Foreign Privatization of U.S. Highways

May 21, 2007

By Henry Lamb, AUGUST REVIEW 

American roads are the hottest commodity in the international marketplace.  State and local governments are falling all over themselves to sell off highways, bridges, and all sorts of other revenue-producing infrastructure, to international financiers who are eager to snap up structures Americans have already paid for, and for which they continue to pay maintenance costs through endless taxes.

The Chicago Skyway, for example, brought $1.83 billion from a Spanish-Australian partnership. The 157-mile Indiana tollway, brought $3.85 billion from the same partnership.  And the state of Texas has recently concluded a deal to sell a Trans-Texas Corridor for $7.2 billion to the same Spanish company who partnered with a Texas construction company.  

What’s going on here?  Why are government officials so eager to sell off our infrastructure?  Because it’s a win-win deal for everyone - except the people who pay taxes and use the highways.  Governments get a pot full of cash up front, and the “public-private” partnerships get a long term cash-cow.  The taxpayers and highway users get ______, well, you fill in the blank.

Actually, these “sales” are long term leases, which is much worse than an outright sale.  The Chicago Skyway deal is for 99 years.  The Indiana Tollway is for 75 years.   In what condition will these important roads be when they are returned to government?  The folks who celebrate the deals today - and spend the billions - will be pushing up daisies by the time a new crop of government officials will have to explain why the roads have crumbled.  

The roads that exist today were bought with taxes and tolls.  They are maintained with taxes and tolls.  Neither taxes nor tolls will be reduced when these roads are sold to public-private partnerships.  In fact, taxes are likely to increase, and the tolls are certain to increase.  Tolls for commercial use on the Indiana Tollway were scheduled to double during the first three years of the deal.  Auto tolls would remain flat for the first three years, and then “catch up” with the commercial rate.  

When the taxpayers and highway users get slapped in the budget by these increases, and complain to their elected officials, the elected officials can do nothing but say “we’re sorry, it’s out of our hands for the next 99 years.”   When the roads begin to crumble and potholes begin to appear, elected officials can do nothing but say, “we’re sorry, it’s out of our hands for the next 99 years.”

When the people of Texas learned about the $7.2 billion deal the state was constructing, they overwhelmed the legislature and demanded a two-year moratorium during which the consequences of the deal could be studied.  The moratorium legislation passed the state House and Senate by a combined vote of 165 to 5 - more than enough to override the governor’s threatened veto.  But legislators are trying to take the teeth out of the legislation by exempting half the roads in Texas.

The Chairman of the Senate Transportation Committee says that the public-private partnership project must go forward, because the state has not raised gasoline taxes in 16 years, and there’s not enough money to build the roads that are desperately needed.

Well, now, he didn’t say what portion of the state and federal gasoline taxes were spent on non-highway projects.  He didn’t say why the gasoline taxes were not increased if a valid need existed.  He didn’t say why the state could not raise the necessary construction funds the same way the public-private partnership will raise it - by pledging future revenues to pay for the funds borrowed.  He didn’t say why he is eager to turn public transportation over to a public-private partnership that is not accountable to the voters.

There is another reason for the media hype and popularity of public-private partnership funding.  To meet the anticipated construction costs of the NAFTA Super-corridor network, incredible sums of capital must be amassed - rather quickly.  Not all cities or states have the expertise or the credit worthiness to structure a multi-billion-dollar financing package.  It’s much easier to turn to an outfit that has done it before - and damn the consequences that will fall on another generation.

The sale, or long-term lease, of the nation’s infrastructure is not just a fix for immediate congestion problems, it is a method of financing a whole new infrastructure designed to allow goods to flow from Chinese-controlled ports in Mexico, throughout the United States, and into Canada.  Proponents of the project know that it will be much easier to get financing from public-private partnerships than from taxpayers who are already over-taxed.  Left up to the taxpayers in each state, the international NAFTA Super-corridor network would be in great jeopardy if even one state refused to cooperate.

That’s why it is necessary to take the matter out of the hands of taxpayers, and let the professional bureaucrats do what they know is best for the poor, uneducated taxpayers, who, in the end, must still pay the bill.  The sale of the nation’s infrastructure is nothing less than a national tragedy.

 

Henry Lamb is the executive vice president of the Environmental Conservation Organization (ECO), and chairman of Sovereignty International.