GANNETT NEWS SERVICE
WASHINGTON - Facing worsening traffic, deteriorating roads and looming shortages in taxpayer funds for highways, states are turning to a controversial way to raise money - allowing private industry to operate toll roads in return for cash up front.
They're inspired by the combined $6 billion that Indiana, Chicago and Virginia received over the past couple of years from foreign companies that received long-term contracts.
In the past year alone, lawmakers in 11 states - Arizona, Colorado, Hawaii, Illinois, Mississippi, New Jersey, Utah, Nevada, Maryland, Missouri and Indiana - have filed legislation to award long-term leases to private companies to run and manage toll roads, according to Jim Reed, a transportation expert at the National Conference of State Legislatures.
Last year, Indiana awarded a 75-year lease to operate the Indiana Toll Road. Fresh legislation would allow the state to look at leasing other highways, Reed said. Similar bills are expected in the coming months in a host of other states, including Delaware, Pennsylvania and Tennessee.
"If a state does not have the stomach to increase the gas tax, does not have the stomach to increase tolls, this becomes an attractive source of upfront capital," said Joe Giglio, a Northeastern University business professor and a former member of the Massachusetts Transportation Finance Commission.
Anticipated funding shortfalls in gas tax revenues by 2011 due to conservation coupled with perennial congestion that generates need for repairs and new roads are coming together to create a crisis of sorts," Reed said. "We feel like states ought to have a menu of options."
State officials say they can use immediate cash infusions from private toll road operators for different road projects or other priorities like fixing schools or lowering property taxes.
When Chicago, Indiana and Virginia got big bucks, "It definitely got people's attention," Reed said. "There was a lot of interest and excitement primarily because there was a large pot of money available now ... rather than later."
However, critics want states to hit the brakes on the toll road privatization idea. They warn that motorists could end up paying higher and higher tolls for decades to come. Congressional critics say the federal government should provide more money for highways instead of endorsing the privatization plans. But lawmakers are reluctant to raise the gas tax because pump prices will rise.
Some skeptics also worry about foreign companies having control over American roads.
"The public (is) ignored or purposely locked out from negotiations while politicians salivate over filling state coffers with billions in fast cash," said Greg Cohen of the American Highway Users Alliance. "It is no wonder that such deals have been greeted with voter disapproval."
Businesses used to build roads early in U.S. history, but that trend virtually ended more than 100 years ago. In 1956, the federal government used tax dollars to build interstate highways, which created a mindset that it's the government's job to build and maintain roads, Giglio said.
In 1988, Virginia allowed a private company to build the Dulles Greenway, a 14-mile toll road reaching from Dulles International Airport into Washington's outer suburbs. Florida and North Carolina also have privately operated toll roads.
The United States is a newcomer to the concept. Europe has had privately managed toll roads since the 1960s, with France, Norway and Italy leading the way, said Neil Gray, lobbyist for the International Bridge, Tunnel and Turnpike Association, which counts private toll operators among its 120 members.
The Bush administration supports increased industry involvement in meeting the nation's transportation needs. The Federal Highway Administration has prepared prototype legislation state lawmakers can use as a template to write their own bills expanding the industry's role, including allowing them to operate toll roads.
Motorists already contribute to roads by paying 18 cents a gallon in federal gas taxes and more in state taxes, critics say. People shouldn't have to pay more tolls to fatten corporate bottom lines long after the companies have recovered money they paid states up front, said Wisconsin Transportation Secretary Frank Busalacchi during testimony this month before a House subcommittee.
"If anybody thinks this is not about money, they're wrong," he said. "The private sector's main responsibility is to the shareholder and to make money. Profit is their purpose."
Contact Raju Chebium at rchebium(AT)gns.gannett.com
Private payouts for public roads
Gannett News Service
WASHINGTON - In 2005, Chicago got $1.83 billion from a consortium led by Cintra, a Spanish construction contractor, and Macquarie Infrastructure Group, an Australian financial firm, for a 99-year lease for the Chicago Skyway, a 7.8-mile road built in 1958, according to documents from the House Transportation and Infrastructure Committee. For more information, go to http://www.chicagoskyway.org.
The same consortium paid Indiana $3.8 billion last year for a 75-year lease of the Indiana Toll Road, a 157-mile-long highway built 50 years ago. As part of the deal, the consortium agreed to make $305 million worth of improvements to the road, including putting in a new electronic tolling system. In April, commercial users will see higher tolls, but passenger vehicles won't be affected. For more information, go to http://indianatollroad.org.
Also last year, Virginia leased the Pocahontas Parkway to Australia's Transurban Group for a 99-year term. That deal is worth about $520 million, according to congressional documents. The parkway, which was opened in 2002, links a beltway around Richmond with Interstate 95. For more information, go to http://www.pocahontasparkway.com.
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