The left-leaning US Public Interest Research Group (US PIRG) has issued a report entitled “Private Roads, Public Costs” that questions the benefits of using private tolls to construct or maintain roads. The report examined all fifteen completed road privatization projects in the US along with 79 known proposals nationwide. “Though these privatization deals seem to offer state officials a ‘quick fix,’ they often pose long-term threats to the public interest,” the report found. “The economics of these deals are such that the upfront concession payments are unlikely to match the long-term value of the higher tolls that will be paid by future generations and not collected for public uses.”
The report cited the specific example of how Cintra-Macquarie, a private Spanish-Australian consortium, paid Indiana officials $3.8 billion to take control of the Indiana Toll Road. Officials used this windfall to finance a ten-year transportation plan. Although Macquarie told private investors that it would recoup the $3.8 billion in just fifteen years, the public will be paying the tolls for a full 75 years. This illustrates that the short-term benefits of the tolling route can be irresistible to politicians who are not likely to be in office a decade after the deal is struck.
“Whatever structural budget shortfalls Indiana faced before the deal will return in the 11th year, but the state will need to face these shortfalls without revenue from its toll road,” the report explained. “Potential investors claim that by outsourcing toll collection to a private company, drivers’ anger will not be directed at the politicians who authorized the toll hikes.”
The report found that the tolling concept necessarily dilutes public control over transportation policy because the decision to impose tolls on certain roads leads to spill-over traffic on neighborhood side streets as drivers seek free alternatives. Non-compete clauses in tolling contracts further bind the ability of local officials to take action to meet the needs of the public. That need is impossible to foresee over the course of deals that have the force of law for up to 99 years.
US PIRG does not oppose all privatization with respect to transportation.
“When it comes to the question of public versus private provision of government services, it is a matter of where best to draw the line,” the report stated.
To that end, the report offered a number of recommendations to address the major problems in privatization agreements concerning newly constructed roads. It found that all deals should be limited to no more than thirty years, that the public should receive the fair value from all future toll collections, the full details of all contracts should be made open to public comment before approval, and an elected legislature must approve and be held accountable for all tolling decisions.
I don’t get why most people criticize public transit systems for needing government support to survive, but expect the government to give them roads without any transparent per-use costs. Roads are expensive. Expect to pay for them.
In the picture’s defense, I find Central Florida’s expressway system quite satisfactory. Sometimes the distance is longer, but its faster due to less traffic, and the roads are better in some sections (although in I-4’s defense, it seems to be under some new construction project every few months).
Nothing helps during rush hour, though. Tolls are expensive, but for the most part, I don’t mind paying them in exchange for what I get.
Of course, I have experienced some other state’s turnpikes and other toll road systems, and they’re pretty bad. I would never pay for it in those places. Even our free highways are better… but then again, we don’t really have as much union road labor (puts on flame suit).
I don’t have an issue with tolls. I spent much of the last two weeks on the Pennsylvania Turnpike, NJ Turnpike, NY Thruway, and Mass Pike–they are all in better condition than most roads in that part of the country. I pay to use them, but I receive a direct and obvious benefit for my payment.
I DO have an issue with privately owned/operated toll roads, and I think that is the point of the mis-named study/article. I’m not a fan of big government, but physical infrastructure too important for the government not to be operating it.
I agree with carlisimo that we should have much more transparency of the subsidies inherent to America’s happy motoring habit. Another good example is cheap or free curbside parking (See Donald Shoup’s work for a great explanation).
I’m not sure why there is so much complaining about toll roads, especially ones that are priced reasonably.
My wife takes a toll road to/from work. It saves her 20-30 minutes in each direction and costs $0.68 each way. Definitely well worth it.
you bet they are right, all this is public officials flogging off something the public were forced to pay into from the creation of the road system to a bunch of monopolists.
the motoring public will see no improvement in the provision of roading and will see constant increases in the price. And any competition to that monopoly road network will find it impossible to get started.
At least the road system being 100% run by the government is somewhat responsive to the democratic process.
“Roads are expensive. Expect to pay for them.”
Uh, what exactly do you think:
– Registration taxes
– Gas taxes
– Driver’s license fees
– Speeding tickets
– Personal property taxes (in sucky states like VA)
– Sales taxes on cars
– etc.
pay for? With toll roads, all you’re doing is paying an $80k a year for each fat union cow to take your money at a toll booth plus millions more to the private contractor that spent a few grand to bribe the right politicians to land the sweetheart contract.
Taken to it’s logical conclusion.
If we privatize every government function in a similar manner, does that mean that our taxes will go down, and people will only pay for the services they use?
