The first public-private partnership toll road established as a not-for-profit corporation has gone bust. The Connector 2000 Association, which operates a sixteen-mile, four-lane toll road linking Interstates 85 and 385 in southern Greenville County, South Carolina, announced last week that it was in default on its financial obligations.
“Traffic on the Southern Connector was inadequate to permit the association to collect sufficient toll revenues to pay debt service on the bonds which came due January 1, 2010,” a Connector 2000 Association statement explained. “The association has been advised that the trustee has made no payment of any such debt service. An event of default currently exists… The association is actively negotiating the restructuring of its bonded indebtedness with the trustee, the South Carolina Department of Transportation (SCDOT), and certain owners of large blocks of the bonds.”
New York Governor David A. Patterson (D) is joining a number of other states in promoting the use of freeway speed cameras as a way to address his state’s massive $7.4 billion budget shortfall. Patterson’s budget proposal, released yesterday, includes a plan to deploy fifty photo radar vans to generate $96 million in net profit for the general fund by 2012.
“The mistakes of the past — squandering surpluses, papering over deficits, relying on irresponsible fiscal gimmicks to finance unsustainable spending increases — have led us to a financial breaking point,” Patterson wrote. “There are no more easy answers…. The only way we can emerge from this crisis is through shared sacrifice.”
What, you thought Ray LaHood’s war on distracted driving would be limited to a lot of hot air, a do-nothing summit and a ban on federal employees text messaging in federal vehicles? Yeah, so did we. Turns out that the position of Transportation Secretary leaves plenty of time for windmill tilting, as the WSJ reports LaHood is back on his old hobbyhorse. The SecTrans is pushing for the federal ban on texting while driving, and he’s back to the old double-nickel strategy: deny federal highway funding to states that refuse to pass local bans on texting while driving. Which is certainly better than some of the more Patriot Act-esque enforcement methods LaHood had been considering. Still, didn’t the mess that was the distracted driving summit convince LaHood that it’s impossible to legislate against stupidity, especially when there’s such a lucrative business in perpetuating said stupidity? Guess not.
With the economy desperately looking for signs that a bottom has been reached, news that Fisker has raised $115m in new funding might indicate that (if nothing else) the money markets are back to their good old speculative selves. At least it might if there weren’t so many darn extenuating circumstances. On the one hand, Fisker seems like the kind of business that has little business attracting much, well, business. Its $90k+ Karma brings little more to the table than some competition for Tesla in the EV-glamor-bauble segment, and like Tesla it’s trying to leverage its first model into ever cheaper, higher-volume vehicles. So why are VC firms giving Fisker the time of day?
In a surprise move, Arizona Governor Jan Brewer (R) took a step to save the freeway speed camera program imposed by her predecessor, Janet Napolitano (D), the current US Secretary of Homeland Security. On Friday, Brewer proposed a Fiscal Year 2011 budget that cut spending by $1.1 billion, reduced the state’s workforce by ten percent and raised taxes by $1 billion to address massive deficits brought on by overspending during the economic downturn. Also tucked into the budget were assumptions that automated ticketing would continue beyond 2011, based on expected results from a new referendum proposal. (Read More…)
US Transportation Secretary Ray LaHood announced on Wednesday that he would re-write funding guidelines to dispense with rigid cost-benefit analysis when deciding which transit programs should receive funds. Under the previous system, because motorists provided the majority of the funding through the gas tax, money was allocated to cost-effective transit programs that promised the greatest overall reduction in traffic congestion. In remarks at the Transportation Research Board annual meeting, LaHood explained that the objective criteria will be replaced by a set of goals.
The Federal Highway Administration (FHWA) will issue a final rule next month that will force states to spend an estimated $1.2 billion to implement the “511” traffic information hotline championed by former Vice President Al Gore. So far, thirty-two states have established telephone numbers that provide callers with pre-recorded traffic updates. The rule will standardize the data formats and required features that will apply to all the states, beginning with coverage in the top-fifty metropolitan areas.
California Governor Arnold Schwarzenegger, desperately seeking new sources of revenue to cover a $19.9 billion budget shortfall, yesterday declared a state of fiscal emergency. As part of his proposed solution, Schwarzenegger called for the deployment of a massive statewide speed camera program to generate at least $397.5 million in net profit to state and local government.
Under the proposal, existing red light cameras at intersections would be converted into “speed on green” cameras that issue citations to motorists who try to speed up at an intersection to make the light. Those who slow down and fail to make the light will be mailed a red light camera ticket.
“Various federal rules are tying our hands and preventing us from reducing costs in some state programs,” Schwarzenegger explained at a news conference yesterday. “I want to remind the federal judges and the politicians California is not Washington. We do not have the luxury of printing money or running trillion-dollar deficits.”
