Skip to comments.Private Toll Operators Salivate Over Donald Trumpís Infrastructure Plan
Posted on 06/11/2017 11:05:39 PM PDT by Tolerance Sucks Rocks
Investors are hoping to seize upon the $1 trillion infrastructure plan proposed by President Donald Trump to transform the nation’s highways, bridges, and tunnels into assets they can monetize by adding tolls and other user fees.
The Trump infrastructure plan, which the administration plans to roll out this week, is centered on the idea of “asset recycling,” which refers to the process of securing new infrastructure spending by leasing the operations of existing public property to private operators.
The privatization-centered scheme has the nation’s largest toll operators salivating. Transurban, Cintra, and TransCore, three major toll operators, have retained federal lobbyists to influence the upcoming plan.
Transurban, which operates Washington-area Beltway tolls, has been accused of price gouging and predatory debt collection practices. In one lawsuit, a driver claimed that she was charged $3,413.75 for unpaid tolls, fees, and fines after Transurban failed to accept her initial payment for $104.15 for missing tolls on the Beltway toll lanes. Washington Post writer Fredrick Kunkle assailed Transurban for “price gouging” after the company hiked its rates to $30 during a winter snowstorm.
During an investor day presentation last month, Transurban’s Jennifer Aument, in charge of North America operations for the Australian company, hailed the Trump infrastructure plan as an opportunity for toll operators like Transurban to expand.
“The people that Trump has put in his administration, they are people who get our business,” Aument said. Trump, Aument added, had appointed several individuals who “were personally involved in working on Transurban’s projects under the Bush administration,” including the Beltway express lane tolls.
At least one prominent Trump official involved in the infrastructure plan has recent financial ties to toll operators. Jeffrey Rosen, the deputy secretary of the Department of Transportation, previously provided legal services to Kapsch TrafficCom North America, according to his ethics disclosure. Kapsch TrafficCom provides tolling technology to several public agencies, including the Port Authority of New York and New Jersey.
The concession model has been used in the past to finance infrastructure deals without raising taxes or securing other sources of revenue.
Former Indiana Gov. Mitch Daniels negotiated a deal in 2006 to lease a stretch of Indiana highway to a consortium of investors. The money raised from the deal financed construction in other parts of the state, while the investors were promised toll proceeds for 75 years. The Indiana Toll Road went from $4.65 to $8 for a car traveling the length of the highway, with semitrailers now paying double.
The public-private partnership model now favored by Trump administration officials is being spearheaded by White House economic adviser Gary Cohn and Transportation Secretary Elaine Chao. We like the template of not using taxpayer dollars to give taxpayers wins, Cohn told reporters on Friday, explaining his preference for the asset-recycling approach.
But many fear that such privatization schemes simply shift the burden from taxpayers to motorists and truckers, while creating a two-tier system that unfairly impairs the ability of low-income drivers from accessing the nation’s interstate highway system. In the process, a small group of investors reap the most rewards.
Cohn and Chao, notably, have ties to the financial firms positioned to exploit the tolling of America’s highways. Cohn is the former chief operating officer of Goldman Sachs and Chao is a former board member to Wells Fargo. Both firms have expressed interest in toll road deals. Though both Cohn and Chao have said they will recuse themselves from matters that directly affect their former companies, it is unclear if they will recuse themselves from private-public infrastructure policies that will attract interest from investment banks.
The rush to embrace a public-private model based on tolling and other private financing methods is seen as a political winner that can bring infrastructure-friendly Democrats together with Republicans concerned about the cost to taxpayers. But the short-term solution based on political expedience may have long-lasting societal impacts.
Alan Pisarski, a travel consultant, noted in a recent column that the fundamental justification for the interstate system was to connect America for military, economic, and social reasons. There was a reason the first 50 years of the national highway system prohibited tolling.
“Where do those people and trucks go if they are priced off the interstate highways by tolling? What national interest can justify that action?” Pisarski asked.
I’m obviously missing something.
So we see a public private partnership, in which these toll companies come in, pay money towards road improvements and upgrades, but then, turn the roads into toll roads. And then everyone using the road pays a toll.
How is this fundamentally different, from biting the bullet and raising gas taxes, or other taxes, to pay for road maintenance??? What am I missing?? How is this good for taxpaying drivers on these roads, who instead of paying road taxes, pay a toll to use the road instead??? They are still paying, just paying a toll company, right????
The Intercept? Reality Leigh Winner’s favorite blog?
One big advantage - it means that politicians and lobbyists can’t redirect the money to non-road-related pork projects. Which is where a lot of the money from those tax sources you mentioned ends up going - unused bicycle trails, useless mass transit projects, boondoggles like the Big Dig, California’s high speed rail to nowhere... All things paid for with money that should have gone to fix, maintain and upgrade highways.
It also means that only the users have to pay for a particular road - those who choose not to use it pay nothing.
Yes, it can be subject to abuse - but overall, a well administered and overseen toll authority works out far better than letting the politicians have more road money to funnel into things that are not roads and infrastructure.
privatization is a good thing. the free market does everything better than the government; everything.
We should be arguing for full privatization of interstates. Sell the land and improvements with absolutely no conditions and no regulatory oversight.
