Leasing Toll Roads is the Wrong Fix

I have a black-and-white photo, taken in 1956, of a truck making its way through the toll plaza on the Kansas Turnpike. The truck, emblazoned with the Graves Trucking logo, belonged to my father's trucking company. 

As it turns out, 1956 was the year the Kansas Turnpike opened. The concept for the three-year project predated the Federal-Aid Highway Act - PresidentEisenhower's historic initiative that created the Highway Trust Fund. In those days, a toll road was one of very few options available for states wishing to build a freeway system. Interestingly enough, some 50 years later, toll roads are again surging in popularity. But this time, they are seen as a quick fix for state financial woes.

Lately, there has been a flood of stories in newspapers across the country about state budget crises. With shortfalls and a general unwillingness to levy tax increases, state politicians are flocking to private investors for the highway equivalent of the payday loan.

In January 2005, the City of Chicago leased the Chicago Skyway (I-90) to a joint venture between the Australian Macquarie Infrastructure Group and Spanish Cintra for $1.83 billion to pay off city debt and fund non-transportation projects. In June 2006, Indiana leased the Indiana Toll Road (I-80/90) to Macquarie-Cintra for a one-time payment of $3.85 billion. Pennsylvania Gov. Ed Rendell recently authorized PennDOT to accept expressions of interest to lease the Pennsylvania Turnpike for as much as $16 billion.

Still other deals are in the works across the nation. It is easy to see why politicians are tempted by this new financing scheme. The nation's highway system is in dire need of maintenance and expansion and states are facing crushing debt loads. Funds to relieve these problems must come from somewhere.

The United States cannot maintain a national highway network if key segments are leased to the highest bidder. More than money is at stake. The leasing of America's roadways allows states to postpone their budget problems without protecting national interests and without a clear understanding of the long-term implications.

Through privatization, we effectively are witnessing the piecemeal dismantling of the nation's interstate highway network. It's happening with the support and encouragement of the U.S. Department of Transportation and - until recently - without Congressional input or review. If that idea raises eyebrows, it should.

The federal government is charged with maintaining a safe and efficient national highway system. Congress has a constitutional obligation to protect interstate commerce by preserving the significant investments that have been made into that system. Is leasing America's toll ways the correct thing to do for the good of the nation? We need to find an answer to that question at the federal level.

Alternatives to leases exist. Since its inception, the interstate system has been paid for with fuel taxes. Trucking pays nearly $15 billion, or 43 percent, in highway user fee revenues annually toward the $35 billion Federal Highway Trust Fund.

The current fuel tax system has worked effectively for many years. Fuel taxes can be uniformly administered, are based on verifiable measures of highway and vehicle use, are relatively simple to collect, not readily evaded, and, most importantly, do not create impediments to interstate commerce.

Privatization, by comparison, permits operators to increase tolls to prohibitive levels. At the same time, under lease agreements, the public loses a degree of control over the road, and there are no guarantees that service and safety levels will be maintained.

Little more than a year ago, highway privatization was a little-understood term that few were even talking about. Today, the momentum behind privatization is considerable. What began as a niche financing scheme is fast becoming a financing mechanism of choice, and the public interest has unfortunately been sacrificed in favor of the almighty dollar.

First, we must consider the impact of privatization on toll rates. Historically, the unspoken fear of voter backlash has kept rate levels affordable for all classes - a guarantee that does not translate in the private sector. Should a company decide to increase rates based on the average rate of change in GDP per capita (the accepted standard), users could see an annual increase of 6.2 percent based on historical figures. Privatized highways can become "Lexus highways," unaffordable for those on limited incomes.

Second, we must consider whether a private operator will ultimately act in the public's best interest. Many of the facilities under consideration for private takeover are among the most critical links in our freight and military logistics chains. In addition to protecting interstate commerce, Congress has a constitutional obligation to protect our national defense, which makes it a necessary partner in the decision-making process - a role it is considering, but has yet to play.

Lastly, and most importantly, we must make sure the actions we take today are motivated solely by the public good. Those who can't afford higher tolls may use smaller, less safe local roads. Operators of privatized roads will be motivated by the profit factor and may not operate the facility in a way that serves the public's needs.

Private operators may also be reluctant to expand the highways if forecasted increases in traffic levels do not produce sufficient revenue to justify the investment. Congestion may go untreated if states sign lease contracts with non-compete clauses that prohibit or discourage the construction of highways that would reduce traffic on the private highways.

This is not to say that public-private partnerships have no place in helping to solve the problem of how to fund our nation's infrastructure needs. Private financing can play a role. But it should be a limited role.

We are a society spoiled by instant gratification and access. Having served two terms as governor of Kansas, I understand all too well the pressures our leaders face to find immediate solutions to complex problems. But I also know constituencies expect their leaders to have the political will to do what's right rather than what's easy.

I challenge our leaders to find that will on this issue. We must take the time to consider the long-term effects that privatization will have on our nation's transportation system and we must explore all available options. As seriously as we consider the financial gains of a lease, we must also consider the potential for losing the benefits of a national asset that has served our country well and will continue to do so if our elected leaders resist the temptations of a quick fix.

Just last year, America celebrated the 50th anniversary of the Dwight D. Eisenhower System of Interstate and Defense Highways. It would be a shame to see this system, the best in the world, be transformed over the next several years into a patchwork quilt of privately operated toll roads.

Bill Graves, a former governor of Kansas, is president and CEO of the American Trucking Associations in Alexandria, Va.

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