Thanks to the unionization of the US auto industry, its politics (and accordingly, those of the state of Michigan) tend to be of the center-left persuasion. This tendency was doubtless aggravated over the last year, as a congressional bailout of the industry was denied by southern Republican senators. But even in Michigan, the union-industry alliance isn’t strong enough to counter the trend towards ever more divisive politics, as two recent stories show some of the ideological cracks forming in this now highly politicized industry. First,according to the Freep, the National Tax Day Tea Party will re-open last year’s political wounds by staging a rally outside the RenCen during the Detroit Auto Show this year. The idea behind the rally is to “make a peaceful yet clear statement against government takeover of America,” specifically the government ownership of General Motors. Though it’s clearly an empty gesture intended to rally political support more than change anything, it will be a jarring contrast to the usual convivial mood at the NAIAS. And it’s just one of several ways in which the politicization of the industry is becoming steadily less containable.
Cash for Clunkers was set up very quickly, and there hasn’t been an accounting of the administrative costs of the program. There also hasn’t been publicly available information about how contractors were picked to process the thousands of transactions that the program generated… My concern is the waste, fraud and abuse that may have resulted from the vulnerabilities that can come with such a quick start.
Senator Chuck Grassley sticks it to Transportation Secretary Ray LaHood, in a letter requesting a full accounting of the cash for clunker program. The DOT was all over fraudulent commercial practices during C4C, but this is the first investigation into possible fraud or overruns on the administration side. Why Grassley waited until now to look into this doesn’t exactly compute, but it will still be interesting to see the results of the audit. After all, could it even be possible that the government spent $3b in a matter of weeks on a consumer incentive without fraud of some kind taking place?
A class action lawsuit was filed Monday against Bradenton, Florida and American Traffic Solutions (ATS) seeking to end the use of red light cameras in the city. Attorney Jason D. Weisser challenged the program on behalf of motorist Jamie Rosenberg and all other recipients of $125 photo tickets since automated ticketing machines were installed in March 2008.
“We intend to pay the debt,” GM’s CEO Ed Whitacre told reporters yesterday. “We’ll be finished by June.” Except that nothing has changed since we determined that GM is “taking taxpayers for a ride.” Here’s what he should have said:
By June we intend to return a small percentage of the taxpayer assistance that rescued this company from sure liquidation. GM will need to achieve an unprecedented market cap valuation at an eventual IPO in order to truly repay taxpayers for this second chance, and I will not rest until we clearly and honestly achieve that goal. Until that day comes, please refrain from printing misleading headlines like ‘GM To Repay Loan By June,’ as these imply that we are able to make the taxpayers whole when, as an unprofitable company, we have no such ability. Thank you.
CSM Worldwide seems to think so, telling Automotive News [sub] that new compacts from Ford and Chevrolet are being pushed into the market to comply with increasing fuel-efficiency and CO2 emission standards. If gas prices stay steady, CSM’s VP for Forecasting, Michael Robinet says “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards will raise incentives and lower profitability.” “It is very possible that U.S. automakers will not achieve their objectives of selling small cars at a profit,” adds CSM CEO Craig Cather. The crux of the argument is that CAFE ramp-ups to 35.5 MPG by 2016 create incentives for automakers to produce small cars without corresponding consumer demand. Luckily there’s a planned gas tax hike for that.
GM was supposed to have a restructuring plan for Opel in place by the end of December, but it’s looking like that deadline is DOA. In a blog post at GM Europe’s “Driving Conversations” blog, GME supremo Nick Reilly explains:
While it is indeed exciting to see that things are coming together, bear in mind this is going to be one of the largest, most complex industrial reorganisations in European manufacturing in years. It will affect thousands of people and their families; impact plants and other stakeholders.
We are determined to do this right. We must do this right. Although we had hoped to have the new business model finalised in December, it appears that more work needs to be done and further consultations will not be rushed.
I said earlier that we would have a plan in place by year-end. Now it looks like an announcement may slip into January. This is not a broken promise. It is a pledge to do something right.
In a NY Times Op-Ed a few weeks back, I laid into the Obama administration for allowing GM to pretend that its $6.7b planned payback is even in the ballpark of what it owes the taxpayers. “If tens of billions in lost tax dollars is simply the inescapable price of preventing a systemic economic collapse, the White House should tell us so,” I wrote. Well, it appears that the White House agrees. Sort of. In an interview with the Detroit News, Gene Sperling, the senior counsel to Treasury Secretary Tim Geithner admitted
The real news is the projected loss [from the $82b+ auto sector bailout] came down to $30 billion from $44 billion
Well, halle-frickin-lujah. Now show us how we’re really going to get $50b out of GM and Chrysler.
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