New Study Warns Against Privatizing Roads

The U.S. PIRG Education Fund has released a study of privatized toll roads across the United States, and concludes that they pose 'a long-term threat to the public interest.'

A growing number of states are considering arrangements in which a private operator provides an up-front payoff or builds a new road in return for decades of escalating toll receipts. The report assesses these deals and identifies a number of problems, including:

· Private toll roads typically require greater toll hikes to generate the same upfront payment that could be generated without privation.

· Private deals lead to serious loss of public control that hinders future transportation planning and typically force public payments to compensate private companies if policies reduce toll traffic.

· Deals are often conducted with inadequate public disclosure or input.

· States generally lack the capacity to oversee or enforce private road agreements

· Problems are compounded by the fact that contracts typically extend 50-plus years in order to obtain large federal tax subsidies.

The study examines 15 completed private road projects and 79 others that are proposed or underway.

Thanks to Phineas Baxandall

Full Story: Private Roads, Public Costs (PDF)



One bad assumption

After reading through this report, I notice makes one glaring mistake. It assumes that the states would be able to raise the tolls just like the private companies do. In the case of Indiana's toll road, tolls hadn't been raised in 15 years because of political opposition. That resulted in the road being in terrible shape and losing money. There were no profits to be realized, it was actually a drain on the state budget.

The report does make many valid points about structuring a deal to make sure the government isn't being taken advantage of, but there are advantages to having a private company run the road beyond the "government inefficiencies" (where they actually exist). It eliminates the irrational populism present in many government actions. This private company still can't just raise tolls without limit, or they risk losing drivers to the conventional roads.

A second point is this...railroads are privately operated, is that fair that a road is a "public good" but railroads aren't? I think if the government is going to stay in the highway and airport businesses, it's only fair that they get into the railroad business too. In my opinion, I think that all roads, rails, and airports should be owned by third party semi-private companies (no Toyota owned toll roads or CSX owned railroads) so that they are available for all to use. Those facility companies could then be regulated just like an electric company or a gas company, with strict price controls that keep them from exploiting their monopolies. This would allow the true cost of each mode to show through, and I think rail would gain significant market share.

Private Roads as a Way to Introduce Road Pricing

Private roads are an interesting way to introduce road pricing. People would raise hell in Los Angeles if any level of government tried to charge for the roads, but the same thing, done by the private sector, will be more likely to be acceptable for ideological reasons.

We should be making roads more expensive and using the money to fund alternatives to driving and cleaner cars; same thing for gas. I know that's not the most popular idea, but that doesn't automatically make it bad.

The downside of road pricing from my perspective is it creates a revenue stream that will most likely be used to build new roads and thus chain us further to vehicular dependence, sprawl, and climate change.

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