most recent example is New Jersey, which plans to decide in May whether to put the New Jersey Turnpike and Garden State Parkway into private hands. The state could gain about $15 billion by leasing them for 75 years to a private company or consortium.
But the road can get bumpy, both configuratively and literally, once private enterprise gains control of these highways. Earlier this year, peak tolls for combination trucks on Highway 407 in Toronto, Canada increased about 4 cents Canadian per kilometer, to about 53 cents, which is about 75 cents US per mile. The province of Ontario leases this road to a syndicate composed of Macquarie and Spain's Cintra.
Will these additional funds go back into the highway or into the consortium's coffers? Remember, these are profit-oriented enterprises, not charitable foundations.
Last June, Indiana leased the Indiana Toll Road for 75 years to this same foreign consortium for $3.85 billion. During a congressional hearing, Oregon Representative Peter DeFazio (D) challenged the decision of Indiana Governor Mitch Daniels (R) to lease the road. “So you're saying that there's no political will to raise the tolls, but if you enter into a binding contract which gives a private entity the right to infinitely raise tolls, then that'll happen - but politically you couldn't say we're going out and raise the tolls,” said Defazio. “Are we outsourcing political will to a private entity here?”
Apparently, many Indianans were asking similar questions. During last year's federal races in November, the state's congressional delegation swung from seven Republicans and two Democrats to five Democrats and four Republicans. Political analysts, including NBC's Tim Russert, said Republicans were “weighed down” by the leasing of the toll road.
SC&RA will continue to monitor this issue and keep members apprised of significant developments. The Association also supports ATA's privatization policy, which includes recommendations to: restrict the use of revenues generated by the sale of the lease to un-tolled highway projects; set toll rates that only cover costs related to the toll facility plus a reasonable return on investment; provide adequate facilities for the trucking industry; rebate state fuel taxes paid by facility users; apply constraints on private operators’ ability to impose fees and restrictions on vehicles; establish a “sinking fund” for continued maintenance and operation; prevent clauses that restrict improvements to competing roads; require open road tolling and make the technology compatible with that used on other Interstate toll roads; and create performance specifications that ensure operations and maintenance that guarantee safety and provide for acceptable trafic flows.
We also agree with ATA that any privatization agreement should create an oversight group with representation from major stakeholders, including the trucking industry.