Selling Our Assets To The Highest Bidder
Let's be clear: Indiana didn't sell the property -- but it gave Spanish construction firm Cintra and Australia's Macquarie Infrastructure Group (MIG) a 75 year contract to manage the road as well as set and collect tolls. It also gave the firm millions in tax breaks. And just before the lease kicked in, Indiana raised tolls for the first time in two decades -- almost doubling the fees for cars. That's because the contract specifies maximum annual percentage increases in the toll rate.
Indiana was not alone. In Virginia, an Australian toll road operator got a 99-year lease for the Pocahontas Parkway. In Texas, Cintra and Zachry Construction got approval to build and operate a 40-mile toll road near Austin.
And these are the first of many, if America's unwillingness to invest in our own infrastructure remains a core political practice. Politicians insist that we voters won't stand for increased road taxes or tolls, but they see little political fallout or harm from having us our fork over money to a foreign corporation instead. I don't get it.
According to Mother Jones, there are proposals to privatize the New York Thruway as well as the Ohio, Pennsylvania, and New Jersey turnpikes.
More than 20 states have enacted legislation allowing public-private partnerships, or P3s, to run highways. Robert Poole, the founder of the libertarian Reason Foundation and a longtime privatization advocate, estimates that some $25 billion in public-private highway deals are in the works—a remarkable figure given that as of 1991, the total cost of the interstate highway system was estimated at $128.9 billion.
There's another wrinkle in the Indiana plan, according to Mother Jones. Environmentalists "noticed an effort to revive (and possibly privatize) a long-stalled project to construct Interstate 69, the so-called NAFTA highway, through the farmlands of southern Indiana." I've been meaning to write about the NAFTA Highway for months; looks like it's also overdue.
Why foreign firms? Because unlike the United States, where public roads have been non-toll (for the most part), many other western countries have gone down the toll road route. MIG, for example, operates toll roads in Canada, Germany and the UK.
No surprise here: Congress has been an enabler.
The 2005 highway bill changed the tax code to allow private firms to raise tax-exempt financing for road projects, something that only governments were able to do up to now. (For congressional pork buffs, this was the same legislation that contained Alaska Republican congressman Don Young's "bridge to nowhere," and that, by way of homage to Young's wife, Lu, was named the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users, a.k.a. safetea-lu.) The bill also expanded eligibility for a transportation subsidy program that includes loan guarantees and lines of credit, and created a pilot program that lets participating states use tolling to finance interstate highway construction and invite private-sector participation on the projects. "It's a very, very sweet deal," says a veteran congressional transportation committee staffer who requested anonymity because of his role advising members on highway policy.
According to Rep. Peter DeFazio (D-OR), the state of Indiana has sold out its citizens. "[The consortium has projected] that they already would have broken even around the 15th year. So we've committed an asset for 75 years and after 15 years the state could have been making money on it."
This is a far cry from President Eisenhower's vision of an integrated highway system that rests on a federal-state partnership.