(Publisher’s note: Virginia counts on public private partnerships to help our infrastructure needs,. Restricting these partnerships would be a significant blow to our state. This article is reprinted from Surface Transportation Innovations, a publication of the Reason Foundation.)
Despite growing opposition from state DOTs and numerous transportation groups, Sen. Jeff Bingaman (D, NM) continues to defend his trio of anti-PPP measures that are included in the Senate reauthorization bill (S. 1813). Rather than rethinking his position in the face of bipartisan opposition, the Senator repeated his ill-conceived notions in an op-ed piece in the Sunday, May 6 issue of The Washington Post, headlined “Taxpayers Paying for Roads Twice.”
Among the many rebuttable assertions in the piece are the following:
- That much of the toll revenues from the privatized Indiana Toll Road “go straight to the company’s bottom line”—as if companies that build highways and others that maintain them aren’t also for-profit enterprises.
- That “the state uses the upfront cash for anything it wants”—neglecting to point out Indiana’s use of the proceeds to fully fund a 10-year highway capital improvement program.
- That drivers who have “paid for the road with 55 years’ worth of their tolls . . . now essentially have to buy it back”—as if the toll road will not need complete reconstruction, as well as widening, during the 75 years of the long-term concession.
- That because of the lease, Indiana should lose federal maintenance funds in proportion to the 157 miles of the Toll Road—even though it was getting those dollars as a state-run toll road all along.
Surprisingly, Bingaman ends by expressing support for the private sector to play a role in “building new roads, tunnels, or lanes” such as the HOT lanes being added to the Capital Beltway. What he does not realize is that toll concessions to rebuild and modernize existing toll roads and toll concessions to build all-new capacity are essentially the same thing. Over a span of 50 or more years, major construction or re-construction will be required in both cases, and toll revenues are the best way to pay for major capital costs and ongoing operations and maintenance. So if it’s legitimate for private investors to make a profit on new toll roads, it’s equally legitimate for them to do so on modernizing existing ones.
My Reason colleague Baruch Feigenbaum has written a policy brief explaining what’s at stake on these issues as House and Senate conferees work on producing a consensus reauthorization bill. You can download “The Senate’s Assault on Transportation Public-Private Partnerships” from http://reason.org/studies/show/senate-transportation-bill-ppp.
A growing chorus of concerned transportation advocates is weighing in with Congress on this issue. Eight of the nine Indiana House members (including all three Democrats) sent a letter to the House leadership of both parties objecting to the Bingaman provisions. The National Governors Association sent a letter to committee chairs Sen. Barbara Boxer (D, CA) and Rep. John Mica (R, FL) in support of greater flexibility for states and against Bingaman’s anti-PPP provisions. Reason Foundation worked with the Bipartisan Policy Center and Building America’s Future on a similar letter to House and Senate transportation leadership. Others actively working these issues include AASHTO, ARTBA, ASCE, AGC, DBIA, IBTTA, the U.S. Chamber of Commerce, and the U.S. Tolling Coalition.
My guess is that Sen. Bingaman had no idea of the depth and breadth of support for transportation PPPs within the transportation and infrastructure community. He seems to have stirred up a hornet’s nest with his ill-considered assault on this critically important tool.
Update: Indiana Gov. Mitch Daniels wrote an outstanding response to Bingaman’s piece, which the Washington Post published on May 10th: “Indiana Didn’t ‘Sell’ Its Toll Road,” which I commend to your attention.