USA Today on Leasing Our Roads
In its July 4th op-ed, USA Today writes:
In the past decade, usage of interstates rose by more than 30%, according to the Department of Transportation, while additions of routes and added lanes increased capacity by only 4%. The problem is simple. Gasoline taxes and tolls, already unpopular, provide a fraction of the money needed to keep traffic from getting worse. Now comes an idea to get around this problem. A number of states, most visibly Indiana, have proposed leasing major toll roads to private companies. By doing so, they can raise billions of dollars needed to make road improvements elsewhere. Ideally, such leases would not be necessary. Governments would give highways and public transit systems the funds they need, and they would not shy away from raising the requisite money from the people who use them. That would ensure a network of efficient, carefully integrated transportation systems in ways that a more piecemeal approach cannot. But given the extreme resistance, which dates back decades and shows no signs of abating, leases are the best option for easing gridlock.
In other words, governments could continue to own the roads and collect toll revenues over time. The op-ed goes onto cite the Indiana deal, which raised $3.8 billion but did not address the original question raised by Max Sawicky:
When a government takes a lump sum in exchange for permitting a private firm to manage a road and levy tolls, it is not only privatizing. It is borrowing, worsening its fiscal position. Most states are looking at growing budget shortfalls in the future, as Medicaid costs in particular continue to grow more rapidly than their revenues. The Gov could just as easily contract out operations and management, but keep the tolls for itself. The fact that the money is earmarked to new projects – investment – is irrelevant. It’s still borrowing. You could just as easily keep the roads and float a bond – also borrowing – for the new projects. The leasing is not necessary. The political onus against explicit borrowing can warp decisions.
I bet the our favorite troll will claim he has addressed the question even if he hasn’t yet to address my questions about the Crowe Chizek DCF model, which is the whole basis for Governor Daniels’ claim that the Cintra and Macquarie offer was a better deal for the state than Daniel Gross thinks.
To its credit – USAToday does not try to claim they have refutes the argument from Daniel Gross.