It might sound good, but I can see a future where very important things (fire, police, schools, military) all go underfunded while the owners/operators of those things make a killing in profits.
Some things should not be profit driven – critical infrastructure is one of those things.
-ted
I’ll let everybody else debate the pros and cons of toll roads.
This picture appears to be looking Eastbound on the on the 408 in Orlando Florida! Based on the position of the toll gate and the sunlight/shadows on the road, I think it’s on the East side of town.
What you are looking at is a HUGE improvement over what we used to have. In the last five years, they’ve been upgrading the “inline” toll gates (the stupid ones that are right in the freeway “right of way”) to include an “express” chute (the left two lanes in the pic) and a “exact change and change provided” chute (the right two lanes that expand into four lanes at the gate ahead).
The express lanes allow those with electronic toll tranceivers to proceed through the gate at freeway speed. Much safer. And all it costs is $30 or so for the tranceiver. You can optionally connect it to a credit card or to a bank account, which is what most people do.
The absolute safest way would be to put the gates ONLY at the entrance/exit ramps, rather than in the middle of the freeway. We have gates of both varieties, and this makes no sense at all. It’s confusing to vacationers and out-of-towners. Many times, I’ve had to slam on the brakes to avoid rear-ending an Ohio, Michigan, or Minnesota plated minivan filled to the top of the windows with suitcases and beach apparel.
But at least the new express lanes help reduce bottlenecks and (somewhat) improve safety over what we used to have (all lanes were bunched up together).
I am sooo against toll roads.
First, the idea that a toll road will ever cease to be a toll road is a farce. At least here.
Second, they use emminent domain to take land, then put up a toll road, then sell it to a business. So, basically, they bought the family farm for under market value, and now some foreign investor gets the profits. Nice.
Third, as soon as the toll road goes in, the idea of putting a badly needed free road in to compete is a non-starter. So, you paid your taxes like everyone else, but the folks ten miles over get a free road, and you get a toll road. Fair?
Sure, toll roads tend to be nicer. So would your house if you could charge your employer your regular salary, and then make him pay again everytime you actually did work.
I am glad to see a left leaning organization figured out that politicians operate in their own self interest. I wonder what’s next. Do they figure out that the welfare state creates dependency and removes the motivation to be self reliant?
We need a new grass roots movement:
I will never knowingly vote for a politition who votes FOR either a Toll Road or a Red Light Camera.
Polititions listening? You can take THAT to the bank.
Don’t tell Gov. Rick Perry. He seems to want Texas to sell all of it’s roads to private toll road operators, then secede from the US.
Look at the great improvements private for-profit insurance companies and hospitals have given the US health care system these past few decades! Costs down, life expectancy up … oops, it didn’t work out that way, did it?
“Whatever structural budget shortfalls Indiana faced before the deal will return in the 11th year, but the state will need to face these shortfalls without revenue from its toll road,” the report explained.
They missed the fact that Indiana had been LOSING money on the toll road before the lease. Therefore, other revenue sources were being sucked into the money-losing toll road for operations, maintenance and repairs. With the toll road expenses now off the books, the money that is no longer plugging holes in the toll road’s budget can now be used on other projects. Does not seem like a loss to the taxpayers to me.
The Indiana Toll Road is probably one of the most unsafe stretches of Interstate (90) in the country. Lack of proper guard rails to prevent crossover accidents is just one of its offenses – I don’t expect any improvement under the new alien overlords.
what really annoys me is when a toll road is the main highway like I-95 in MD and DE. They hit you up for about $4 each, and it’s not the expense i mind, it’s the back up at the toll booths on weekends that makes me crazy. A friend said to get EZ Pass, well that doesn’t matter when theres a 2 mile backup every weekend at certain times at these toll booths before you can even get to the EZ Pass lane. I’d much rather spend an extra $100 a year in taxes if it went only to roads and get rid of these toll roads, than sit in a back up at toll booths whenever i travel
Although Macquarie told private investors that it would recoup the $3.8 billion in just fifteen years, the public will be paying the tolls for a full 75 years.
The $3.8 billion dollars that Indiana received doesn’t magically go away, either. Indiana used that money to build other roads. If you actually believe in the value of the investments in infrastructure that Indiana made, then those will provide benefits over 75 years. If you want to criticize that spending, fine, but Indiana would have still been better off to make the deal and put the $3.8 billion in the bank rather than keep a money-losing road.
“Whatever structural budget shortfalls Indiana faced before the deal will return in the 11th year, but the state will need to face these shortfalls without revenue from its toll road,”
Revenue from the toll road? Indiana had commissioned a study showing that it was costing more to pay the toll collectors and otherwise collect the toll than the revenue collected from the toll, much less when you also count the money to maintain the road, which the private group is also funding. (And that’s part of why the Indiana Toll Road was so badly maintained.)
