Deal emerges as states rights hero against privatized toll roads
By Terri Hall
January 13, 2012
You gotta give him credit. Georgia Governor Nathan Deal learns quickly. He’s reversed his predecessor’s plans to privatize Georgia’s public roads in very controversial contracts known as public private partnerships (PPPs or P3s). Former Governor Sonny Perdue put a P3 program in place in 2009.
That was then and this is now.
After the explosive blowback from imposing tolls on EXISTING HOV lanes on I-85 in Gwinett County last October, Deal had to backtrack and slash toll rates by more than half in the first week. The Georgia Department of Transportation (GDOT) also increased the number of passengers needed to access the HOV lane from two to three, knocking many cars off the HOV lanes and into the general purpose lanes causing absolute GRIDLOCK on the free lanes. A not so ‘peachy’ public backlash followed in the Peach State. Deal pleaded with the Federal Highway Administration (FHWA) to revert that requirement back to two passengers for motorists carpooling, but the FHWA rejected it.
Shortly after the fall-out over the I-85 HOV/HOT toll lanes ensued, GDOT pulled back a P3 for a project known as “West by Northwest” on I-75 & I-575. The P3 industry was completely taken aback. They can’t fathom an elected official with the audacity to reverse controversial, anti-taxpayer policies that they lobbied into place so easily in 2009.
January 12, Deal blasted P3s in his State of the State speech as “ill-conceived sell-outs” of state sovereignty. Finally someone gets it! The backlash to P3s, particularly the over-sized Trans Texas Corridor P3, in Texas has been no less vehement. However, Texas Governor Rick Perry, unlike Georgia’s Governor Deal, dug his heels in and continues to shove P3s down Texans throats.
Perry has gotten away with saying one thing and doing another. His presidentially-timed book, Fed-Up, touts his commitment to states rights and state sovereignty. However, he’s sold off both to the highest bidder in plain sight through his support of P3s. The Texas voters have never held Perry accountable for his unspeakable acts of trampling on property rights (eminent domain for private gain) and selling off state sovereignty. But it’s interesting to note, in order to get re-elected on 2010, Perry did have to fool enough Texas voters into believing he had pulled the plug on the Trans Texas Corridor, though the TTC was still moving forward under a new name -- “innovative connectivity plan.”
It was the relentless cry from the grassroots that led to the complete repeal of the Trans Texas Corridor by the Texas legislature in 2011, AFTER Perry was re-elected in 2010. Yet Perry still brags about the Trans Texas Corridor on his presidential campaign web site. Perry’s total disconnect with the grassroots in his own state are reflected in his nepotism as he futilely clings to his presidential hopes. Yet even with the repeal of the Trans Texas Corridor, it’s still being built segment by segment through P3s that Perry and the Texas legislature just authorized in the 82nd legislative session in 2011, despite the grassroots opposition by more than 100 tea parties.
Elected leadership makes all the difference
Perhaps another reason for the reverse in Georgia is due to the fact that its transportation commissioners are also ELECTED not appointed. The grassroots in Texas advocated that the Texas legislature scrap the current five gubernatorial appointees that make-up the Texas Transportation Commission and replace them with elected leadership that answer directly to the PEOPLE for four years when the Texas Department of Transportation was under the sunset review process. But Perry insisted his current appointees stay in place so that he can continue to force his unpopular, anti-taxpayer, anti-property rights agenda upon Texans. As many Americans have discovered, Rick Perry and the Texas Legislature are controlled by special interests, not the public interest, and they’ve been allowed to get away with being tone deaf to the public outcry against P3s and tolling on existing roads.
As Georgians discovered, transportation commissioners now have the power to levy taxes through tolls with unprecedented ease by imposing tolls on existing freeways. When a P3 is involved, they hand that power to levy taxes over to a private corporation (essentially a form of fascism). Clearly, that doesn’t sit well with taxpayers or anyone concerned about state sovereignty over public infrastructure.
Permanent new tax - tolls in PERPETUITY
In the old days of traditional turnpikes, toll roads were implemented on brand new roads and financed using private toll revenue bonds with no risk to the taxpayer -- and without messing with existing corridors that are already built with tax dollars. The taxpayers also insisted that the tolls come off the road when it’s paid for.
Well, under P3s, dubbed “innovative financing,” the projects use heaps of taxpayer money (in Texas, up to three-quarters of the funding comes from the taxpayer, not the private entity), and the toll stays in place long after the debt is retired as the private entities cash-in through guaranteed profits for a half century or more. The toll rates aint cheap either -- on two projects in Texas, the toll rates will be 75 cents PER MILE to take the foreign-owned toll road.
In Texas, unelected public toll authorities use similar financing schemes as they borrow money against the revenue stream of one toll project in order to fund the next, necessitating the toll on the first project stay in place longer. When they do this multiple times over, called multi-leveraging, the tolls will end up staying in place in perpetuity because the financing for other projects depends on another’s revenue stream.
They’re also using borrowed money to secure more borrowed money and so on, many times over -- like building roads with credit cards. It’s the same sort of financing gimmicks that caused the sub-prime mortgage crisis that brought down the housing market and global economy. Our politicians are building an infrastructure bubble that will be deemed too big to fail and they’ll come to the taxpayers to bailout their mess.
Perry and the Texas legislature just gave unelected toll authorities ownership of any state or federal highway segment that it tolls in PERPETUITY (HB 1112 passed in 2011). Why would a toll authority need to “own” a road in perpetuity? Why wouldn’t it revert back to a FREEway once the toll is paid off and then operated and maintained by the highway department? Because they plan to keep the tolls in place in PERPETUITY.
Toll authorities have no other revenue stream to maintain their roads except tolls, unlike the highway department that receives gas taxes and other taxes/fees to build and maintain public roads. In October of 2009, the Alamo Regional Mobility Authority (the new way to refer to tolling authorities by leaving the word “toll” out) even admitted it will charge tolls in perpetuity when it imposes tolls on every single EXISTING freeway lane on US 281 in San Antonio.
So our hat’s off to Governor Deal who’s not only standing up for states’ rights and state sovereignty, but also smart enough to see a LOSING position on P3s and tolling in Georgia and RETREAT. Now if Texans would wise-up and require their politicians to do the same!