Federal highway program gridlock: Bills push tolls and P3s as quick fix
By Terri Hall
July 28, 2014
The Federal Highway Trust Fund is going broke. The 18.4 cents a gallon in gasoline tax levied by the federal government is no longer sufficient to fund the highway program. The current federal highway bill, MAP-21, expires next month. The House passed a short term extension bill that puts off the pain until after the mid-term elections in November, and it remains to be seen what short-term fix the Senate will pass, but we’ll be right back where we started next May.
Rather than discipline the use of the fund to restrict it to highways only, the feds continue to divert significant gas tax revenue to transit programs that auto users do not benefit from. If ending transit diversions still isn’t sufficient to fund the program, then indexing the gas tax to inflation (with a cap to protect against runaway inflation) is preferable to a massive increase in tolling and selling off our public highways to private, even foreign, corporations in public private partnerships known as P3s.
President Barack Obama proposed a highway bill that would rely on massive tolling, including lifting the federal ban on tolling existing interstates, as well as P3s and corporate tax hikes to fund the next highway bill. He also recently signed a presidential memorandum offering further support for P3s from every crevice of the federal government.
It reads like a press release from the pro-toll lobby group International Bridge, Tunnel and Turnpike Association (IBTTA): “It shall also be the policy of the Federal Government for all agencies to facilitate, as appropriate, greater public and private partnership and collaboration, including with international investors and companies, to develop, improve, and maintain infrastructure across the country…”
His new policy also creates a Center for Innovative Transportation Finance and specifically calls for a greater use of P3s. The Federal Highway Administration already has an Office of Innovative Program Delivery that’s already a resource for states and private corporations, and it already heavily encourages the use of P3s. So this ‘new’ policy isn’t really new at all. It’s a duplication of an already questionable bureaucracy and a total waste of taxpayer dollars.
P3s are designed to extort exorbitant toll rates from the traveling public, since it outsources the tax hike to private entities. Dallas drivers have to pay 95 cents a mile to use privately-run toll lanes on Interstate-635 in peak hours. That’s more than a $5,000 per year tax hike. P3s aren’t your mother’s toll road that was truly a ‘user’ fee - where only those who used the road pay for the road. Now they use prolific amounts of taxpayer money to subsidize the private toll lanes, so everyone pays, but only the few can afford to actually use them.
They also put taxpayers on the hook for the private company’s losses, limit the expansion of surrounding free routes, manipulate speed limits to drive more traffic to the toll road, and force taxpayers to pay for any ‘uncollectable’ tolls. P3s involve long-term contracts that aren’t competitively bid in the first place and aren’t put out for bid again for up to 99 years, granting the private entities multi-generational monopolies over public infrastructure.
Other bills still push tolls Other members of congress have suggested a gas tax hike or a repeal of the federal gas tax and replace it with a tax on a barrel of oil. Most recently, Senators Mike Lee and Marco Rubio have proposed legislation to dial back the federal gas tax from 18.4 cents a gallon down to 3.7 cents over five years, and have the states increase their state gas tax and control their own destiny by controlling the money without federal strings attached. They have the backing of conservative powerhouse FreedomWorks.
There are problems with every bill. Taxing a barrel of oil rather than at the pump gets the taxation away from the user fee model. While conservatives like the sound of letting the states handle the business of building and maintaining highways, we have an interstate highway system and need to ensure there’s connectivity between the states and that our interstates are properly maintained at interstate-grade throughout the country. Interstate commerce could also be impeded by the imposition of tolls.
Plus, states are just as guilty of pushing the task of building and maintaining highways down to local governments through tolling and increases in property and sales tax. A tax hike at the state or local level is still a tax hike and isn't conservative. Bottom line: no level of government wants to raise the gas tax, so they keep kicking the unpleasant task of increasing taxes down to the next level of government, which is exploding taxpayers’ cost to travel with tolls compared to a gas tax funded system.
If there are objectionable federal strings attached to gas taxes, eliminate them. Expecting that states will do a better job without any oversight is wishful thinking, not good public policy. Tolls are one of the biggest threats to our freedom travel today. Unleashing it on all 50 states, including in the 22 states that currently do not have any toll roads, is disastrous.
The simple solution, not necessarily an easy one, is to fix the gas tax system to ensure it sufficiently funds our national highway system. Ditto on the state level. Turning to gimmicks like P3s as if it somehow magically gets our highways fixed with private sector dollars is the most expensive option. Private companies don’t just plunk billions on the table as a charitable contribution, they want their money back with interest, and with a P3, profit - lots of it.
Publicly-run toll roads don’t have to nor should they make a ‘profit.’ The toll you pay should be based on the cost of building the road and retiring the debt, period. But under a P3, the private entity’s debt can be paid off within 15-20 years, and under the long-term leases, continue to collect tolls for another 30-80 years. Government can be just as bad when they continue to collect tolls well after the road is paid for, but at least taxpayers have a means for redress to either lower or eliminate the toll. Under a P3 scenario, they don’t.
Congress has plenty of national priorities its ignoring and transportation seems to be a favorite. It’s high time they truly fix the problem and stop outsourcing tax hikes to unelected toll agencies, or even worse, private corporations the public cannot hold accountable. Anything less is taxation without representation and deserves a taxpayer revolt.