Indiana received $3.8 billion for selling leasing for 75 years a money-losing asset. GM and Chrysler should be so lucky.
toll roads are one thing, they can be annoying but they tend to be well-maintained and fast so I don’t mind. In NY at least there’s a great parkway system that usually parallels these with no charge.
Privately owned toll roads are nothing more than a vehicle for politicians to extract kickbacks from the toll road system that already exists. I will admit that there is also the incentive to avoid resposibility for raising tolls, but it’s pretty clear that avoiding a short run of bad press is not as important in American politics as your ability to fundraise.
“The $3.8 billion dollars that Indiana received doesn’t magically go away, either.”
Except for the money Mitch Daniels invested in Credit Default Swaps.
“Indiana received $3.8 billion”
This is the joke of the whole toll road concept. Where the hell do you think that money comes from? YOU. The choices are:
1. Remove the idiotic toll booths and money-losing infrastructure. Fund your roads from the sources listed above in my 9:33pm comment, which raise plenty of money already. Cost to the public to maintain the road in this way is X dollars.
2. Operate the road as a public toll road. Cost to the public is X + the salaries of the fat union losers to sit in the toll booths.
3. Sell the road to a foreign company. Cost to the public is X + the salaries of the fat union losers to sit in the toll booths + the extra cost of private financing + the required profit margin.
Tolling is just a gimmick to fool the gullible into thinking they’re getting something for nothing. It makes about as much sense as taking a 30 year lease on a Pontiac G6.
johnthacker
those good points lead me to the conclusion that the Indiana DOT needs new management, not that private tolls are necessary. Tolls are going up in either case, but when private owners are behind it you can count on paying for their profits and their lobbying on top of the necessary minimum. Where’s the upside?
I think the idea is that if the private sector can make money off it, the government should be able to also.
I’ve never been a believer in the idea of a “massive inefficient government bureaucracy.” At least, not the idea that it is any more massive or any more inefficient than a private sector bureaucracy.
tedward: “In NY at least there’s a great parkway system that usually parallels these with no charge.”
What is the alternative from driving from Buffalo to Albany? That might true downstate, but anywhere near the Great lakes, you must pay to drive the Thruway or drive hours out of your way. I once had to drive from Rochester to Rhode Island and paid $12 (it’s more now) each way to drive 300 miles on the Thruway for a highway on basically flat land. In PA, the turnpike tolls are justified as there are tunnels since it goes through mountains. Now living near Cincinnati, I can drive hundreds of miles in any direction on several federally funded interstates for nothing other than fuel costs.
Having lived in the pay to leave state, NJ where every way out is a toll of some kind, I’d rather not see any tolls with exception granted to tunnels and some bridges.
I would love to see where some government actually built a convenient bypass or alternative from a toll road, but I doubt it ever happened. Usually, the alternative is to at least stop at a bunch of lights instead of getting on the tollway.
Usually, the tollway is built because there is too much traffic on the existing roads. The solution to that is supposed to be to take the taxes being paid by those drivers, and extend the network of free roads.
I suppose if they built a toll road in such a way that they added more lanes to a moderately busy freeway without using the land in a bad way (like an elevated express lane), then it could be okay. But that’s not what gets done. They instead take up land that is badly needed for more lanes or another highway, and then make you pay what you already were paying for.
As much as I curse the bandits who own and run Highway 407 around Toronto, I must admit the ever increasing tolls (about 20 cents/km) keep traffic at reasonable levels. I routinely travel the 30 km commute across Toronto in less than 20 minutes in rush hour, winter included. Still, when I get that $200 monthly bill ..
IC Turbo
Good point…I don’t know of one between Buffalo and Albany (and I did a year at SUNY Buffalo with a home base near Albany). They have been spending good money on the parkways further south though, as an alternative to widening the toll roads further.
The secret to getting a toll free parkway in your area is apparently to run it through your most affluent suburb. In NY’s case that’d be westchester county. All the movers live right on the saw mill or taconic pkwy’s and boy are they never going to have a toll booth installed. The trade off used to be local financing of repairs, but of course that’s no longer the case. So there’s an obvious solution; forcibly emigrate affluent suburbanites into prepared communities at least 20 miles off of the existing toll road infrastructure (you may want to scatter them in little clumps). It’s too far for convenient access and besides, waiting for toll booths is for other people. Before you know it the local windy road will ditch it’s lights and become a driving paradise. If you don’t have such a road don’t worry, one will be built in short order. No need to thank me.