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Group Finds Toll Roads Not in Public Interest

April 16, 2009

Group Finds Toll Roads Not in Public Interest
Public interest think tank issues report critical of road tolling movement.

PIRG report coverThe left-leaning US Public Interest Research Group (US PIRG) earlier this month issued a report calling into question the benefits of using private tolls to construct or maintain roads. The report examined all fifteen completed road privatization projects in the US along with 79 known proposals nationwide.

“Though these privatization deals seem to offer state officials a ‘quick fix,’ they often pose long-term threats to the public interest,” the report found. “The economics of these deals are such that the upfront concession payments are unlikely to match the long-term value of the higher tolls that will be paid by future generations and not collected for public uses.”

The report cited the specific example of how Cintra-Macquarie, a private Spanish-Australian consortium, paid Indiana officials $3.8 billion to take control of the Indiana Toll Road. Officials used this windfall to finance a ten-year transportation plan. Although Macquarie told private investors that it would recoup the $3.8 billion in just fifteen years, the public will be paying the tolls for a full 75 years. This illustrates that the short-term benefits of the tolling route can be irresistible to politicians who are not likely to be in office a decade after the deal is struck.

“Whatever structural budget shortfalls Indiana faced before the deal will return in the 11th year, but the state will need to face these shortfalls without revenue from its toll road,” the report explained. “Potential investors claim that by outsourcing toll collection to a private company, drivers’ anger will not be directed at the politicians who authorized the toll hikes.”

The report found that the tolling concept necessarily dilutes public control over transportation policy because the decision to impose tolls on certain roads leads to spill-over traffic on neighborhood side streets as drivers seek free alternatives. Non-compete clauses in tolling contracts further bind the ability of local officials to take action to meet the needs of the public. That need is impossible to foresee over the course of deals that have the force of law for up to 99 years.

US PIRG does not oppose all privatization with respect to transportation.

“When it comes to the question of public versus private provision of government services, it is a matter of where best to draw the line,” the report stated.

To that end, the report offered a number of recommendations to address the major problems in privatization agreements concerning newly constructed roads. It found that all deals should be limited to no more than thirty years, that the public should receive the fair value from all future toll collections, the full details of all contracts should be made open to public comment before approval, and an elected legislature must approve and be held accountable for all tolling decisions.

A copy of the report is available in a 900k PDF file at the source link below.

Source: PDF File Private Roads, Public Costs (US Public Interest Research Group, 4/1/2009)

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