Tolls – or highway robbery?

April 18, 2007

Jay Bookman, ATLANTA JOURNAL-CONSTITUTION

All over the country, politicians are being seduced with a line of baloney that almost always proves effective, whether it's peddled by an alleged Nigerian widow with an e-mail account or by pin-striped suits from Wall Street.

"Get your free money!" the sales pitch goes. "Billions and billions of dollars in free money! Step right up and sign on the dotted line . . ." And public officials, desperate for money to build badly needed roads and bridges, are indeed stepping right up. In Indiana, a private consortium recently handed the state a cool $3.8 billion in return for the right to collect tolls for 75 years on the state-owned Indiana Toll Road. In Chicago, city leaders have collected $1.83 billion in return for a 99-year lease on the Chicago Skyway toll road. In Texas, a private group has agreed to pay the state $2.1 billion just for the right to build a toll road that doesn't even exist yet. And by the end of the year, Georgia Transportation Commissioner Harold Linnenkohl expects a similar type of long-term lease deal will be floated for an unspecified project in metro Atlanta.

It all sounds so sweet: State officials get billions of dollars without having to raise taxes; private companies get long-term leases on toll projects that are all but guaranteed to turn a nice profit for them, year after year; bankers, financial analysts, lawyers and consultants all get a healthy cut of the billions passing through their hands. Everybody's happy.

But to make such an arrangement work, there's gotta be a sucker somewhere. Look in the mirror. You're it.

Think for a moment about the nature of toll roads. They depend on a captive market of travelers who have little or no choice but to pay extra to get where they need to go. That doesn't mean that tolls can't be a useful way to finance roads. When travelers are tapped to finance a highway they use, a toll essentially becomes a users' fee, particularly if the tolls are removed once the project is paid off.

The concept of long-term leases, however, takes that approach to a whole 'nother level. In Indiana, Texas and elsewhere, government is putting its captive market of toll-paying travelers in the hands of a private company, which is free to generate revenue by jacking those tolls higher than elected officials would dare.

That's where the "free money" paid to state governments really comes from — higher tolls paid by their own citizens.

The long-term leases offer a way for government to privatize a tax hike. Even worse, that higher tax will be paid solely by the users of those toll roads, while revenues from that project benefit the entire state.

It's hard to blame Linnenkohl and others in his position — they are simply responding rationally to an irrational situation. States are in dire need of hundreds of billions of dollars to build highways, transit systems and other transportation infrastructure, and gasoline taxes can't generate that kind of money.

The federal gasoline tax of 18.5 cents a gallon, for example, hasn't increased since 1991, even while the cost of highway construction has soared. As a result, the federal Highway Trust Fund is projected to run dry by 2009. At the state level, Georgia's gasoline taxes haven't been increased since 1979, and they have become grossly inadequate to the state's needs.

Nonetheless, state and federal representatives claim that trying to raise the gasoline tax would be political suicide. That's nuts. Gasoline prices jump 30 cents a gallon in a week or two, with much of that money going overseas so that Arab sheiks can build ski slopes in the desert, and nobody even blinks an eye. Yet Georgians aren't smart enough to accept a 10-cent-a-gallon increase, introduced over a number of years, with all the revenue to be spent here on their own behalf?

By refusing to consider raising the gas tax, we are forcing governments to turn to convoluted and grossly inefficient methods of fund-raising such as leasing toll roads — and their captive markets — to private firms.

That approach is a particular rip-off for metro Atlanta commuters, who already pay a lot more in gasoline taxes than they get in return in transportation spending. Financing new metro projects largely through tolls, rather than direct taxes, will compound that inequity.

And if those metro toll projects are leased to private industry to get cash for investors and state government — well, every scam needs a sucker.