Posted on 06/02/2007 12:08:00 AM PDT by JohnHuang2
The nation's transportation experts have identified their top three priorities: a national freight network, urban congestion and connecting new urban centers with the interstate system. The American Association of State Highway and Transportation Officials, meeting in national conference last month, heard futurists predict that the cost of meeting the transportation needs would be $3.1 trillion over the next 25 years. State and local governments are turning to "public-private partnerships," or PPPs, to produce the funding.
The city of Chicago was happy to partner with a Spanish-Australian group that paid $1.83 billion for a 99-year lease to operate the Chicago Skyway. The same outfit paid Indiana $3.85 billion to operate the Indiana Tollway for 75 years. The same Spanish company has partnered with a Texas firm to give the state of Texas $7.2 billion to build and operate the first leg of the Trans-Texas Corridor. And Pennsylvania's Gov. Rendell is expecting a bid of between $15- $18 billion for the Pennsylvania Turnpike.
Most states have already enacted or are considering legislation to authorize this PPP financing of public infrastructure.
(Column continues below)
Public opposition to PPP financing encouraged the Texas Legislature to adopt a two-year moratorium on the state's PPP projects. The governor's veto, however, along with threats from the U.S. Department of Transportation, forced the Legislature to pass a watered-down compromise bill that blocks only future PPP projects, but allows the current Trans-Texas Corridor to go forward.
Public opposition to PPP financing encouraged chairman of the House Transportation & Infrastructure Committee James Oberstar and Transit Subcommittee Chairman Rep. Peter DeFazio to issue a May 10 letter to governors and state transportation officials that warned about rushing into PPPs that did not fully protect the public interest.
"We don't need their advice, frankly," said Indiana Gov. Mitch Daniels. He said the letter was "nothing but congressional posturing." Daniels' criticism was typical of the response from state officials.
National Surface Transportation Policy and Revenue Commission Vice Chairman Jack Schenendorf told the conference attendees the federal program no longer has a sense of mission, which has led to competition among the states for federal funds and to the proliferation of "earmarks" for local political advantage.
Regardless of the finger-pointing, the fact remains that driving in urban areas is a nightmare, and driving on the interstate system is like playing tag with 18-wheelers – and it's getting worse, not better. The people want relief, but not at the expense of bondage to PPPs.
Officials claim transportation revenues from traditional sources are barely adequate to maintain existing roads and do not provide for future construction. If this contention is true, the next question to be answered must be: Is this the result of inadequate fuel tax rates, or have the revenues from fuel taxes been siphoned off for other purposes?
This question directed at transportation officials produces an incredible array of slippery answers. Legislators, at every level of government, should insist that transportation taxes be spent on nothing but transportation. If transportation taxes are used exclusively for transportation needs and the revenue is inadequate, then a tax increase is required to meet the needs of the people.
Realistically, with gas prices above $3 per gallon, no politician will suggest increasing the gasoline tax, when it is so much easier to sell off a highway to a PPP and reap billions in new money – without having to ask the voters for a tax increase.
The voter still pays; he just won't have a vote. And the price he pays will be more. Toll roads built or operated by PPPs must pay a profit to the shareholders of the firms that put up the money. If the state builds and operates the infrastructure, that profit does not have to be built into the price, and therefore, the voter saves a bundle.
Infrastructure sales to PPPs are the hottest ticket in town. It's going to take a monstrous effort by the people to reverse this trend that is clearly rushing across the nation like a tidal wave. Transportation officials see PPPs as the answer to their revenue problems. Legislators tend to "go along" with the budget committee, unless they are peppered by contacts from their constituents.
Texas voters tried valiantly to put a moratorium on the sale of the Trans-Texas Corridor to Cintra-Zachry, the Spanish-Australian PPP that wants to pay $7.2 billion to the state. They succeeded in the Legislature, but threats from the governor and the federal government ignored what the people want.
In every state and every community, someone is planning, right now, to sell public infrastructure to a public-private partnership. Chances are better than good that the PPP has its roots in another country. This can't be good for America.
http://findarticles.com/p/articles/mi_m0XPQ/is_2004_June_14/ai_n6266716
“I’ve seen things you people wouldn’t believe; attack ships on fire off the shoulder of Orion; I’ve watched C-beams glitter in the dark near the Tannhauser Gate.”
... That’s all I’m prepared to say.
The difference is that this article talks about leases on public infrastructure, not private property transactions.
Hmmm...
I don’t think the Japanese tried to put “noncompete” clauses in their purchase contracts, which forbade the state or any other private developer from building a similar development in the same region. Many of these road leases have those types of anti-competetive provisions embedded deep in the lease agreements.
I would be fine with outsourcing TXDot to Japan, but a Spanish company?
Thanks. Your post + Wikipedia have added to my knowledge base.
Never been a fan of infrastructure privitization....unlike business, which out-sources to save money...the govt out-sources to give their buddies lucrative deals, costing taxpayers more.
Sounds more like Business-Socialism
Sucker's deal. Bud Shuister stole, begged borrowed every penny he could from the National highway Trust Find for Pennsylvania roads and they are still the worst (especially the Pa. Tpk.).
trying to maintain that road will break anyone's bank, unless they charge tolls of $50.00 per mile.
They'll charge it, the drivers will pay it, and they still won't fix it ----
I love this idea. First, our government taxes us for projects and keeps them forever. It is like putting money under a mattress. Second, road building is full of graft and overruns. Third, government can’t seem to both regulate and manage the same thing. Let them lease the management of the roads and then watch and criticize them as much as they want. If ever there was somebody who needs to clean out the closets and have garage sales, it is our governments. They are pack rats.
And thenlend your support to stopthenau.org
The NAU is the elitist's plan to create a North American Union. We have to stop this now!
The key aspect of these asset sales is that the owner cannot take it with him. We can always seize the property from the buyer if they default on their side of the bargain. We can always force him to accept our settlement terms.
The questions being raised by those who oppose these sales entirely misses the point: the taxpayers must demand that their money be returned to them. The taxpayers must not allow government to view this as some type of honey-pot windfall jackpot to fund more big government.
The basic problem here is that the Interstate Highway System celebrated its 50th anniversary last year -- and much of the system has reached the end of its useful life (just in case anyone has been wondering why this has become a hot topic in the last couple of years).
The cost of upgrading and rebuilding that infrastructure is going to be enormous, and fuel tax revenues simply aren't going to be an adequate source of financing for this monumental effort.
Leasing a highway to a private operator allows a state government to focus its resources on doing the "heavy lifting" in rebuilding the infrastructure, while the day-to-day cost of operating/maintaining the asset will be passed on to a private operator who can do it far more efficiently than government can.
The fact that the most vocal opponents of these lease arrangements are usually public-sector labor unions is a good reason to at least consider these deals seriously.
People forget that America was always a good investment. Most of American industry at the turn of the last century was owned by Brittish and German investors.
The folks who are screaming most about this are probably assorted US labor unions and domestic firms that want to keep the contracts. If outsourcing to reputable firms helps us lowers the cost of rehab’ing the roads, it’s called efficiency AND SHOULD BE ALLOWED.
International trade and efficient specialization across businesses located peaceful democratic countries should be encouraged. We are not talking about illegal immigration, terror money from Saudi oil, or any of that, in this piece.
Trans-Texas Corridor PING!
BTTT
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