Let the free market reign and we’ll soon see better quality roadways with less congestion.
One other issue - this begins to take the “highway money” club away from Congress so they can’t use it as a tool to force compliance with an unpopular agenda (such as their use of the club to force Montana to impose highway speed limits pleasing to the Feds.) It also removes the same club from the arsenal of the President; during his terms, the Obama Administration routinely made sure states that didn’t vote for him, like Texas, got mysteriously shortchanged on what they were supposed to get just to maintain the Federal interstates. Yes, Obama weaponized the FHA.
The Feds can’t withhold money they never got their hands on.
One difference might be that once a private company officially owns existing infrastructure, with no competition, they might not be adequately answerable if they fail to maintain it or charge excess tolls. At least legislators can be voted out of office.
When there is competition. Otherwise there is not a "free market". I always think of a company that used to control restaurants at a lot of highway rest stops on the East coast. Once they had a long term contract in a particular state, they had no incentive to maintain quality above a minimum level and the food sucked. How is this different from a company that gets long term control of a large section of interstate highway?
A) you’ll still be paying the taxes, along with the tolls.
B) the rights-of-way, original design and subsequent expansions of the freeway were all already paid for by taxpayers, in the case of interstates by people from other states too.
C) in CA at least, some of these operators are only investing in the toll taking equipment on existing, unimproved road (I-680 from Walnut Creek south is an example)
I’d be willing to bet money that at least in CA the contracts for lane conversions will include stuff like “will complete bike trail X” and “will fund segment Y of High Speed Rail...”
A positive side, granted.
there are many many alternatives to using the interstates.
full privatization implies the buyer needs to have a 40-50 year perspective. Therefore, he can not overprice interstate use. If he does, then people will gradually move away. He’ll be stuck with a very expensive albatross with massive ongoing maintence costs.
Plus it’s important to realize a private owner will improve quality AND reduce costs versus government.
The conversion/rebuild/expansion of I-635 in Dallas is a good example of how to work it. The Feds under Obama refused to fully fund needed repairs (as the Feds are supposed to do) let alone needed updates and upgrades, so Texas went ahead and converted much of the highway. There is a subsurface six lane toll road running under the six or eight ‘free’ lanes that were completely rebuilt. No ‘free’ lanes were permanently taken away and in fact the rebuild added a little capacity and is a massive improvement in all respects. The toll road of course adds much additional capacity - but the payments made to use the toll lanes go to maintain the entire thing, both ‘free’ and toll lanes.
Basically, they didn’t take away any free capacity and they added more at no cost to the taxpayer in general. It’s not like the initial taxpayer investment is being stolen. Only users of the additional capacity will pay anything additional, and without the toll road there would be no expansion or improvements.
As for the CA toll road operators - I did say “properly administered”. Nothing in California is properly administered; the local tollway authorities here spend money constantly on upgrading and improving their roads. Potholes get filled in hours and they provide complimentary roadside assistance, to use a couple examples of their improved service offerings. The toll roads get repaved every few years instead of every few decades. Signage is fanatically maintained. When was the last time you heard of a state highway department doing that?
Possibly, but I suspect not. Trump probably will not be interested in that and will possibly leave CA out of said partnerships - or use Federal supremacy to simply bypass the state government. Allowing Interstate conversion to tollways is actually a Federal function.
The theory is that the private companies will tend to run the facilities more efficiently. The Indiana toll road had no toll collectors the last time I drove on it; I’m sure that never would have happened if it was still run by the state.
This is laughably untrue in my area and in a large part of the country with which I am familiar.
Taking a plane might be an alternative if you are traveling a long distance and live near an airport, don't need to bring much with you, and can arrange transportation on the other end.
Shipping goods by rail might be an alternative if you really have a lot of heavy items and live near a rail siding.
Driving on small state highways or back roads might be an alternative if you have lots of time to go a much longer distance and can get around natural obstacles.
This is not many, many alternatives.
Things might be headed in the direction you propose but I don't think it is right to call this a "free market" especially as it will be a guaranteed monopoly. It will be sort of like the situation where there is only one phone company or internet provider.
If the tolls replace all fuel taxes, license plate fees and any other transportation related fees then perhaps it might be worth considering, however, it is very likely the present tax structure will continue and the consumer will just have to incur the additional costs of tolls.
What next, privatize rivers??????????
The tolls replace those items on tolled roads. You still have to pay for the non-tolled roads in an area... like all the roads you travel to get to the toll road. However, if you don’t take the toll road, you pay nothing additional for it and the alternative is cranking up the various taxes and fees... then getting nothing because the politicians spent it all on high speed rail instead of fixing the highways and bridges.
As I noted above, the way it’s done in Texas these days is to not remove the ‘free’ lanes, just to fund the expansions and maintenance with tolls on the express lanes.
One reason Texas is doing it this way is because we had several interstate bridges start getting big gaping holes in their road decks (including one ‘surprise’ car swallowing hole on I-30 over the Trinity River) due to the lack of the Feds paying to maintain their highway. The economy was crap so taxes couldn’t be raised. What’s left to do?
We actually have an interesting situation in Texas where we *may* soon have two competing tollways serving the same general areas.
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